Vertex Pharmaceuticals Incorporated (VRTX)

Q3 2011 Earnings Call

October 27, 2011 5:00 pm ET


Matthew Emmens - Chairman, Chief Executive Officer and President

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

Nancy J. Wysenski - Chief Commercial Officer and Executive Vice President

Michael Partridge - Senior Director of Strategic Communications

Robert Kauffman -

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


David Friedman - Morgan Stanley, Research Division

Y. Katherine Xu - William Blair & Company L.L.C., Research Division

Matthew Roden - UBS Investment Bank, Research Division

Mark J. Schoenebaum - ISI Group Inc., Research Division

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Matthew J. Andrews - Wells Fargo Securities, LLC, Research Division

Yaron Werber - Citigroup Inc, Research Division

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

Howard Liang - Leerink Swann LLC, Research Division

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

Edward A. Tenthoff - Piper Jaffray Companies, Research Division

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

Jason Kantor - RBC Capital Markets, LLC, Research Division

Philip Nadeau - Cowen and Company, LLC, Research Division



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Good day, ladies and gentlemen, and welcome to the Vertex Pharmaceuticals Inc. Third Quarter 2011 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Michael Partridge. You may begin.

Michael Partridge

Thank you. Good evening, and welcome to Vertex's Third Quarter 2011 Conference Call. Our commercial team has had great success with the launch of INCIVEK combination treatment for people with genotype 1 chronic hepatitis C. After only 5 months into the launch, we have seen rapid adoption of INCIVEK and increasing penetration into the prescriber base. Matt Emmens will kick things off for us today with comments on the importance of the introduction of INCIVEK, what it means for the future of the company and how we are positioned to just maybe develop and commercialize more new medicines like INCIVEK that can cure or significantly improve the treatment of other serious diseases.

Ian will review the financial statement with a particular focus on the revenue stream being generated by INCIVEK, which allows for reinvestment into the business and also creates the potential for significant earnings and cash flows. Nancy will discuss how she and her team are progressing in the early launch and particularly, how the increasing penetration of the prescriber base is important to the adoption of INCIVEK. Nancy will also comment on how we are positioning ourselves to continue to play a major role in the hepatitis C market as it evolves. Dr. Peter Mueller will end the call with a review of the significant progress with the development of our other hepatitis C regimen including the INCIVEK VX-222 combination regimen and the pipeline of other medicines including the recent NDA and MAA submissions of KALYDECO, also known as the VX-770.

KALYDECO is Vertex's second breakthrough oral medicine and is for cystic fibrosis, a genetic disease that affects children and adults. He will also review the recent progression of the VX-509 in rheumatoid arthritis. I will comment that in the weeks ahead, we have data from 3 disease franchises being presented at major medical meetings. First, the North American Cystic Fibrosis Conference in Anaheim on November 3 through 5, where we will have Phase III data presented for KALYDECO in the G551D population. We will also have there Phase II data for the KALYDECO VX-809combination in F508 patients.

Then, AASLD, the major liver meeting taking place in San Francisco from November 5 to 8. We will have data there for INCIVEK in patients who are co-infected with HCV and HIV. And also data for our short-duration quad regimen of INCIVEK VX-222, pegylated-interferon and ribavirin.

Finally in Chicago, the American College of Rheumatology Conference, or ACR, taking place from November 5 to 9 will feature the first presentation of data for our selected JAK3 compound, VX-509. We are looking forward to highlighting our robust and diverse pipeline of medicines at these prominent conferences.

After our prepared remarks today, we will be joined by Dr. Bob Kauffman, and we will be happy take your questions. We expect today's call to conclude at 6 p.m.

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. These statements, including those regarding the market launch of INCIVEK, 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 non-GAAP financial measures and a reconciliation of those measures to GAAP is available in our third quarter 2011 financial press release, which is on our website.

Thank you. I will now turn the call over to Matt Emmens.

Matthew Emmens

Thank you, Michael, and good evening, everyone. There are 3 key themes that we want to convey in today's call that we believe are defining our company. First, early INCIVEK revenue is already impressive and we have only just begun to treat the many people living with hepatitis C. Second, Vertex is more than just INCIVEK. We have a diverse and robust pipeline of 8 different medicines in development. And third, we are well along in establishing Vertex as a global health sciences company.

Vertex is fulfilling its mission of bringing transformative medicines to people with serious diseases worldwide. An INCIVEK combination therapy for hepatitis C is now available for patients in multiple countries, including the U.S. and Canada, where we are commercializing the medicine ourselves; 4 countries in Europe, where it is marketed as INCIVO by the Janssen; and Japan, where we'll be sold by Mitsubishi Tanabe under the brand name TELAVIC.

INCIVEK has a compelling profile and many groups across our company have done an outstanding job of understanding the needs of patients and physicians in this market. We believe that we are delivering real solutions for the hepatitis C community. With INCIVEK, we believe we have set a high bar in the treatment of hepatitis C. Our goal is to sustain leadership in this disease. That means continuing the very successful launch of INCIVEK, continuing our efforts to explore new ways of achieving high viral cure rates and further shortening treatment duration, and continuing to improve treatment options and outcomes for people living with hepatitis C.

We are expanding our commercial portfolio rapidly. Just 5 months after the approval of INCIVEK, we have new drug applications under review but global revelatory agents for KALYDECO, our second potential breakthrough medicine. If approved, KALYDECO would be the first medicine to address the underlying cost of cystic fibrosis or CF, a major step for Vertex and the cystic fibrosis community.

I want to recognize the many people at Vertex who have been dedicated to this program for so many years. I also want to thank the CF Foundation, who provided us with early financial support to help advance our research programs. We were able to move forward quickly, thanks to the efforts of many doctors and nurses at CF Centers in the U.S., Europe, Canada and Australia. The families who are touched by this disease every day and most importantly, the children and adults living with cystic fibrosis, who remain ever hopeful that new medicines are just around the corner.

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