Vertex Pharmaceuticals (VRTX) Q1 2023 Earnings Call Transcript

Vertex Pharmaceuticals (VRTX -0.80%)
Q1 2023 Earnings Call
May 01, 2023, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Vertex Pharmaceuticals first-quarter 2023 conference call. All participants will be in a listen-only mode. [Operator instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ms.

Susie Lisa. Please go ahead.

Susie Lisa -- Senior Vice President, Investor Relations

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 first-quarter 2023 financial results conference call. On tonight's call making prepared remarks, we have Dr. Reshma Kewalramani, Vertex's CEO and president; Stuart Arbuckle, chief operating officer; and Charlie Wagner, chief 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's marketed cystic fibrosis medicines, our pipeline, and Vertex's 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. In addition, the impact of foreign exchange is presented inclusive of our foreign exchange risk management program. I will now turn the call over to Reshma.

Reshma Kewalramani -- President and Chief Executive Officer

Thanks, Susie. Good evening, all, and thank you for joining us on the call today. We're pleased to have opened with a strong start to 2023 as first-quarter global CF product revenues grew 13% versus the first quarter of 2022. In addition, we completed the exa-cel U.S.

rolling BLA submissions for sickle cell disease and beta thalassemia and secured U.S. approval for Trikafta in patients 2 to 5 years of age. Now is an especially exciting time at Vertex because, within our five launches in five years, or five and five goal, we see multiple programs with near-term launch potential including exa-cel in sickle cell disease and transfusion-dependent beta thalassemia, the Vanzacaftor triple in CF and VX-548 for acute pain. In total, we now have programs in eight disease areas in mid- and late-stage development, six of which are past the proof-of-concept stage as depicted on Slide 5.

With this breadth of compelling opportunities, we're investing accordingly to drive continued pipeline success, clinical trial progress, and the buildout of commercialization capabilities. In addition, beyond the eight disease areas already in the clinic, the next wave of innovation is advancing through preclinical development, including programs in Duchenne muscular dystrophy, myotonic dystrophy type 1, Nav1.7 for pain, and gentler conditioning agents for use with exa-cel. With a uniquely strong and durable CF franchise, multiple near-term commercial opportunities, a broad and rapidly advancing pipeline, a strong balance sheet, and an exceptionally talented and committed team, Vertex has never been as well positioned to deliver for patients and shareholders for years to come. With that overview, I'll turn to the details of recent R&D progress starting with CF.

Our next-in-class Vanzacaftor triple combination is completed enrollment in its two phase 3 clinical trials in patients ages 12 years and above, known as SKYLINE 102 and 103, and is progressing well. Enrollment in patients ages 6 to 11, known as the RIDGELINE study, is also advancing rapidly. We continue to anticipate the completion of the SKYLINE studies by the end of this year. And I'm pleased to share we now project the completion of the RIDGELINE study at approximately the same time as the SKYLINE studies.

Recognizing the very high bar set by Trikafta, we have high expectations for the Vanzacaftor triple program based on the totality of the evidence generated to date and as was recently reported in Lancet Respiratory Medicine. Pre-clinically, our HPE assays, which have consistently proven to have robust translation from the bench into the clinic, showed greater restoration of chloride transport with the Vanzacaftor triple than with Trikafta. In the phase 2 clinical program, the Vanzacaftor triple drove greater CFTR function and correspondingly lower levels of sweat chloride than has been seen with Trikafta. As such, we believe the Vanzacaftor triple has the potential for enhanced clinical benefit along with the convenience of once-daily dosing.

In addition, we expect the Vanzacaftor triple to carry a substantially lower royalty burden. Another important study in our CF portfolio pertains to VX-522, our CFTR mRNA therapy that we're developing in partnership with Moderna for the more than 5,000 CF patients who cannot benefit from CFTR modulators. We have initiated the single ascending dose, or SAD study, of VX-522 and are actively enrolling and dosing CF patients. We anticipate completing the SAD portion of the study and initiating the multiple ascending dose portion of the study this year.

Turning now to exa-cel, our gene editing program for severe sickle cell disease and transfusion-dependent beta thalassemia. Exa-cel holds the potential to be the first CRISPR-based gene editing treatment to be approved as well as the promise to be a one-time functional cure for these diseases. This is our most advanced program outside of CF and we expect exa-cel to be our next commercial launch. Per our prior guidance, we completed our BLA submissions for both sickle cell disease and TDT in the U.S.

at the end of last quarter. We now await acceptance of our filings and assignment of the PDUFA date. Our filings include requests for priority review, which if granted, will result in an eight-month review by FDA from the time of submission. Internationally, as previously announced, both the EMA and MHRA have validated our exa-cel MAA submissions and those filings are under review.

We see a significant opportunity for exa-cel. Stuart will comment further on the market opportunity and our launch preparations in just a few minutes. Turning next to our pain program and VX-548, our novel, highly selective NAV1.8 inhibitor that holds the promise of effective pain relief without the side effects or addictive properties of opioids. We have confidence in the outlook for this program given, one, NAV1.8 is a genetically and pharmacologically validated target; two, we have multiple positive proof-of-concept results with our predecessor NAV1.8 inhibitor, VX-150, across acute neuropathic and musculoskeletal pain and with VX-548 itself in acute pain; and three, our phase 3 program with VX-548 in acute pain is substantially similar to the positive phase 2 trials we have already concluded.

