Vertex Pharmaceuticals Incorporated (VRTX) Earnings Call Transcript & Summary

Awesome. Last session of the day. Thank you very much for all for joining us today. My name is Mohit Bansal. I'm one of the biotech and pharma analyst here at Wells Fargo. And I have the Vertex IR team with us, Susie Lisa, Head of IR; and Manisha Pai. She's part of the IR team as well. So thank you very much, both of you to join us.

Thanks for having us, Mohit.

I don't have ED, Investor Relations, sorry, I do not have the title -- thank you. So exciting times at Vertex. There's a lot more to talk about, not just CF at this point. So talk a little bit about what you are -- where investors are asking most of the questions and where you're spending most time in terms of talking about the Vertex story at this point?

Sure. So I think it is an exciting time, and we have sort of a catalyst-rich period coming up. So I'd say most of the conversations relate around that. I will say recent news last month, we have been getting a lot of CF questions heading into competitor data that I think ended up being not as much of a concern as many have thought. And so CF questions have gone back more towards commercial aspects, the ALYFTREK, which continues to go very well and then our Next-Gen 3.0 family of therapies that are in the pipeline. But the majority of questions, I think, focus on upcoming catalysts, and that's primarily within our new disease area pillar of renal therapies, namely disease-modifying therapies that are addressing unmet need in the renal area where historically, they've had basically repurposed cardiovascular medicine. So really, we're calling it a renal renaissance in a very exciting time. The most near-term catalyst will be on our inaxaplin therapy, which is for APOL1-mediated kidney disease. And that's where we said that you should expect in the next couple of months, our Phase II proof-of-concept study for a patient population expansion study called AMPLIFIED, which is looking at patients with 2 APOL1 alleles and then 2 cohorts, one that has more modest level of proteinuria and the other cohort has the 2 APOL1 alleles and type 2 diabetes. So you'll get that proof-of-concept data sometime in the coming months. The next catalyst that's super exciting will be our November 30 PDUFA date for povetacicept in IgAN. So this will be our first launch -- commercial launch in the renal area. We're very excited for that. We are launch ready. Our sales force is hired. We have very high degrees of nephrology experience in that sales force given the depth of the pipeline, the clinical differentiation of pove, the safety profile and the patient administration benefit. So we're very excited for that. And then the next -- we've got a couple of other data sets before the end of the year, likely one in myotonic dystrophy type 1, which is certainly timely right now. We can go into more detail there. In our CF therapies, VX-828 is the first of the NextGen 3.0, you could see data before the end of the year. And then we'll complete enrollment in our 2 Phase III diabetic peripheral neuropathy studies, and that's in the chronic pain space. We'll complete enrollment before the end of the year. Those are 12-week studies that would put us on pace for data sometime in the first half of 2027, likely. And then very importantly is you will get the Phase III interim analysis in the first quarter of 2027 on inaxaplin in the sort of primary or pivotal study there of primary AMKD, which is patients with 2 APOL1 alleles and heavy proteinuric burden. And so we're very excited for that. It's been a long time coming and likely would be our second launch in -- commercially in the renal space. And sorry, I would just add that Crinetics just closed last week, right? And so more to come there in terms of updating guidance, but continue to be encouraged by the PALSONIFY launch in the U.S. and hoping to be able to accelerate launches outside the U.S. and then look forward to atumelnant in CAH and getting -- completing enrollment in that Phase III study. I think those are most of the key catalysts, but it is a lot going on between now and the first half of next year.

Clearly a lot going on basically, and we barely mentioned CF here. Awesome. So let's just talk -- why don't we start with the time like in the chronological order, the catalyst here, right? So inaxaplin in AMKD, but let's just talk about the Phase II portion of the trial. So there is a population expansion study for diabetic patients. And you have characterized this being a little bit more risky than the broader patient population. So talk about that. And then also, I want to touch upon the moderate proteinuria patients because so far, with this molecule, we have only seen data in FSGS patients. So how much does the moderate proteinuria patient data set derisk the eventual trial, at least for the proteinuria endpoint?

