VRTX

Vertex Pharmaceuticals Incorporated (VRTX)

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Vertex Pharmaceuticals Incorporated (VRTX)

Q4 2012 Earnings Call

January 29, 2013 05:00 PM ET

Executives

Michael Partridge - IR

Jeffrey Leiden - CEO

Peter Mueller - Head, Research and Development and CSO

Stuart Arbuckle - CCO

Ian Smith - CFO

Bob Kauffman - CMO

Analysts

Geoffrey Porges - Bernstein

Geoff Meacham - JPMorgan

Mark Schoenebaum - ISI group

Rachel McMinn - Bank of America Merrill Lynch

Michael Yee - RBC Capital Markets

Lisa Bayko - JMP Securities

Yaron Werber - Citi

Robyn Karnauskas - Deutsche Bank

Terence Flynn - Goldman Sachs

Matt Roden - UBS

Christine Huang - Barclays

Sara Slifka - Morgan Stanley

Brian Abrahams - Wells Fargo

Sara Slifka - Morgan Stanley

Howard Liang - Leerink Swann

Katherine Xu - William Blair

Jason Kolbert - Maxim Group

Phil Nadeau - Cowen and Company

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Vertex Pharmaceuticals Incorporated Fourth Quarter 2012 Earnings and Financial Results Conference Call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will be given at that time. (Operator Instructions). As a reminder, this call may be recorded.

I would now like introduce your host for today's conference, Mr. Michael Partridge. You may begin.

Michael Partridge

Thank you operator and good evening everyone. Joining me on tonight’s call are Dr. Jeff Leiden, Chairman and CEO, Dr. Peter Mueller, Head of Research and Development and Chief Scientific Officer, Stuart Arbuckle, Chief Commercial Officer and Ian Smith, Chief Financial Officer.

Our agenda tonight is as follows: Jeff will begin with Vertex’s strategy and key business priorities heading into 2013. After that, Peter will update our progress with our clinical development programs. Then Stuart will discuss INCIVEK and hepatitis C market trends and provide some commentary on the outlook for KALYDECO in the U.S. and Europe. And to close, Ian will review the fourth quarter and full 2012 results and our 2013 financial guidance. After the prepared remarks, Dr. Bob Kauffman, Vertex’s Chief Medical Officer, will join us for Q&A.

We would like to conclude tonight’s call at 6:00 p.m. We want every analyst who has a question to be able to ask and so please be considerate and limit your questions to one with a related follow up.

I will note that information discussed on this conference call includes forward-looking statements, which are subject to the risks and uncertainties discussed in detail in our reports, including our 10-K and 10-Q reports, which have been filed with the Securities and Exchange Commission. These statements including without limitation those regarding the market launch of INCIVEK and KALYDECO, our development plans and expectations, and our guidance are based on management's current assumptions and are subject to risks and uncertainties that could cause actual outcomes and events to differ materially.

GAAP and non-GAAP financial measures will be discussed on this call. Information regarding our use of these measures and a reconciliation of non-GAAP to GAAP is available in our fourth quarter 2012 financial Press Release, which is on our website. And I would also refer you to the information on Slide 5 of tonight's webcast.

Thank you. I will now turn the call over to Jeff.

Jeff Leiden

Thank you, Michael. Good evening. I had the opportunity to speak with many investors at the JPMorgan Conference earlier this month. What I spoke about then and what I’d like to reiterate is that during the last two years, Vertex has undergone a rapid and profound evolution. We launched two transformative medicines at that time; one for people with hepatitis C and one for patients with cystic fibrosis.

The successful launch of these medicines allowed us to significantly strengthen our financial position over this period. We finished 2012 with approximately $1.3 billion in cash and equivalents.

During the same period we also progressed multiple potential transformative medicines into late stage development and we are now poised to expand our presence in the importance of these areas of hepatitis c and CF.

Our evolution has positioned us with the future with a clear focus; using innovative science to develop new transformative medicines for people with serious diseases in specialty markets.

Let me now take a moment to discuss the four strategic priorities that we believe will enable us to achieve this goal. Priority one, we are focusing investment on key development programs on cystic fibrosis, hepatitis c and autoimmune diseases.

In cystic fibrosis, Vertex has a long term strategy just to provide benefit to as many CF patients as possible and to maximize the benefit for these patients with our approved and investigational medicines. KALYDECO has already approved for people with the G551 D mutation and CFTR gene. There are approximately 2000 such patients worldwide age six and older that we hope to treat.

In 2013, we are conducting multiple Phase 3 and other proof of concept label expansion studies of Ivacaftor monotherapy. Ivacaftor is the generic name for KALYDECO. If successful, these studies would allow us to treat up to 7000 patients worldwide with Ivacaftor.

We also expect to initiate a pivotal phase 3 development program this quarter for combination regimen of VX-809 and Ivacaftor and people with CF who have two copies of the Delta F508 mutation. These patients represented approximately 50% of the worldwide CF population or about 35,000 people.

In hepatitis c, our long term strategy is to develop simple all-oral regimens with durations of 12 weeks or less that provide a high viral cure rate. In 2013, we plan to conduct multiple phase 2 studies of 12 week all-oral treatment regimens that include our nucleotide analog VX-135. Our goal is to generate both safety and viral cure data in the second half of 2013 to support the start of pivotal development of one or more all-oral regimens in 2014.

Read the rest of this transcript for free on seekingalpha.com