VX-548 has been granted fast-track and breakthrough therapy designations for acute pain in the U.S. We initiated pivotal development last year and enrollment and dosing across the three phase 3 studies continue to progress nicely. These studies have been designed to support our goal of a broad, moderate-to-severe acute pain label that would enable prescribing and usage across multiple care settings, including at the site of care post-discharge and in the home. We continue to anticipate completing the acute pain phase 3 pivotal program toward the end of this year or beginning of next, creating another potentially significant and near-term commercial opportunity.

In addition, we continue to enroll in dose patients in a 12-week phase 2 dose-ranging proof-of-concept study of VX-548 in diabetic peripheral neuropathy, a form of peripheral neuropathic pain. I'm pleased to share we also anticipate completing this phase 2 study toward the end of this year or beginning of next. Transitioning now to Inaxaplin, or VX-147, the first potential medicine to target the underlying cause of APOL1-mediated kidney disease, or AMKD. In March, we were very pleased with the publication of the phase 2 results for Inaxaplin in the New England Journal of Medicine.

Importantly, the paper was accompanied by an editorial and a feature on the science behind the study. We see this coverage in the New England Journal of Medicine as underscoring the importance of the Inaxaplin data and the medicine's potential. The phase 2b dose-ranging portion of the global phase 2/3 pivotal study remains on track to complete this year. Recall, this study has a preplanned interim analysis at 48 weeks of treatment, which if positive, could serve as the basis to seek accelerated approval in the U.S.

With Inaxaplin, we see the potential to bring a first-in-class treatment to the approximately 100,000 patients with AMKD in the U.S. and Europe and unlock a multibillion-dollar market opportunity. Moving now to type 1 diabetes. There are more than 2.5 million people with type 1 diabetes in North America and Europe alone and we are committed to delivering a transformative, if not curative medicine, for this disease.

We have three programs in our type 1 diabetes portfolio, all of which use the same fully differentiated insulin-producing islet cells, which have already demonstrated proof of concept. Our first program, or VX-880, the naked cell program uses standard immunosuppressants to protect the islet cells from the immune system. I am pleased to share that both part A and part B of the study are now fully enrolled and dosed. In both portions of the study, dosing of patients was staggered, with part A patients receiving half dose and part B patients receiving the full target dose.

The next step in the program is part C in which patients will be treated concurrently with the full target dose. This should facilitate faster timelines. We look forward to sharing VX-88- data from more patients and with longer duration of follow-up at medical congresses this year, including the ADA Scientific Sessions in June. Our second program, VX-264, or the cells plus device program, encapsulates these same cells in a proprietary device that is designed to shield the cells from the body's immune system, and hence, there is no requirement for immunosuppressants.

Both the IND in the U.S. and the CTA in Canada have cleared site activation. And study initiation activities are underway in both the U.S. and Canada, and we look forward to enrolling and dosing patients in this phase 1/2 study in the near term.

Third, our hypoimmune program in which we edit the same cells to cloak them from the immune system. This would represent another path to obviating the need for immunosuppressants. In March, we expanded our collaboration with CRISPR Therapeutics into type 1 diabetes, and this new licensing agreement will enable us to use CRISPR/Cas9 to edit the cells. This research-stage program continues to make progress.

Lastly, also in the T1D portfolio, the ViaCyte VCTX-211 hypoimmune program using a ViaCyte cell line, remains on track. This program has finished enrollment and dosing in group 1 of the phase 1/2 study. Let me conclude with our alpha-1 antitrypsin deficiency, or AATD program, which continues to enroll both the phase 2 study for VX-864 and the phase 1 study for VX-634. The phase 2 program for VX-864 is a 48-week study in patients with AATD that will assess both liver clearance of Z polymer and serum functional AAT levels.

This study is projected to complete enrollment later this year. The phase 1 healthy volunteer study of VX-634, the next-in-class molecule with multifold greater potency and better drug-like properties, is projected to complete this year. With that, I'll now turn over the call to Stuart.

Stuart Arbuckle -- Chief Operating Officer

Thanks, Reshma. From a commercial perspective, our focus continues to be to reach all patients eligible for our CFTR modulators and maintain high levels of adherence among patients already on therapy, while also preparing for potential near-term launches for exa-cel VX-548 in acute pain and the Vanzacaftor triple combination in CF. I'll first review our CF first-quarter commercial results and then the longer-term outlook for our CF portfolio. I will then comment on the exa-cel opportunity and our launch preparations given that we have now completed our regulatory filings in the U.S., Europe, and the U.K.

We had a strong first quarter with growth predominantly driven by bringing our medicines to younger patients including Trikafta in children ages 6 to 11 in the U.S., plus Europe and Canada. And we remain confident in the growth outlook for 2023. Last week, as expected, we received FDA approval for Trikafta in the U.S. for children ages 2 to 5 years, which adds approximately 900 new patients who, for the first time, will have a treatment to address the underlying cause of their disease.