Sure. So maybe to start with that group and then go back to diabetes. I think that the data that you have seen was the Phase II portion of the Phase II/III for the pivotal, right? And yes, that was an FSGS population. But what we think, and we have long held this belief is that what is crucial is not the FSGS diagnosis, but the confirmation that you have 2 APOL1 variants, right? You need the genetic test. And FSGS is just a histological confirmation. It's a scarring pattern. But you don't see patients referred for biopsy to confirm that unless they have a very heavy proteinuric burden. So in the Phase III study, it's likely you will see a high percentage of FSGS patients. But if you had FSGS, you were welcome. If you didn't, you were welcome as long as you had 2 APOL1 alleles and a high proteinuric burden. So I think in the modest proteinuria group here, we think the important thing is inhibition of APOL1. And we have 98% plus inhibition of that, and that's why we have confidence. We still need to see the data. But in this proof of concept in that more moderate proteinuria group, it's not FSGS that we're treating. It's the APOL1 inhibition and hence, our view or our optimism for the data. The one difference, obviously, will be you have less dynamic range because you're starting at a lower point, there's less reduction, if you could, on an absolute basis because you aren't starting at 0.7 or 0.8, right? You're starting at something like 0.3 or lower. Now to your diabetes question, I think there, too, we're excited for that data. But the question here is we know we're inhibiting APOL1 what we don't know is how much of their kidney function is impaired by their type 2 diabetes as opposed to the APOL1, and we're not treating the type 2 diabetes, right? So that's what we look forward to learning. I think that we are quite pleased with how rigorous we were. It was a real challenge to enroll the interim analysis in the more homogeneous population of the Phase III study, AMPLITUDE. And now we're looking forward to having decent 20-plus patient size cohorts in each of those 2 arms for the AMPLIFIED data in the coming months.

Got it. So you're more -- like do you think the probability is higher for a good data set in the moderate patient followed by the diabetes patients.

I think you could say there's a clearer through line, if you will, and there's more of a question mark on the type 2 diabetes impact upon kidney function. Yes.

Got it. And these trials are -- these cohorts are a gating factor for you to expand the program into those indications.

That's right. We talk about in the AMPLITUDE study, the pivotal study with interim analysis next year that we view that as about 150,000 patients in the U.S. and Europe. And that if you expand the separate cohort here from AMPLIFIED, it's likely adding about 100,000 additional patients to the target population.

Got it. So one question we get, so moving to the AMPLITUDE Phase III trial. So these are so similar that I had to say Phase II and Phase III. So I think the agreement with the FDA was that at 1-year mark based on proteinuria reduction and what -- where do you stand on eGFR, it could be a potential file label data set at that point. So the question we get a lot is that is 1-year time point enough to see good enough improvement on eGFR or like the ranges of outcome could be like you continue the trial or not.

So it is a 48-week endpoint for the interim analysis of the Amplitude Phase III study. And the endpoints there, the accelerated approval endpoint, to be clear, is the change in eGFR from baseline. And then in addition, right, it is the reduction in proteinuria. And I would say that our confidence in this study stems from 2 things. One is that in the Phase II portion of this Phase II/III study, we saw at just 13 weeks, a 47.6% reduction in proteinuria. And that's pretty dramatic, and it continues to decline from there. And so that sort of proteinuria reduction, I think it's reasonable to assume would be associated with stabilization of eGFR, right? And it's -- you have to look at how it's doing versus placebo on top of current standard of care. The second thing is that we know that AMKD patients, the rate of decline of their eGFR is about 50% faster than typical CKD patients. And so they're losing about 6 or 7 per year versus something more like losing or 4 or so, 3 or 4 for typical CKD patients. So that's why we think that at 48 weeks, we are hopeful that we can show this -- demonstrate this type of result in addition to strong reduction in UPCR.

Got it. And then how should we think about the disclosure there? So FDA wants to see eGFR not in this indication, but I mean, typically in IgAN, they do want to see eGFR data, but you do not necessarily want to disclose it. So like should we expect data on both endpoints or just proteinuria when you...

I think that for the Amplitude inaxaplin study in the interim analysis, that's the endpoint. So we will disclose that 48-week eGFR. And if it's successful, right, then we will continue to enroll the study -- sorry, we hope we're on target to complete enrollment by the end of this year, right? But we will continue to follow patients for the full 2-year endpoint. in IgAN. And I would say that the field may be changing in AMKD, but it's not there yet, and there's still clearly this eGFR endpoint. In IgAN, in contrast, as you know, the agency has moved to UPCR as an endpoint. And I think there is still debate ongoing about disclosures of 1- or 2-year eGFR. The U.S. FDA clearly will accept 1-year eGFR data. Other global regulators will not, right? There isn't a path to accelerated approval in Europe. And there are more patients in Asia with IgAN than there are in U.S. and Europe combined. So that's some of the work that we're going back to consider in terms of disclosures and timing on pove in IgAN.

Got it. So for pove, FDA is allowing 1 year eGFR at this point. Got it. That's probably the reason some of your competitors are looking at the early data and then just trying to...

I think some who are more focused solely on the domestic opportunity versus we are thinking about the entire global opportunity. Got it. So stay tuned.

Got it. Very helpful. So moving to pove. So ahead of the launch later this year, so I mean, you have -- you are preparing for a broad launch in the -- with a large field force here. Talk a little bit about like you are probably going to -- you are the third one to the market, but you have the best offering in terms of overall profile of the product. Talk a little bit about, is there a low-hanging fruit or KDIGO guidelines updating to like less is better kind of situation. So like -- how should we think about the early adopters and ultimately before your profile kind of broadens the scope for you?

