Vertex Pharma (VRTX) Updates on Pipeline; Offers FY15 Financial Goals

Vertex Pharma (NASDAQ: VRTX) outlined 2015 business priorities to support the development, approval and launch of new medicines that treat the underlying cause of cystic fibrosis (CF). The company also provided 2015 guidance for KALYDECO® (ivacaftor) net revenues and for non-GAAP operating expenses. These updates were made in conjunction with the 33rd Annual J.P. Morgan Healthcare Conference that begins tomorrow in San Francisco. Vertex's Chairman, President and Chief Executive Officer, Jeffrey Leiden, M.D., Ph.D., will discuss the company's continued execution of its corporate strategy and 2015 priorities as part of a live presentation on Monday, January 12 at 9:30 a.m. PT (12:30 p.m. ET). The presentation will be webcast on Vertex's website, www.vrtx.com.

“Vertex enters a year where the potential approval and launch of the combination of lumacaftor and ivacaftor, and continued geographic and label expansion for KALYDECO, are expected to significantly increase the number of people treated with our medicines,” said Dr. Leiden. “We enter 2015 with a strong cash position of approximately $1.4 billion, which, when combined with continued revenue growth, will allow us to invest in key internal and external opportunities in CF and other diseases to bolster our pipeline and position the company to advance other transformative medicines in the coming years.”

Vertex today provided the following updates:

KALYDECO (ivacaftor)

At the start of 2014, more than 2,200 people with CF ages 6 and older with the G551D mutation were eligible for treatment with KALYDECO in North America, Europe and Australia. Following the expansion of the KALYDECO label throughout 2014, more than 3,100 people ages 6 and older are currently eligible for treatment with KALYDECO, including people with one of eight gating mutations and, in the United States, people with the R117H mutation. Vertex currently expects that by the end of 2015, more than 3,700 people may be eligible for treatment with KALYDECO, including children ages 2 to 5 and, in Europe, adults with the R117H mutation.

Vertex today announced that its New Drug Application (NDA) for the use of ivacaftor in children ages 2 to 5 who have the G551D or one of the eight additional gating mutations was accepted for filing by the Food and Drug Administration (FDA), and a target review date of March 17, 2015 was set under the Prescription Drug User Fee Act (PDUFA) for the FDA's approval decision.

In Europe, discussions are ongoing regarding reimbursement for patients with non-G551D gating mutations. Additionally, a Marketing Authorization Application (MAA) variation for ivacaftor in people ages 18 and older with the R117H mutation and an MAA line extension for ivacaftor in children ages 2 to 5 with gating mutations have both been validated by the European Medicines Agency (EMA). Validation indicates that the application is complete and starts the regulatory review process by the Committee for Medicinal Products for Human Use (CHMP). Following its review, the CHMP issues an opinion that is then considered by the European Commission, which has the authority to approve medicines for the European Union. If approved, Vertex would then begin the country-by-country reimbursement approval process.

In Australia, KALYDECO was listed on the Pharmaceutical Benefits Scheme (PBS) as of December 1, 2014, which is intended to provide reimbursement for all eligible patients ages 6 and older with the G551D or other gating mutations. Patients in Australia have now begun to receive treatment with KALYDECO.

Lumacaftor in Combination with Ivacaftor in People with Two Copies of the F508del Mutation

Vertex today announced that the FDA has accepted its NDA for the combination of lumacaftor and ivacaftor in people with CF ages 12 and older who have two copies of the F508del mutation. The FDA granted Vertex’s request for Priority Review, with a target review (PDUFA) date of July 5, 2015 for the FDA's approval decision. In Europe, the MAA for this combination regimen has been validated by the EMA and is under review by the CHMP. The CHMP granted Vertex's request for Accelerated Assessment of the MAA, which is given to new medicines of major public health interest and shortens the review time from approximately 210 to 150 days for the CHMP to give an opinion following the start of the review. The CHMP opinion is then reviewed by the European Commission, which generally issues a final decision within three months. If approved, Vertex would then begin the country-by-country reimbursement approval process. In 2015, Vertex also plans to submit applications for regulatory approval of the combination of lumacaftor and ivacaftor in Canada and Australia. There are approximately 22,000 people with CF ages 12 and older who have two copies of the F508del mutation in North America, Europe and Australia, including approximately 8,500 in the United States and 12,000 in Europe.

Vertex also plans to initiate a study of lumacaftor in combination with ivacaftor in children ages 6 to 11 who have two copies of the F508del mutation in the first half of 2015. The study is expected to evaluate the combination regimen as part of a single-arm, open-label design in approximately 50 children. The primary endpoint of the study will be safety and pharmacokinetics.

VX-661 in Combination with Ivacaftor in People with One or Two Copies of the F508del Mutation

Vertex is currently conducting a 12-week Phase 2 study of VX-661 in combination with ivacaftor in people with CF who have two copies of the F508del mutation. Vertex completed enrollment in the study in October 2014. The study enrolled approximately 20 patients who received placebo and approximately 20 patients who received one of two doses of VX-661 (50 mg q12h or 100 mg QD) in combination with ivacaftor (150 mg q12h). The primary endpoint of the study is safety, and additional secondary endpoints will evaluate the pharmacokinetics and efficacy of VX-661. 12-week data from this study are expected in the first quarter of 2015.

