福泰製藥 (VRTX) 2010 Q3 法說會逐字稿

Good day, and welcome to the Vertex Pharmaceuticals, Inc. third quarter 2010 conference call. Today's conference is being recorded. For today's opening remarks and introductions, I would like to turn the conference over to Mr. Michael Partridge. Please go ahead, sir.

Thank you. Good evening. This is Michael Partridge. Welcome to the Vertex conference call. As we get started, I will review some of the key highlights from our third quarter.

We completed and disclosed top line results from the two remaining Phase III trials of telaprevir-based regimen for the treatment of hepatitis C, ILLUMINATE in genotype-treatment-naive patients, and REALIZE in genotype 1 treatment failure patients. We also completed a convertible debt financing that strengthened our balance sheet. This enabled us to complete the third quarter with approximately $1.2 billion in cash, cash equivalents and marketable securities and allows us to enter 2011, our telaprevir launch year in a strong financial position. And recently we have initiated two important clinical trials.

First, in hepatitis C, we started a 700-patient Phase IIIB study that will evaluate twice daily dosing of telaprevir; and second in cystic fibrosis, we commenced a Phase IIA trial evaluating a combination of our two CFTR modulators, VX-770 and VX-809. Looking ahead, we have a number of important events in the near term. At the AASLD meeting in Boston next week, we will present Phase III ADVANCE and ILLUMINATE data for telaprevir to the medical community. We will complete our rolling NDA submission for telaprevir shortly thereafter.

Beyond hepatitis C, we are also approaching the conclusion of the Phase III registration program of VX-770 and the G551D mutation. We should have data from this program in the first half of 2011. In addition, we expect to receive clinical data from our trial of VX-765 in epilepsy before the end of this year. We anticipate that it will be a busy end to a very exciting year. Following me on today's call will be prepared remarks from Matt Emmens, Nancy Wysenski, Dr. Peter Mueller, and Ian Smith. In addition, Dr. Bob Kaufman is also here with us today and he will take part in Q&A.

Please 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. We will discuss GAAP and non-GAAP financial measures 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 2010 financial press release, which is on our website.

Before I turn the call over to Matt, I would like to remind those of you not attending the ASLD conference that next Monday, November 1st, we expect that we will webcast our presentation to investors and analysts. The presentation will focus on the Phase III registration data for telaprevir. We will be joined at our event by clinical investigators, Professor Stefan Zeuzem and Dr. Andrew Muir. We anticipate the webcast of our presentation will begin at approximately 8:00 p.m. Eastern Time and run for approximately one hour. Thank you. I will now turn the call over to Matt.

Thanks, Michael. Let me get this speaker a little closer here so everybody can hear. Well, in short, we are right where we want to be. We have achieved many and expect to achieve all our major goals that we established for the Company in the year 2010. We now have full data from the Phase III registration program for telaprevir-based therapy in hepatitis C. This will allow us to complete the rolling NDA submission this quarter.

The profile we are establishing for a telaprevir-based therapy supports our plan to achieve and sustain leadership in hepatitis C. We have a regimen that has shown the ability to significantly increase viral cure rates, or SVR, in people with genotype 1 hepatitis C, regardless of their past treatment history. This regimen has also shortened the treatment duration by half for the majority of treatment-naive patients that we tested. Heading into AASLD, we don't see a drug in development anywhere that is better positioned than telaprevir when approved to treat hepatitis C. We're also looking to the future in pursuing novel direct-acting antiviral combinations, and we believe we are well positioned as anyone in the hunt for even better future regimens.

As we announced today, we have completed enrollment in our combination study of telaprevir and VX-222. We have an update to that study, which is perhaps not surprising, that Peter will talk about shortly. Importantly, we expect to see on-treatment data in the first half of 2011. This has also been a year of progress for our drug candidates to treat cystic fibrosis. We are approaching completion of our Phase III registration program for VX-770. We also just announced the start of a very important proof of mechanism trial with VX-770 and VX-809 that targets the most common CF mutation. This trial may help us understand the number of people living with CF that we may be able to treat, if our research and developed plans are successful.

