Good morning, everybody. I'm Terence Flynn, Morgan Stanley's U.S. Biopharma Analyst. Pleased to be kicking off our 24th Annual Healthcare Conference here in New York City. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. I'm very pleased to be kicking off the conference this morning with Vertex Pharmaceuticals. Joining me is Reshma Kewalramani, who is the company CEO and President. Thank you so much, Reshma. It's great to see you this morning bright and early.
Good morning, Terence.
Maybe, I'll turn it over to you to just give us an update on the company's diversification journey. I know that's been a big focus of yours as the CEO here. There's been a lot of movement on the company's pipeline and also the Crinetics acquisition recently, and so maybe just give us a mark to market on where you stand on that journey.
You bet. Well, good morning all, and for you brave souls who've made it here at 7:00 A.M., it's very nice to see you. We have been on a journey. It's more than 10 years now to diversify our company and continue to grow. I do want to make sure that we talk about CF for one minute. CF has been and remains important to us, and we see more growth in CF as we now launch ALYFTREK around the world and get down to lower age groups. We also have our last 5% of patients for which we don't yet have a therapy.
That foundational pillar of CF continues to go strong. Outside of CF, over the last three years, we've been bringing CASGEVY to more people around the globe, and you know CASGEVY has a very significant patient journey. And now we are at a point where we can see patients who are initiating, who have first cell collections and have infusions. We have line of sight into the growth, and it looks very good and I continue to believe CASGEVY is going to grow into a multi-billion dollar asset. Over the last year or so, we have been launching JOURNAVX in acute pain. This is the first non-opioid in more than two decades, and I really like what I see in the growth there.
Then we were talking about the fourth pillar, which was going to be renal medicine. It is, but I think it is actually going to just switch places with rare endocrine and Crinetics, which is our fourth pillar now with PALSONIFY, which is an approved medicine in the U.S. It is approved in Europe, launched in the U.S. This is a medicine for acromegaly. Then of course there is the renal pillar. The PDUFA date for our first renal medicine, pove in IgAN is November 30th, and I am sure we will get into a little bit more there. There is much more beyond that. In total, there is something like six programs in phase III, more than that in phase II, and I like what is coming out of the bench into the clinic as well. So lots going on inside and outside of CF.
Great. Well, no, that is a perfect framing. I guess, the area I want to dig into first is just your kidney franchise. Obviously, that has been a big focus of investors. You mentioned the pove PDUFA date coming up here. Maybe just level set us on differentiation. I think that is a question we get a lot from investors is there are two competitors that have launched into the market already. So as you come from a third to market position, how do you think about differentiation of pove?
Yeah. So when you think about IgA nephropathy, just to level set, you are looking at something like 300,000 patients between the U.S. and Europe, let us say 150,000 inside the U.S., and then add another 1 million or so in Asia where we are going with Zai in China and associated countries and with Ono Pharmaceutical in Japan and a few other countries. So it is one of these rare diseases that is a common rare disease. In terms of coming to market, it turns out that this is an interesting area where there are three medicines that are all launching, let us call it within a year or so of each other in the category of APRIL or APRIL/BAFF.
In my mind, as I think about IgA nephropathy, and I happen to be a nephrologist, this is a disease that is very well understood in terms of its etiology. It is a B-cell-mediated disease. It is a disease that results from autoantibody production. When you think about it that way, it makes most sense to have a medicine that works on both APRIL and BAFF, because those are the two cytokines that are most responsible for B-cell development maturation. It wouldn't make sense to me to work on only APRIL or only BAFF unless you saw some concern in the safety profile. We now have the profile. We put out a fairly extensive press release.
The safety profile looks really good and the efficacy, and this is numerical and it's cross-trial comparisons. You got to take this with a grain of salt. When I look at the numerical response, pove has the best numerical response in terms of proteinuria, hematuria, Gd-IgA1 levels, and that's important. But maybe the most important thing which could be surprising to you is the fact that it's also the most patient-friendly dosing. This is a biologic.