Vertex plans to initiate a Phase 3 pivotal program of VX-661 in combination with ivacaftor in February. The initiation of the Phase 3 program is based on safety and efficacy data from Phase 2 studies of VX-661, including interim data from the ongoing 12-week Phase 2 study and previously completed studies of VX-661 in combination with ivacaftor in people with two copies of the F508del mutation and in people with one copy of the F508del mutation and one copy of the G551D mutation, and recent regulatory discussions regarding the design of the Phase 3 program. The program will consist of four studies that will evaluate VX-661 dosed as 100 mg once daily (QD) in combination with ivacaftor dosed as 150 mg every 12 hours (q12h). The first of the studies is expected to begin in February. Additional details on each of the four planned studies are provided below:

• Two Copies of the F508del Mutation: In February, Vertex plans to begin a Phase 3 study to evaluate the combination of VX-661 and ivacaftor in people ages 12 and older who have two copies of the F508del mutation. The primary endpoint of the study will be absolute change in ppFEV1 through six months of treatment versus placebo. The study will enroll approximately 500 patients in North America and Europe. The majority of the study sites will be in Europe, including the countries of Denmark, France, Germany, the Republic of Ireland, Italy, the Netherlands, Spain, Sweden, Switzerland and the United Kingdom.
• One Copy of the F508del Mutation and a Second Mutation that Results in a Gating Defect in the CFTR Protein: In the second quarter of 2015, Vertex plans to begin a Phase 3 study to evaluate the combination of VX-661 and ivacaftor in people ages 12 and older who have one copy of the F508del mutation and a second mutation that results in a gating defect in the CFTR protein. The primary endpoint of the study will be absolute change in ppFEV1 through eight weeks of treatment with VX-661 and ivacaftor versus ivacaftor alone. The study will enroll approximately 200 patients in North America and Europe.
• One Copy of the F508del Mutation and a Second Mutation That Results in Residual CFTR Function: In the second quarter of 2015, Vertex plans to begin a Phase 3 study to evaluate the combination of VX-661 and ivacaftor in people ages 12 and older who have one copy of the F508del mutation and a second mutation that results in residual CFTR function. This study will also evaluate ivacaftor dosed without VX-661. The primary endpoint of the study will be absolute change in ppFEV1 through eight weeks of treatment as part of a crossover design. The study will enroll approximately 300 patients in North America and Europe.
• One Copy of the F508del Mutation and A Second Mutation That Results in Minimal CFTR Function: In the second quarter of 2015, Vertex plans to begin a Phase 3 study to evaluate the combination of VX-661 and ivacaftor in people ages 12 and older who have one copy of the F508del mutation and a second mutation that results in minimal CFTR function. The study will initially enroll approximately 120 patients, and the primary endpoint will be absolute change in ppFEV1 through 12 weeks of treatment versus placebo. Expansion of the study to an additional approximately 150 patients will depend on an interim futility analysis of efficacy data from the initial approximately 120 patients.

Next-generation Correctors

Vertex has multiple next-generation correctors in the lead-optimization stage of research and expects to begin clinical development of a next-generation corrector in 2015. In vitro data showed that a triple combination of VX-661, ivacaftor and a next-generation corrector resulted in increased chloride transport in human bronchial epithelial cells with one or two copies of the F508del mutation, as compared to the use of a single corrector in combination with ivacaftor.

Research and Early-stage Development Programs

In addition to its ongoing CF research activities, Vertex is advancing multiple additional research and early development programs aimed at the discovery of future transformative medicines for serious diseases, with a focus on specialty markets. The company’s research and early development efforts are focused on oncology and multiple neurological diseases. Vertex expects multiple compounds in oncology and neurological diseases to be in clinical development in 2015.

Financial

“We expect 2015 to be a year of rapid and significant growth in revenues based on treating many more people with CF following the potential approval and launch of the combination of lumacaftor and ivacaftor and further label and geographic expansion for KALYDECO,” said Ian Smith, Executive Vice President and Chief Financial Officer for Vertex. “As our revenues increase, we are committed to managing our operating expense to support high future operating margins and earnings growth.”

Vertex today provided the following financial outlook and will provide complete financial guidance on its year-end conference call on January 28, 2015:

• Vertex entered 2015 with approximately $1.4 billion in cash, cash equivalents and marketable securities. In July 2014, Vertex entered into a credit agreement that provides for a secured loan of up to $500 million, $300 million of which Vertex received in July 2014 and is currently outstanding.
• Vertex expects total 2015 KALYDECO net revenues of $560 to $580 million. Vertex expects to report total 2014 KALYDECO net revenues of approximately $460 million and fourth quarter KALYDECO net revenues of approximately $120 million. Anticipated 2015 KALYDECO net revenues reflect:
  • Use of KALYDECO by eligible patients in Australia following the completion of reimbursement discussions in late 2014
  • Use of KALYDECO in people in the United States with the R117H mutation following FDA approval in late 2014
  • The completion of reimbursement discussions for gating mutations in certain European countries
  • Use of KALYDECO in children with CF ages 2 to 5 with the G551D or other gating mutations in the United States, based on potential approval in March 2015
• Vertex expects that its combined non-GAAP R&D and SG&A expenses in 2015 will be in the range of $1.05 to $1.1 billion. The increase as compared to 2014 is primarily a result of launch preparation activities for lumacaftor in combination with ivacaftor and the planned pivotal Phase 3 development program for VX-661 in combination with ivacaftor. Vertex's expected non-GAAP R&D and SG&A expenses exclude stock-based compensation expense and certain other expenses recorded in 2015.

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