Yes. I think that we've been very happy to see the early launches from competitors and the reactions in the marketplace, right? IgAN patients are typically otherwise very healthy and on the younger side, right, they're -- in their 40s typically and sort of have been these ticking time bombs. But there are 160,000 patients in the U.S. that are biopsy confirmed in terms of their diagnosis. And even with the strong launches that you've seen, we're still talking very small penetration into those 160,000 or so patients. I think that we are really looking forward to our PDUFA date and launch later this year. Our sales force is in place and ready. I think we're quite pleased to see how many of them have prior nephrology experience given their optimism around the broader renal pipeline that we have. I think the messaging clearly will be on the trifecta, as you mentioned, of better clinical data, clean safety profile and then the patient administration characteristics, which we think are clearly differentiating in terms of once weekly low-volume 0.46 ml -- sorry, once monthly low-volume auto-injector at home. And I think that -- this will be a market where we will -- I think you will see switching and we'll go after switchers and we'll go after de novo patients as well. I think initially, as the field is moving so fast and you see fairly recent changes to KDIGO guidelines, right, in terms of trying to get patients to that threshold of 0.5 in terms of their proteinuria. I think initially, you probably will see physicians targeting higher proteinuric burden patients, but we would expect to see that coming down over time and a goal to get more and more patients to those guidelines. And KDIGO also, right, recall, instead of previously it was treated serially ACEs, ARBs, SGLT2s, then disease-modifying therapies. Now I think it is more of a move to do things concurrently and recognizing sort of saving nephrons sooner is better. And so looking to get patients on these disease-modifying therapies. And so between share of voice, the clinical profile, clean safety, the patient administration benefits and then also, we think our expertise in CF with patient programs around getting them on drug, supporting them on drug, helping them with reimbursed access, et cetera, that's important in the chronic therapy as well, and our expertise in CF will serve us well there, too, and that's how we're looking to have winning share.

Very helpful. And we have seen eGFR data for like eGFR for wild-type, then some eGFR data for Vera as well. So how do you internally think about those eGFR data sets? Like they look more robust than anything that we have seen in IgAN so far. So let's say, using [indiscernible] as a benchmark, I mean, do you -- like -- so do you have to be in that ballpark? Like I mean, like is there a number where it looks inferior or superior to existing therapies? Or like how do you think about that?

Yes. I think that there are a couple of ways to look at it. On the one hand, right, stabilization, you could say, is stabilization, right? But we do think that there's potential that, again, sort of back to time is nephron, if you will, you'd rather save more of them sooner. And if you're on a chronic therapy, could a 42% reduction versus something in the 30% reduction in UPCR, does that compound over 10 years. And we think that it potentially will. We also know that we had best-in-class results from our interim analysis in terms of reductions in Gd-IgA1 and resolution of hematuria as well as in getting the percentage of patients to both KDIGO guidelines. So I think all of that is what will help differentiate us understanding that those are strong. eGFR itself is a proxy for progression to end-stage renal disease and death, dialysis and transplant, right? So I think understanding these other endpoints like proteinuria, hematuria and Gd-IgA1 are proxies for eGFR. There's strong understanding by physicians and even payers there. So I don't think we'll necessarily -- I think we are well positioned to advocate our case, if you will.

Got it. Completely makes sense. The other indication, which doesn't get talked a lot about is myasthenia gravis here. I mean, Vor has shown seen or RemeGen has seen some interesting data in China there. So mechanistically, how BAFF and APRIL could differentiate versus what is out there, FcRns are the front line and then you have complement inhibitors out there. What is the value proposition for BAFF/APRIL inhibitor in myasthenia gravis based on your thoughts?

Yes. I think we view myasthenia gravis as, if you will, sort of the poster child for a B-cell-mediated disease. So being able to inhibit at really 2 points on the maturation cycle, we think, is very compelling. And the data out of China with a wild type, we felt were -- did support that view of myasthenia gravis as being sort of a prime candidate for a B-cell inhibitor. And we think with the design, the engineering that's gone in to TACI in terms of its tissue distribution and penetration, et cetera, that we would be hopeful that we could show even better results in myasthenia gravis. So we're currently enrolling a Phase II study. It's a 12-week study. We haven't given time lines on that, but that's another catalyst to look forward to probably over the next 12 months or so. And sorry, on FcRns and others, right, I think the key advantage of BAFF/APRIL inhibition is that you -- other therapies, right, you need to cycle on and cycle off, but the autoantibodies continue to develop, right? So with the BAFF/APRIL inhibitor, you wouldn't -- you could have chronic therapy and you wouldn't need to cycle on and cycle off and you could have sustained benefit.

Makes sense. So the Phase II study is actually not that big a study, like 30 patients across placebo, and I think there are 2 treatment arms there. So given the small size here, what exactly are you looking for? Because I think you'll make a go/no-go decision for Phase III based on this. So what exactly are you looking for to make that decision here?

Yes. We haven't given a bogey for that. But we do think...

I have to ask.