We are well funded with a cash position of more than $1.2 billion. That's a great position to be in to launch our lead drug candidate telaprevir and also to develop projects we have behind it. I want to reiterate something I've said before. What differentiates Vertex is the scale of opportunities that we have in research and development following closely behind the launch of telaprevir. Our goal is to create commercial leadership in multiple disease areas and transform Vertex into a fully capable biopharmaceutical company. In 2011, you'll hear us talk about how we will leverage our planned commercial successes with telaprevir to continue to build our Company.

Right now, we're focused on completing the NDA submission for telaprevir and on ensuring a successful launch. We continue to put significant effort into hiring high-quality commercial leaders to manage the planned launch and future sales of telaprevir. We're creating something that hasn't existed before here at Vertex, and it's very exciting for everyone involved to build something new and something different. We were recently recognized in the Journal of Science as one of the best places to work in the industry, ahead of many of the world's leading pharmaceutical companies. Simply put, it's a great time to be at Vertex. Thank you for your time, and I will now turn the call over to Nancy.

Thanks, Matt. I would like to focus on three important areas today. Firstly, why AASLD is important for us and what we're looking forward to at this conference. Secondly, our view on the evolving hepatitis C market landscape. And thirdly, more detail on our progress building the commercial organization.

So first, to AASLD. As this is a major medical meeting, we're looking forward to the presentations of the ADVANCE and ILLUMINATE data from our Phase III registration program in genotype 1 hepatitis C treatment- naive patients. Additionally, based on the positive feedback we have received on our previously reported top line results from the Phase III REALIZE trial, we believe there will be a high level of interest in the REALIZE data within the context of improved therapies for treatment-failure patients. We expect to have a significant clinical and scientific presence at this meeting. I know this conference is of high interest to investors, and I look forward to seeing you there.

Across all of our Phase III data, we believe that the data at AASLD will show the broad utility that telaprevir-based therapy could have, once approved, in treating people with hepatitis C. We're also planning to meet with and interact with key opinion leaders and investigators who are on the front line of hepatitis C treatment. These discussions should further improve our understanding of the clinical opportunity and challenges in this disease as we finalize our planning for the launch of telaprevir. Right now, we're also closely monitoring activities taking place in the field that may result in public health institutions and government agencies coming together in a concerted effort to identify and treat more hepatitis C patients.

While there are hundreds of thousands of patients already waiting for new treatments, millions more are unaware that they have the disease, which brings me to my second topic-- the hepatitis C market opportunity. At AASLD, we'll be able to take another look at the near-term hepatitis C market potential following recent disclosures in this space. A cursory analysis suggests that telaprevir continues to be well positioned compared to emerging competition. We're also very excited about what our market research is telling us regarding the profile of telaprevir. From physicians, patients, and the published data, we see the potential for telaprevir-based therapy to be a market leader, and through further label expansion studies, we hope to extend its leading presence into the future.

For example, we just announced the start of a study evaluating BID dosing. This is just one of many planned activities to enhance the profile of telaprevir-based regimens. If successful, this trial could likely establish twice-daily dosing of telaprevir prior to the introduction of any competing agent with a similar or more favorable dosing schedule. Before I close, I would like to say a few words about our commercial and medical affairs organization. We're pleased with how these are taking shape. We're building our capability and creating a new field-based model to address current medical needs within hepatitis C.

This model is designed to leverage key expertise from groups across the Company. Commercial sales specialists, managed market personnel, medical science liaisons, medical care liaisons and government affairs to address barriers that could challenge effective treatment of the disease. We believe this approach offers us an advantage as we engage with the medical community in preparation for the anticipated launch of telaprevir. And now, to the further expansion of our commercial organization, we're leveraging the knowledge that we're gaining through the development and prelaunch preparations for telaprevir, and we've also increased our activity on the cystic fibrosis front.

Not only are we preparing for the first set of registration data for VX-770 to come in the first half of next year, we own worldwide rights to our CF compounds; and therefore, we're starting to establish commercial strategies for this program outside of the US. We've begun to recruit key leadership in Europe and Canada to build and manage appropriate plans to address the cystic fibrosis market in these territories. These efforts will build the foundation necessary to harness the opportunities that we believe will exist for VX-770, if approved, as well as our overall cystic fibrosis program. Thanks for your time and attention, and I'll now turn the call over to Peter.

