Vertex Pharmaceuticals, Inc. (VRTX) Q1 2014 Earnings Call Corrected Transcript: 01-May-2014
Michael Partridge - Vice President-Investor Relations, Vertex Pharmaceuticals, Inc.
Jeffrey Leiden - Chairman, President & Chief Executive Officer, Vertex Pharmaceuticals, Inc.Jeffrey A. Chodakewtiz - Chief Medical Officer and Senior Vice President, Global Medicines Development, Vertex Pharmaceuticals, Inc. Stuart A. Arbuckle - Executive Vice President and Chief Commercial Officer, Vertex Pharmaceuticals, Inc. Ian F. Smith - Chief Financial Officer & Executive Vice President, Vertex Pharmaceuticals, Inc. Peter Mueller - Executive Vice President, Global Research and Development, and Chief Scientific Officer, Vertex Pharmaceuticals, Inc. Other Participants Geoff C. Meacham - Analyst, JPMorgan Securities LLC Geoffrey Craig Porges - Analyst, Sanford C. Bernstein & Co. LLC Mark J. Schoenebaum - Analyst, International Strategy & Investment Group LLC Michael J. Yee - Analyst, RBC Capital Markets LLC Terence C. Flynn - Analyst, Goldman Sachs & Co. Brian C. Abrahams - Analyst, Wells Fargo Securities LLC Ying Huang - Analyst, Barclays Capital, Inc. Howard Liang - Analyst, Leerink Partners LLC Matt M. Roden - Analyst, UBS Securities LLC Liisa A. Bayko - Analyst, JMP Securities LLC Brian P. Skorney - Analyst, Robert W. Baird & Co., Inc. (Broker) Koon C. Ching - Analyst, Credit Suisse Securities (USA) LLC (Broker) MANAGEMENT DISCUSSION SECTION Operator: Good day, ladies and gentlemen, and thank you for your patience. You have joined the Vertex Pharmaceuticals Incorporated first quarter 2014 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 conference may be recorded. I would now like to turn the call over to your host, the Vice President of Investor Relations, Mr. Michael Partridge. Sir, you may begin. Michael Partridge, Vice President-Investor Relations Thank you, operator, and good evening, everyone. Joining me on tonight's call are Dr. Jeff Leiden, Chairman and CEO; Dr. Jeff Chodakewitz, Chief Medical Officer; Stuart Arbuckle, Chief Commercial Officer and Ian Smith, Chief Financial Officer. Our agenda tonight is as follows: Jeff Leiden will begin by reviewing Vertex's strategic business priorities for 2014. Then Jeff Chodakewitz will review our clinical progress in cystic fibrosis including the results of the study of VX-661 in combination with KALYDECO in G551D F508del patients. Dr. Chodakewitz joined Vertex at the start of 2014 and we are happy to have him join us on this and future calls. Next, Stuart will discuss KALYDECO product revenues and provide some commentary on the outlook for KALYDECO growth in 2014. To close Ian will review the financial results and discuss our updated financial guidance. Joining us for Q&A are Dr. Bob Kauffman and Dr. Peter Mueller. We plan for the call to run for a total of one hour. Please be considerate and limit your questions to one with a related follow-up. This conference call will include forward-looking statements, which are subject to the risks and uncertainties including those discussed in detail in our reports filed with the Securities and Exchange Commission including our 10-K and 10-Q. These statements including without limitation those regarding the performance of 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. Information regarding our use of GAAP and non-GAAP financial measures and a reconciliation of GAAP to non-GAAP is available in our first quarter 2014 financial results press release. This press release is on our website and I would also refer you to slide 4 of tonight's webcast. Thank you. I will now turn the call over to Jeff Leiden. Jeffrey Leiden, Chairman, President & Chief Executive Officer Thanks, Michael, and good evening, everyone. Vertex is in many ways a company in transition. We have made cystic fibrosis a clear focus of our business and we've made a decision to no longer invest in hepatitis C. At the same time we're continuing to invest in early-stage research to identify compounds in CF and other areas that could become transformative medicines for patients with serious diseases as well as opportunities for Vertex growth. This transition in Vertex business represents our continued execution against three strategic priorities for 2014. I talked about these priorities earlier this year and I'd like to review them again now. First, focus on driving forward our cystic fibrosis development programs to enable the launch of multiple transformative CF medicines globally. Our clinical and commercial teams have made significant progress in CF already this year. For example we have expanded the U.S. KALYDECO label to include additional patients. We have now completed dosing in the Phase III studies of VX-809. We have recently received orphan status for VX-661 and we are today reporting positive clinical results for a study of VX-661 in patients heterozygous for G551D and F508del. Second, continue to invest in research, internal research is critical growth engine for Vertex and we expect that it will produce more transformative medicines to provide sustainable growth in the future. And third, maintain financial strength so that we can continue to invest in the discovery and development of our new medicines. We ended the first quarter with more than $1.3 billion in cash and with KALYDECO revenues of approximately $100 million that we expect to grow through the year and in future years. This financial position supports our investments for future growth. Our goal in CF is to treat as many people as possible and to enhance the benefits to those that we treat. Jeff Chodakewitz will give you more detail on our recent CF clinical progress. But before I turn it over to him I would like to acknowledge that today marks the start of CF awareness month and recognize all the patients, families, doctors, nurses and caregivers who are involved in the treatment of CF. Thank you for your continued support as we seek to improve the lives of more people with this devastating disease. Our continued progress in CF clinical development is a strong sign that our commitment to people with CF is unwavering.