Vertex Pharmaceuticals Incorporated (VRTX)

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Vertex Pharmaceuticals Incorporated (VRTX)

Q3 2012 Earnings Call

November 01, 2012 5:00 pm ET


Michael Partridge - Senior Director of Strategic Communications

Jeffrey M. Leiden - Chairman, Chief Executive Officer, President, Member of Audit & Finance Committee and Member of Management Development and Compensation Committee

Ian F. Smith - Chief Financial Officer and Executive Vice President

Peter R. Mueller - Chief Scientific Officer, Executive Vice President of Global Research & Development and Member of The Scientific Advisory Board

Robert Kauffman

Stuart A. Arbuckle - Chief Commercial Officer and Executive Vice President


Geoffrey C. Porges - Sanford C. Bernstein & Co., LLC., Research Division

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Gloria Woo

Geoffrey C. Meacham - JP Morgan Chase & Co, Research Division

Omar Saad - ISI Group Inc., Research Division

Michael J. Yee - RBC Capital Markets, LLC, Research Division

Liisa A. Bayko - JMP Securities LLC, Research Division

Alethia Young - Deutsche Bank AG, Research Division

Brian Corey Abrahams - Wells Fargo Securities, LLC, Research Division

Matthew Roden - UBS Investment Bank, Research Division

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Ying Huang - Barclays Capital, Research Division

David Friedman - Morgan Stanley, Research Division



Good day, ladies and gentlemen, and welcome to the Vertex Pharmaceuticals Incorporated Third Quarter 2012 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like introduce your host for today's conference, Mr. Michael Partridge. Sir, you may begin.

Michael Partridge

Thank you. This call was originally scheduled for Monday night and postponed due to the storm. We know there are many listeners who have been directly affected by the storm, and our thoughts are with them as they try to get things back to normal. So thank you to everyone for joining us tonight.

Vertex continued to make progress towards building a global business in the third quarter of 2012. With KALYDECO, our approved medicine for people with cystic fibrosis with the G551D mutation, we achieved sales of $49 million in the quarter. We are now treating the majority of eligible G551D patients in the U.S. We believe that the near-term inflection point for KALYDECO growth is achieving reimbursement across the major European markets.

In cystic fibrosis, our goal is to improve the lives of all patients with CF, and we're making progress toward this goal. We refer to KALYDECO as ivacaftor when discussing investigational uses, and ivacaftor monotherapy has the opportunity to address more patients through ongoing label expansion studies. In particular, we have initiated 3 additional Phase III trials of ivacaftor and together with other ongoing and planned studies could expand the treatable population to approximately 15% of CF patients.

Additionally, on the basis of our recent Phase II VX-809 plus ivacaftor data, we are on track to begin pivotal development of this combination in F508del homozygous patients in early 2013. We believe the success with our ivacaftor label expansion studies and success with the VX-809 plus ivacaftor combination would enable us to address the majority of the 70,000 CF patients in the U.S. and Europe.

With INCIVEK for the treatment of hepatitis C, we reported sales of $254 million in the third quarter. INCIVEK is the leading DAA in the hepatitis C market and continues to be an important medicine for hepatitis C patients. We reiterated our full year net revenue guidance for INCIVEK today.

In hepatitis C, we are advancing our uridine nucleotide analog VX-135, previously referred to as ALS-2200, which we are developing in collaboration with Alios. We are executing on a strategy of developing VX-135 with other promising DAAs in multiple all-oral combinations. We announced agreements this morning with GSK and Janssen to enable us to evaluate VX-135 in multiple 12-week, all-oral combination regimens. Our goal is to complete multiple Phase II short duration, all-oral studies within 2013 and be poised to move quickly to pivotal development in 2014.

Joining me on the call tonight to discuss Vertex's strategic and financial outlook and recent progress in our R&D pipeline are Dr. Jeff Leiden, Chairman and CEO; Ian Smith, CFO; and Dr. Peter Mueller, Head of Research and Development and Chief Scientific Officer. After the prepared remarks, Stuart Arbuckle, Vertex's recently appointed Chief Commercial Officer; and Dr. Bob Kauffman, Vertex's Chief Medical Officer, will join us for Q&A.

We will conclude tonight's call at 6:00 p.m. To help us do that, we would ask that you please limit your question 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 reconciliation of non-GAAP to GAAP is available in our third quarter 2012 financial press release, which is on our website.

I would also refer you to the information on Slide 5 of tonight's webcast. Thank you, and I will now turn the call over to Jeff.

Jeffrey M. Leiden

Thanks, Michael. Good evening, everyone. To reiterate what Michael said, our thoughts are with those affected by Hurricane Sandy, including some of you on the phone.

I'd like to acknowledge the many Vertex employees who worked through the storm and who are continuing to work hard, with the goal of making sure the patients who need our medicines can continue to get them.

Tonight, I'd like to frame my remarks around Vertex's strategy and our priorities for today, tomorrow and the future. First, I'll provide a perspective on how we are positioned today in key diseases, and also how we are preparing to further improve treatment of these diseases tomorrow and in the future. I'll put these strategies in the context of our overall financial strategy and operating philosophy and describe how we're managing our business as we move forward into 2013. After that, Ian will review the details of our third quarter financial performance and discuss the activities we are undertaking to ensure that we are prioritizing our investment in the business. Then, Peter will provide you with some specific updates on recent progress in our pipeline and plans for tomorrow and the future and the serious diseases for which we are creating medicines.

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