Turning to the longer-term outlook. We see continued growth in CF beyond 2023. As Reshma mentioned, at the beginning of this year, there were more than 20,000 people in North America, Europe, Australia, and New Zealand with CF who could benefit but were not yet being treated with our approved medicines. Beyond the key growth driver of reaching younger patients through new approvals, we also continue to make progress in securing additional reimbursements.

This includes multiple agreements spanning our CF portfolio for younger patients in Europe and, most recently, also Australia and New Zealand. A second driver of CF product growth is the compelling portfolio of real-world outcome studies, including model data, which validate the positive outlook for long-term growth in the overall CF population due to improved survival. Model data related to projected survival and long-term health outcomes were recently published in the Journal of Cystic Fibrosis and include a 33.5-year increase in median projected survival with Trikafta therapy versus the standard of care. A third growth driver for our CF portfolio will be our next-generation Vanzacaftor triple, which provides an opportunity to bring a new and potentially improved treatment option to patients, including those who've discontinued therapy with our other medicines.

We estimate that there are approximately 6,000 patients who have discontinued one of our existing CFTR modulators. And longer term, a fourth factor to help drive extended growth in our CF portfolio is VX-522, which is designed to provide mRNA therapy for the more than 5,000 patients who cannot benefit from CFTR modulators. Shifting now to exa-cel, which holds curative potential for patients with sickle cell disease and transfusion-dependent beta thalassemia. With the recent completion of our exa-cel regulatory submissions in the U..S, Europe, and U.K., our commercial teams are preparing for the potential approval and launch of this multi-billion dollar opportunity.

Sickle cell disease and transfusion-dependent beta thalassemia are neither silent nor undiagnosed diseases. Our initial launch will focus on the approximately 32,000 most severe patients in the U.S. and Europe. These patients have been sick their entire lives with a chronic, often disabling disease that carries a high burden of care.

They could soon have the opportunity for a potential lifetime cure. Our launch preparations are informed by extensive market research and insight generation, including through direct engagement with patients, providers, and payers to understand their perceptions of gene therapy and the potential uptake of a product like exa-cel. We are encouraged by the strong interest and enthusiasm shown by all stakeholders for a genetic therapy that could provide transformative benefit for patients. Starting with patients.

The journey for someone to receive exa-cel can be summarized in three key phases: one, the pretreatment period where patients decide a genetic therapy is right for them and are referred to an authorized treatment center by their hematologists and begin the cell collection process; two, the manufacturing period where a patient cells are edited and become the exa-cel drug product; and three, the treatment period where a patient receives myeloablative conditioning, then their edited cells, and is followed for successful engraftment. Survey data from sickle cell and beta thalassemia patients indicate that more than a quarter strongly believe genetic therapy is the right choice for them. Of the balance, the vast majority want to learn more about future treatment options through their own research and through the lived experiences of exa-cel patients and their treating physicians. With providers, we've learned there is a clear recognition of the differences between various genetic therapy approaches and a strong preference for gene-editing therapies, like exa-cel, over gene insertion approaches using lentivirus.

Our market research suggests that approximately 70% of providers prefer a gene-editing approach over other gene therapy mechanisms. Our teams are focused on providing access to key support and systems for both patients and providers to ensure the best possible treatment experience. Accordingly, we have made strong progress toward ensuring authorized treatment centers are administratively and logistically prepared to initiate the exa-cel treatment journey for patients upon approval. Approximately 50 U.S.

centers are actively engaged in the process to become an ATC located in those areas with the highest prevalence of patients. Similarly, in all four key European markets, all 25 targeted ATC sites are in process. Payers are another important area of focus. We are actively engaging with key commercial and government payers and policymakers in the U.S.

and Europe. First, with regard to commercial payers in the U.S.. Our conversations are focused on the patient need and clinical profile of exa-cel, including dramatic reductions in VOCs and hospitalizations for sickle cell disease patients and in transfusions for beta thalassemia patients. We are confident that payers will recognize exa-cel's value in patient populations where current lifetime cost of care can exceed $4 million.

We are working with insurers to ensure broad access for the approximately 35% of sickle cell disease and transfusion-dependent thalassemia patients who are commercially insured. Now to government payers. Approximately 45% of severe sickle cell disease patients in the U.S. are insured by Medicaid, and thus, we've also been working with state agencies to ensure Medicaid patients have broad access to exa-cel.

We recognize that a critical element for adoption is ensuring a separate payment for the exa-cel therapy in addition to the reimbursement already in place for the transplant procedure costs. Encouragingly, many states are already providing access to cell and gene therapies with separate payment policies for the procedure and the therapy. And we continue to engage with state agencies around payment models ahead of the launch. In addition, in February of this year, the Biden administration demonstrated their commitment to ensuring access to cell and gene therapies like exa-cel through the announcement of a CMS demonstration project called the Cell and Gene Therapy, or CGT Access Model.

