The paragraph is an introduction to Vertex Pharmaceuticals' Fourth Quarter 2024 Earnings Call. The Operator welcomes participants and explains the listen-only mode and opportunity for questions. Susie Lisa, the Senior Vice President of Investor Relations, introduces the call, mentioning that it includes remarks from CEO Dr. Reshma Kewalramani, COO Stuart Arbuckle, and CFO Charlie Wagner. The call will cover forward-looking statements about Vertex's medicines, pipeline, and financial performance and notes financial results presented on a non-GAAP basis. Susie then hands over to Dr. Reshma Kewalramani, who hints at upcoming leadership changes in mid-2025.

Stuart Arbuckle is set to retire on July 1 after nearly 40 years in biopharma, including over a decade at Vertex as Chief Commercial Officer and COO. He played a key role in transitioning Vertex from hepatitis C to CF, leading the commercial launches of CFTR modulators like KALYDECO and ALYFTREK, as well as new products CASGEVY and JOURNAVX. Known for his professionalism, leadership, and patient-first approach, Stuart's succession has been meticulously planned to ensure a smooth transition. Charlie Wagner, CFO since 2019, will assume the COO role on July 1 to continue executing future opportunities.

The paragraph announces the promotion of Duncan McKechnie to Executive Vice President and Chief Commercial Officer at Vertex, effective July 1. McKechnie has extensive industry experience, having worked at GSK and Novartis, and has been with Vertex for 12 years, contributing significantly to the company's successful product launches. He has also led Global Health Economics and Value and Access Functions. The paragraph highlights Vertex's strong commercial execution, which led to double-digit revenue growth for the 10th consecutive year. In 2024, Vertex's revenue surpassed $11 billion, exceeding expectations, and the focus for 2025 is on expanding their patient base, especially with ongoing product launches like CASGEVY.

The paragraph highlights the recent approvals of two new drugs by Vertex: ALYFTREK, a fifth-generation medicine for cystic fibrosis, and JOURNAVX, a groundbreaking oral non-opioid pain medication approved for moderate-to-severe acute pain, which represents the first new class of pain medicine in over 20 years. These approvals are seen as significant steps in public health efforts, particularly in combating the opioid epidemic. The company is focused on commercializing these treatments, expanding access, and anticipating serving a larger patient population, including those with cystic fibrosis, sickle cell disease, transfusion-dependent beta thalassemia, type 1 diabetes, renal diseases, and peripheral neuropathic pain. Additionally, Vertex expects to achieve key clinical development milestones in three pivotal studies this year.

The paragraph provides an update on Vertex's progress across several clinical trials. It highlights the completion of enrollments in studies for zimislecel, povetacicept, and inaxaplin, potentially leading to U.S. regulatory filings. There is also ongoing work on suzetrigine for diabetic peripheral neuropathy and VX-993 for pain management. Additional trials include transformative medicines like VX-670 for myotonic dystrophy and VX-407 for autosomal dominant polycystic kidney disease. Furthermore, Vertex has launched ALYFTREK, a new CFTR modulator for cystic fibrosis in the U.S., with plans for international expansion, while advancing development of next-generation CFTR modulators. The company emphasizes its broad diversification in its revenue base, pipeline, and global presence.

The paragraph discusses advancements in therapeutic drug development for cystic fibrosis (CF) and renal conditions. It highlights different next-generation CFTR modulators, with the NG 3.0 regimen showing promising results in improving chloride transport in CF patients. It also mentions the ongoing Phase 1/2 study of VX-522 for patients who cannot benefit from existing CFTR modulators, with results expected later this year. In renal drug development, the focus is on inaxaplin for APOL1-mediated kidney disease (AMKD) and povetacicept for B-cell-mediated autoimmune diseases. The AMPLITUDE study aims to complete enrollment for AMKD patients, with plans for potential accelerated approval in the U.S. Additionally, a new Phase 2 study, AMPLIFIED, has been initiated for patients with AMKD and comorbidities like type 2 diabetes.