Thank you, Nancy, and good evening, everyone. With my remarks, I will briefly highlight our recent progress in hepatitis C, and spend a little more time on the progress we are making in other pipeline priorities including cystic fibrosis and epilepsy. I'll start with telaprevir in hepatitis C. In line with our plans to submit a rolling NDA, earlier this year we submitted the CMC non-clinical documents, and as of last week, we submitted the first part of the clinical package with all documents for the advanced Phase III trial.

Importantly, we recently concluded also a very successful pre-NDA meeting with the USFDA and with Health Canada as a prelude to our planned submission in Canada. We view our interactions with the FDA and other agencies about the proposed NDA for telaprevir as straightforward and constructive, and we are confident that the submission will include everything that the FDA has requested for their review. We are focused on the completion of the rolling NDA submission with the clinical documents from ILLUMINATE and REALIZE this quarter. Also in hepatitis C, we announced today that we have completed patient recruitment into Phase II combination trial of telaprevir and VX-222, and any remaining patients will be randomized in the coming days. This will enable us to reach our initial target enrollment of 100 patients for the study.

We also announced today that we are modifying this trial and will no longer randomize patients into arm A, the lower-dose-two-drug arm in which patients were dosed with a two drug combination of 100 milligrams of VX-222 and 1125 milligrams of telaprevir twice daily. The decision to stop this arm was based on meeting a predefined stopping rule related to wild breakthrough here in the first four weeks of dosing. Patients already enrolled in our May are being rolled onto pegylated interferon ribavirin therapy. The other two-drug arm, which is evaluating a higher dose of VX-222, namely 400 milligrams twice daily, as well as both of the four drug arms that include telaprevir and VX-222 in combination with pegylated interferon ribavirin are continuing without any modification. To date, no wild breakthrough has been reported in any of these arms.

At the present time, there are a number of patients currently in screening and not yet randomized. These patients will be randomized into one of the remaining three arms of the trial. We continue to expect to obtain on-treatment data from this trial in the first half of 2011 and the first SVR data in the second half of 2011. As Nancy mentioned, our collaborated Tibotec has initiated a Phase IIIB trial to evaluate BID dosing of telaprevir. The trial is expected to enroll approximately 700 genotype 1 treatment-naive people in two telaprevir-based treatment arms and will be conducted in approximately 135 trial sites globally.

Based on advice from regulatory authorities, this trial does not include a control arm of pegylated interferon ribavirin. It will be a non-inferiority drug comparing BID dosing and every eight-hour dosing of telaprevir . We expect SVR data as early as 2012. In closing with hepatitis C, additional progress was made in our HCV/HIV co-infection Phase II trial. We announced today that we have completed enrollment of 60 patients. This trial is evaluating the safety and tolerability of telaprevir-based dosing, alongside several different market-leading drugs for HIV, including Reyataz-based regimen and Atripla. And just before I turn to cystic fibrosis, we are making significant progress in the CMC manufacturing aspect of telaprevir. Our inventory build is on track in anticipation of the launch of telaprevir and we are now manufacturing ready tablets that can be shipped to pharmacies upon approval.

Now, turning to cystic fibrosis. So last week, our nonclinical, clinical, and market research programs were highlighted at the North American Cystic Fibrosis Conference. Specifically, data from VX-809, our Phase II corrector were presented, as well as invitro data of 770 that support future evaluation of VX-770 monotherapy in CF patients with a variety of CFDR dating mutations similar to that of the G551D mutation, which are currently evaluated in our registration program. There continue to be very strong support and enthusiasm from the CF community about the potential for CFDR modulators to address the underlying defective protein responsible for this disease.

Now to our Phase III registration program for 770. We remain on track to receive data from the program in people with the G551D mutation in the first half of 2011, and we expect to submit an NDA for VX-770 in the second half of 2011. This submission will be supported by recent safety data from the 16-week dosing period in the discover trial in patients with the Delta 548 mutation, as well as the ongoing Phase III STRIVE and ENVISION trials in patients with the G551D mutation.

With the rapid progress we have made in these trials, we are now ramping up our CMC manufacturing efforts. We are also establishing regulatory strategies for VX-770 outside the US, since this is a disease area where we expect to commercialize globally. We see additional opportunities to potentially expand our patient reach in our CF program and initiated last week a Phase IIA proof of mechanism trial, evaluating combination regimens of our corrector compound VX-809 and VX-770, our potentiator compound. This is an important trial to help us understand the value that the combination of CFDR modulators may have in addressing the Delta 548 mutation, the most prevalent mutation affecting more than 85% of the CF population.