The CGT Access Model will be administered through CMS Innovation Center, which has a total budget of approximately $10 billion for the exploration and testing of novel delivery methods and approaches. Intended to accelerate and enhance broad Medicaid access for sickle cell disease patients, the CGT Access Model will, over time, facilitate this in two important ways: by creating a pathway for state Medicaid agencies to delegate authority to CMS to coordinate and facilitate innovative payment models, including outcomes-based agreements, or OBAs, with cell and gene therapy manufacturers like Vertex. And in addition, CMS has confirmed any outcomes-based arrangement for in-patient therapies requires payments separate from the hospital in-patient bundle. We view this CGT Access Model as an important indicator of the understanding of the severity of these diseases and the need to provide broad access to potentially transformative therapies for these historically underserved patient populations.

We are extremely excited about the potential for exa-cel, our first commercial launch outside of CF in many years, and look forward to updating you further on our launch preparation activities on future calls. I'm also looking forward to updating you on our continued progress to discover, develop, and secure access to transformative medicines for all people living with CF. I will now turn the call over to Charlie to review the financials.

Charlie Wagner -- Chief Financial Officer

Thanks, Stuart. Vertex's results in the first quarter of 2023 demonstrate our consistent strong performance and attractive growth profile regardless of macroeconomic conditions. First-quarter 2023 revenue increased 13% year over year to 2.37 billion. Growth was led by a 33% year-over-year increase outside the U.S.

on continued strong uptake of Trikafta Kaftrio in markets with recently achieved reimbursement, as well as label extensions into younger-age groups. U.S. CF revenue grew 3% year over year with ongoing consistent performance. First-quarter 2023 combined non-GAAP R&D, acquired IPR&D, and SG&A expenses were 1.2 billion, compared to 687 million in the first quarter of 2022.

Q1 2023 results include $347 million of acquired IPR&D charges, compared to just 2 million of such charges in the first quarter of 2022. First-quarter 2023 IPR&D expenses resulted from several new collaborations which augment our internal innovation efforts as detailed on Slide 15, including collaborations with Entrada Therapeutics in DM1, ImmunoGen for gentler conditioning agents, and the expansion of our relationship with CRISPR Therapeutics into type 1 diabetes. Aside from our investments in external innovation and the resulting higher acquired IPR&D charges, operating expense growth was driven as expected by continued investment in research and our advancing pipeline which includes mid and late-stage clinical assets across eight different disease areas. For example, these investments are directed toward clinical studies for Vanzacaftor triple in CF, VX-548 in acute pain, and type 1 diabetes, as well as pre-commercial buildout activities for exa-cel and other potential near-term launches.

Given the potentially transformative benefit to patients and multibillion-dollar market opportunities for our programs, we will continue to invest appropriately. First-quarter 2023 non-GAAP operating income was $902 million in the quarter, compared to 1.17 billion in the first quarter of 2022. First-quarter adjusted earnings per share were $3.05. We ended the quarter with 11.5 billion in cash and investments as our cash flow generation and balance sheet remain very strong.

Now switching to guidance. Given our first-quarter results and our consistent execution, there are no changes to our 2023 financial guidance as detailed on Slide 16. We continue to expect product revenue guidance of 9.55 billion to 9.7 billion, representing 7% to 9% growth year over year. Note that this guidance continues to include an expected approximate 1.5 percentage point headwind to our revenue growth inclusive of our foreign exchange risk management program.

As we mentioned in early February, given our years of experience in CF, we have strong visibility to our 2023 revenue guidance range, which is inclusive of expected new approvals like the Trikafta U.S. approval in patients ages 2 to 5 and new reimbursements outside the U.S. Note, too, that 2023 product revenue guidance continues to reflect revenue from cystic fibrosis products only. Exa-cel is not included in guidance as potential approval and launch dates in the EU, U.K., and U.S.

are still to be determined. We are also reiterating our 2023 guidance for combined non-GAAP R&D, acquired IPR&D, and SG&A expenses in the range of 3.9 billion to 4 billion. Our 2023 non-GAAP operating expense guidance now includes approximately 400 million of upfronts and milestones from previously existing or recently completed BD transactions versus the 300 million that was anticipated at the beginning of the year. Our operating expenses continue to be more than 70% allocated to R&D and are funding the significant continued progress of our multiple mid and late-stage clinical development programs.

Additionally, we are funding the expansion of our commercialization capabilities in anticipation of the multibillion-dollar market opportunities represented by our programs with near-term launch potential. Our guidance for projected full-year 2023 non-GAAP effective tax rate of 21% to 22% is also unchanged. In closing, Vertex performed exceptionally well in the first quarter of 2023. We delivered strong revenue growth, invested internally and externally, and accelerated programs across our diverse pipeline.

We're also proud of our industry-leading culture of innovation that we believe will continue to drive long-term success. A few highlights from our recently published Corporate Responsibility Report are found on Slide 17. And as we continue to advance our programs in 2023, we anticipate further important milestones, as highlighted on Slide 18, to mark our continued progress in multiple disease areas. We look forward to updating you on our progress on future calls, and I'll ask Susie to begin the Q&A period.