A patient will be taking this for the rest of their life and their ability to take a small volume, pove is 0.46 million, in an auto-injector once monthly is a very favorable presentation, and I think that's actually going to be one of the greatest differentiators. I also think our ability to support patients through their journey is going to be important. We've learned a ton doing the same in cystic fibrosis. I think that's going to be important. The last thing I'll call out is we have built the largest sales force, and that is to serve patients where they are. There are certainly centers of excellence and large clinics, but there's also smaller number of patients in the community setting, and we want to be able to serve all patients.
Great. Maybe just one follow-up there is that GFR kidney function is the other endpoint that you guys-
Yeah.
...are studying. The trial is going on for two years to look at that. As you think about positioning the kidney function data, how do you think about the importance of that in either a label or at some point down the road, given one of your competitors will already have some of that data?
Yeah. This one has been a rapidly evolving field. 10 years ago, 15 years ago, the FDA wasn't yet comfortable with proteinuria as an accelerated endpoint. The community, the renal community, has been working with the FDA, with academic centers, with industry to get proteinuria to be it. We are now at a point where proteinuria is routinely accepted in IgAN as an accelerated approval endpoint. Your point, Terence, is around, all right, where are we with GFR? On GFR, the agency has been hinting, and in the spring renal meetings, they all but said they're going to get comfortable with one-year GFR as the endpoint as opposed to two years GFR, which is where it was at prior to those meetings with the FDA.
Where we are is that we want to launch pove around the globe. That is our ambition. That is what we are going to do. For that to happen, we have to meet the global regulators where they are. Global regulators, so think MHRA for the U.K., the EMA for EU, and the Asian regulators, not to mention Australia, are not yet at the point where proteinuria is acceptable.
They are at the point where two year GFR is okay, and so we're methodically making our way around to understand where they are with one-year GFR. But we won't cut our dataset early because our ambition and our goal is to have pove go around the globe. It is true that the FDA has become increasingly comfortable, and they've all but said one-year GFR would be acceptable to them.
Great. It seems like you're unlikely going to get that one-year GFR on because you want to preserve the integrity of the dataset for the global-
That's exactly right.
Great.
That's exactly right. If you cut the data early, as you remember, the FDA had instructed all three companies in the APRIL/BAFF space to not share the GFR because it was ongoing. Once you cut the GFR and share it, if the U.S. is okay with it, that would be the concern for the global regulators.
Okay. Maybe just one on the commercial side. You mentioned you're going to have one of the largest renal sales forces out there. What have been some of your early conversations with payers? Obviously, we've seen a couple of quarters from Otsuka now in terms of the uptake of their IgAN drug. How are your preliminary conversations with payers going and anything to update us on there?
Yeah. On the payer side, they are familiar with the disease. They are familiar with proteinuria, the accelerated approval, the correlation to GFR and such, and they're very familiar with the outcomes of patients with IgA nephropathy. Unfortunately, that is progression to dialysis, transplantation, or death. The value of slowing that progression is well understood to them. We've been in conversations, the ones that we are allowed to have legally and appropriately since about last summer.
We've targeted and discussed pove with more than 70% of payers, and the conversations have been productive and positive. I expect that we will be able to secure reimbursement. I expect that it will be the kind of reimbursement that would be appropriate and commensurate with what you've already seen in the field. This one seems like the payers are familiar, and they are understanding of the value of medicines that prevent death, dialysis, or transplantation.
Okay. Great. I think the other thing as we think through differentiation is breadth of program or breadth of-
Yeah.
...indication set on a label. I think back of some of the historical examples here where that is oftentimes pretty important as you think about formulary positioning.
Yeah.
So maybe just give us an update on kind of where we stand with the pove program in terms of breadth of opportunity and the next set of data that we should focus on here.
Yeah. I think the Alpine team did a really nice job in studying pove in multiple potential indications by way of these phase II basket studies that they conducted. For us, after pove and IgAN, that is the November 30th PDUFA date. I expect the next phase III readout to be in membranous nephropathy. I think that has an advantage to our first discussion point around differentiation. I think nephrologists are going to find it helpful and easier for their clinical practice to pick a single B-cell modulating drug across the various glomerular diseases that they are dealing with.