We are also anticipating data from the VX-765 Phase II proof-of-concept trials in epilepsy now. As a caspase 1 inhibitor, VX-765 inhibits the production of IL-1beta, a major driver of inflammatory responses. In preclinical studies, this compound showed reduced seizure frequency in both acute and chronic models of epilepsy, and the proof of concept study will be completed soon. And we expect to have clinical results, including safety and seizure frequency data before the end of the year.

We are also making progress with enrollment in the ongoing Phase II proof-of-concept trial of VX-509, our JAK3 inhibitor in rheumatoid arthritis. We expect interim data from this trial in 2011. As you can hear, we have had a tremendously productive year, as we continue to build a balanced, yet focused clinical pipeline of opportunities. Now, I want to thank you for your attention and turn the call over to

Thanks, Peter, and good evening to everybody. Vertex is financially strong and we look forward to becoming a cash-flow-positive Company as early as 2012, upon the planned launch of telaprevir. To get to this stage, it has been necessary to make significant investments across our business. We've executed a number of financial transactions through the recent years in order to maintain a strong capital structure and to support the continued investments in our pipeline.

Most recently in the third quarter, we completed a convertible debt financing of $400 million. That put our cash position as of September 30, 2010, at over $1.2 billion of cash and cash equivalents to support the planned launch of telaprevir and maintain the overall business strategy. We are well capitalized as we enter 2011, and have the financial strength to maintain our investment into our research and development pipeline. We've carefully planned this position, as we'd like our R&D pipeline to create fast followers to the planned launch of telaprevir, something unique for a Company at this stage.

We tend to operate the Company under a model of revenue growth and high operating margins, which is enabled by the high-value specialty disease areas. Specifically, in hepatitis C, based on the prevalence of this disease and the potential impact on the healthcare system, we have a rare opportunity with the significant clinical data demonstrated by telaprevir-based therapy to provide a new medicine for people with hepatitis C and increase the value of the Company. We aim to better understand and then cure or make significant improvement to the treatment of serious and life-threatening diseases. In addition to hepatitis C, we have programs underway in several other disease areas in which these new therapies are urgently needed. As a result, we are preparing the Company for potential successes behind telaprevir in areas such as cystic fibrosis.

Success in these additional areas should allow us to maintain an R&D investment for the discovery and development of new medicines, create programs to ensure that patients have access to our new therapies, and enable us to maintain high operating margins, again, a rare opportunity. Now, to our third-quarter financial results. I'm just going to go over the bottom-line components of our financials on today's call. Specifically our GAAP net loss in the third quarter of 2010 was approximately $209 million. This compares to the third quarter of 2009 of approximately $150 million. The main-line items within our income statement can be found in this quarter's press release.

When comparing the loss on a non-GAAP basis to the third quarter of 2009, our loss increased to approximately $175 million from approximately $127 million in the same quarter of last year. The change was principally attributed to an increase in total operating expenses to support advancement of telaprevir towards its potential launch. Before I conclude, we are reiterating our GAAP and non-GAAP loss guidance we provided earlier this year. Specifically, in 2010, we guided to a non-GAAP loss of approximately $600 million. We expect to end 2010 with a substantial cash position and to be well funded as we enter 2011, a planned launch here for telaprevir.

We are committed to managing the business to achieve positive operating cash flow with telaprevir, while making the investments necessary for potential future successes in other disease areas. Michael, back to you.

Thanks very much, Ian. We would now like to open up the call to questions.

(Operator Instructions) Our first question comes from Rachel McMinn with Bank of America-Merrill Lynch.

Hi. This is [Marsha] for Rachel. I have a couple of questions. So you've got $1.2 billion on the balance sheet. Can you comment on how you feel about your financial position going into the launch? And then the second one is on 222, can you talk about the safety profiles to the two and the ongoing combination study?

Hi, Marsha, and thanks for the question. I'll take the first question on the financial position. So there's part of it that we're actually proud of where we are financially for a Company as we enter this period of the development of the Company, but clearly we're financially strong, with $1.2 billion of cash. We did recently do the convertible debt offering that has put us in that position.