Questions & Answers:

Operator

We will now begin the question-and-answer session. [Operator instructions] And the first question will come from Salveen Richter with Goldman Sachs. Please go ahead.

Salveen Richter -- Goldman Sachs -- Analyst

Good afternoon. Thanks for taking my question. With regard to the exa-cel launch, you discussed the three steps that need to occur for patient to get treatment here. Could you just speak to the overall time that will be required, in your mind, after approval for a patient to actually be administered drug? And then secondly, the gene insertion competitor clearly has been doing work here and it's taken some time, but they've done foundational payer work.

Just wondering what the read-through is from -- from all the work they've done to -- to your launch progress as well. And in the context of this, on the R&D and SG&A front, as we look to next year, how do we think about how that SG&A line might inflect in the context of not just this launch but also the pain launch as well? Thank you.

Reshma Kewalramani -- President and Chief Executive Officer

Thanks very much for the question. I'm going to ask Stuart to talk about the exa-cel timelines and a little bit about the launch. Stuart.

Stuart Arbuckle -- Chief Operating Officer

Yeah. So, Salveen, as I outlined in my prepared remarks, this is a relatively extended process that takes multiple months from beginning to end, as I said, from the patient deciding with their physician that a genetic approach is the one that they would like to undertake through mobilization, and then manufacturing. And then very very importantly is the -- the last step, which is obviously the most important because that's when they are infused with their edited cells. Because of the nature of that last step, where the patient has to undergo myeloablative conditioning and therefore has a multi-week stay in the hospital, while they're followed to see whether the product has engrafted before they are released in the hospital, they have to schedule that into their life.

And so, that is a -- obviously a very significant undertaking for an individual. But of course, the payoff there is they're looking to get a potential lifetime cure for that multi-month process. So, it is a multi-month process with that last step obviously being one that they need to schedule into their -- into their life, hopefully then to receive a lifetime of benefit from exa-cel. In terms of kind of what are we learning from the -- the marketplace, from our interaction with payers, we're incredibly encouraged by the reaction we've had from payers, both their understanding of the severity of both sickle cell disease and transfusion-dependent thalassemia and the very significant burden that it has on patients, their families, and of course, the broader healthcare system and the cost associated with that.

Also, we're very encouraged by their reaction to the product profile that exa-cel has and how positive they appear to be -- to be working with us to try and ensure that there is as near as possible access to exa-cel as close to possible post-approval. So, we're really very encouraged by the response from payers across the continuum, commercial payers, and, very importantly, for this population, both Medicaid and Medicare. I think you had a question on SG&A evolution. I think that's probably best handled by Charlie.

So, Charlie, do you want to take that one?

Charlie Wagner -- Chief Financial Officer

Yeah. Salveen, thanks. Given that we've just reiterated our 2023 opex guidance, you can expect I'm not going to have much to comment on about 2024. I will say that the growth in opex in 2023, of course, is driven by the advancements in the pipeline.

We've got multiple programs mid and late-stage, including a few that are very close to commercialization. Even with that, the majority, over 70% of our opex, is invested in R&D. Looking ahead, as we have more programs moving toward commercialization, you could see a little bit of a mix shift toward -- toward commercial spend. But importantly, with our model of focusing on transformative medicines in specialty populations, we always expect the SG&A burden on the business would be quite low.

It gives us the ability to drive significant profitability over time.

Salveen Richter -- Goldman Sachs -- Analyst

Thank you.

Operator

The next question will come from David Risinger with SVB Securities. Please go ahead.

David Risinger -- SVB Securities -- Analyst

Yes, thanks very much, and thank you for the updates. So, I was hoping you could talk about your vision for VX-548 in chronic pain. So, obviously, you're studying it in DPN. But specifically, what I'm interested in is, assuming that you succeed in your phase 2 neuropathic pain trial, how might Vertex pursue phase 3 development? How do you see the target product profile for the product? And would you consider development in musculoskeletal pain as well? Thank you.

Reshma Kewalramani -- President and Chief Executive Officer

Sure. Hi, David. This is Reshma. Let me take that one for you.

We see three distinct areas for a drug like VX-548. One is acute pain. I'll put that aside for now and I'll come back to it. And instead of seeing the chronic market as one market, we actually see these two, the first being neuropathic pain and the second being, let's call it, musculoskeletal pain.

In that chronic market which we subdivide into two, the -- our immediate area of interest and where we are already in phase 2 in the update on today's call is that we are now projecting the completion of that phase 2 proof-of-concept study by the end of this year, early next. We see that as a very substantial market. And we're pursuing that first because, one, there's high unmet need; two, because it fits our commercialization model, that is to say, a specialty market. I fully expect that VX-548 and NAV1.8 inhibition, in general, will also be effective for musculoskeletal pain.

And I say that not based on conjecture, but rather because the predecessor molecule, VX-150, we've already taken that into a form of musculoskeletal pain, and it was positive there as well. So, the way I see our pain portfolio progressing is acute pain first, we're already in phase 3. That program will be completed toward the end of this year, beginning of next. And I see that as the first pain opportunity in terms of nearest to market.

