Vertex Pharmaceuticals Incorporated (VRTX) Earnings Call Transcript & Summary

Okay. Good afternoon, and welcome to the second day of the Cantor Global Healthcare Conference. My name is Carter Gould. I cover large-cap biopharma here at Cantor. I am pleased to welcome Vertex to the stage. Joining us from the company, Susie Lisa and Manisha Pai from the IR squad. Plenty of momentum in the past 12 to 16 months cystic fibrosis leadership has been sort of reaffirmed most recently and tangible progress on the povetacicept front. From our perspective, the CF and Pove story has been pretty easy to tell, but there's lots going on -- if I like to say, there's lots going on with Pove beyond IgAN. There's lots going on in renal beyond Pove, and there's lots going on in CF beyond renal. So looking forward to a discussion. I hope we can touch on a whole number of those topics. And I guess maybe to just kick things off, Susie, maybe you had a very high-profile acquisition announced most recently. I think the timing of that raised a lot of questions and would love to kind of just hear why is the right time for you guys to make such a notable high-profile acquisition and really add some diversification efforts.

Great. Thanks, Carter. I appreciate you having us and a great question to start with. And I think as many people know, the Vertex story from an investor standpoint, is more difficult to tell because there isn't a clear therapeutic category, right, or a platform. Instead, we adhere strictly, very strictly to our R&D strategy, which has the set criteria. And a few of those criteria include things like understanding the human causal biology. Are there validated biomarkers? Is it a specialty market? Are there streamlined pathways in terms of regulatory and clinical development? And we apply those criteria so strictly to any disease area we pursue internally as well as any acquisition we consider externally. Now something fits in what we call the sandbox disease areas, and it can help accelerate one of our existing programs. We go after it like Entrada and DM1 is a good recent example or if we don't have a presence in a disease area that we've identified and we see an asset that can launch our presence into that space with a differentiated product like an Alpine or like a Crinetics, then we move forward aggressively on it. And I think that we do -- we executed this deal from a position of strength, right? We're expanding our leadership in CF. You're seeing good commercial uptake on CASGEVY and Dravics. We're on target for $500 million plus in revenue from both of those products this year. The renal pipeline, as you mentioned, is really exciting. But this rare specialty endocrinology space where what you measure in Phase II is what you measure in Phase III, right? It feels very derisked to us. And we love the call point. I think a lot of our learnings from our CF commercial expertise can be deployed for Crinetics and that like we did with Alpine, we can hopefully accelerate some of the launch timings or expand the global footprint, et cetera, and bring our expertise. So when we see something that we identify, we move aggressively to get it before we don't feel like with Aside, if you recall, there were a lot of assets. We were confident in our due diligence and move forward the one that we thought was best-in-class, potentially best-in-class. And with Crinetics, it's the same sort of story.

Okay. So without such a sort of multipolar kind of narrative for Vertex, how do you sort of frame the strategic priorities for the company into the end of the year and into next year?

Yes. So we are excited to be now with the closing Crinetics last week, right? We talk about these disease area pillars. So commercialized in, obviously, CF as well as hematology with CASGEVY and acute pain. Now with Talsonifi's launch underway in acromegaly in rare endocrine diseases. And then we look very much forward to a PDUFA date of November 30 for povetacicept in IgAN. So that will be the first launch in our fifth pillar, if you will, in renal. And with 3 programs behind that, we're excited for that. So the Pove PDUFA date is a key milestone, November 30. Before that, though, I would say you're likely to get the Phase II proof-of-concept data in essentially a patient population expansion study for Anexapin. And that's the AMPLIFIED Phase II study, which is looking at -- it's a Phase II study of about 50 patients. All patients have 2 APO1 alleles. About half of them have more modest proteinuria than you see in the pivotal study, AMPLITUDE and about half of them have a heavier proteinuria, but type 2 diabetes. And so we see this as separate and above from the AMPITUDE pivotal study. That catalyst technically flies into 2027, but you'll get that interim analysis of the Phase III study in early 2027. And that's about 150,000 patients. This study, separate and above would be an incremental 100,000 patients if you were to see positive results from AMPLIFY. So we're excited for that. And that is probably the nearest-term catalyst in the Pove IgAN that I mentioned. And Also, we have promised Phase II proof-of-concept data in our myotonic dystrophy type 1 program before the end of the year as well as a look at the first of our NextGen 3.0 CF portfolio of products that's VX-828. So I think those are the key milestones before the end of the year. And then also, we'll complete enrollment in our 2 Phase III studies in diabetic peripheral neuropathy in our chronic pain franchise. Those studies are both 12-week studies, and so you could look at data, say, maybe by mid-2027. And happy then to go into the outlook in type 1 diabetes and some of the other areas that we have, too. But those are the key near-term catalysts as well as continued commercial execution.