Having pove in IgAN and pove in membranous, I think will be valuable. I do think membranous will be next, and I think the one after that is going to be myasthenia gravis. The myasthenia program is in phase II. The membranous nephropathy program is in phase III. To close out on membranous, the DSMB has met, and they have picked 80 mg, which is the same dose that we had studied in phase II in the RUBY-3 trial in the event you want to look at those data as the phase III dose.
Great. As we think about read-through, I guess from IgAN to these two other indications, either one of those that you would put a higher probability than the other, or they are both about the same given B-cell biology, how do you think about read-through from IgAN to those two?
Yeah. I think it is reasonable to look at the phase II RUBY-3 trial for membranous to get a sense of where that is going. It is the same dose, it is 80 mg, so you know the safety because we just announced the results from the interim analysis accelerated approval cohort for IgAN, and there are lots of similarities between IgAN and membranous. As Gd-IgA1 is to IgAN, PLA2R is to membranous, and you can see what that reduction was. I think that is a reasonably easy analogy to make.
I am very excited about the myasthenia opportunity because there is a wild type TACI that already completed a phase II study in China-only population, so you got to think about that. When you look at the timeline, and if you plot, for example, time on the x-axis and the ADL, the activities of daily living on the y-axis, the wild type TACI in that China-only cohort had really nice results. Of course, pove is an engineered TACI, is better binding affinity, is higher potency, better tissue distribution.
I am very excited about this. This is a patient population that has a disease that is one of the most B-cell mediated diseases, if I can call it that way. While there are medicines that are available that have been real game changers, unfortunately, they have to be cycled on and cycled off, but the disease doesn't cycle. Pove would be a medicine that could be taken consistently over the period of the patient's life, and I think that could bring a real benefit.
Okay, great. Maybe we'll move over to inaxaplin, which is another one of your pipeline assets. This is for APOL1-mediated kidney disease.
Right.
First, maybe just again, give us a little bit of background on the disease and the need there, and then as we think about the upcoming data from AMPLIFY, I'd like to dig into that a little bit because I think that's expected in the fall here, and this is from a phase II study.
Absolutely. So staying with the renal franchise, this is about inaxaplin in a disease called AMKD, APOL1-mediated kidney disease. The disease itself is fairly new. It was just described in about 2010 or so. Basically, it's a disease that occurs only in people of recent Sub-Saharan African descent. It is a very rapidly progressive disease, and fundamentally what you see is if you have two APOL1 alleles versus if you don't, your risk of progression is something like 5x, 6x. It's extremely high compared to those who do not have APOL1.
There are about 150,000, let's say 100,000- 150,000 people with AMKD in the United States, i t's largely a disease in the Western world that is in the U.S. These patients have no medicines that have been specifically approved for their condition. We have a program that is going to read out, it's called AMPLITUDE, early next year. It's in phase III development. We have an agreement with the FDA for potential approval, and the accelerated approval is based on one-year GFR.
The FDA is not yet comfortable in AMKD, unlike in IgAN, for proteinuria to be the accelerated approval endpoint. That study finished its enrollment in the IA cohort last year. We are on track to finish the full cohort enrollment in 2H of this year, and we're fully on track for the phase III interim analysis readout early next. That's AMPLITUDE. But as Terence said, there is another study, AMPLIFY, and we do have to talk to the teams about not naming them so similarly. AMPLIFY is a phase-II-B study. That one will read out this year and in the fall is about right.
We are on track for that readout this fall. That one I would think of as an expanded population, as an indication expansion from AMPLITUDE. So AMPLIFY has two cohorts in that phase II study. Cohort one is modest proteinuria, so up to 0.3 g- 0.7 g of proteinuria, whereas AMPLITUDE is more than 0.7 g . And cohort two in AMPLIFY is patients who have AMKD, so they have two APOL1 alleles, but they have a second disease, and that second kidney disease is Type II diabetes. The reason I consider them expansion cohorts is obviously when you have lower proteinuria, this modest proteinuria cohort, the dynamic range is smaller.