Second, the neuropathic pain program. And I do expect that 548 will work in musculoskeletal pain. I don't see that as a Vertexian disease because it requires a primary care outreach. But certainly, if the medicine can help, and I believe it will, we'll find a way to get it to patients, but that won't be through a Vertex commercialization enterprise.

David Risinger -- SVB Securities -- Analyst

Thank you.

Operator

The next question will come from Mohit Bansal with Wells Fargo. Please go ahead.

Mohit Bansal -- Wells Fargo Securities -- Analyst

Great. Thank you for taking my question. Maybe a question on -- on exa-cel, one more question on that. So, I know -- I mean you are excited about the opportunity and you're talking about 32,000 patients there, and the drug clearly works.

I mean it's pretty amazing. But when we talk to doctors, they talk about, you know, maybe initial opportunity will be in 5,000 to 10,000 patients in the U.S. And they're a little bit worried about safety at this point early on. And the investment community is also a little bit looking at it as a show-me story.

So, could you help us understand what we are missing in terms of when we -- when you talk to payers and prescribers, where do you think the disconnect is and how do you think -- like what steps would we need to happen for -- for this disconnect to disappear? Obviously, launch would be -- would be an important part there.

Reshma Kewalramani -- President and Chief Executive Officer

Hi, Mohit. This is Reshma. I think your question is about exa-cel and what do we really see as the real potential. I have very high confidence in the fact that there is significant unmet need.

This is a disease that has really no therapy that can offer curative potential, full stop. There is no debate on that. With regard to the potential of our medicine, all of the data that we've shown to date show that this medicine has transformative, if not curative potential. And I'm going to ask Stuart to comment on what we've heard from patients, from payers, and from stakeholders in general about their level of understanding and enthusiasm for this product.

And I'll also ask Stuart to remind what we see as the market size. What I'll say is that, in the U.S. and Europe, there are 150,000 people with sickle cell and beta thalassemia. We are not targeting that full set with this busulfan-based conditioning exa-cel program.

We're targeting 32,000. Stuart.

Stuart Arbuckle -- Chief Operating Officer

Yeah. Reshma said the 32,000, those patients who are sort of at the severe end of the spectrum, essentially, patients very similar to those that were enrolled in our clinical trials, these are patients who are having multiple veno-occlusive crises per year for our sickle cell disease population and multiple transfusions a year for those in the transfusion-dependent thalassemia patient population. So, these are patients who -- whose lives are very very significantly impacted by their disease, and it really impacts all aspects of their life, impacts their -- their loved ones, impacts their ability to work, and they have a very very significant burden of disease and also a very significant burden for their healthcare system. So, in the discussions that we've had with both patients, payers, and physician groups, the unmet need is very very clearly well understood.

The potential for curative one-time therapies is very very much something that people are looking forward to. I think with any new technology and with any new product, there are always going to be some questions that people will have around things like safety as these are really transformative and innovative therapies. And to some extent, for some people, that's something that can only get solved over the course of time and with their own lived experience. But certainly, the level of enthusiasm we're seeing from all stakeholders is very very high.

And we're very optimistic about this being a multi-billion dollar opportunity.

Mohit Bansal -- Wells Fargo Securities -- Analyst

Thank you.

Operator

The next question will come from Geoff Meacham with Bank of America. Please go ahead.

Geoff Meacham -- Bank of America Merrill Lynch -- Analyst

Afternoon, everyone. Thanks for the question. Just have a couple. Stuart, on the Vanzacaftor triple, just curious on your updated view as to differentiation, you know, obviously, beyond dosing.

Just assuming that a patient is doing well on Trikafta, you know, with the argument be to switch -- or I think you mentioned in the prepared remarks the patients have been -- have discontinued Trikafta. You know, what's the logic in them maybe responding to the -- the new Vanzacaftor triple? And then, secondly, Charlie or Reshma, you guys have almost 12 billion in cash, a pretty good pipeline, and no real urgent need for BD. So, should we think about capital investments in areas that, you know, are probably needed and more of a build-out like gene or cell therapy? I'm just curious about, you know -- about uses of uses of cash going forward. Thanks.

Reshma Kewalramani -- President and Chief Executive Officer

Sure, Geoff. Let me ask Stuart to tackle Vanzacaftor first, and then I'll ask Charlie to comment on capital allocation. Stuart.

Stuart Arbuckle -- Chief Operating Officer

Yeah, hey, Geoff. So, on Vanzacaftor, just to remind everybody on the call, as you know, our goal in cystic fibrosis is to get as many people as possible to carry a level of chloride transport as we can-- carry levels of sweat chloride, pardon me, as we can, because we believe if we can do that, we will essentially be able to prevent CF developing in people as we know it today. As you know, from our in vitro assays, but also from our clinical data with the Vanzacaftor triple combination, we believe we can get to even higher levels than we've even been able to establish with Trikafta, which as you know, sets a very very high bar. And so, the study that we have ongoing both in 12-plus but also now 6 to 11 is aimed to do just that, to compare Trikafta with Vanzacaftor.

