Vertex Pharmaceuticals - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 revenue was $2.96B (+12% YoY) with non-GAAP diluted EPS of $4.52; both beat consensus (Revenue: $2.91B*, EPS: $4.25*) on stronger CF demand and early contributions from ALYFTREK, JOURNAVX, and CASGEVY.
• Guidance was reiterated: FY25 revenue $11.85–$12.0B; non-GAAP combined R&D/AIPR&D/SG&A $4.9–$5.0B; non-GAAP tax rate 20.5–21.5%.
• Commercial KPIs inflected: 110,000 JOURNAVX prescriptions filled, ~150M covered lives (84M unrestricted), >75 CASGEVY ATCs activated, 115 first cell collections, 29 infusions (16 in Q2).
• Pipeline clarity: FDA feedback narrows peripheral neuropathic pain to DPN first; two Phase 3 suzetrigine DPN trials to complete enrollment by end of next year, while VX-993 will not advance as monotherapy in acute pain.

What Went Well and What Went Wrong

What Went Well

• CF leadership sustained; U.S. revenue +14% to $1.85B on demand and favorable gross-to-net, OUS +8% to $1.12B; ALYFTREK EU approval and NHS England reimbursement broaden access.
• JOURNAVX adoption accelerated: 110,000 scripts, 150M covered lives, 84M unrestricted; >50 targeted healthcare systems and ~500 hospitals added to formularies; management ramping commercial investment given responsiveness.
• CASGEVY execution improved: >75 ATCs activated; 115 first cell collections; 29 infusions (16 in Q2); expanding reimbursement footprint including Northern Ireland, Scotland, and Denmark.

Quote: “Momentum accelerated… we executed with very strong performance across the board, growing and diversifying revenue with multiple new product launches...” — Reshma Kewalramani.

What Went Wrong

• VX-993 Phase 2 in acute pain missed SPID48 primary endpoint; company will not advance VX-993 as monotherapy in acute pain, though safety was similar to placebo.
• FDA does not see a path today to broad PNP label; Vertex will prioritize DPN as first indication and defer LSR Phase 3, implying a stepwise neuropathic pain strategy.
• Prior quarter (Q1) saw OUS revenue decline due to IP violations in Russia, and non-GAAP EPS missed consensus ($4.06 vs $4.29*), highlighting near-term ex-U.S. pressures and launch ramp timing.

Transcript

Speaker 0

Good day and welcome to the Vertex Pharmaceuticals second quarter 2025 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would now like to turn the conference over to Susie Lisa. Please go ahead, ma'am.

Speaker 1

Good evening, all. My name is Susie Lisa, and as the Senior Vice President of Investor Relations, it is my pleasure to welcome you to our second quarter 2025 financial results conference call. On tonight's call, making prepared remarks, we have Dr. Reshma Kewalramani, Vertex Pharmaceuticals' CEO and President, Duncan McKechnie, Chief Commercial Officer, and Charlie Wagner, Chief Operating and Financial Officer. We recommend that you access the webcast slides as you listen to this call. The call is being recorded, and a replay will be available on our website. We will make forward-looking statements on this call that are subject to the risks and uncertainties discussed in detail in today's press release and in our filings with the Securities and Exchange Commission.

These statements, including without limitation those regarding Vertex Pharmaceuticals' marketed medicines for cystic fibrosis, sickle cell disease, beta thalassemia, and moderate to severe acute pain, our pipeline, and Vertex Pharmaceuticals' future financial performance, are based on management's current assumptions. Actual outcomes and events could differ materially. I would also note that select financial results and guidance that we will review on the call this evening are presented on a non-GAAP basis. I will now turn the call over to Reshma.

Speaker 7

Thanks, Susie. Good evening, all, and thank you for joining us on the call today. As anticipated, momentum accelerated, and we executed with very strong performance across the board, growing and diversifying revenue with multiple new product launches, driving advancement of programs in pivotal development, and progressing the earlier stage R&D pipeline. We continue to reach more patients with more products and delivered $2.96 billion in revenue in the second quarter, representing 12% growth versus Q2 2024. We remain sharply focused on commercialization across multiple disease areas and expansion of our patient reach. We are pleased with the first six months of launch performance, as well as physician and patient feedback on both Eliptreq in CF and Jurnavix in acute pain, as well as the building global momentum for KASGEVI, our gene-edited therapy for sickle cell disease and beta thalassemia.

In addition to this commercialization focus, research and clinical progress remain paramount. To that end, we continue to rapidly advance the four programs in pivotal development and are working with urgency to begin our fifth in primary membranous nephropathy. Before I cover R&D highlights for the quarter, I would like to acknowledge our CSO, David Altshuler's retirement a year from now and the planned CSO transition to Mark Bunnage, our current SVP and Global Head of Research. David will be retiring from Vertex Pharmaceuticals effective August 1, 2026, after an incredible 13-year career with the company. David initially joined Vertex Pharmaceuticals as a member of the Board of Directors in 2012 and became Chief Scientific Officer in 2015. During David's tenure, multiple CF medicines have advanced from research through commercialization, including Orkambi, Symdeko, TRIKAFTA, and Eliptreq.

Our disease sandbox has broadened, and we successfully advanced the scientific breakthroughs that became KASGEVI and Jurnavix. In an industry with notoriously low R&D success rates, David's teams delivered remarkable achievements year after year. David is a world-renowned physician scientist who's known for his creative and critical thinking, penchant for debate, and commitment to building teams. On a more personal level, I know him as a deeply passionate Vertexian, dedicated physician, and valued member of the executive team. As mentioned in our earnings release, as part of this planned transition, I am delighted to announce that Mark Bunnage will assume the role of EVP and Chief Scientific Officer effective February 1, 2026, after which David will work with Mark to ensure a smooth transition. Mark joined Vertex and has worked alongside David since 2016.

