Good evening. This is Michael Partridge. Welcome to Vertex's First Quarter 2022 Financial Results Conference Call. On tonight's call, making prepared remarks, we have Dr. Reshma Kewalramani, Vertex's CEO and President; Stuart Arbuckle, Chief Operating Officer; and Charlie Wagner, Chief Financial Officer; Dr.

Bastiano Sanna, Chief of Vertex Cell and Genetic Therapies and Dr. David Altshuler, Chief Scientific Officer, will join for Q&A. We recommend that you access the webcast slides as you listen to this call. This call is being recorded, and a replay will be available on our website.

We will make forward-looking statements on this call that are subject to the risks and uncertainties discussed in detail in today's press release and in our filings with the Securities and Exchange Commission.

These statements, including, without limitation, those regarding Vertex's marketed CF medicines, our pipeline and Vertex's future financial performance are based on management's current assumptions. Actual outcomes and events could differ materially.

I would also note that select financial results and guidance we will review on the call this evening are non-GAAP. I will now turn the call over to Dr. Reshma Kewalramani..

Thanks, Michael. Before we begin, as this will be Michael Partridge's last quarterly call with us, I'd like to take a moment to recognize Michael for his outstanding service and contributions to Vertex.

For 25 years, he has been the face of Vertex with analysts and investors and with his calm and steady approach, Michael has led our IR team through countless milestones and many evolutions of the company.

More recently, through the launch of all four of our marketed cystic fibrosis medicines and the emergence of our broad, mid- and late-stage pipeline, Michael has been an integral part of the Vertex leadership team, helping share our story with the world. Michael has shown a true passion for Vertex and the patients we serve.

We are grateful for his dedication, and I want to personally thank Michael for all that he's done for Vertex. On to the quarterly review. Vertex is off to an excellent start across the board with strong performance in the CF business, rapid advancement of the pipeline and continued operational excellence.

Q1 CF product revenues grew 22% year-on-year to $2.1 billion, reflecting continued growth in the number of CF patients treated globally. And despite continued significant investment in internal and external innovation, our non-GAAP operating margins remained industry leading at 56%.

We maintained a rapid pace of progress in research and across the clinical stage pipeline with a half a dozen programs now post the POC stage. And we finished the quarter with a strong balance sheet and $8.2 billion in cash and investments. CF has been the exemplar of our R&D strategy.

The last 6 to 12 months have made it clear, our R&D strategy is proving itself beyond CF with the discovery and development of small molecules and cell and genetic therapies across a number of disease areas.

This serial innovation enables the potential to transform, if not cure, multiple diseases and in so doing help more patients and drive long-term growth for the company.

Fundamentally, the goal of our strategy grounded in causal human biology, validated targets and biomarkers that translate from bench to bedside and all the way through pivotal development is to increase the odds of success in drug discovery and development.

With the data we've generated in CF, in sickle cell disease and beta-thalassemia, and now in rapid succession with positive proof of concept in APOL1-mediated kidney disease, pain and type 1 diabetes, our clinical stage pipeline has never been broader in terms of the number of disease areas more diverse in terms of modalities or more advanced.

The company is now at a new inflection point with continued growth in CF, the advancement of our broad clinical pipeline with 6 programs in mid- and late-stage development, representing multibillion dollar opportunities and the potential from the next wave of therapies approaching the clinic.

In this next group of programs that have initiated IND-enabling studies is our mRNA program in CF, the self plus device program in type 1 diabetes, the next wave of small molecule correctors in AATV and our in vivo gene editing program in DMD.

A number of these programs are on track for IND filings later this year with clinical trials beginning thereafter. Our R&D strategy combined with our business model positions us well for continued innovation and sustained growth as we work to bring additional transformative medicines to more patients around the globe.

With this as context, I'll now review the R&D highlights for the quarter. Looking to our future in CF, we continue to strengthen our leadership for the long term. Our real-world experience with TRIKAFTA continues to accumulate. And as Stuart will discuss, raises the bar for any regimen in development.

That said, -- if it is possible to outperform TRIKAFTA, we're determined to be the ones who do so. Our next-in-class triple combination of VX-121, tezacaftor 561 is rapidly progressing through pivotal development. More than 180 clinical trial sites are open and enrolling patients in our Skyline Phase III program.

We expect to complete enrollment by late 2022 or early 2023. As a reminder, VX-121/tezacaftor/561 has the potential for greater clinical benefit than TRIKAFTA and is a more convenient once-daily treatment that carries a lower royalty obligation for Vertex.

For the more than 5,000 patients who do not make any CFTR protein and cannot benefit, therefore, from a CFTR modulator, we are developing an mRNA therapy together with our partner, Moderna.

IND-enabling studies for this program have been completed, and we remain on track to submit an IND in the second half of 2022 with clinical development starting thereafter. Turning to the pipeline beyond CF. Starting with CTX001, our gene editing approach designed to provide a potential functional cure for sickle cell disease and beta-thalassemia.