And obviously, we were looking forward to seeing the data when those studies read out. As you identified, I think there's really going to be sort of two treatment opportunities for the Vanzacaftor triple combination. If the efficacy is superior to what we see with Trikafta, I think it's going to be a really exciting new treatment option either for those people who are currently being treated with one of our existing CFTR modulators or the patients who have discontinued one of our CFTR modulators. And I said in my prepared remarks, globally, there are about 6,000 of those patients now.

Now your question is why might they respond to Vanzacaftor if they haven't responded to our other medicines. Actually, the major reason for discontinuation is not lack of efficacy. Our products are amazingly efficacious in just about every patient. It tends to be for things like adverse events, and so, I do think it's going to be an attractive treatment option for people to consider who may have discontinued one of our previous CFTR modulators.

So, obviously, the data will be very influential to all of this. We're looking forward to seeing that now that the studies are fully enrolled and ongoing. And so, we're looking forward to seeing that data, but I do think Vanzacaftor has the potential to be an even better treatment option for many patients even than Trikafta is.

Charlie Wagner -- Chief Financial Officer

And then, Geoff, on capital allocation, no change at all in our strategy or priorities. Top priority continues to be investment in innovation, both internally and externally. You saw that we were active with BD in the first quarter. While -- while it may be true that if you look back over the last 18 months or so, we've done a number of BD transactions in selling gene therapy, I don't think you have to project forward that that's the only place we're focused.

As you know, we've got a sandbox of these areas and, we are modality agnostic and will do the deals that make sense for our program areas and fit our strategy. Lastly, I guess I would be remiss to point out we -- we do have an ongoing share buyback program as well. We've been at that for about five years or so, and that program continues to be a part of our capital allocation strategy.

Geoff Meacham -- Bank of America Merrill Lynch -- Analyst

Great. Thank you, guys.

Operator

The next question will come from Phil Nadeau with Cowen and Company. Please go ahead.

Phil Nadeau -- Cowen and Company -- Analyst

Hi, good afternoon. Thanks for taking our questions. A few on VX-548 in acute pain. Can you talk a bit more about your target product profile? What level of energy do you want to do, you want to achieve, with how many side effects? And maybe as a follow-on to that, could you discuss the target patient population? Who would be the ideal patient for non-opioid option? And how many procedures per year, approximately, does that patient group have? Thank you.

Reshma Kewalramani -- President and Chief Executive Officer

Sure. Let me comment on the target product profile a bit, and then I'll ask Stuart to comment on the market size, both in terms of patient numbers and dollar potential. So, Phil, you know, if we recapitulate the results that we saw in phase 2, which you'll recall, is substantially similar to what we're doing in phase 3, that is to say a study in abdominoplasty as a form of a soft tissue model and bunionectomy as a form of a hard tissue pain model, that would be a home run for us. What I mean by that is efficacy, pain relief that's quick and durable, a benefit-risk profile that is quite attractive, and by mechanism of action, that is to say, the way 548 works is on the peripheral nervous system, not centrally, no addictive potential.

That is an absolute home run. I'm going to ask Stuart to comment on market size in terms of dollars and patients. Stuart.

Stuart Arbuckle -- Chief Operating Officer

Yeah, thanks, Reshma. So, the study program that we've got -- we've designed, which Reshma just commented on, is designed to secure for us a label for moderate to severe acute pain in contrast to a number of other relatively recent approvals in acute pain which have been related to post-surgical pain and linked to certain procedure types. That's not the label we're seeking for. We are seeking a label for moderate to severe acute pain writ large, could be post-surgical, and that's indeed the nature of our studies, but that is not the label we're seeking.

So, we are not sizing the market based on the number of procedures or the number of surgeries. It is for the broad treatment of acute pain, which can't be controlled with kind of standard NSAIDs and things like that. When you look at that market opportunity in the U.S. alone, it's roughly 1.5 billion treatment days of medicine are utilized.

And despite 90-plus percent of those prescriptions being generic, therefore very very cheap, it is a $4 billion market in the U.S. alone today. So, we see a very very significant commercial opportunity for VX-548 if it has the profile that Reshma described.

Operator

The next question will come from Michael Yee with Jefferies. Please go ahead.

Andrew Tsai -- Jefferies -- Analyst

Andrew Tsai on for Michael Yee. Thanks for all the updates. So, I wanted to follow up on the acute and chronic pain study. So, the first question we have is, do you think acute pain should have read-through to chronic pain and vice versa? And then, second question for us is for your phase 1 CF program with Moderna.

We understand there's a SAD dataset coming up later this year, but just curious when we can expect to see longer-term MAD data. Is it possible that could come out later this year, or should we be ruling out that scenario? Thank you.

Reshma Kewalramani -- President and Chief Executive Officer

Sure, let me take the mRNA question first and then I'll come back around to pain. With regard to the program we have ongoing with Moderna, that's the VX-522 program. It is a program for the approximately last 5,000 patients or so who simply can't benefit from CFTR modulators. It is a SAD/MAD program with the SAD portion of it going on right now.