But we financed the Company here to take the Company through the early launch of telaprevir, which includes 2011, to a point where within cash flow positive hopefully from the cash flow we generate from the launch of telaprevir. So we did want to put ourselves in that position. I think we're through our major, let's say prelaunch development -- financing transactions. We're in great shape, and as I say, we're proud of the position we're in and now we can take on the opportunity of launching telaprevir, yet still maintaining our investments in R&D.

This is Bob. I'll take on the question about the safety profile. So I'll just reiterate the announcement we made today about the discontinuation of RMA was purely for viral break through reasons. There was not a safety or tolerability issue that led to that.

As you'll note, there were patients that were in the study for quite a number of weeks at the time that these discontinuations took place. So although we don't normally talk about the safety profile in ongoing studies, I think you can take from that that things are going along well in the trial and we can plan to continue with enrollment in all the other arms.

Thank you.

Thank you. Our next question comes from Mark Schoenebaum with ISI Group.

Hi. It's actually Navin for Mark. Just, Bob, maybe you can expand on the safety issue with 222. You said you didn't see anything worrisome. I'm just wondering from your prior experience with the drug, now at the low dose is out, is there any -- should we be concerned that with the higher doses we're going to see greater GI issues? Is GI a dose-dependent side effect?

I'll just say there were no safety issues, as I pointed out. The discontinuation of RMA was related to viral break through only. And obviously at this point, the study's been going on for quite sometime. There are some patients that are into the study by many weeks; and as I said, we're continuing with the study as we had otherwise planned.

Okay, great. Then just one question on 770, and just trying to get some more understanding on your -- on the exact registration strategy there. Not sure what exactly you need for registration, if you could clarify there, please.

What we've said and is the case is that the primary efficacy studies that will support registrations are the 102 and 103 studies. And the 104 study that was recently concluded in Delta F508 patients is providing supplementary safety data to support the filing. And we expect to have data on the first two studies and actually the third as well in the beginning part of next year, in the first half of next year.

Okay, thank you very much.

Thank you. Our next question comes from Ted Tenthoff with Piper Jaffray.

Great, thank you very much for taking my question. It's good to get to speak to you. Talk a little bit, probing into the 222 combination study, and this is more of a 30,000-foot view question in terms of your view of ultimate stat C therapy in hepatitis C, but does the viral break through with the lower dose without background or standard of care raise questions in your view about the viability of a two-agent oral stat C? And, I guess where I'm kind of leading to this is, with a first in class and very potent proteases inhibitor, potentially most potent non-nuke, what are the other strategic assets that make sense to really achieving this goal of oral stat C?

Maybe, Ted, I would say something here. So first of all, I think at this given point in time, we continue the high dose arm without any interruption, without any break through at this given point in time. And so we are basically also believing that there is a high potential for the overall study to succeed because we have also the other two arms, which is a four-drug regimen that could leave us -- and if successful, with maybe quite astonishing results in shortening the timeline for treatment regimens and maybe get into higher SVR rates as we go forward. And also there, safety is an important component and they move forward as we speak according to plan. So at this given point in time, the study is ongoing and I'm not making any conclusions about the value or not value of any of the regimen. So that's the first thing.

In terms of the other strategies that you can have, I think we are commonly considering, given what we have seen to basically come with the first arm, or now a fourth arm again, that may contain either interferon or ribavirin and maybe see the light of day beginning of next year in terms of going into patients. So I think that's the near term strategy around this type of particular regimen that we have in mind. I think it's way too early to draw any conclusions from what you have seen so far about the value. I personally believe it's high value, it's still ongoing.

All right, that's helpful. Thank you.

Thank you. Our next question comes from Geoffrey Meacham with JPMorgan.

Hi, this is [Christian] on behalf of Geoff. I have a couple of questions. First, I was wondering if you heard anything in regards to the aisle 28B testing getting incorporated into clinical practice? And would payers appreciate the therapeutic difference between telaprevir and boceprevir? And I have another series of questions.

This is Bob. I'll take the first question. Yes, now that the tests are a bit more available, we've heard that clinicians are using them. Remember, this is in the context of peg and ribavirin therapy, which is where the value of the aisle 28 has been shown. I think it's yet to be seen how much value aisle 28B testing will be have, except the comment that I've made before, and that is that actually could offer the opportunity to provide more optimized regimens, for example, shorter duration of regimens, should aisle 28B have a role in a direct acting antiviral therapy, that's the place where we see the potential value coming.