The paragraph discusses the progress of clinical trials for two medical projects: a treatment called pove for IgA nephropathy (IgAN) and a renal program VX-407 for autosomal dominant polycystic kidney disease (ADPKD). Pove's promising once-monthly, small volume subcutaneous administration is advancing towards potential accelerated approval in the U.S., with over 100 clinical sites open globally for its interim analysis cohort. VX-407 is an earlier-stage program for ADPKD, a prevalent and severe genetic kidney disease with no current treatments targeting its underlying cause. The disease is primarily due to variants in the PKD1 gene, leading to cyst formation, impaired kidney function, and potential kidney failure. Completion of the VX-407 Phase 1 trial is nearing, offering a significant opportunity to address this life-shortening disease.

The paragraph discusses VX-407, a novel small molecule aimed at correcting protein-folding issues in ADPKD, potentially benefiting up to 30,000 patients with specific mutations. The company aims to expand its reach to all 300,000 ADPKD patients eventually. They anticipate completing a Phase 1 study and, if successful, moving to Phase 2 trials. Stuart Arbuckle, retiring from Vertex, reflects on his 13-year tenure and expresses confidence in the company's continued success in developing transformative medicines. He is optimistic about Duncan taking over as the new Chief Commercial Officer, praising his strategic, operational, and managerial skills.

The paragraph discusses the company's gratitude to shareholders and analysts and introduces its focus on three recent product launches: ALYFTREK, CASGEVY, and JOURNAVX. ALYFTREK, a new CFTR modulator, was approved as the fifth treatment for cystic fibrosis, showing comparable effectiveness to TRIKAFTA with the benefit of once-daily dosing and coverage for additional mutations. It offers a lower royalty burden and extends patent protection until 2039. The company reports strong CF results, expanded patient eligibility, and positive feedback from physicians and patients on ALYFTREK. The launches demonstrated regulatory and reimbursement progress.

The paragraph discusses the introduction and early reception of ALYFTREK, a once-daily CFTR modulator designed for cystic fibrosis patients, including those with rare mutations not responsive to other treatments. Centers are currently familiarizing themselves with its usage and necessary liver monitoring, and initial patients have started treatment. It is anticipated that despite monitoring requirements, ALYFTREK's benefits will drive its adoption. Regulatory reviews outside the U.S. are ongoing, with potential approvals in several countries expected by 2025. Additionally, the paragraph mentions CASGEVY, a one-time treatment for sickle cell disease and beta-thalassemia, which has been positively received since its approval over a year ago. Its launch is progressing, with over 50 authorized treatment centers aiming for a global total of 75.

The paragraph discusses the progress and expansion of CASGEVY, a therapy for sickle cell disease and beta-thalassemia, with regulatory approvals in the Middle East, including Bahrain, Saudi Arabia, and the UAE, and plans for further expansion in Kuwait and Qatar. The therapy is also accessible in England through a reimbursement agreement with NHS England and in the U.S. through private insurance and Medicaid. The company aims to expand access further and leverage its 2024 foundation for future growth. Additionally, the paragraph mentions the recent approval of JOURNAVX, a new type of oral, non-opioid painkiller, marking the first new class of pain medicine in over 20 years.

The paragraph discusses the launch and commercialization of JOURNAVX, a new non-opioid medication for moderate-to-severe acute pain in the U.S., highlighting its effective pain relief and favorable safety profile without addiction potential. It aims to transform acute pain treatment and address the high demand for non-opioid options, as opioids often lead to addiction issues. Commercial efforts focus on engaging healthcare professionals and payers to ensure rapid patient access and establish a new standard of care. The product has received positive media coverage, indicating significant societal interest, and the company's sales team is actively promoting its benefits to healthcare providers.

The paragraph discusses the efforts to expand access and awareness of JOURNAVX, an oral non-opioid pain inhibitor, in various healthcare settings. The company is engaging with high-volume hospitals, health systems, and pharmacies to facilitate the approval and distribution of JOURNAVX. They are also in discussions with payers and group purchasing organizations to support its use. Promotional initiatives are underway to increase awareness among physicians and patients. There's growing interest from policymakers for non-opioid pain relief options, highlighted by federal acts like the NOPAIN Act and state-level legislative efforts to support non-opioid alternatives. The company expects JOURNAVX to benefit from such initiatives, including potential Medicare add-on payments.