Since that time, Mark has held increasing senior leadership roles across research, starting as Senior Vice President Site Head Boston Research and most recently as Senior Vice President Head of Global Research, overseeing all five of Vertex's research sites. Under Mark's leadership, we advanced many molecules to the clinic, including KASGEVI and Jurnavix, enaciplin for APOL1-mediated kidney disease, VX828 for cystic fibrosis, VX670 for DM1, and VX407 for autosomal dominant polycystic kidney disease. Mark was also intimately involved in the diligence that led to the Alpine acquisition, which brought Povatassisept to Vertex. I look forward to celebrating David's retirement and welcoming Mark as Chief Scientific Officer when the time gets closer. Returning then to R&D highlights, I'll limit my comments to the pipeline programs with the most significant new information to share, specifically cystic fibrosis, pain, type 1 diabetes, and the renal programs.

Starting with cystic fibrosis, as of July, we've gained approval for Eliptreq in the U.S., UK, EU, and Canada. We've also secured reimbursement for Eliptreq in England, and we'll add Ireland shortly. Patients in Germany and Denmark already have reimbursed access due to existing agreements and provisions. Across other EU member nations and Canada, we're working with reimbursement bodies to secure access for eligible patients as quickly as possible. As we continue to expand our existing CFTR modulator portfolio to younger age groups, we also continue to develop new CFTR regimens with the aim of reaching our longstanding objective of bringing most, if not all, people with cystic fibrosis to normal levels of CFTR function. Our next Gen 3.0, or NG 3.0 regimen, is next on deck.

The backbone of the NG 3.0 combination is VX828, the most efficacious CFTR corrector that we have ever studied in vitro and brought to the clinic. We are nearing completion of the Healthy Volunteer Study, and we remain on track to initiate a cohort of people with cystic fibrosis with the VX828 regimen before the end of this year. Finally, in cystic fibrosis, on VX-522, I am pleased to note that the Data Safety Monitoring Committee has completed its review and has endorsed restarting the trial. We're now in the process of working to resume dosing in the MAD portion of the Phase 1-2 for the 5,000 or so patients who cannot benefit from our CFTR modulators and expect to do so in the near term. Now shifting to pain.

First, in peripheral neuropathic pain, or PNP, we had a productive end of Phase 2 meeting with the FDA on our PNP program. While a broad PNP label remains our goal, at this time, the FDA does not see a path to a broad indication. As such, we will not be initiating an ELISAR trial at present. Instead, in light of the discussions and clear agreement with the FDA regarding approval requirements for diabetic peripheral neuropathy, or DPN, we will begin a second DPN Phase 3 study shortly in order to secure DPN as our first PNP indication for Cecetragine. Recall, we have Breakthrough Therapy designation for the DPN indication.

Also note that our first Phase 3 study of Cecetragine in DPN is already well underway, and with the near-term initiation of the second DPN study, our goal is to complete enrollment of both of these trials by the end of 2026. We look forward to working with the agency to secure DPN as our first PNP indication, to expand the indication over time, and to continue to discuss a potential pathway to a broad PNP label. Turning now to acute pain and VX993, another NAV 1.8 inhibitor. This afternoon, we shared top-line results from the Phase 2 trial of this molecule in the post-bunionectomy setting. To recap, as part of our serial innovation strategy, we developed VX993 with three main goals. First, to have an IV option. Second, to provide additional NAV 1.8 inhibitor candidates for potential use as co-formulation with future NAV 1.7 inhibitors.

Third, to further refine dose-response relationships, including whether higher clinical exposure might result in greater clinical efficacy. Focusing on this last point of efficacy, based on the predicted clinical potency and exposure of 993, we powered the Phase 2 trial with the goal of detecting a treatment effect higher than previously achieved. This Phase 2 trial included a placebo group, three VX993 dosage arms, and a hydrocodone reference arm. The primary endpoint was SPID 48 compared to placebo. The results showed that VX993 was safe and well tolerated, with no related SAEs and an overall profile consistent with the placebo arm. The placebo effect was well controlled, and desired 993 exposures were achieved with adequate separation between doses. On efficacy, VX993 did not meet the primary endpoint and did not show statistical significance at the 0.05 level.

The SPID 48 treatment effect was similar at both the mid and high doses, and both were numerically better versus placebo. The outcome of the study, combined with the totality of evidence from our preclinical models and previous NAV 1.8 inhibitor clinical studies in acute pain, suggests we are at the high end of the NAV 1.8 dose response curve for acute pain in the post-bunionectomy setting. As such, we do not plan to advance VX993 as monotherapy in acute pain because we do not expect that it will be superior to our NAV 1.8 inhibitors. We do plan to complete the ongoing VX993 study of diabetic peripheral neuropathy to further define the exposure-response relationship and maximal efficacy of NAV 1.8 inhibitors in this chronic pain indication. To close out on pain, a quick word on our NAV 1.7 inhibitor program.

We're very encouraged by strong preclinical progress in this program and look forward to advancing candidates for use alone or in combination with NAV 1.8 inhibitors. Transitioning now to type 1 diabetes. ZomylaCel will soon complete enrollment in dosing of its pivotal study, positioning us for global regulatory submissions in 2026, if the data are supportive. Recall, we expect about 60,000 severe type 1 diabetic patients may potentially benefit from this first ZomylaCel submission. In June, at the ADA meeting and concurrently in the New England Journal of Medicine, positive data for ZomylaCel in type 1 diabetes were presented that continue to demonstrate this cell therapy's transformative potential.