Okay.

And we'll just have to wait to see.

Okay. Go ahead.

Christian, this is Nancy. In response to your question about the differences between telaprevir and boceprevir and the payer's view. We're early on now in the, in a very lengthy and robust process that will result in our pricing at the point of our launch of telaprevir; and I can tell you that as we go into that research, one thing that is very evident is that the payer community sees how highly innovative these products are. And in addition to that, we are aware as they are that these products actually save lives. They are cures. So the more effective a product becomes, the more quickly we cure a greater number of patients, therefore staving off future charges to their healthcare system.

Thank you. I have a CF question. Could you help us understand where VX 770 can be used in CF patients who do not have a G 551D mutation? I'm just trying to understand what percentage of CF patients VX 770 can be targeted to.

This is Bob. As you know, at the CF meeting, we presented data on series of other -- invitro data on a series of other gating mutations. So these are other mutations that produce the same phenotype of the G551D, which is the focus of our registration program. In general, we've seen a good correlation between invitro and invivo date, but obviously this is something we will have to study clinically. It could add as many as 3% or so more patients -- 3% of the total CF community to -- potentially to the market for VX 770, should those studies turn out to be successful, and it's something we're certainly looking at exploring.

This would be 3% in addition to the percentage of patients with G 551B?

Yes, so those are estimated to be about 4% of the total CF population. This would add perhaps another 3% of the total CF population on top of that, and there could be others. I mean, we're still in the process of exploring what other mutations might actually be beneficial to study.

Christian, this is Michael. There was an abstract that we can send to you that details a number of these mutations, what they specifically are. Be happy to do that.

All right, great. Thank you. Thanks very much.

Thank you. And our next question comes from Phil Nadeau with Cowen & Company.

Yes, and thanks for taking my questions. My first is on the BID dosing trial that you've just initiated this evening. I was wondering if you could disclose for us the non-inferiority margins for that study.

Yes, it's something -- those kinds of details we don't usually get into. That's all I can say really about that.

Okay, fair enough. And then second, Ian, a question for you. If I look at my model and compare the loss run rate that you're at right now with your guidance, seems like that implies the loss is going to decrease in Q4. Is that correct? And if so, why? Is there a milestone payment expected, or something outstanding in the fourth quarter?

So you're correct. When you take the nine month run rate and -- then we do anticipate a lower loss, and that will be a combination of both a lower R&D number, but it's actually principally driven by revenues. And those will be revenues that are generated from our relationships with Mitsubishi and J & J.

Okay, great. And, Nancy, one last question for you. There's some speculation that Merck may already be on file with boceprevir. I'm wondering first if you're hearing that same thing; and second, if that changes your strategy in any way if boceprevir were to come few months before telaprevir?

I'm not the expert on what Merck is doing or planning, but I can tell you that we will do everything in our current plan, which is a plan for success; and to date, I think the profile of telaprevir has shown superiority in many ways over boceprevir, and we're just going to continue with our plan and come to market and I'm sure it will be a success.

Okay. Would it affect your pricing at all if they put out a price before you did?

We can't comment on pricing, and again, I can't comment on what Merck's plans are.

Okay, fair enough.

The only other comment I want to make is it's not like there's miles in between if that is true, which is not a given at this point in time. We are basically in the process of finalizing our submission. I think it's a matter of weeks, not months.

Great, thank you.

Thank you. Our next question comes from Tom Russo from Baird.

Thanks for taking the question. I was wondering if there was anything else from the telaprevir plus 222 trial that you can say in terms of -- I don't know if there would be breakthroughs that were non-mild type or the percent getting to undetectable in the high dose arm, or maybe if you can refresh us on the stopping criteria, what we can rule out as being seen in the high dose arm? Anything along those lines?

Nothing along those lines. We've -- we don't have a lot of information at this point about the trial. I'll go back to our overall goals. We're very happy with the study design. We have both the higher dose arm and the two quadruple arms, and the study is just proceeding on.

Can you comment at all on what proportion roughly of patients in the arm B have gotten out to pick a time point, like four weeks?

Yes, Tom, Maybe I'll just jump in on this one, which is in terms of disclosure regarding the study, we'll be providing an on treatment update in 2011, given that we did achieve completion of enrollment in this quarter. So we'll provide you with the on treatment update in 2011.