We plan to submit for U.S. and EU regulatory approvals for CTX001 for beta-thalassemia and sickle cell disease by the end of 2022, and we expect this to be our next commercial launch. Enrollment in both Phase III studies is complete, and we have now dosed more than 75 patients across both programs.

We look forward to sharing more clinical data on CTX001, including longer-term follow-up and more patients at medical forms this year. Moving on to VX-147, our first-in-class small molecule inhibitor for people with APOL1-mediated kidney disease or AMKD, which has made rapid progress into pivotal development.

In December, we reported unprecedented Phase II proof-of-concept results. In patients with FSGS, a particular kind of APOL1-mediated kidney disease, treatment with VX-147 led to a 47.6% reduction in proteinuria compared to baseline. VX-147 was generally well tolerated. There were no SAEs related to VX-147, and all AEs were mild to moderate in severity.

In late March, we initiated pivotal development of VX-147 following agreement with FDA and the design of the program, which included one, a single adaptive Phase II/III study design in people with 2 APOL1 mutations, proteinuria and decreased renal function; two, evaluation of VX-147 in the broad AMKD population representing approximately 100,000 people in the U.S.

and Europe with this disease; and three, the ability to conduct an interim analysis, which if positive, could provide a pathway to accelerated approval in the U.S. Transitioning now to our pain program.

In late March, we announced that VX-548, a novel first-in-class, non-opioid NaV1.8 inhibitor achieved statistically significant and clinically meaningful relief in 2 Phase II studies of acute pain, meeting our high expectations.

In the 2 studies, one following abdominoplasty and one following bunionectomy, VX-548 at the highest dose tested showed a rapid, sustained and consistent decrease in pain intensity compared to placebo on the primary endpoint of SPID48, a time-weighted sum of the pain intensity difference from time of first dose to 48 hours.

In assessing the SPID-48 score, it's important to note, higher scores indicate greater pain relief. VX-548 was superior to placebo with a statistically significant mean SPID-48, of 37.8 in abdominoplasty, and 36.8 in bunionectomy.

In the reference arm of the study, standard of care opioid therapy showed a mean SPID48 difference from placebo of 12.5 and 14.7, respectively. From a safety and tolerability perspective, VX-548 was well tolerated at all doses. There were no serious adverse events related to VX-548 and the majority of adverse events were mild or moderate.

Given the high unmet need for an efficacious and well-tolerated non-opioid pain medicine, we are working with urgency to advance VX-548, our goal is to bring forward a novel class of pain treatment with the potential to provide effective pain relief without the addictive potential or adverse side effects of opioids.

And we plan to advance VX-548 into pivotal development for acute pain in the second half of 2022, pending discussions with regulators. I'll conclude with the type 1 diabetes program and VX-880, our stem cell-derived fully differentiated islet cell replacement therapy that could offer a functional cure for people living with type 1 diabetes.

In the U.S. and Europe alone, type 1 diabetes affects more than 2.5 million people. As we announced earlier this week, the VX-880 program has been placed on clinical hold in the U.S. by the FDA and we're working with urgency to understand more. At that time, we also shared the safety and efficacy data from the first 3 patients treated to date.

To recap, the first patient was treated with half the target dose of cells has achieved insulin independence at day 270, with a hemoglobin A1c level of 5.2%. The second patient also a half dose had positive results through day 150.

The patient achieved robust increases in measures of pancreatic lipase islet cell function and improved glucose control while simultaneously experiencing a 30% decrease in exogenous insulin use. Taken together, the results from patients 1 and patients 2, both treated at half dose, demonstrate proof of concept for VX-880.

The third patient who is the first to receive a full dose of VX-880 has reached the day 29 milestone. As of day 29, the patient showed encouraging early indications of efficacy, with increasing C-peptide levels and improving glycemic control.

The first detailed assessment of pancreatic islet function and glycemic control for patients in the study occurs at the day 90 visit. Across the program, in the 3 patients dosed to date, there are no SAEs related to VX-880.

The majority of adverse events are mild to moderate, and the overall safety profile is consistent with the immunosuppressive regimen used in the study and the perioperative period. These are the data to date. Of course, all 3 patients will be continued to be followed per study protocol.

We look forward to working constructively and expeditiously with the FDA to understand and address their questions so that we can resume the trial as soon as possible in the U.S. To close out on type 1 diabetes, a quick word on our self plus device program, we continue to make progress with our sales and device approach.

In this program, instead of using immunosuppression to protect the cell from the immune system, the immunoprotective device is designed to serve that function. We remain on track for an IND filing for this program later this year.

In summary, Vertex continues to deliver significant growth in CF, we're making rapid progress with programs in 6 disease areas in mid- and late-stage development, including 5 programs that are already in or entering pivotal development, with another wave of programs on track to enter the clinic starting later this year.