All 12 patients with at least one year of follow-up who received a full dose of ZomylaCel as a single infusion achieved ADA-recommended target hemoglobin A1c levels less than 7%, freedom from severe hypoglycemic events during the evaluation period, and greater than 70% time in range. Remarkably, 10 of the 12 patients at 12 months were insulin-free, a testament to the potential transformative benefit and durability of this therapy. We also continue to make preclinical progress on our approaches to cloak the same VX880 cells from the immune system, including improved immunosuppressive regimens, gene editing to produce hypoimmune islet cells, and novel immunoprotection to encapsulate these cells. We look forward to updating you as these programs advance. Finally, a few updates on our kidney portfolio, which now has clinical stage programs in four diseases: IgA nephropathy, APOL1-mediated kidney disease, primary membranous nephropathy, and autosomal dominant polycystic kidney disease.

Starting with Povatassisept, a number of autoimmune diseases are driven by uncontrolled B cells. By controlling B cells, Povatassisept is designed to restore immune balance for patients and holds the potential to have transformative benefit across multiple disease states. Povatassisept was specifically engineered for better tissue penetration and to deliver optimized, targeted dual inhibition of the BAFF and APRIL cytokines, which both play a key role in the pathogenesis of B cell-mediated autoimmune diseases. First up for Povatassisept is IgA nephropathy. We disclosed previously that we completed enrollment of the interim analysis cohort in the Rainier Phase 3 trial. Today, we are pleased to share that we are on track to complete enrollment of the full Rainier study by the end of this year.

With regard to the interim analysis cohort, once this group completes 36 weeks of treatment, we will conduct the interim analysis and, if positive, will file for potential accelerated approval in the U.S. in the first half of 2026. To close out on IgA nephropathy, studies to support the launch of Povatassisept for at-home self-administration with a subcutaneous autoinjector are also well underway. Next, and consistent with this pipeline and product potential, the second disease state where we believe Povatassisept can provide B cell control is primary membranous nephropathy. Based on strong emerging data from the RUBY 3 study, we completed our end of Phase 2 meeting with the FDA and reached agreement on a Phase 2/3 adaptive study for traditional approval of Povatassisept versus standard of care, with the primary endpoint of complete remission at 72 weeks. This Phase 2/3 study will begin later this year.

We have prioritized additional diseases in which we believe Povatassisept also holds best-in-class promise. Based on emerging data, potential patient impact, the treatment landscape, and commercial opportunity, the next two autoimmune diseases in focus for us are generalized myasthenia gravis and warm autoimmune hemolytic anemia, or WAHA. To summarize, our current priority disease areas are IgA nephropathy, primary membranous nephropathy, generalized myasthenia gravis, and WAHA, and we are deprioritizing other indications at this time. Next, on enaciplin for APOL1-mediated kidney disease, we remain on track to complete enrollment in the interim analysis cohort of the Amplitude pivotal trial in primary AMKD this year. Of note, while we are able to enroll more adolescent patients, we have hit an important milestone in this study, where the target number of 10 to 17-year-old AMKD patients has now been achieved.

After completing enrollment in the IA cohort, these patients will be followed for 48 weeks of treatment, at which point we will conduct the interim analysis and, if positive, we'll be poised to file for potential accelerated approval in the U.S. The Amplified study, a Phase 2 proof of concept study in patients with AMKD and comorbidities, including type 2 diabetes, is also underway, and this trial is on track to complete enrollment by the end of 2025. To close on our kidney pipeline is VX407 for autosomal dominant polycystic kidney disease, a first-in-class small molecule protein folding corrector that is designed to treat the underlying cause of autosomal dominant polycystic kidney disease by restoring PC1 protein function, thereby reducing total kidney volume and preventing progression to kidney failure.

As a reminder, there are approximately 300,000 patients with autosomal dominant polycystic kidney disease, and there are no approved therapies that treat the underlying cause of this disease. We believe about 10% of patients with autosomal dominant polycystic kidney disease may be eligible for treatment with VX407. This quarter, we'll begin the VX407 proof of concept trial, which is a 52-week single-arm study in 24 patients that will evaluate the efficacy of VX407 as measured by height-adjusted total kidney volume. In closing, Vertex Pharmaceuticals has multiple Phase 3 programs well underway that are poised for accelerated or traditional approval. These trials have either already completed enrollment or are on track to do so in 2025.

They each serve a disease with high unmet need, and they've secured multiple regulatory designations, including FastTrack, Breakthrough Therapy, Regenerative Medicine, or RMAT, PRIME, amongst others, all of which positions us for multiple regulatory submissions in 2026 and early 2027, with potential approvals and launches to follow. Accordingly, as we drive to achieve our R&D milestones, we're executing on the concurrent work of preparing for commercialization of these potential launches. With that, I'll now turn over the call to Duncan for a commercial update.

Speaker 3

Thanks very much, Reshma. I will focus my comments tonight on the CF franchise, including the launch of Eliptreq in the U.S., the continuing global launch of KASGEVI, and the U.S. launch of Jurnavix in moderate to severe acute pain. Starting with CF, our CF franchise continues to deliver strong results as we grow the number of eligible patients taking our CFTR modulators. We continue to make progress with younger patients, patients with rare mutations, and patients in new geographies. The overall market outlook is also supported by the fact that patients are living longer. Now turning to the U.S. launch of Eliptreq, our fifth therapy approved to treat the underlying cause of CF. We believe Eliptreq is the best CFTR modulator available for eligible patients.

As we've discussed on prior calls, versus TRIKAFTA, Eliptreq provides further improvements in CFTR function, as measured by sweat chloride, is indicated for additional mutations not covered by the TRIKAFTA label, and offers the convenience of once-daily dosing. In the U.S., the early launch of Eliptreq is progressing well across all patient groups. We have seen particularly rapid uptake in those patients who are naive to CFTR modulators and thus newly eligible for Eliptreq, as well as those who previously discontinued one of our other CFTR modulators. For patients currently on TRIKAFTA, many have been on therapy for multiple years, have experienced incredible clinical benefit, and therefore have considerable brand loyalty.