Okay, and then just continuing a little bit, maybe bigger picture there, and following up on an earlier question, at what point would you decide if you want to try to include something that's currently external to Vertex? And could you provide maybe as part of that answer, an update on the NS 5A and how if at all that might fit into this trial at some point?

I think that's a good question. So in general, as we have said in earlier calls and interactions, we are very interested in basically exploring a broad set of different regimens as they become available to us. And that includes basically all mechanisms that are currently in the discussions. The main ones, like 5A nukes, non-nukes, but also other interferons or potentially immune-related type of approaches. Now, when it's the right time whenever we have such a regimen, it is not necessarily to be linked to this ongoing trial. There will be separate trials that we'll try to figure out the value of any of these as we go forward. So we have high interest and always have, and we are currently evaluating all that, including our internal ones, as to how to best to strategize to reach out to the patient populations that need our help.

Okay. Last question, and I'll step out. Can you comment at all on what gave you the confidence to start recruiting leaderships for the CF program in Europe and Canada?

We've got an ongoing clinical program, as you've heard. We expect that to report out in the first half of next year. We're confident, because we've had a good, solid history, and we're moving forward with the buildout in both cases.

Okay, thanks very much.

Thank you. Our next question comes from Yaron Werber with Citi.

Hi, this is Gloria actually covering for Yaron. I was just wondering if you could give us some color on your expectations for the Phase II JAK program in rheumatoid arthritis? Do you expect similar side effects to JAK in that Pfizer has, what about the relative potency, is it more selective? If you could give us a little more color on that.

I think when you go back into the data that we have released, I think we have shown in (inaudible) settings that we, based on markers down to JAK2 in relevant dosing regimens, which is a superiority over other JAK moleculars that are out there, which hit JAK2 and JAK1. So from that, we expect near term and long-term benefit, because JAK2 and JAK1 is involved in several metabolic, but also nerve differentiating type of mechanisms, and I think we will be fine. Given the Pfizer data that are out there that you might have seen, I think we'll have to go for a lower dose regimen, which basically at that level will not hit JAK2 if that's enough confidence, but JAK3 as the main mechanism has importance and gives us enough confidence that our molecule might work. To be seen next year when we have all the data. Overall, the confidence level is high.

Thank you.

Thank you. Our next question comes from Howard Liang with Leerink Swann.

Thank you very much. Regarding the telaprevir 222 combination trial, I think Peter mentioned that there's been no viral break through in any of the other arms, and Bob mentioned that a patient has been on it for many weeks. So my question is should we take the lack of a modification to arm B as a very positive data point and specifically have arm B pass the same interim look that has stopped arm A?

The trial -- that's why we're doing the study. The trial is ongoing and we'll see how the results go. As we said, at this point things look well and we'll just take it as it comes.

How it -- maybe I'll just add. Clearly, we've had some discussion about this since we recently found out, but what we're finding with the whole landscape here is the two-drug oral is really challenging. We've seen the data in the abstracts for ASLD now. Matt made a comment in his remarks that this didn't come as a surprise, it's the low dose arm. To us, we're dealing with it. We're thinking about how the study may progress in the other arms. We're hopeful, given those four drugs. We're hopeful in the high dose two-drug arms, but we're starting to find that this is very challenging for two direct antivirals put together, to cure this virus in specifically the naive patients.

It does just give me a chance to also say it is, it is positive how we see the market starting to shape now. When we look at telaprevir-based therapy, which is telaprevir, interferon and ribavirin, we find there's a lot of discussion around combination therapy in the two drugs and could that just come and change this market. We're finding it's very hard. When it's very hard, it takes longer. So we're happy to see how telaprevir and interferon and ribavirin is progressing, because we think that could be a market lead for a long period of time while we try to understand maybe a further improvement to the regimen. And that's what we're working on. That's what this study is about, but we're happy with where we are with telaprevir-based therapy, as well as interferon and ribavirin.

Regarding the BID versus TID, I think what's called the optimize study, the patient -- the selection rule for 24 weeks of treatment, I think it was described as based on week four response. My question, is this a new selection scheme? I think previously, it was both week four and week 12.

Yes, you're very, very astute to pick that up. It is slightly different. And we are using week four as the determining criteria for deciding on the duration of treatment. And in many respects, it's a bit simpler and it's something we obviously want to explore in this trial.