I think that teed up most of the rest of the conversation here. But maybe before we jump down any of those sort of -- one thing that we get asked all the time is -- or oftentimes we kind of go down this is really understanding how much the company has really matured over the past sort of 2 to 3 years. And I think for folks sometimes the development on the commercial side has been maybe lost in the mix a bit. So maybe just lay out kind of how that commercial infrastructure has kind of evolved since you guys were solely a CF study story not too many years ago.

Yes. I think that's a really good insight. And I think sometimes investors think -- sometimes we even joke CF sells itself. That's not the case, right? But it is a very efficient model, but I think there are a lot of learnings from CF particularly on the patient support side of things that we can leverage into other areas, like I mentioned. But I think the company has evolved, right, initially with the hiring of the sales force and support structure around CASGEVY, right, with a very long patient journey and a lot of support that's required both at the authorized treatment center level as well as for patients and their families for a functional cure, like truly transformative therapies. These people are in the hospital 2 or more times a year and now they're not. So hiring the sales force for that completely separate and distinct from CF. And then the learnings going into a mass market like acute pain with 80 million prescriptions, right, initially starting with about 100 sales force reps there, 150, while we were building up the reimbursement and access there. We doubled that sales force earlier this year in the March, April time frame as more reimbursed access came online and have been adding things like marketing initiatives, directed TV content on streaming services. If you search for total knee replacement, have you thought about your pain therapy as well, right? Celebrity spokes people like Jason Tatum and Lindsey Vaughan, right, and educating about the total cost of the opioid crisis, the pain crisis because people are undertreated, et cetera. So I think a lot of maturation and growth. And what we're excited for is Crinetics comes with its own sales force for the specialty endocrine space. And then in renal, we are ready to go. And this is really the first time where you will see synergies in the sales force, if you will. It's not why we did it, but with 4 programs in renal, IgAN to be the first, we see sort of a great halo effect. So we were able to, I think, very excited. We were able to hire the vast majority of the reps have prior nephrology experience because I think they're excited about Plovine IgAN as well as the pipeline behind that and their relationships with nephrologists. And so I think this one will be really exciting. We aim to have the largest sales force and greatest share of voice of the novel disease-modifying therapies in that space.

Okay. So since you teed it up, let's talk a little bit about Pove. At this point, we're 2-plus months out from the PDUFA date. How would you sort of frame updates on the FDA interactions and confidence into the PDUFA? You clearly sound pretty confident, but I'll let you refine it.

I think that nothing -- nothing really to disclose, but the Renal division has a good -- has been a really good partner to us, and I think everything remains firmly on track with good visibility for November 30.

Okay. As far as some of the emerging competitor data and I guess, more clarity on sort of the longer-term eGFR trends. How that impacts positively or negatively your view of differentiation for Pove versus some of the earlier movers?

Yes. I think that all things equal, it would be nice to have all your data all the time, but we feel strongly that there is such a good understanding and acceptance of the correlation of UPCR reduction to eGFR stabilization, right? And then those competitors who have released the data, you have seen that, right? And so we feel that we are truly differentiated in our UPCR reduction with that 52% at 36 weeks, whereas some competitors had an extra month of data, right? So we truly think it's best-in-class in terms of UPCR reduction, best-in-class hematuria resolution of Gd-IgA1 reductions and in getting more patients to KDIGO guidelines to 0.5 grams, right? So we think we have a good story to tell there as well as not just the greatest reduction but the shape of those curves, the speed of the reduction, I think, really matters. And so I think UPCR reduction is a proxy for eGFR stabilization, which in and of itself is a proxy for progression to ESRD, right, and death dialysis and transplant. So I think we feel very good about that clinical story as well as the safety profile. And then we know that we have a clear advantage in terms of the patient administration characteristics with the only folks with the lowest dose 0.46ml, so it's not painful. It's through an auto-injector, and it's monthly compared to weekly or much higher dose with a prefilled syringe from the competitor.