In this context, the pace of transitions is steady as these patients continue their conversations with physicians and make decisions that balance the short-term logistics of augmented liver monitoring with Eliptreq against a lifetime of potential benefits, including greater CFTR protein function and once-daily dosing. Overall, we're very pleased with the reports of Eliptreq clinical success that physicians and patients are sharing, whether they were naive to a CFTR modulator, are returning to therapy, or have recently transitioned from TRIKAFTA. We continue to expect the majority of patients who are currently on CFTR modulator therapy will transition to Eliptreq over time, given its multiple benefits. We're also now in the process of launching Eliptreq in England, following our recent reimbursement agreement with NHS England, as well as in Germany and Denmark. Transitioning to KASGEVI, our transformative one-time treatment for patients with sickle cell disease and beta thalassemia.

The KASGEVI launch is building momentum, and we're pleased with the progress we're making in 2025, as well as the growth it positions us for in 2026. In quarter two, we've seen an acceleration across the board in patient initiations, cell collections, and infusions. This progress is a reflection of the foundational work initiated in 2024 to build our ATC network, expand our geographic footprint to include the Middle East, and secure reimbursement for KASGEVI worldwide. Regarding reimbursement, 10 countries now provide access to KASGEVI, including the U.S. and several European and Middle Eastern countries. In terms of our KASGEVI launch metrics, I'm pleased to report that since launch and through the end of quarter two, 2025, firstly, we have met our authorized treatment center goal, with more than 75 ATCs now activated globally.

We are now dosing patients with sickle cell disease, or TDT, in multiple regions, including the Middle East, Europe, and the U.S. Secondly, nearly 250 patients have been referred by their physicians to an ATC to initiate the treatment process. Approximately 115 patients have had their first cell collections, including 35 first cell collections in quarter two, 2025. Finally, a total of 29 patients have completed their treatment journey and received their infusions of KASGEVI-edited cells, including 16 patients in the second quarter of 2025. Now shifting to the launch of Jurnavix in moderate to severe acute pain. Jurnavix received FDA approval on January 30 and has been available in-channel since March. We continue to see a very positive reaction to this novel, non-opioid option for the treatment of moderate to severe acute pain.

We're pleased with the rapid pace of payer coverage, P&T committee reviews, formulary adoption, breadth of usage, and hospital uptake. We're also very encouraged by the broad range of positive Jurnavix experiences reported by both physicians and patients. I'll detail several key elements of our ongoing launch. One, we continue to make great progress with payers, which is a testament to their appreciation for the Jurnavix clinical profile and the importance of offering a novel, non-opioid option in the treatment of acute pain. As of mid-July, across commercial and government payers, approximately 150 million lives, or roughly half of all lives covered in the U.S., have reimbursed access to Jurnavix. With commercial payers, our negotiations continue to progress very favorably. We recently reached a formal coverage agreement with a second large national pharmacy benefit manager to make Jurnavix available to their customers, representing an incremental 22 million commercial lives.

As a result, we now have formal coverage from two of the three large national PBMs and anticipate adding the third before year-end. In addition, we now have national agreements in place with the two largest hospital group purchasing organizations to make Jurnavix available to acute pain patients in their network member hospitals. In Medicare, we continue to engage with plans to secure coverage. For Medicaid patients, through mid-July, we added six state plans since our quarter one earnings call for a total of 16 states, with legislation that ensures access is available without prior authorization or step-edit requirements. We continue to expect the coverage across commercial, Medicare, and Medicaid payers will continue to expand through 2025. Two, we are prioritizing the P&T committees at approximately 150 healthcare systems and roughly 2,000 hospitals. The majority of these 2,000 hospitals ladder up to one of the 150 healthcare systems.

Last quarter, we disclosed that more than a third of these target healthcare systems had taken steps to initiate the P&T review of Jurnavix. I'm very happy to report that over a third of these priority target healthcare systems have now added Jurnavix to their formularies, protocols, or order sets, and many more have Jurnavix under active consideration. In addition, at the hospital level, about 500 of the 2,000 hospitals we're targeting have also added Jurnavix to their formularies, protocols, or order sets. Three, prescribing patterns are encouraging for the near and long-term outlook for Jurnavix, with excellent breadth of usage to date across a wide range of inpatient and outpatient settings, pain conditions, and physician specialties, in line with the broad label. Lastly, more than 110,000 prescriptions were successfully filled for Jurnavix across the retail and hospital settings as of mid-July.

We remain tremendously excited about our opportunity to transform the treatment of pain and will continue to invest as we see warranted. Given the rapid contracting and formulary progress we have made, as well as the prescriber and patient feedback, we believe now is the time to make additional investments in our commercial activities behind Jurnavix. This includes additional marketing activities in Q3, as well as field support, as we continue to secure more access and hospital formulary wins over the coming months. We have high confidence that we are in the early days of creating another multi-billion dollar franchise for Vertex Pharmaceuticals.

To conclude, we are well on our way to establishing a new era of commercial diversification at Vertex Pharmaceuticals as we execute on multiple launches in CF, sickle cell disease, TDT, and acute pain, and begin the build-out for the next wave of launches in a number of disease areas with high unmet need. We look forward to bringing our transformative therapies to millions more patients and to keeping you updated on our progress. I'll now turn the call over to Charlie to review the financials.