We have a strong financial profile and balance sheet that enables continued investment to drive serial innovation. With that, I'll turn it over to Stuart..

one, patients who have not yet initiated treatment, largely in countries where we are recently reimbursed and therefore, are early in the launch curve; two, patients in geographies where we are not yet reimbursed; and three, younger age groups who will be addressed through ongoing label expansions.

We are confident in our ability to reach the vast majority of these patients over time. TRIKAFTA KAFTRIO are now available and reimbursed in more than 25 countries, we have continued to reach new reimbursement agreements with the most notable reached example being Australia, where TRIKAFTA is now reimbursed for eligible patients ages 12 and above.

We also continue to make progress extending treatment to younger patients. In January, we secured approval for KAFTRIO in Europe and the U.K. for children ages 6 to 11. And in April, Health Canada granted marketing authorization for TRIKAFTA for the same patients.

In the U.S., we recently submitted an sNDA for approval of ORKAMBI for children ages 1 to less than 2 years. We also completed enrollment in the Phase III study of TRIKAFTA in children ages 2 to 5 and anticipate submitting for U.S. approval for this age group before the end of 2022.

As Reshma mentioned, powerful real-world and long-term experience with TRIKAFTA further strengthens the clinical value proposition of this combination. We have previously shown evidence that treatment with our medicines, KALYDECO, ORKAMBI and SYMDEKO slows lung function decline, one of the hallmarks of disease progression for CF patients.

We now have data that compares lung function over time for patients treated with TRIKAFTA to untreated matched controls. And these data show that patients on TRIKAFTA on average, do not lose any lung function over a 2-year follow-up period. Generally, CF patients lose 1% to 3% of lung function every year.

We will be presenting these important new data at an upcoming medical forum. As Reshma noted, the last 6 to 12 months have been a remarkable period for Vertex as multiple programs reached late-stage development. I would like to provide a few thoughts on 2 programs in late-stage development that could be among our next commercial opportunities.

Starting with CTX001, our CRISPR/Cas9-based gene editing therapy for hemoglobinopathies, which we plan to file for regulatory approval before the end of this year. Commercial and launch preparation activities for sickle cell disease and beta-thalassemia are well underway.

Over the past year, we have developed a deep understanding of the sickle cell and TDT markets, including where patients with these diseases are concentrated, the physicians who would refer them for treatment and the key treatment centers that will facilitate the patient journey.

With our submissions planned for later this year, our launch preparation activities are progressing rapidly. Key leadership positions and teams are in place across multiple functions, including medical, commercial and manufacturing. A small number of centers of excellence in the U.S.

and Europe will treat the vast majority of severe sickle cell and thalassemia patients. Our research suggests that about 90% of U.S. patients reside in 24 states and about 75% of patients in Europe reside in 4 countries. We have identified the potential centers and their referral networks in these countries.

We are already engaging with public and commercial payers in the U.S. and EU, and we are developing robust patient service programs to support patients throughout the treatment journey.

We continue to see tremendous potential for CTX001 to help patients, and we look forward to the possibility of bringing this groundbreaking therapy to those living with sickle cell disease and beta thalassemia.

Finally, with the recent completion of the 2 Phase II studies in acute pain and the positive POC results in both studies, as Reshma noted, we now plan to advance VX-548 into pivotal development in acute pain in the second half of this year. Let me review with you briefly the market opportunity we see in pain.

There is a vast unmet need in the treatment of moderate to severe pain and especially for medicines with an improved benefit risk profile, including avoiding the side effects and addictive qualities of standard of care opioids.

To give you some perspective on the market for acute pain, which is our initial target market for VX-548, every year, there are more than 1.5 billion treatment days for acute pain in the U.S. with a large proportion of these, including a prescribed opioid.

It is an unfortunate fact that some of these scripts result in addiction problems for some patients and contribute to the opioid epidemic in the U.S.

provisional data from the CDC's National Center for Health Statistics for the latest 12-month period ending April 2021, recently estimated that there were more than 75,000 overdose deaths from opioids in the U.S., an increase of 35% compared to the prior 12-month period.

A novel, highly effective class of medicines that does not have these safety concerns would therefore have tremendous potential. For instance, one can imagine a step therapy paradigm in which a patient is started on NSAIDs, escalated to a NAV 1.8 inhibitor, and only as a last resort, prescribed in opioid.

The first indication we are pursuing for VX-548 is moderate to severe acute pain, and we see this segment of the market as a specialty market that fits the Vertex commercialization model well. But the mechanism is applicable to other types of pain, as demonstrated by VX-150 which showed positive POC across acute, neuropathic and musculoskeletal pain.

We look forward to discussing plans in these indications on future calls. I am very excited about our continued progress in bringing our CF medicines to more patients globally and about the promise of our late-stage pipeline. I will now turn the call over to Charlie..