And when you have two kidney disease, it's not clear what kidney disease is causing your proteinuria. Is it 50/50 Type II diabetes and AMKD? Is it disproportionately AMKD, disproportionately Type II diabetes? And of course, our medicine, inaxaplin, only takes care of the AMKD portion. So that's why that's an indication expansion, a potential indication expansion. Those results could expand the 150,000 people in the U.S. to maybe add another 100,000 or so. So that's what the AMPLIFY study looks like.
Great. Maybe we'll just focus on the modest proteinuria cohort. What would you view as kind of a good result there, and what are the implications then for the AMPLITUDE study as we think about that phase III if we see the data from cohort one, recognizing cohort two is Type II diabetic, so again, a bit more of a wild card.
Yeah.
In Cohort I, how do you think about what the bar is for success there?
Yeah. I hesitate to offer a bar. I think what I said when we were doing the phase II for AMPLITUDE is double-digit proteinuria improvements would be beneficial. Some took that to mean 10.1%, others took it to mean 99.9% improvement. I would say anything in the 20%, 30% range would be positive. Again, remember, in modest proteinuria, your dynamic range is just smaller, but I think if you have double-digit improvement in that line, I think that would be a positive.
If I'm remembering correctly, the lowest level of proteinuria that later turned out to have value when the sponsor did the time to ESRD dialysis or death trial was something like 14%, 15%. So I think numbers like that tell you that those are values of proteinuria improvement where when you go on to do the hard outcomes trials, you show benefit.
Great. Just remind us what would be needed for an indication expansion here. Would you need a separate phase III program for both of these, or could you somehow use this phase II data in support, assuming AMPLITUDE was positive and supported the primary approval? How does the regulatory path work, I guess, for these-
Yeah.
...other indications?
It's really an excellent question, Terence, and the real answer is I don't know as we sit here today. We haven't had our end-of-phase II meeting with the FDA because we're not at the point of having the phase II data. What I would say is the way to think about this is secure the results from the AMPLIFY study. If positive, have discussions with regulators around what the next steps are. I strongly suspect that what you say is about right, that they'd want to see what AMPLITUDE says because AMPLITUDE would be the study that has the proteinuria improvement and the GFR endpoint. Then what additional work the agency might want to see in the lower proteinuria group or the diabetic cohort group would come after that.
Okay.
But I wouldn't expect this to be the kind of situation, and you know Vertex moves very fast, where after we have the AMPLIFY data, we'd be moving on to more clinical trials. It's the kind of situation where we need to have conversations with the regulators.
Okay, great. Before we move to one commercial question I had is just on the AMPLITUDE phase II trial, you mentioned one-year GFR. I know in IgAN, there was a lot of debate about kind of slope of decline, and fortunately, with the data we've seen so far from some of the drugs is stability of GFR. In this disease, you mentioned very rapid progression, unfortunately. So how do we think about what kind of delta or what we'd want to see on a GFR endpoint from AMPLITUDE?
Yeah. So you'll remember that the AMKD patient population, even in comparison to how we used to think about IgAN, although I think our own views are evolving. IgAN, it turns out, is not a slowly smoldering disease. As you can see from the results that have been revealed, one-year GFR declines quite rapidly. AMKD is known to be a rapidly declining renal condition, which is why the agency was comfortable with one-year GFR and why we were able to power the study to that end. I won't share with you what our power calculations are, but based on the rapidity of decline in AMKD, we have confidence that we've powered the study correctly and that we'll be able to show a difference at the one-year point.
Okay, great.
It's actually interesting that you can show that difference now with IgAN at the one-year point.
Yeah, for sure. All right, so we'll stay tuned for that data next year. The commercial opportunity, kind of similar question to pove. Walk us through kind of how you're thinking about the build-out here, the rollout. Less competition here, so you guys are in a first-to-market position.
Yeah.
I know there's some work on the diagnosis front that you and the team have been doing.
Yeah. This one is exceptionally high unmet need. There is no targeted therapy in this area, and as we already discussed, the progression of kidney disease is unfortunately very fast. Here, the thing to think about is diagnosis. AMKD as a disease was just described in 2010, and genetic testing is not commonplace. When we started the phase III trial, we started to do genetic testing as part of the trial infrastructure so that patients who were diagnosed with AMKD, if they qualified, could go into the clinical trial.