Speaker 0

Thanks, Duncan. Vertex's Q2 2025 revenue growth accelerated as expected, and our results demonstrate our consistent strong performance and attractive growth profile. Second quarter 2025 total revenue increased 12% year-over-year to $2.96 billion. U.S. revenue growth of 14% year-over-year was driven in CF by ongoing patient demand and favorable gross-to-net versus prior year, and also included contributions from KASGEVI, Jurnavix, and collaboration revenue. As expected, revenue outside the U.S. rebounded this quarter and was up 8% year-on-year, including healthy CF growth and a contribution from KASGEVI. Included in total revenue and the regional growth rates was $30 million of KASGEVI revenue, $12 million from Jurnavix, and $21 million of collaboration revenue. Second quarter 2025 combined non-GAAP R&D, acquired IP R&D, and SG&A expenses were $1.24 billion compared to $5.43 billion in the second quarter of 2024.

Excluding Alpine-related acquired IP R&D, non-GAAP operating expenses increased 24% year-on-year, driven primarily by the continued advancement of our broad pipeline, including clinical trials for IgA nephropathy, pain, and type 1 diabetes, as well as the build-out of commercial capabilities in pain. Second quarter 2025 acquired IP R&D expenses were $2 million compared to $4.4 billion in the second quarter of 2024, which included the acquisition of Alpine Immune Sciences. Second quarter 2025 non-GAAP operating income was $1.33 billion compared to a non-GAAP operating loss of $3.15 billion in the second quarter of 2024. Second quarter 2025 non-GAAP effective tax rate was 19.4%. Second quarter 2025 net income was $1.2 billion compared to a net loss of $3.3 billion in Q2 of 2024.

Second quarter 2025 non-GAAP earnings per share were $4.52 compared to a loss per share of $12.83 in the second quarter of 2024, primarily due to higher revenue and disciplined operating spend, as well as the impact of the Alpine acquired IP R&D expense in the second quarter of 2024. We ended the quarter with $12 billion in cash and investments after deploying approximately $395 million to repurchase more than 865,000 shares in the second quarter. In May, we announced a new $4 billion share repurchase program, building upon our existing $3 billion share repurchase program, which was authorized in 2023 and had $570 million remaining as of June 30th. Our priorities for cash deployment remain unchanged, innovation and growth fueled by investment, both internal and external, followed by share repurchases.

Now switching to guidance, we are reiterating all elements of our financial guidance, including our 2025 total revenue guidance range of $11.85 to $12 billion, representing growth of approximately 8% at the midpoint at current exchange rates. This outlook reflects our expectation for continued growth from our portfolio of CF medicines, including the ongoing launch of Eliptreq in the U.S., followed by other regions later this year. Recall that Eliptreq carries a meaningfully lower royalty burden than TRIKAFTA and extends our composition of matter patent protection to 2039. Revenue guidance also includes KASGEVI revenue as we treat more patients in geographies where we have secured regulatory approval and reimbursement. Given the duration of the patient journey, we have high visibility into KASGEVI revenue.

As patient initiations and cell collections continue to ramp, we expect commensurate increases in infusions, but note that because the timing of infusions is predicated on patient scheduling choices, there may be revenue variability from quarter to quarter. In addition, guidance reflects additional revenue contribution from Jurnavix in the second half due to gains in sustainable payer coverage. Recently announced positive coverage decisions are included in our revenue guidance. Overall, we are confident in our ability to deliver another strong year of revenue growth for Vertex Pharmaceuticals in 2025. We are also reiterating guidance for combined non-GAAP R&D, acquired IP R&D, and SG&A expenses in a range of $4.9 to $5 billion for the full year 2025, though we expect to be at the high end of this guidance range. Consistent with prior commentary, this range includes approximately $100 million in projected IP R&D charges.

We will continue to invest a majority of our operating expenses into R&D, given the momentum in our multiple mid and late-stage clinical development programs with four and soon to be five Phase 3 studies ongoing and multiple Phase 2s. In addition, given progress with respect to reimbursement and access and the size of the opportunity for Jurnavix, as Duncan mentioned, we are increasing our investment in marketing and commercial initiatives to support the launch in the second half of this year. We expect an immaterial cost impact from tariffs in 2025, based on what we know today, due to our significant U.S. presence and our geographically diverse supply chain. Of course, given the dynamic nature of the tariff situation, including the potential for sector-specific tariffs, this outlook is subject to change.

Finally, on guidance, there is no change to our expected full-year 2025 non-GAAP effective tax rate in the range of 20.5% to 21.5%, which implies a higher effective tax rate in the second half of the year. We do not anticipate recent tax legislation to have a material impact on our expected effective tax rate in 2025. In closing, Vertex Pharmaceuticals yet again delivered strong results in Q2 2025, growing and diversifying our revenue with the launch of two new products in the U.S., Eliptreq and Jurnavix, continuing the global launch of KASGEVI and making significant pipeline progress across the portfolio. These and other anticipated milestones of continued progress in multiple disease areas are detailed on slide 17. We look forward to updating you on our progress on future calls. I'll now ask Susie to begin the Q&A. We will now begin the question and answer session.

To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. We ask that you please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble our roster. Your first question today will come from Jessica Fye with JPMorgan. Please go ahead.

Hey guys, good afternoon. Thanks for taking the questions. I had a couple on pain. For the additional commercial efforts behind Jurnavix, was that increase always planned as coverage came into place, or is that a reaction to what you're seeing as you kind of continue the launch so far? For Cecetragine in DPN, I think you said you'd complete enrollment in both Phase 3s by the end of 2026. I'm just curious, can we expect enrollment completion for the first Phase 3 trial much sooner than that? Thank you.

