Vertex Pharmaceuticals Incorporated (VRTX)

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Vertex Pharmaceuticals Incorporated (VRTX)

Q4 2011 Earnings Call

February 2, 2012 5:00 PM ET


Michael Partridge – Senior Director of Strategic Communications

Jeff Leiden – President and CEO

Ian Smith – EVP and CFO

Peter Mueller – EVP, Global Research and Development, and Chief Scientific Officer

Robert Kauffman – Chief Medical Officer

Nancy Wysenski – EVP and Chief Commercial Officer


Geoffrey Porges – Bernstein

Terence Flynn – Goldman Sachs

Rachel McMinn – Bank of America Merrill Lynch

Michael Ulz – JPMorgan

Wesley Nurss – ISI

Gloria Woo – Citi

Howard Liang – Leerink Swann

Jason Kantor – RBC Capital Markets

Andrew Peters – UBS

Ted Tenthoff – Piper Jaffray

Matthew Andrews – Wells Fargo

Ying Huang – Barclays Capital

Liisa Bayko – JMP Securities

David Friedman – Morgan Stanley

Marko Kozul – ThinkEquity

Daniel Brims – Brean Murray

George Farmer – Canaccord



Good day, ladies and gentlemen, and welcome to the Vertex Pharmaceuticals Incorporated Fourth Quarter 2011 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, with instructions following at that time. (Operator Instructions) As a reminder, this conference call is being recorded.

Now, I’ll turn the conference over to Michael Partridge. Please begin.

Michael Partridge

Good evening and welcome to Vertex’s 2011 financial results conference call. 2011 began a fulfillment of Vertex’s vision of improving patients’ lives with breakthrough medicines. As we look to 2012, we are focused on balancing the revenues we are generating with the breadth of investment required to drive continued innovation in our pipeline and generating significant earnings and cash flows.

With me today to review our 2011 accomplishments and outlook for 2012 are Dr. Jeff Leiden, who will kick off the call with an overview of our business focus for 2012, and Ian Smith, who will comment on selected year-end and fourth quarter 2011 financial results and 2012 financial guidance.

A press release announcing our fourth quarter and 2011 financial results and 2012 financial guidance has been issued. Please refer to this release for the primary line items within our income statement.

After our prepared remarks, we will be joined by Dr. Peter Mueller, Nancy Wysenski and Dr. Bob Kauffman, and we will be happy to take your questions. We will ask you to please limit your questions to one with a related follow-up. We’re stopping tonight’s call promptly at 6 PM, and for any questions after that, we will be in our offices to take your call.

Finally, let me 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 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 full-year 2011 financial results press release which is on our website. All 2010 and 2011 expenses discussed in this call exclude stock-based compensation expense, restructuring expense and any intangible asset impairment charges net of tax, any revenues and expenses related to certain September 2009 financial transactions, commercial milestone payments and items related to Vertex’s collaboration with Alios.

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

Jeff Leiden

Thanks, Michael. I joined Vertex just six weeks ago, and I am extremely pleased with the execution we are demonstrating across the business. On today’s call, I want to reiterate for you again what I said at the beginning of the year at the Annual JPMorgan Healthcare Conference and what I said two days ago, when we announced the approval of KALYDECO. And that is that Vertex is well-positioned to be a global business, to help many more patients with serious diseases and to continue to generate significant cash flows.

In less than a year, Vertex received approvals and launched two breakthrough medicines in different life-threatening diseases: INCIVEK for the treatment of hepatitis C and KALYDECO for the treatment of cystic fibrosis.

Looking ahead, we have a pipeline of eight other potential medicines and expect to generate proof of concept data for many of these programs throughout 2012. This is a very exciting and deep pipeline that gives us the opportunity to launch additional new medicines over the next few years that could deliver significant benefits to patients and their families, and significant value to Vertex and our shareholders.

Launching INCIVEK last year was a crucial turning point for Vertex and enabled us to demonstrate not only our research and development expertise, but also our ability to build a commercial team that flawlessly executed one of the most successful drug launches in the industry. Prior to launch, we anticipated strong demand for this medicine from people living with hepatitis C and the healthcare providers who treat them. But INCIVEK’s performance in the first seven months exceeded even those expectations. INCIVEK is now available in multiple countries including the U.S., Canada and nine countries in Europe. We believe this reflects the clinical benefits of the drug, and the outstanding work of our commercial organization.

Our fourth quarter and year-end 2011 results reflect the very rapid launch of INCIVEK and have created strong cash flow to enable investment in our late stage pipeline of medicines while also returning value to shareholders. Ian will review our financial results with you momentarily. As our hepatitis C commercial group remains keenly focused on INCIVEK’s launch, we are progressing efforts to sustain our leadership in hepatitis C for the long-term. We have a number of future opportunities in this disease including an all-oral regimen in Phase 2 and two novel nucleotide medicines which are now in Phase 1.

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