Separately, we also started up genetic testing in the real world, offering free testing as appropriate with groups like Natera. They have genetic testing for genetic kidney disease. If you're a nephrologist and you have a patient that you suspect could have AMKD, you could avail yourself of free testing. Through those programs, which have been going on for quite a few years now, three, four years now, we've already identified a number of patients, and so if and when a drug is approved, we would have a bit of a head start in patient identification.
That's going to be the primary focus of our sales team if and when the drug is approved to make sure that physicians are aware and the education has already started, that genetic testing is happening. I will tell you as an aside, as we talk to nephrologists, which we're doing now largely for IgAN, it's interesting enough that AMKD has really captured the hearts and minds of nephrologists because they see it as the first precision medicine opportunity in nephrology. We have the advantage of being able to do education on both these dimensions, IgAN and AMKD.
Okay, great. Maybe just two follow-ups. The first, I know you're not going to guide on pricing because it's too early, but just obviously maybe talk to us about some of the puts and takes high level, this disease versus IgAN. It sounds like they're similar prevalence numbers. Again, similar rapidity of kidney decline, but anything else that we should think about potential price points. The second is leveraging your existing infrastructure.
Yeah.
You mentioned you're building out already with one of the largest renal sales force. Can you use that for inaxaplin, or is there an incremental build that you need to do there?
Yeah. The overlap between the physicians treating inaxaplin or who could use inaxaplin for AMKD and who might use pove for IgAN is about 70%. Those are a hefty overlap, but it is not 100% overlapping circles. The reason we decided to build the largest team for IgA nephropathy versus the other APRIL or APRIL/BAFF is this desire to get to all patients, whether they are in centers of excellence, large practices, or the smaller ones. We also have the advantage of being able to then bring out inaxaplin.
But we also have programs after that. We talked about membranous, and there is an ADPKD that is autosomal dominant polycystic kidney disease after that one. So we have an expectation to be in renal medicine for a long time across a number of diseases. But first things first, and it is indeed pove in IgAN that we think we are going to be there first. On pricing for inaxaplin, I think that the right way to think about it is these medicines, if they are approved, whether it is pove or inaxaplin, they will come with data on GFR and proteinuria that speak to its potential in time to death, dialysis, and transplantation.
That is all the same. So I think the price points that you are seeing now are fair enough. I think when you do the health economics, whether you do it formally or for something like a NICE or an NHS, or you do it in a less formal way for other payers, the health economics are very supportive. So I think it is a reasonable proxy with what you are seeing in the current wave of medicines.
Okay, great. You mentioned in the beginning how important the cystic fibrosis franchise has been, but also will be on the forward. You are, again, rolling out the Gen, I forget, 3.0, 4.0 at this point-
Yes.
...of ALYFTREK.
Yeah.
It has been so many years now, and obviously it has been great to see all the progress. Maybe just high level, talk about some of the puts and takes as we think about that franchise in 2027. Obviously, you mentioned you are still going to some of the lowest age groups now. You have the ALYFTREK conversion going on. I am not sure if there is any other geographies left, but anything we should think about for 2027?
Yes, maybe three things as you think about the near term, so let us call it the next few years. For the here and now, it is about getting ALYFTREK around the globe. It is regulatorily approved in almost all regions. In some regions, we are working on pricing and access. Where we have regulatory approval and access, it is about getting people who would prefer to be on ALYFTREK. It is the best medicine we think we have made to date. So people who are on TRIKAFTA, they want to be on a once-daily medicine, or they just want to be on the best medicine that we think we have made.
That is the switch that is happening. There are also naive patients. For example, in certain countries like Italy, there is a lot of these ultra-rare mutations for which ALYFTREK has an approval, and so there are some of these very rare mutations that are coming onto ALY. So think about the ALY launch around the globe. Then think about ALY in the original ALY application, it was six years and above. We are working on two to five, and then we are going down the age groups. So that is the next thing that you can anticipate.