Okay, and lastly, just a disclosure question for Ian, will STRIVE and ENVISION, the CF trials, will the two separate trials be announced at the same time? I think STRIVE will conclude a little earlier.

We look at that as a broad registration program that is done in adults and then also ages six through 11. We look at it as a complete package, so you should expect to see top line data from that study in the first half of 2011 and all to come together, because that's how we'll be talking to the FDA.

Thanks very much.

Thank you. Our next question comes from David Friedman with Morgan Stanley.

Hi, this is Sarah for Dave. Can you tell us what the resistance profiles were of the breakthroughs in the VX 222 trial? Was it mainly nuke or PI resistance? And will you be presenting these data; and if so, can you give us a sense of where?

This is Bob. We don't have resistance data at this time. That's obviously work that will be ongoing. And in terms of presenting the data, I think the best bet is to be presenting them next year, when we have -- early next year when we have the on treatment data.

Okay, great. Thank you.

Thank you. Our next question comes from Jason Kantor with RBC Capital Markets.

Thank you. A lot of my questions have been asked, but on the optimize study, will there be -- will you be releasing any kind of interim data, or is the first data we're going to get the 2012 SVR data?

This is Bob. No interim data analysis is planned.

I'll just follow Bob with that this is a Phase III B study. It is something that we -- it's a registration study and we want to put on our label. It will be conducted in that manner, so the first top line results you'll see will actually be the primary end point, which would be SVR.

And then there was a comment earlier that this was going to be one of many trials designed to enhance the profile of telaprevir. What are some of the other approaches that you can go after?

So this is Bob. We're obviously looking at a number of things. There are certain subpopulations of HCV patients that have important medical needs. And I would enumerate those as HIV, HCV co-infection, pre and post transplant, patients with more decompensated liver disease that haven't been studied in our current program, which obviously we want to begin to approach them. We're doing active planning for those at the present time.

Okay. And then finally, I'm not trying to get to you give data you haven't given, but I think there's confusion about how you described data from the 222 study when you said that you had not -- in the other arms you had not seen any viral breakthrough. Will you -- was that something that just applied to the four-drug arms, or did that statement also apply to the two-drug high dose arm?

It applies to all three arms, the two-drug high dose arm, plus the four-drug arms.

Okay. Thank you very much.

Thank you. And, operator, I think we have time for one more question.

Thank you. And our last question will come from Katherine Xu with Wedbush Securities.

Hi, good afternoon. So just wondering whether you can comment on this at all. Your partner Tibotec , they do have a next generation inhibitor TMC435 (inaudible) for telaprevir and if it starts safely for GMC 435 next year, it will probably go together in 2013 as well. So just curious, from their perspective, what is the strategy

Thanks for the question, Katherine. And the way we look at this is that the study we're doing is to establish a BID regimen with telaprevir. Bob and Peter both talked about our time line. If we're starting dosing in November of this year, we would anticipate completion of the study in 2012. We'll talk about from our perspective that establishes, if successful -- establishes a BID regimen in 2012; and therefore, may be selling the drug as a BID drug in 2013.

I actually think and we believe based on our assessment of time lines that that is ahead of the TMC435 compound that you talk about. I have noticed in some of the research coverage that you published that you do have an expectation that could come in 2013. We believe that is just -- it's too accelerated given the program they have to get through, and that's one of the reasons why we wanted to push our BID dosing schedule and be on the market and dosing telaprevir ahead of TMC435. It's interesting at this point 435, but I think it still has a long way to go. We'll find out more at ASLD. We need to see the complete data set from that molecule, and from our perspective, it's about establishing the right dosing schedule and the best dosing schedule for telaprevir.

And I add maybe one sentence to it. As long as you have ribavirin in the mix, which is a BID drug, I think there's not necessarily a huge benefit for a QD regimen in terms of compliance, because if you take all the drugs at the same time, you basically have a higher chance that people stay compliant. And especially if you have to go for longer regimen. That's I think a given. So I think, yes, it is a potential benefit, but I think how big that is needs to be seen.

Thank you.

This is Michael again. Thank you very much for spending the last hour with us. We look forward to the opportunity to speak with many of you again in conjunction with the liver meeting, which starts this coming weekend. And tonight, the investor relations team is available if you have any additional questions. Thank you.

This concludes today's conference. Thank you for your participation.