Thanks, Stuart. Vertex is off to an excellent start in 2022 as our R&D pipeline continued to deliver significant milestones, and we again delivered strong financial performance in the first quarter. First quarter total product revenues were $2.1 billion, an increase of 22% compared to the first quarter of 2021.

Our growth was again primarily driven by new patients coming on therapy compared to the prior year, including continued robust uptake of KAFTRIO internationally, following expanded reimbursement access in a number of geographies over the past year as well as continued growth of TRIKAFTA in the U.S.

Our first quarter 2022 combined non-GAAP R&D and SG&A expenses were $687 million compared to $531 million in Q1 2021. The year-over-year increase in expenses was driven by increased research costs and investments in our advancing pipeline with multiple programs now in mid- and late-stage development.

Additionally, we continue to make investments in CTX001 pre-commercial activities in anticipation of regulatory filing by the end of this year.

Starting in the first quarter of 2022 and going forward, consistent with reporting practices that have been recently adopted by peer companies, we no longer exclude, from our non-GAAP results, research and development charges from upfront or contingent milestone payments in connection with collaborations, asset acquisitions or the licensing of third-party IP.

We have also updated prior year reported non-GAAP figures to be consistent with the new basis of presentation. This change in reporting affects only our non-GAAP numbers and the impacts on reported results for Q1 '22 and Q1 '21 were not material.

Our continued strong revenue growth, combined with our efficient operating model resulted in Q1 non-GAAP operating margin of 56% and non-GAAP operating income of $1.17 billion, an increase of 16% year-over-year. Our non-GAAP effective tax rate for the first quarter of 2022 was 22%.

We ended the quarter with $8.2 billion in cash and short-term investments as we continue to maintain a very strong balance sheet profile. Now to guidance. We are maintaining our previously issued guidance for full year 2022 CF product revenue and non-GAAP effective tax rate.

We are adjusting our guidance for combined non-GAAP R&D and SG&A expenses to reflect the change in reporting of upfronts and milestones as I described moments ago. Specifically, our guidance for total CF product revenue remains at $8.4 billion to $8.6 billion.

At the midpoint, this is a year-over-year increase of approximately $1 billion or 12% growth. Non-GAAP operating expenses are now projected in a range of $2.82 billion to $2.92 billion, including potential upfront and milestone payments from existing or ongoing collaborations.

Finally, we continue to project a non-GAAP effective tax rate in the range of 21% to 22%. As we look out to the remainder of the year and into 2023, we have a number of important pipeline milestones that will demonstrate our continued progress, and these are shown on Slide 16 of the webcast.

In summary, we are on track for our 8th consecutive year of double-digit revenue growth in 2022. The CF business is strong, and we have invested to maintain leadership in CF for the long term.

At the same time, we are now going through an inflection point as a company well on our way to diversifying Vertex into new disease areas beyond CF as the broad pipeline of potentially transformative medicines advances.

As a result, our unique business strategy, which enables significant reinvestment in internal and external innovation while sustaining high profitability leaves us exceptionally well positioned for further significant value creation over time. We look forward to updating you further as we progress through the year.

Let's now open the call to questions..

And the first question will come from Cory Kasimov with JPMorgan. Please go ahead..

Just want to say thanks to Michael, first of all, all help over the years. It's obviously been very much appreciated. So my question is on your Phase III trial for VX-147 and AMKD.

And I'm curious about kind of your confidence in the potential for an accelerated filing at the 48-week time point based on the predictive nature of reduction in proteinuria materially impacting the slope of eGFR curves at that time?.

Yes. Cory, with regard to the 147 program, the key features of the study design are that it's a singular Phase II/III study. It is a study that will enroll the broad population, so the full 100,000 patients that could be eligible for this drug. And the third feature of the study is the 1 you asked about.

We have built in a prespecified interim analysis at the 48-week time point. And if that analysis is positive, that provides the pathway to accelerated approval. The relationship between proteinuria, that's what we studied in Phase II is very tight, high correlation with EGFR, which is a measure of renal function.

And the reason I have such high confidence in the interim analysis is because the reduction in proteinuria that we saw in Phase II is an unprecedented 47.6% in this very specific and a very aggressive form of AMK called FSGS. So with that 47.6% reduction in proteinuria and you do the translations to what you would expect in terms of GFR.

What I come out with is a high confidence level for the interim analysis. That was why it was so important that these 3 features that I mentioned were agreed upon with the agency when we went to them at the end of Phase II meeting..

The next question will come from Jeff Meacham with Bank of America. Please go ahead..

This is Jason on for Geoff. Congratulations on the quarter. And again, want to extend our congratulations to Michael. A few quick if I may.

Could you discuss how the pain programs fit in strategically within the commercial portfolio, given the focus on rare diseases, basically, is this an asset you're potentially thinking about partnering with? Is it advances? Or are you kind of looking at maybe establishing the necessary commercial infrastructure? And then it does sound like the clinical hold on 80 was a bit of a surprise.