Speaker 7

Hey Jess, this is Reshma. Let me split that into two parts. I'll take the second part first, and then I'll ask Duncan to comment. Yes, I think that the first DPN might well enroll ahead of the second DPN because it started ahead of time, and the enrollment is going very well. I will ask Duncan to comment on Jurnavix. As you know, it's really important to secure payer coverage as we ramp commercial efforts behind that. Duncan, any more comments on how you're thinking about commercialization?

Speaker 3

Sure, and thank you for the question, Jess. Obviously, we're now about five months or so into the launch, and I'd say there's sort of three factors that are really driving our thinking. Firstly, as Reshma just alluded to, we're very pleased with the progress we're making with payer coverage and hospital formularies, particularly considering how lengthy P&T processes can be. Secondly, we're receiving incredibly positive feedback from physicians and patients on how well Jurnavix is working for them clinically. Thirdly, we've seen both in the face-to-face arena with our sales organization, as well as in the digital arena, we've seen Jurnavix to be incredibly promotionally responsive. Based on those three factors, yes, we are thinking that now is the right time to augment our spend in marketing and field support.

Although I would add the last comment that we do anticipate that field support would still sit within the specialty model.

Thank you.

Speaker 0

Your next question today will come from Salveen Richter with Goldman Sachs. Please go ahead.

Good afternoon. Thanks for taking my question. With regard to the strategy in pain here, can you help us understand now that you won't be moving forward with a broad P&P label today, maybe what your plan is around running these DPN trials and whether it's taking next-generation drugs or so forth to move into LSR or any of the other smaller indications like small fiber neuropathy or some of the others. Secondly, in light of the Jurnavix launch that's progressing here, maybe help us understand how to think about gross-to-net over the balance of the year and beyond. Thank you.

Speaker 7

Sure thing. Salveen, let me take those questions. With regard to our plans in P&P, it remains our goal to get a broad P&P indication. Our conversations with the FDA at this recent meeting were very productive. They were open-minded. They were very open to ongoing discussions, but it was equally clear that at this time they do not see a path to P&P. That's just not where they are. However, we have a clear agreement on DPN, so the first order of business for us is to secure the DPN indication, hence the start of the second DPN study. We can broaden that indication, and we had really good conversations of how that could occur. As you point out, small fiber neuropathy, that could be one broadening of the label. It could be by way of mono or polyneuropathies.

It could be by way of distal or proximal, and there are certainly ways in which we can augment that label. The real big prize for us remains broad P&P, and we think that the way to get there might well be with ongoing conversations with the agency and with our NAV 1.7 plus NAV 1.8 portfolio. What I would say is here and now secure DPN, work to broaden the indication, and might be one step at a time. SFN is one example of a next indication, and then broaden all the way to P&P as we are able to have more conversations with the agency. Any comments that you want to add to gross-to-net, Charlie?

Speaker 0

Yes, I mean on gross-to-net, obviously it's elevated in the early months of the launch. We had said all along that volume would ramp up ahead of revenue with the most significant revenue contribution in the second half of the year. Again, the elevated gross-to-net in the early days is a result of our patient support programs. As we continue to expand our coverage, those programs will start to fall away. Gross-to-net will normalize over the course of the year, but beyond that, I'm not going to provide further detail. Your next question today will come from Jeff Maycomb with Citibank. Please go ahead.

Good afternoon, guys. Thanks for the question. I just have a couple also on pain. Reshma, I want to ask you about the implications of the FDA feedback and the 993 data. The first question is, could the strategy in chronic pain evolve to now include broader indications such as joint pain, et cetera, in other words, like outside of P&P? On 993, do you think it makes sense to look at more of a PAN 1.8, 1.7 mechanism, at least involving maybe multiple isoforms just to try to maximize the treatment effect? I wasn't sure what the strategy is there from a pipeline perspective. Thank you.

Speaker 7

Sure thing. Let me do chronic pain first, and then we'll come back to 993. Jeff, on chronic pain, I think the approach is, as we just described for the previous question, DPN first, then add on single indications, but work with the agency to get to broad P&P. We've had these discussions. They've left us with some questions. We need to talk with each other some more. On musculoskeletal, which is, I think, the point you were raising, I do think that this class of compounds can work based on the data that we saw, for example, with VX150 and osteoarthritic pain. We're still very focused, first and foremost, on acute and then neuropathic. We will get to the musculoskeletal, but I don't see that in the highest priorities.

On 993 and what the plan is with regard to acute pain, the big next steps for us on acute pain, obviously, launch Jurnavix. We have our IV formulation with the 993 version, and we now have two potential molecules that could be used with the NAV 1.7 molecule that's making very good progress on the bench. I would say the big next thing to look for us to do in acute pain is combination NAV 1.7/1.8. Remember, preclinically, what we see is a synergistic, not additive effect, and that's going to be really important. I hope that helps.

Thank you.

Sure thing.

Speaker 0

Your next question today will come from Ellie Merrill with UBS. Please go ahead.

Hey guys, thanks so much for taking the question. Just two on Jurnavix for me. First, can you comment a little bit more on how the progress in the real-world evidence generation is going at some of these key health systems and how you expect that to impact the cadence of P&T formulary placement? Then just second, on gross-to-net, I know you mentioned that there's been use of patient support programs initially in the launch. What should we expect going forward in terms of the use of the patient support programs as we think about gross-to-net from here? Thanks.

Speaker 7

You bet. Ellie, let me take the first half of your question, and I'll ask Duncan to talk to you a little bit about the PFP patient support programs. Formulary coverage, Ellie, is going really well with the hospitals and with the integrated delivery networks, and some extremely, some very large, prominent programs with lots of procedures have added Jurnavix, frankly, faster than I would have expected, given how long P&T committees normally take. With regard to evidence generation, I'll speak to a couple of studies that we're running in terms of lifecycle management. We have a Phase 4 trial in a variety of, let's call it, plastic surgery indications, and another one in a variety of orthopedic conditions. The emerging data look really good, not only in terms of pain control, but also in terms of reducing opioid use and having patients go through an opioid-free journey.