The paragraph discusses the pricing and launch strategy for JOURNAVX, a new pain medication priced at $15.50 per pill or $31 per day, aiming to balance broad access with investment returns. The company is implementing financial assistance programs to ensure patient access and plans to ship JOURNAVX to wholesalers by the end of the month. The paragraph concludes with Vertex's successful commercial execution in 2024 and its plans for further growth in 2025, including the global launch of CASGEVY and ALYFTREK, as well as reporting on a 16% increase in total product revenue during the fourth quarter of 2024.

The paragraph highlights the revenue growth and financial performance of the company in 2024. Revenue grew by 12% to $11.02 billion, driven by strong performance in established and newer markets, aided by non-recurring items. Expenses increased significantly, with fourth quarter R&D and SG&A expenses rising to $1.3 billion, influenced by investments in pivotal studies and commercial launches. Acquired IPR&D expenses were notably higher due to collaborations and acquisitions, such as Alpine Immune Sciences. Full-year R&D and SG&A expenses totaled $8.82 billion, largely due to these investments. The rise in SG&A costs supported the launches of JOURNAVX and CASGEVY. Non-GAAP operating income for 2024 was down to $696 million, from $4.37 billion in 2023, indicating increased costs impacting overall earnings.

The paragraph discusses financial results and expectations for a company, highlighting a $4.4 billion IPR&D charge from the Alpine acquisition in 2024, which significantly impacted the effective tax rate and earnings per share. The fourth quarter 2024 non-GAAP tax rate was 21.3%, with full-year 2024 at 91% due to non-deductible charges, compared to 19.4% in 2023. Fourth-quarter non-GAAP earnings per share decreased from $4.20 in 2023 to $3.98 in 2024, with full-year EPS dropping from $15.23 to $0.42. The Alpine charge accounted for roughly $17 per share. The company ended the year with $11.2 billion in cash and continued share repurchases totaling $1.2 billion. Looking ahead to 2025, they project revenue between $11.75 billion and $12 billion, driven by U.S. growth and CF medicine sales, including ALYFTREK's U.S. launch. Ex-U.S. revenue might be reduced due to intellectual property issues in a specific country, affecting Q1 sales due to prior inventory increases not recurring.

The paragraph outlines the company's financial guidance and strategic plans for 2025, emphasizing growth in revenue from CASGEVY and the recent U.S. launch of JOURNAVX. The company expects JOURNAVX's patient volumes to increase before significant revenue due to financial assistance programs. Metrics on its launch will be provided in 2025. Despite anticipated gross margin benefits from a lower royalty rate on ALYFTREK, this will be offset by higher costs from new product launches. The projected budget for non-GAAP R&D, acquired IPR&D expenses, and SG&A is $4.9 to $5 billion, including $100 million in IPR&D charges. A significant portion of expenses will continue to be invested in R&D, driven by ongoing and new clinical studies. The rise in commercial costs is associated with supporting JOURNAVX's launch and investments in future renal therapies and zimislecel opportunities, all while maintaining profitability and cash flow.

In the paragraph, Vertex outlines its business achievements and plans for 2025, anticipating a non-GAAP effective tax rate between 20.5% and 21.5%. The company highlights its 2024 accomplishments, including strong revenue growth, advancing the CASGEVY launch, and securing significant regulatory approvals. Vertex is launching two new products in the U.S., expanding the global roll-out of CASGEVY, and enrolling four Phase 3 studies, with three studies expected to reach critical enrollment milestones in the current year. The paragraph concludes by providing contact details for questions from the audience, with Salveen Richter from Goldman Sachs asking about the JOURNAVX pre-launch efforts and mRNA program in cystic fibrosis. Reshma Kewalramani invites Stuart to respond to the JOURNAVX query and indicates that she will address the mRNA question.

The paragraph discusses efforts to ensure the broad availability of JOURNAVX across U.S. retail chains, expecting distribution through wholesalers by the end of the month. It highlights the importance of accessibility for patients in acute pain and notes compliance in providing information to payers and institutions, with indications of swift access being prioritized. Additionally, it mentions an mRNA therapy, VX-522, for patients lacking options, comparing the potential improvement in ppFEV1 to existing treatments, with acceptable outcomes ranging from a 3% to 14% improvement.

