Vertex Pharmaceuticals Incorporated (VRTX)

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Vertex Pharmaceuticals Inc. (VRTX)

Q4 2009 Earnings Call Transcript

February 4, 2009 5:00 pm ET


Michael Partridge – Senior Director, Strategic Communications

Matthew Emmens – Chairman, President and CEO

Nancy Wysenski – EVP and Chief Commercial Officer

Peter Mueller – EVP, Global R&D, and Chief Scientific Officer

Ian Smith – EVP and CFO

Bob Kauffman – SVP, Clinical Development and Chief Medical Officer


Rachel McMinn – Bank of America Securities/Merrill Lynch

Geoffrey Porges – Bernstein

Ed Tenthoff – Piper Jaffray

Mark Schoenebaum – Deutsche Bank

Ian [ph] – Credit Suisse

Yaron Werber – Citi

Geoff Meacham – JP Morgan

Howard Liang – Leerink Swann

Eric [ph] – JMP Securities

Jason Kantor – RBC Capital Markets

Terence Flynn – Lazard Capital Markets

Brian Abrahams – Oppenheimer & Company

Adam Cutler – Canaccord

Davis Bu – Goldman Sachs

Jason Zhang – BMO Capital Markets



Good afternoon, ladies and gentlemen. My name is Lisa and I am your conference facilitator today. At this time, I would like to welcome everyone to the Vertex Pharmaceuticals conference call. All lines have been placed on mute. After the Company s remarks there will be a question-and-answer session. (Operator instructions)

At this time, I would like to turn the conference over to Michael Partridge. Please go ahead, sir.

Michael Partridge

Thank you. This is Michael Partridge. Good evening, and welcome to Vertex's conference call. 2010 may be the most important year in Vertex’s history, which will be defined by the anticipated progress of Telaprevir for the treatment of hepatitis B as well as several other programs across our pipeline.

First with Telaprevir, starting in the spring, we will begin to receive FBR data from our Phase 3 program. Dosing of all study drugs is now complete in all Telaprevir Phase 3 trial and in the second half of the year; we expect to submit the NDA for Telaprevir.

Additionally, with the goal of further enhancing our leadership in hepatitis C we expect to begin the STAT-C Combination trial of Telaprevir and VX-222 in the first quarter. Right now, we are engaged in late-stage discussions with the FDA and global regulators on the design of this trial. We expect to conclude those discussions soon and provide you with specific information about the trial plan We continue to expect to initiate this trial in the first quarter and be able to have the first interim data in the third quarter of this year.

Secondly, for cystic fibrosis, we have completed planned enrollment of two of the three trials in our Phase 3 registration program of VX-770, our potentiator compound and we are on track to have pivotal data and submit an NDA for this compound in the second half of 2011.

Additionally, we announced yesterday results from a preliminary analysis of data from the Phase 2a study with VX-809, reflecting continued progress of this compound. On the basis of these data, we anticipate starting a combination study with VX-809 and VX-770 as a next step.

Third and importantly, demonstrating the versatility and success of our research, we have positioned to receive data from other proof of concept studies in other therapeutic areas in the second half of 2010, with both a novel molecule for epilepsy and a novel molecule for rheumatoid arthritis.

In today’s call these major events and what they mean for our business and financial strategy will be reviewed by Matt Emmens, Dr. Peter Mueller and Ian Smith.

Tonight we also want to introduce to you the newest member of the Vertex’s management team, Nancy Wysenski, who joined us in December as our Executive Vice President and Chief Commercial Officer. Dr. Bob Kauffman is also here with us today, he will be joining for Q&A.

Please note that information discussed on the conference call includes forward-looking statements which are subject to the risks and uncertainties discussed in detail, in our reports that we filed with the Securities and Exchange Commission including our 10-K.

GAAP and non-GAAP financial measures will be discussed on this call. Information regarding our use of non-GAAP financial measures, and a reconciliation of those measures to GAAP is available in our year-end 2009 financial press release which is on our Web site.

All of 2009 expenses and 2010 guidance, discussed in this call are inclusive of stock-based compensation, and executive transition expenses, restructuring expense, acquisition-related expenses, loss from exchange of convertible debt and other certain charges.

Lastly, after our prepared remarks, we will accommodate as many questions as time permits. Once the call concludes our IR team, joined by Matt, Peter, Ian, Nancy and Bob, will be in the office to answer any additional questions.

Thank you. I’ll now turn over the call to Matt.

Matthew Emmens

Thanks, Michael. As Michael just said, we expect 2010 to be a defining year for Vertex. Our vision has to build a biopharmaceutical company that carries out truly innovative research. That focus is on tough medical problem. That vision is becoming a reality starting with the planned NDA submission of our first potential breakthrough compound, Telaprevir later in 2010, and the plan launch in 2011.

The launch of this compound, if approved, could enable us to build a fully capable biopharmaceutical company that has the scale and future growth opportunities. Our current portfolio beyond Telaprevir is taking shape. It includes additional potential combinations for the treatment of HCV and the orphan disease cystic fibrosis as well as other proof of concept studies. It is very exciting and an important time for Vertex.

(inaudible) pipeline is a research engine that continues to create compounds that we believe could potential transform serious diseases. With drug candidates we have in clinical development is approximately 12 preclinical candidates and 12 lead optimization programs we are making the transition to becoming a commercial company while also maintaining our commitment to that innovative research we talked about. This is what I mean when I talk about scale. I m sure you will hear more on these early stage programs as this year progresses.

We believe that we are building towards the goal of transforming the treatment of major diseases and offering significant returns for our shareholders. Financially, we are committed to turning cash flow positive following the launch of Telaprevir and delivering high operating margins.

Our intention is to build a company that provides access and delivers new and innovative medicines across multiple high-value specialty markets. If you take a look at our 2010 defined events, I ask you to imagine our potential shape and profile as we enter 2011, just one year from now.

An NDA submitted for Telaprevir and organization poised for launch for product into a major disease category, HCV. Additionally, our registration program for VX-770 in cystic fibrosis will be nearing completion and based on the result, we could be preparing for a second NDA submission in another important disease, cystic fibrosis.

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