But then again, regulators have seemingly started operating with I guess, an abundance of caution for gene and cell therapies. And do you see any potential negative read-throughs to the upcoming CTX001 submission? Or have regulators seem fairly comfortable with the safety and efficacy package as is..

Jason, there's a few different questions in there. Let me try to parse it out into pain and how we see CTX001. On CTX001, we've been very pleased with the momentum that we've seen in the study. As I said in my prepared remarks, the enrollment is complete.

We've dosed more than 75 patients we've secured really every regulatory designation available prime RMAT orphan here and in Europe. And we are planning forward for our filing towards the tail end of this year. On the pain program, let me make 2 comments, and I'm going to turn it over to Stuart to give you some more color.

We see acute pain and neuropathic pain as fully Vertexian. I don't feel the same way about musculoskeletal pain or something like back pain or knee pain or some such pain that will categorize as musculoskeletal.

That being said, based on the pharmacologic validation with our own VX-150 and the genetic validation, I do expect this mechanism to be effective across the 3 pain states. Stuart, a little more color on the commercialization..

Yes. And Jason, I think there is a bit of a misconception about us as a company that we're a rare or an orphan company. And as Reshma described that's not how we define ourselves.

Our research strategy is to focus on specific diseases where we understand the human biology, whether or dare validated targets, as Reshma said, either genetically or in the case of NAV 1.8 now pharmacologically and they're in markets where we can access them with a specialty infrastructure. And we think pain fits that description perfectly.

As Reshma said, there's various different segments of the pain market that you can think about acute, neuropathic and the chronic musculoskeletal. The commercial opportunity in the acute pain segment is enormous. Acute paying accounts for over $1.5 billion with the B treatment days a year in the U.S. alone.

And despite more than 90% of those prescriptions being generic, the market is valued at $4 billion. So if we are able to bring forward an asset that has opioid or better efficacy, without the side effect liability of opioids and other pain medications.

We think the opportunity is very, very significant in acute pain, multibillion dollar in acute pain opportunity. And as Reshma said, similarly in neuropathic pain, multibillion-dollar opportunity, that's also a specialty market that we could service through a specialty infrastructure..

Next question will come from Robyn Karnauskas with Truist Securities..

So a few quick ones. 2 quick ones, some inclusion criteria for your Phase III trial for AMKD. How challenging do you think the enrollment might be? You've indicated there's 100,000 patients how many are actually genotypes are seeking treatment? Do you have to do more work to actually get the genotype? And second question is really on CTX-1.

Could you just give us some more color as you've been talking to more of the centers, maybe buckets of patients that would be the initial patients most likely to 1 drug and what their characteristics are? And are you creating a registry or a list of patients who might be willing to start therapy..

I'm going to start on AMKD, and then I'll ask Stuart to provide some color on the patients for both sickle cell disease and beta thalassemia for the CTX001 program. Robyn, the key criteria for entry into the AMKD study is proteinuria, reduced renal function and 2 APOL1 alleles by genotyping. The actual genotyping test is fairly simple.

It's a simple blood test, but you are right that it is not commonly performed. And the reason it's not commonly performed is because before now, we didn't really have anything to offer our patients who had APOL1-mediated kidney disease.

Recognizing that, we've added some features into our Phase II/III clinical trial to ensure that we will have the kind of enrollment that we seek and that we can bring this medicine forward with speed. The first is it's a global study with many sites up and running in the U.S. and in the EU. The second is all patients are on standard of care.

So there is no patient who is going to have to go on to placebo to be part of the study. This is a study where 1 arm gets standard of care plus VX-147 and the other arm gets standard of care.

And third, we have a concurrent genotyping study up and running where patients can get genotyped and they can, if they wish, then enroll in the Phase II/III study. I think that those measures are going to be very helpful as we make progress on the enrollment. Stuart, I'm going to turn it over to you for CTX001 and patients that you see..

Yes, Robyn, thanks for the question. So -- as we've commented previously, there's about 150,000 patients who have sickle cell disease or transfusion development, fusion dependent thalassemia in the U.S. and the EU.

However, as you can imagine, we don't think that there are -- that is the entire population is going to be eligible for CTX001 given the current conditioning regimen.

So based on the inclusion criteria with our study, but also our research and other people's research, talking to physicians about the types of patients that they think are likely to be potential candidates. We think that's around 32,000 of the 150,000. Of that 32,000, about 25,000 of those are sickle cell, the majority of which are here in the U.S.

So that is the patients that we think are likely to be potential candidates for CTX001 with the existing BSA-based conditioning regimen..

The next question will come from Salveen Richter with Goldman Sachs. Please go ahead..

Michael, it has been a pleasure working with you. You'll be very missed here. Two clinical questions. One on CTX001.