I expect that you're going to see us presenting those papers in upcoming conferences. Duncan, can I ask you to make a couple of comments on the PFP program?

Speaker 3

Sure. Just to step back, we put the PFP program in place in order to provide a seamless experience for patients in advance of payer coverage. As we noted in our prepared remarks and as Charlie Wagner commented on a couple of minutes ago, as we see our coverage with payers increasing over the course of this year, that program becomes unnecessary, and essentially we will retire that program as we see national coverage. Obviously, we're not quite at that point yet, but that is the plan by the end of the year, to conclude that program. As Charlie Wagner alluded to earlier, I don't think we're providing specific gross-to-net guidance with regard to that program.

Got it. Thanks.

Speaker 0

Your next question today will come from Tazin Ahmed with Bank of America. Please go ahead.

Hi, guys. Maybe to switch the subject up a little bit, can I ask a couple on COBI? Is it your plan to launch with the autoinjector when you go live on IgA nephropathy? In terms of the indications that you're prioritizing on a go-forward basis, you've included generalized myasthenia gravis. I'm just curious about where you think you could particularly differentiate, given that it seems like that's a pretty crowded market already. Thanks.

Speaker 7

Yeah, Tazin, on COBI, you have it exactly right. We plan to launch in the IgA nephropathy indication, which of course is the first indication, with the autoinjector. Just to confirm, GMG, you mean myasthenia, not membranous?

Yes, that's correct.

Yeah. You know, the myasthenia indication is very exciting for us, and it is one of the ones that we've prioritized. Maybe four lines of reasoning to share with you. The first is there remains very high unmet need in this area. We don't have any medicines that target the underlying cause of disease. As you know, some of the medicines being used need to be cycled on and cycled off. In the off period, that gives the opportunity for the autoantibodies to redevelop and continue to cause damage at the junction. The COBI mechanism is a dual APOL1 inhibition, i.e., it dampens down the B cells, both the earlier B cells and the plasma cells, which is, of course, the underlying cause of myasthenia. The second is emerging data in this class is very appealing and points to a strong treatment effect.

The third is that I expect that the regulatory pathway is going to be an efficient development pathway. The last is, as you put all of this together and you think about the underlying cause of disease, high unmet need, the emerging data from others in this class, and then you think about the fact that COBI was specifically engineered to have best-in-class properties in terms of potency, binding affinity, as well as tissue distribution, this is why we're so excited about myasthenia.

Speaker 0

Your next question today will come from Evan Sagerman with BMO Capital Markets. Please go ahead.

Hi guys. Thank you so much for taking my question. Another follow-up kind of on the pipeline and a product for COBI. Can you kind of walk me through the rationale for prioritizing the indications such as generalized myasthenia gravis, warm autoimmune hemolytic anemia, of course IgA nephropathy? Was it clinical data, early data, kind of preclinically, or commercial considerations that drove these decisions?

Speaker 7

Yeah. Evan, this is Reshma. Let me take that one for you. All of the above. As you know, RUBY 3 and RUBY 4 give us good insight into a basket of renal indications and a basket of heme indications. We have emerging data, for example, in membranous, which points us to best-in-class potential in that disease, which has no other treatment. It gives us an indication of best-in-class potential for WAHA or warm autoimmune hemolytic anemia. It is indeed emerging data from our own data sets. Sometimes, as in the case with myasthenia, it's emerging data from the class, taking into account that COBI has this benefit of being engineered to be best-in-class. There is the emerging data. There is also consideration given what exists in the marketplace and whether it treats the underlying cause of disease and whether we have a transformative medicine.

It certainly takes into account our ability to be successful commercially. All of those have gotten into us prioritizing IgA nephropathy, membranous, myasthenia, and WAHA. Just to close out on that, prioritizing for myasthenia means we are ready to go to the agency to have our discussion on what the pivotal program looks like. Prioritizing for WAHA means we are awaiting a final data set that we expect towards the end of this year. I hope that helps.

Great. Thank you.

You bet.

Speaker 0

Your next question today will come from Divya Rao with Cowen & Company. Please go ahead.

Hi, this is Divya on for Phil. I just had two questions on Jurnavix. One is just a little bit technical, but I was curious for patients that are getting free samples, if they are to show up at a retail pharmacy, I was curious if you could walk me through the protocol for how they actually are able to secure the free drug. The second is I was curious if you could comment on the split of Jurnavix scripts and how much are coming from maybe retail pharmacies versus hospitals and any insights into the type of physicians prescribing Jurnavix. Thank you.

Speaker 7

You bet. Duncan, can I ask you to comment first, maybe quickly, on how free samples work, and then a little bit more detail on the physician types and split between hospital and retail?

Speaker 3

Absolutely. Thank you for the question. In terms of the free samples, these are provided through the patient's physician. They're supplied to the patient by the physician, and they do not show up in the retail data. In terms of the split of retail versus hospital prescriptions, about 65% of the prescriptions are in the weekly IQVIA data that you see for retail prescriptions. The remainder are in the hospital space. In terms of the types of physicians using Jurnavix, it is a broad range. About 15,000 physicians are now prescribing Jurnavix. We're seeing many more physicians, hundreds of physicians, come on each week. The types of physicians are general surgeons, plastic surgeons, orthopedic surgeons, dentists, and anesthesiologists. They are prescribing for a broad range of treatments consistent with the label, everything from sprains and strains through reconstructive surgery to total knee replacements.

Speaker 0

Your next question today will come from David Reisinger with LeRoink Partners. Please go ahead.