In this conversation, Evan Seigerman from BMO Capital Markets congratulates the company on a successful 2024 and 2025 start and acknowledges Stuart Arbuckle's retirement. Seigerman inquires about the progress of early discussions with payers regarding the drug JOURNAVX and the expected coverage by retail channels. Stuart Arbuckle responds, expressing optimism about the payer discussions, emphasizing the recognition of the need for non-opioid treatments, and anticipates broad access and growth in coverage throughout the year. However, he does not provide specific figures for covered lives but expects more payers to adopt JOURNAVX on their formularies over time.

The paragraph discusses the 2025 financial guidance for a company, focusing on the growth in its CF (cystic fibrosis) business, driven primarily by activities in the U.S. and international markets. Charlie Wagner explains that the company's guidance range of $11.75 billion to $12 billion represents an 8% growth at the midpoint. In the U.S., growth is supported by launches of products like ALYFTREK and JOURNAVX, as well as the increasing sales of CASGEVY. Internationally, strong growth is expected despite intellectual property issues in one country impacting the growth rate, especially in the first quarter. Jessica Fye inquires about fourth-quarter revenue benefits from non-recurring items, to which Wagner responds that the growth was driven by strong CF volume and a price increase but declines to quantify the benefits.

The paragraph discusses favorable financial dynamics in the U.S., noting that gross to net figures tend to fluctuate, with the first quarter generally being more negative, but seeing a positive outcome in the fourth quarter. Outside the U.S., there was strong volume growth in CF, aided by one-time items like VAT rebates. In the Q&A session, Geoff Meacham from Citibank congratulates Stuart, Charlie, and Duncan on announcements and queries about the considerations for the Phase 3 design of JOURNAVX and LSR, pending regulatory feedback. Reshma Kewalramani explains that they are awaiting a regulatory meeting after analyzing Phase 2 data and consulting experts. Stuart is expected to provide comments on ALYFTREK, though no update is available yet.

The paragraph discusses the anticipation of regulatory interactions over the summer regarding the broad PNP indication from the FDA. Stuart Arbuckle mentions strong interest in ALYFTREK from patients, including those naïve to CFTR modulators, those eligible now with ALYFTREK's approval due to additional mutations beyond TRIKAFTA, and transitioning patients. Some have already received prescriptions. Geoff Meacham acknowledges this update. A question from Michael Yee addresses concerns about the reimbursement strategy for JOURNAVX amidst the opioid crisis, focusing on the importance of public payer coverage through Medicare and Medicaid, as well as commercial insurance. The implication is that Stuart Arbuckle should be confident in overcoming reimbursement challenges for JOURNAVX's launch.

In the paragraph, Stuart Arbuckle expresses his excitement and confidence in the future of Vertex and its new product, JOURNAVX. He believes the company is thriving both scientifically and commercially and is optimistic about obtaining broad payer coverage for JOURNAVX due to the significant unmet need for an effective non-opioid pain reliever. Arbuckle mentions that there are ongoing federal and state policy moves that could support JOURNAVX's availability. As for his decision to leave the company, he states it is a personal decision to move on to the next chapter of his life. Michael Yee acknowledges Arbuckle's comments, and then William Pickering from Bernstein congratulates Stuart on his retirement and asks about the placebo effect assumptions in the design of the DPN Phase 3 study compared to previous studies.

In the paragraph, Reshma Kewalramani addresses questions regarding the Phase 3 trial of a medication, suzetrigine, compared to a placebo. While avoiding specific details, she mentions leveraging existing data from numerous Phase 2 and Phase 3 studies on diabetic peripheral neuropathy (DPN) and highlights the inclusion of a gabapentin group in the trial. Kewalramani emphasizes that the trial's design and sample size consider expected placebo effects. William Pickering acknowledges the response, followed by Liisa Bayko from Evercore ISI, who congratulates the team and asks about the pain program's patient and product availability strategies.

The paragraph discusses the positioning and distribution strategy for JOURNAVX, a pain medication intended for moderate-to-severe acute pain. Reshma Kewalramani and Stuart Arbuckle emphasize their goal for JOURNAVX to become a first-line treatment option. Arbuckle mentions plans to stock the product widely in both retail and hospital pharmacies, with distribution to wholesalers by the end of the month. The medication has a broad label, allowing it to be used across different patient populations. While it may initially be used following procedures to avoid prescribing opioids, the aim is for it to be utilized widely for acute pain of various causes.