So with those points in mind, how much should we read through from the competitor launch data, right, you guys are going to launch later this year. Obviously, there's going to be a period as the product's ramping. In the meanwhile, we're going to have sort of incremental updates from the companies, other earlier movers on how their launches are going. Why should we not read through from those launches to the overall market size in the interim?

I think that we have been quite gratified. I'm pleased to see the strong uptake so far. It points to the fact that IgAN patients are -- they're 130-plus thousand of them in the U.S. that are biopsy confirmed with their diagnosis. They're typically younger patients, otherwise healthy in their 40s and have been kind of these ticking time bombs, right, waiting for a therapy. So I think that certainly the first mover with Otsuka and [indiscernible] will benefit from those -- from being first mover. But even with the strong uptake, we're still talking really small numbers out of that total pie here in the U.S. And so I think that there's still plenty of patients to go after. We'll also be going after switchers in this type of market. I think you will potentially see that and not giving any color on sort of shape of the curve, but we do aim to have winning share over the long term.

Have you guys thought about how you're going to communicate launch metrics in the early kind of quarters and months of the launch? I don't know what you guys have said around communicating or being allowing scripts to be visible or beyond that, how you guys are planning on communicating?

Yes. I think stay tuned and still working through that.

As far as povetacicept beyond IgAN, you're moving into a number of other programs, but there's -- there's been sort of illusions to potentially expanding beyond the initial 4 indications. How should we think about that? And to the extent that, that might be sort of teased out with greater clarity over the course of the balance of the year or into next year?

Yes. So we are currently in the Phase III portion or Phase II/III for primary membrane nephropathy and that there's no accelerated approval pathway there. So that is a 104-week study. But we were -- we chose the -- there was a dose-ranging study. We chose the 80 mg dose to move forward with. So that's ongoing. And then we're also currently not in renal, but in a Phase II in Myasthenia Gravis, that's ongoing as well in Pove and still evaluating the RUBY-4 data in WAHA. And so we do still are very excited about the Pove pipeline and a product potential here and are executing on that as quickly as we can and more to come.

Okay. As far as the MG effort, how should we sort of Think about that trial design, I guess, the rationale for that trial design. Obviously, there's some compelling data out of China. You guys have talked about trying to recapitulate that in a Western population. But this really short-term trial is maybe kind of walk through that and exactly what you guys are trying to show?

Sure. So I think a couple of things. One is that we do view Myasthenia Gravis as kind of the poster child for B-cell-mediated diseases. So that's sort of the cause of biology there. Secondly, we found the China-only data very, very compelling, and that's with a wild-type TACI versus we have this designed engineered TACI for better tissue distribution, et cetera. So we'd hope to be able to perform as well or better. And I think in terms of the duration or the size of the trial, about 30 patients, 12 weeks, we are looking for a meaningful treatment effect, right? And it is a dose-ranging study. And that's really what we're looking to get out of it. And I think that the opportunity here, again, you could say like IgAN a crowded space, but with the FcRns, for example, the need for cycling, et cetera. We don't see that with Pove and so we think it could be a much better option for patients.

Okay. We touched in your opening comments on an axon, and maybe we should pivot there. We're going to get amplified data, as you mentioned before the end of the year. Should we have lower expectations here relative to what you showed with AMPLITUDE? Clearly, your competitor in the space had, let's just say, noisy data. I think sort of validating your decision to kind of approach these populations separately. That certainly looks like the right decision in retrospect. But should we go into this with maybe a different set of expectations than maybe the people went into the original study.

The Phase II.

Yes.