Yes, thanks very much. I have two questions, please. First, on Jurnavix, I was wondering if you could comment on the number of commercial lives with unrestricted access. Second, with respect to VX828, could you please provide a little bit more color on your expectations for the profile of this candidate? Thanks very much.

Speaker 7

Sure thing, Dave. Let me take the A2A question, and then I'll ask Duncan to comment on Jurnavix. A28, as I said in my prepared remarks, it is the most efficacious CFTR corrector that we've ever studied in vitro that we've advanced into the clinic. I expect that it is going to have most, if not all, patients get to carrier levels of sweat chloride. I expect a good safety profile. I expect a good DDI profile based on the preclinical data. To wrap up on A28, we do continue to track towards initiating the CF cohort before the end of this year. Duncan, Jurnavix.

Speaker 3

Thank you for the question, David. Obviously, we are extremely pleased with $150 million lives covered in just a few months. To get to the answer to your question, 84 million of those lives are unrestricted. I can tell you that for every single contract we have negotiated to date, every single one of those is for unrestricted access, which we define, as you know, as no prior authorization or step edit. What that means, of course, is that based on high demand for Jurnavix, there are, of course, some plans that have put in place coverage of Jurnavix in advance of any agreement with us. In those situations, there can be a prior authorization or step edit. We will be working to reduce that ratio over the balance of the year.

At this point, $150 million lives covered, two out of the three PBMs are covering, and we're working with the third, as you'd expect. Every single agreement we have done is for unrestricted access.

Speaker 0

Your next question comes from William Pickering with Bernstein. Please go ahead.

Hi, thank you very much for taking my question. Just a couple from me. One was on the NO PAIN Act. I was a little bit surprised to see that Jurnavix was not included in the draft rule that was published, I guess it was about a month ago, and any kind of concerns or kind of process to get that on the list for 2026. Second was with KASGEVI. Just what are you seeing in terms of the cycle time from cell collection to infusion, and do you see potential for that to accelerate going forward? Thank you.

Speaker 7

Sure thing. Let's do KASGEVI first. As you heard Duncan talk to in his prepared remarks, we are seeing an acceleration in the momentum, and part of that is simply having patients at various points in their journey. There are a lot more patients who've now had cells collected and are ready to be infused, and that's what we're looking forward to in the back half of this year. With regard to cycle time, yes, I do think that there is opportunity for improvement. I'd say, I think we said it was going to be somewhere around four to five months for the full process, and that's kind of where we see it. Of course, it makes a difference if the patient is a TDT patient or if the patient is a sickle cell disease patient. It's easier for cell collection with our TDT patients.

We have plans in place to ensure that the cycle time comes down as we make progress overall. On the NO PAIN Act, you know that the draft proposal included some language that says that because Jurnavix is not specifically indicated for post-surgical pain, it was not included on the draft list. Clearly, Jurnavix is indicated for post-surgical pain. Indeed, both Phase 3 RCTs were in post-surgical pain, one in abdominoplasty, one in bunionectomy. I think we're going to be able to get this confusion resolved, and I do expect that Jurnavix will be on the final list, which is due this fall.

Speaker 0

Your next question today will come from Terrence Flynn with Morgan Stanley. Please go ahead.

Great. Thanks so much for taking the question. Just wondering, two questions. The first is on Jurnavix, if you can just confirm if there's any inventory in the second quarter that we need to think about as we do the math on a dollar per script basis. On the 993 Phase 2 data, just wondering if you think you need to make any tweaks to the preclinical models at all here, given that data, and particularly as you think about the NAV 1.7 assets that you're developing. Thank you.

Terrence, could you just maybe rephrase the first part of your question? We didn't quite get it here.

Sorry. Was there any inventory in 2Q for Jurnavix?

Speaker 7

Terrence, on Jurnavix, you know the buying patterns for hospitals are variable, so we see the normal variability for buying patterns in hospital, but no, no inventory to speak of. On 993, this is a really important question you ask about how did our preclinical models perform. The reason it was really important for us to do the 993 study and go up to the dose levels we did and to ensure that in this study we saw good dose separation between the low, medium, and high dose is exactly to do what you were referencing, to make sure that our models are properly trained. What we saw with 993 coming into the Phase 2 study is a molecule that was predicted to be more potent, a molecule that we could dose higher, and the exposures are very, very high.

Our models would predict this is at the 99.999% to the EC50, so multi, multi, multifold the EC50 levels. What we learned from this is we do indeed get very high exposures, and we do indeed get separation of exposures of the mid and high dose. Nonetheless, the efficacy for the medium and high dose, as you can see in the press release, is about the same, different than low dose, but the same to each other. This is what lets us know that now we are at the very high end of the dose response curve, and we know that this medicine is not likely to be superior to our existing molecules. This is a very important Phase 2 result, and that's why we're pleased to have completed the study and to have gained this information. We are now able to be at the leading edge with our models.

Nick, we'll take one more question, please.

Speaker 0

Your last question today will come from Mohit Bansal with Wells Fargo. Please go ahead.

Great. Thank you very much for taking my question. Just wanted to check in on the most-favored nation and the letters government has sent out here. Given that your exposure to Medicaid, do you see any risk there? I mean, you could be protected because of the orphan disease, but just wanted to make sure it is not on the cards. Thank you.

Speaker 7

Mohit, we have not received a letter. The lines of communication are open. We are able to have good dialogue with D.C., and we're paying close attention and digesting the latest news, but I can confirm that we did not receive a letter.

Got it. Thank you.

Speaker 0

This will conclude our question and answer session, as well as conference call. Thank you all for attending today's presentation. A replay of today's event will be available shortly after the call concludes by dialing 1-877-344-7529.