On the commercial front, how much precedent has been set on the payer front globally by bluebird, particularly given their difficulty with the EU? And then secondly, on the Duchenne gene editing program, -- could you just provide some details on the construct? And is this in partnership with CRISPR..

Salveen, I'm going to start with the DMD question, and then I'm going to turn it over to Stuart to talk through CTX. The DMD program is -- one, I know, Salveen, you've asked me about before, in just 1 second, I'm going to turn it over to Bastiano. We have made really nice progress on that program.

This is a gene editing-based program, and we are in IND-enabling studies with the IND plan for next year.

Bastiano, can I ask you to give a little bit more color on this?.

Sure.

So our approach to D&D is a little bit different than all the other gene therapy approaches because we have deliberately actually chosen to go with like a near full-length exon-skipping dystrophin approach, which is based on human genetics because as you know, patients with back dystrophy, for example, have a near full line dystrophin and for the very mild disease.

The gene therapy approaches that are used by -- in other contexts, they only deliver a truncated version of the dystrophin or various lengths, but it's called micro dystrophin for a reason.

Gene editing is actually on the approach that has the potential to deliver the near full-length protein, which is required for what we believe is going to be a durable transformational functional cure. You remember that this program came to us through the acquisition of Axonics.

And since then, we have worked really, really hard on both analytical and process development for our technology because given what has happened in the field that we did pay close attention to those purity and other things like development and process development to be sure that we have the best product technology-wise as opposed together with science.

So we feel very optimistic about our approach and as Vesa said, very pleased to be in IND-enabling studies and we aim to file the IND in 2023 and beginning clinical development soon thereafter..

Salveen, on transformative therapies and kind of payment models, which I think was the basis of the question. I don't think what happened with Blue Bird has set a precedent that transformative onetime functional cures are never going to get paid for in the EU or elsewhere.

Clearly, there's disappointment in the community about the license withdrawal However, we, as part of our prelaunch planning are engaging with payers, both here in the U.S. and overseas.

And based on the capabilities that our team has demonstrated in securing reimbursement for CF, given the transformative potential that CTX001 holds, I'm optimistic that we going to be able to bring that medicine to patients around the world pending license approval..

The next question will come from Michael Yee with Jefferies. Please go ahead..

We have 2 questions on APOL1-mediated kidney disease.

And the first question was just around your confidence in enrolling the Phase II portion and whether or not you expect that data at the end of the year and what you can say about that? So going back to sort of a follow-up in terms of identifying these patients and speed and confidence of getting these people enrolled.

And the second question relates to the Phase II portion, which is on EGFR and whether or not you have a good idea around the slope of decline over a time period for these patients and whether or not there's any heterogeneity between the different diseases within and what you're assuming for in the Phase III in decline?.

Yes. Mike, with regard to enrollment, it is really simply too early to comment on enrollment dynamics for VX-147. We presented and shared the Phase II data just in December and the Phase III started just 3 months after that in March. So a little too early to call.

But as I commented, I think the genotyping study, the number of trial sites that we are opening around the globe and the fact that this is a study where both arms get treatment will help with enrollment. On the GFR question in the Phase III portion, the -- this group of patients, those with 2 APOL1 alleles have a very rapid decline.

And when I say that, I mean north of 5 ccs per year. And when you have that kind of rapid decline, it gives you the opportunity to assess the impact of your drug, which is why this 1-year accelerated endpoint potential is really important. So what we demonstrated in Phase II is reduction in proteinuria.

That was the approximately 50% reduction, 47.6% on -- that is very tightly correlated with the EGFR, the measure of kidney function and the measure of kidney function in people with 2 APOL1 alleles, regardless of whether you call it FSGS or you call it another disease, is very high.

So I feel very good about where we are in terms of getting the clinical trial up and running and very good about the way we've designed the endpoint on both proteinuria and eGFR..

The next question will come from Phil Nadeau with Cowen & Company. Please go ahead..

Michael, let me add my thanks for all your help over the years. Best of luck in your next adventure. You're certainly going to be missed here. Two questions from us. First, brief commercial and then VX-880.On the commercial last quarter, you called out inventory build. You haven't mentioned inventory yet on the call.

So curious where inventory stands and whether there's destocking in the quarter. Then second on VX-880, appreciating it's still early days since the clinical hold that was initiated. But do you have any sense of why the FDA is not convinced. I think in the press release, you mentioned they didn't believe the benefit risk was positive.

Is that because they don't think you need more benefit -- or is there some risk they're worried about? And then second on VX-80, you have 1 ex U.S. trial site, any desire to increase the numbers to continue enrolling patients what the U.S. hold is instituted.

And last, of course, if you have any preliminary thoughts on what you need to do to release the hold would all be curious to hear..

Let me ask Charlie to start with your question on the inventory for the quarter.