The paragraph details a discussion among Reshma Kewalramani, Charlie Wagner, and Stuart Arbuckle regarding financial expectations and product information for Vertex's products, JOURNAVX and ALYFTREK. Charlie Wagner explains that there will be more product stocking in the first half of the year, but revenue will mainly come in the second half due to patient assistance programs. Phil Nadeau asks about the accuracy of prescription data for JOURNAVX and the expected average script duration, as well as a dispute with Royalty Pharma over ALYFTREK. Reshma clarifies that the ALYFTREK issue is straightforward due to a clear contract with the CF Foundation. Stuart mentions that JOURNAVX is labeled for moderate-to-severe acute pain but does not provide specifics on script duration.

The paragraph discusses the anticipated usage and prescription patterns for a medication called JOURNAVX in comparison to non-steroidal anti-inflammatory drugs and opioids. JOURNAVX is expected to have a prescription duration similar to non-steroidals, around 14 days, due to its lack of associated risks that opioids carry, which typically limit their usage to 7-8 days. Phil Nadeau raises a question about the accuracy of prescription data split between retail and inpatient settings, to which Stuart Arbuckle responds that retail prescription data is generally robust, while inpatient data is more volume-related. The company plans to provide updates on prescription statistics and covered lives as key markers of early launch success by 2025. Eliana Merle from UBS then inquires about ALYFTREK, noting patient starts from different segments.

The discussion focuses on the potential for recapturing patients who had previously been on CFTR modulators but discontinued and were now considering ALYFTREK. Stuart Arbuckle expresses confidence in ALYFTREK's ability to attract these patients due to its strong clinical profile, efficacy, and convenient once-a-day dosage. While he does not have detailed information about individual patient motivations for discontinuing other CFTR modulators or returning to ALYFTREK, he is optimistic about the drug's appeal. The dialogue transitions to Tazeen Ahmad asking about potential self-cannibalization within ALYFTREK and the growth opportunity related to type 1 diabetes data, which Stuart is expected to address.

The paragraph discusses the anticipated transition of cystic fibrosis patients from TRIKAFTA and older CFTR modulators to ALYFTREK due to its favorable benefit-risk profile and once-daily dosing. No specific rate of switching is projected. It also details the VX-880 program for type 1 diabetes, currently in Phase 3, which targets about 60,000 patients, including those with brittle diabetes and kidney transplants requiring immunosuppression. Another program in Phase 1/2 involves encapsulated cells requiring no immunosuppression, aiming to reach all type 1 diabetic patients. Additionally, research is ongoing to develop hypoimmune VX-880 cells and alternative immunosuppression methods. The paragraph ends with a transition to a question from Dave Risinger.

The paragraph features a discussion on strategies to ensure broad formulary access for a drug called suzetrigine without imposing burdensome hurdles on prescribers. Stuart Arbuckle emphasizes that merely having a drug on the formulary is not enough if utilization management controls hinder its prescription. The aim is to achieve broad access across both commercial and government channels with minimal restrictions, which has been a focus in discussions with payers. Policy initiatives like the reintroduced alternatives to PAIN Act also support this goal by proposing measures such as no utilization management controls for Medicare Part D patients and equal co-pays for branded, non-opioid drugs versus generic opioids. The discussion also touches upon addressing countries violating Vertex's intellectual property, with plans to prevent further violations being considered.

The paragraph discusses the strong IP portfolio related to CF, extending into the late 2030s, and highlights successful IP defense in global markets, except for Russia, where an unauthorized copy is permitted. Efforts to enforce rights in Russia are ongoing, but the issue is considered isolated. The discussion then shifts to Olivia Brayer's question about potential utilization management controls for JOURNAVX, where Stuart Arbuckle mentions that discussions with payers aim to minimize such controls and avoid medically inappropriate requirements like step edits through generic opioids. These discussions are ongoing both before and after the product launch.

The paragraph discusses the efforts being made by a company to engage with P&T formulary committees in institutional settings before and after the approval of a product called JOURNAVX. Before approval, they provided as much compliant information as possible to help institutions prepare for a quick review upon approval. Post-approval, they are reengaging with these institutions to accelerate the review process, which can typically take 12 to 18 months. The paragraph also includes a brief transition to the closing of a conference call, with instructions on how to access a replay of the event.

This summary was generated with AI and may contain some inaccuracies.