The last thing is emerging countries. Think Brazil, think Türkiye. There are some countries that we are still getting to in terms of reimbursement. Smaller countries, but important nonetheless, and that would be what we are thinking about in the near term with the commercialized medicines in CF. Those medicines, ALY is part of what we call NG 2.0, Next Gen 2.0. The next one after that is Next Gen 3.0. There are three medicines in that one. I should call them potential medicines. VX-828, which is the lead, VX-581, and VX-272.
After that, there is a Next Gen 4.0, and you can believe that there will be a Next Gen 5.0 and beyond. Until we can demonstrate to ourselves that we have reached the peak of the best sweat chloride that we can achieve, we are going to keep going. We have talked about the fact that we believe we have already achieved that asymptote for ppFEV1, the lung measurement, and we are getting awful close to sweat chloride. We have submitted some abstracts to the fall North American CF meeting, and fundamentally, when you diagram out the Gaussian distribution of sweat chloride in carriers or normals, you will see that the center point, the median, is about 30 mmol, and then there is a normal distribution around that.
When you look at people treated with ALYFTREK, for example, it closely approximates that Gaussian distribution, telling us that we're getting close. But as long as we haven't proven that to ourselves, we're going to keep going, and that's what NG 3.0 and NG 4.0 is about.
Great. One follow-up, as you mentioned the global rollout of ALYFTREK. I know historically every year there's pricing declines in a lot of these geographies. Given the profile of ALYFTREK, does that allow you to at least keep price more stable than maybe otherwise you would if you just had TRIKAFTA? Or should we expect kind of the same progression as you typically see, which is pricing declines year-over-year?
ALYFTREK, and actually TRIKAFTA before it, in the ex-U.S. regions you know that you have to go for a rebid every three years, four years, as the contracts call for. What they look at is real-world data, and the real-world data that they're looking at is the decline of lung function. TRI, and now ALY, are one of the few medicines that I've ever worked on that actually look better in the real world than they even did in the clinical trial because you see this flattening of the decline of lung function. Everybody's lung function, just like kidney function, declines. It's about maintaining it at the most stable levels that you can.
We have been able to hold price steady in some countries based on that kind of real-life data. I wouldn't want to leave you with the impression that that's doable in all countries across the globe. There are some countries by just simply the way the country operates, there are expectations of price declines. But where there is an opportunity to present data and decisions are made on that data, we have been able to hold price stable because the data are even better in the real world.
Great. Maybe in the last couple of minutes, anything else in the pipeline that you'd want to highlight for us? I know you guys have also a deep early-stage pipeline. You mentioned some of the Gen 3.0 cystic fibrosis assets with ADPKD.
Yeah.
But anything else that should be on our radar in the next six months?
All right. I'll call out a few, but don't tell anyone that I called those out and left some of the others behind. Maybe in the phase III pipeline, the thing to call out is the Type I diabetes program. There's the Semma cell program, that's the cell therapy that could be a one-and-done curative therapy, and I am super excited about that one. But I'm even more jazzed about the type O program that I think I mentioned on the earnings call because that opens up the opportunity to even more patients than the type A program.
The IND is cleared, and I'm excited about dosing patients in that phase I/II study. Also in phase III is atumelnant. That is an asset that came to us by way of the Crinetics acquisition. Atumelnant is a medicine that I see having multi-billion dollar potential and the opportunity to serve 20,000 patients, some number between 15,000 and 20,000 in the U.S., add another 15,000 ex-U.S., for CAH, congenital adrenal hyperplasia, as well as a second disease called Cushing's disease.
Atumelnant is in phase III development for CAH, phase I/II development for Cushing's. If I pick something from the very earlier stage pipeline, and this is not in the next six months, but I really like the progress that we're making in the NaV1.7 space. As you know, I have a lot of enthusiasm for this opportunity of making a combination NaV1.7/1.8. That one's in late preclinical development, so we have chemical matter, and now it's a matter of going through the standard procedures to bring that potential medicine into the clinic.
Great. Well, I think we're up against time.
Okay
Thank you so much, Reshma. Really great to see you.
Very nice to see you, Terence, and thank you all.
Thank you