Charlie, do you want to talk a little bit about the revenues for the quarter and how you see inventory?.

Yes. Thanks for the question. As we've mentioned previously, it's not at all uncommon for us to see channel inventory and patient inventory fluctuations quarter-to-quarter on the order of magnitude of $20 million to $50 million. We called out an inventory increase in the fourth quarter. We did see some destocking in the first quarter.

We just didn't call it out specifically..

And with regard to your questions on VX-880, Phil, what we shared earlier this week is what we know. By regulation, the agency is 30 days to provide us their list of questions or their information request. We are highly confident in this program and deeply committed to type 1 diabetes.

And we're looking forward to constructively and expeditiously working with the agency to resume the trial in the U.S. as soon as possible. The trial is up and running, as you rightfully point out in 2 regions right now in the U.S. and in Canada. The trial remains up and running in Canada.

We have not received any word from Health Canada for any questions or concerns that they have. And with regard to opening up additional sites, that's always been in the plan. It has nothing to do with the hold in the U.S., and we intend to have more sites coming on in time..

The next question will come from Colin Bristow with UBS. Please go ahead..

This is Colin. Congrats on the quarter, Michael, thank you for the help and all the best in the future. So and in Reshma, we had previously spoken before the AbbVie readout, and you talked about the amount of competitive intelligence work you have done, and this ultimately gave you confidence that the AbbVie triplet would not be a threat.

Can you give us was on point. I'm curious if you had any early thoughts or insight into NextGen correct? I think it's AbbVie 576 that they plan to advance into the clinic. And then also on the competition side, there was some press recently about Cone Therapeutics, which have assets targeting the NBD1 domain.

So I'd be curious to get your take on this approach also..

Yes. Colin, I'll start and then I'm going to ask David to add a little comment. Colin, I won't speak directly to any competitor. That's not my practice. But let's talk about CF in general. Over the years, we've established a leadership position in CF, and we've not only sustained it, but we've expanded it.

And our goal of out innovating ourselves and if possible, even bringing more efficacious medicines forward than TRIKAFTA. And absolutely, in the case of the last 5,000 patients bringing forward a nucleic acid therapy for them, that remains unchanged. TRIKAFTA is the standard of care today.

And the closest competitor to TRIKAFTA has been and remains today our own VX-121561, tezacaftor. I'm going to ask David to just give you a few comments on why we have so much confidence in our molecules and the HBE assays, which are really the workhorse and the translational element of what we do.

David, a few comments from you on our confidence and why we know when we have something in the lab, it translates into the clinic..

Absolutely, Rashmi. As you've seen over the years, the Vertex deployment of the HBE assay has proven itself over and over again to be translationally relevant and predict clinical outcomes.

And that's been true through Gladeco, or can be Symdeko, VX-445, TRIKAFTA and also with VX-121, that triple where we saw improved chloride transport in the HBE assay. We also, as you remember, did a Phase II study that showed improved sweat chloride and other very promising attributes such as the FEV1 change.

So we really believe in that assay, and we've proven it out. We do continue to work on small molecules to outdo not just TRIKAFTA, but the X21 which is in Phase III.

And we do follow everything that goes on, and we believe that the most promising molecules that could possibly challenge the VX-445 our own 121 triple and those things we might bring beyond it..

The next question will come from Mohit Bansal with Wells Fargo. Please go ahead..

And again, my congratulations, and thank you very much for Michael as well. So maybe a couple of questions on the diabetes program. Could you comment on the C-peptide levels for the first patient at day 270. Was there an increase after 150.

And do you -- when do you expect to see a plateau flattering effect for C-peptide? And last 1 related is that do you have a target peptide level for these patients that might lead to insulin independence eventually?.

Yes. Well, it's really good questions. I'm going to reframe the question a little bit and ask Bastiano to comment, but I want to make sure I explain this well. The way you know that a patient is insulin independence actually is by a very strict criteria. And that strict criteria is they don't take insulin any longer, exogenous insulin.

Their fasting glucose level is less than 126 and their postprandial, that's to say after food, glucose level is less than 180. And the reason we're able to declare patient number one as insulin independent is because they meet all of those criteria. Now you asked a good question about what do we expect in terms of durability of effect.

And I'm going to turn it over to Bastiano to talk about the experience with cadaveric transplants, the quantity and quality of our cells and why we think that our approach is a durable long-term durable approach.

Bastiano?.

And it actually allows me to talk about what is really important in this problem, which is the quality and the nature of our sales our sales are fully differentiated, undistinguishable from naturally occurring beta cells. So they share a common biology.

Now what we know about the biology of beta cells is that at first, they pretty much all set when it comes to their numbers and their differentiation, which means that they last a lifetime. That is what is known about itself.

That is actually consistent with what has been learned over the years with cadaveric islets, where when the patients are compliant with immunosuppressive therapy and the transplant is therefore successful, these cells can last for a very, very long time.

So ourselves, we believe that being of the same biology and in the context of a similar therapeutic approach being linear transplant, we believe that there is the potential for the cells to last as long as the natural beta cells do, which is a lifetime. When it comes to the..

I think that was a ..

The next question will come from Evan Seigerman with BMO Capital Markets. Please go ahead..

I'll just add, Michael, thank you for everything over the years. You will be missed greatly. Charlie, 1 for you. I love if you could speak to the impact of FX on OUS sales. I don't think you mentioned anything in your prepared remarks.

Did that factor into your decision not to raise guidance despite expanded reimbursement, I'm not pointing to kind of what you announced in Australia recently..

Yes. Evan, thanks for the question. Again, just to remind folks, the reiterated guidance for revenue, $8.4 billion to $8.6 billion sets us up for another really strong year. That's $1 billion above 2021 and 12% growth. As we reiterated the guidance, we considered a number of puts and takes. Australia, of course, is good news that we've had this year.

We also consider things like inventory fluctuations in FX, which is a very modest headwind. And all of that taken together, we feel is accurately captured in the $200 million range between the low end and the high end of guidance..

And then no real impact on FX or kind of -- can you speak more to that?.

Yes. It's pretty modest. Two-thirds of our revenues are in the U.S., one-thirds ex U.S. We have a very active and very effective hedging program that blunt some of the impact of foreign exchange changes.

And so for us, with -- again, with sort of a baseline 12% growth rate, the relative impact of FX is pretty modest and very small compared to some of our peers..

Operator, we have time for one more question..

Your next question will come from Liisa Bayko with Evercore ISI. Please go ahead..

I guess we'll be the last one to thank Michael for all of his hard work. And we'll hope you'll keep in touch with us..

You bet..

I just want to see if we get a little more detail on some of the type 1 diabetes metrics. Like for example, we don't have some of the HBA1c number for patient 2 at 90. And it would just be nice to see how that's tracking. I know there was a reduced exogenous inflow news, so that's good.

And then some of the other -- I guess, are you saying if you didn't mention the (inaudible) C-peptides, maybe it hadn't reached an appropriate level yet. I'm just curious because the peak simulator wasn't shown either for some of those endpoints -- those time points. So just curious to fill in some of the holes here..

Yes. Sure thing. Liisa, we shared a fair amount of data on all 3 patients dosed to date, the first 2 patients at half dose and the first full dose patient who is at the day 30 milestone across all of the patients in terms of efficacy, we see really good efficacy. And we've shared now out to day 270 on patient number one, who is insulin independent.

You're right, we haven't shared all of the details at all of the time points across the patients. but you should expect us to share all of the details in terms of hemoglobin A1c, C-peptide levels, stimulated and fasting as well as the CGM, that's the continuous glucose monitoring data and, of course, all safety at upcoming congresses this year.

So you will see all of the data on the patients with all of the follow-up..

And then just one more question, if I may. Sorry, I might have missed this earlier, but for CTX001, have you finalized what you need to file with FDA? And then if you could give us an indication of where you're going to present the data, the next data out there, that would be great..

Yes. On CTX001, we shared last data on, I believe, 22 patients last year at the European Hematology meeting. We now have dosed over 75 patients. So we have substantially more information, and you should expect to see that at upcoming congresses this year.

With regard to the data package for the agency, what we need to do, as we've discussed, is complete our discussions with them. And the 2 outstanding areas of discussion are the number of patients and the duration of follow-up that they would like to see in the filing. You know we have all of the designations like RMAT and orphan and such.

So we've had the opportunity to have conversations that bring us to this point. It's now wrapping up those conversations with both the U.S. and the EU to wrap up on the discussion of numbers and duration..

And it seems like you've done a bunch of work on sort of the market and it looks like the markets are relatively concentrated.

Do you have any sense of sort of capacity and how we should think about how many patients could be treated in the current scenario on a yearly basis?.

Yes. Liisa, I think you're asking about in the U.S. and EU, how do we see bed capacity for patients to be able to come in and have the procedure for CTX001. Since we're out of time, I'll just take it really quickly. Stuart and the team have mapped this out.

It is very concentrated, the overall helming majority of patients in the EU who qualify for this therapy are concentrated in 4 countries. The overwhelming majority of patients in the U.S. who qualify for this therapy are concentrated in less than 25 states, and we have mapped out the centers where they would be treated.

And yes, we see that the numbers of patients that we expect to be treated are going to have a way to have that done in centers with the right expertise..

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Michael Partridge for any closing remarks. Please go ahead..

Thanks, operator. Thanks, everybody, for joining the call tonight. Thank you also for all of your kind words, very much appreciated. It has been an honor and a privilege to represent Vertex, and it's also been fun to always interact with all of you. As always, the team and I are in the office tonight if you have additional questions.

Take care, and have a good evening..

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..