You know, when we did Kalydeco and Trikafta, for example, our patients used to tell us that they knew from the first day that they were on placebo or active therapy. So, I can't rule out when we will know whether we have efficacy. But in terms of timelines and what you can plan for, we expect to be done with the SAD this year, and we expect to be well into the MAD this year. So, those are the timelines we're looking forward to.

With regard to the pain studies and what you could expect there, I don't really see read-through from acute to chronic neuropathic pain or vice versa. What I do see read-through is from the phase 2 studies to phase 3. And I also see read-through from the NAV1.8 class, that is to say, VX-150 which already showed efficacy in acute, neuropathic, and musculoskeletal. So, I look forward to the VX-548 pain study results and the VX-548 dose-ranging phase 2 neuropathic range -- neuropathic study results, that's where I'm looking to for precedents, the phase 2 program in 548 itself in acute pain and the VX-150 program across the three pain types.

Andrew Tsai -- Jefferies -- Analyst

Very clear, very helpful. Thank you.

Reshma Kewalramani -- President and Chief Executive Officer

Sure.

Operator

The next question will come from Will Pickering with Bernstein. Please go ahead.

Will Pickering -- AllianceBernstein -- Analyst

Hi. Thank you for taking my question. Another one on pain. For the neuropathic pain study, could you talk about reasons to be optimistic that this drug will compare favorably to existing treatment options based on your experience with VX-150? And then, very quickly on sickle cell and the CGT Access Model, how does the timeline for that program compare to the expected launch timeline for exa-cel? Thank you.

Reshma Kewalramani -- President and Chief Executive Officer

Sure. The first question on how do we think about VX-548 in neuropathic pain and what are our expectations, as I shared with you earlier, when we were waiting on the acute pain phase 2 results, I have high expectations for the VX-548 program in general. And that extends to neuropathic pain. And the reasons for that are multifold.

But here are three reasons: one, NAV1.8, as a target, has often been called the Holy Grail in the pain setting because pain signals go through the NAV1.8 channel, and that's how these signals are propagated. So, they are central to the perception of pain. That is for acute and that is the same for neuropathic. Two, VX-150, the predecessor molecule, already delivered positive proof of concept in neuropathic pain.

That study had patients -- the 150 study had patients with something called small fiber neuropathy, and it also had patients with diabetic neuropathy. That's the study we're doing now, diabetic neuropathy. And three, the VX-548 molecule is multifold, more potent, and has better drug-like properties, which is why we went on to seek another molecule despite the success with 150. You put that all together and that sort of gives you a sense for why we have high expectations for this.

I think you had a second question on CGT. Let me ask Stuart to comment on that.

Stuart Arbuckle -- Chief Operating Officer

Yeah, well, so on the CGT Access Model, I would consider this kind of complementary to our ongoing efforts with both government and commercial payers to secure access for exa-cel as close to approval as we -- as we possibly can. The model has only just been announced. And so, it's obviously going to take a while for that to be fleshed out and then -- and then implemented. We're certainly not relying on that to be in place for a successful launch of exa-cel.

As I said in my prepared remarks, we've been having extensive discussions with both government and commercial payers for the last few months and will continue to up to and post the approval of exa-cel. And so, we are working with them. We're not relying on the CGT Access Model for a successful launch. What I do think it is a signal of, though, is just how important payers consider getting innovative therapies like exa-cel to these traditionally underserved patient populations.

So, to us, it's a real indicator of a groundswell of opinion that people want to get these transformative medicines for patients who have been poorly treated in the past.

Will Pickering -- AllianceBernstein -- Analyst

Thank you.

Operator

Your next question will come from Jessica Fye with J.P. Morgan. Please go ahead.

Jessica Fye -- JPMorgan Chase and Company -- Analyst

Hey there, good evening. Thanks for taking my question. I have a commercial question on VX-548. I believe the randomized phase 3 trials have a primary analysis against placebo, but there's also an opioid comparator arm.

How do you think about the commercial implications if the pain efficacy looks better or worse than the opioid arm? Thanks.

Reshma Kewalramani -- President and Chief Executive Officer

Yes, this is Reshma. You're right about the study design. It is a study that has a primary endpoint of VX-548 versus placebo, just like the phase 2 study. And there is a secondary endpoint with regard to the opioid comparator arm.

And you'll remember, in the phase 2 study, we also had an opioid arm. But in the phase 2 program, given the reasonably efficient study design, it was not for comparison but for context. But I will point you to the press release that we put out to give you -- if you want to get a sense for what the magnitude of the treatment effect was and how it compares, and I'll just say that it compares favorably. Of course, it was not there for comparison.

Let me turn it over to Stuart to comment on the commercial implications.

Stuart Arbuckle -- Chief Operating Officer

Yeah. So, Jessica, if you offered people today a medicine which had opioid-like efficacy but without all of the associated baggage including addictive potential, they would tell you that that is a very very attractive treatment option for them to be considering. If we were superior to an opioid, then clearly, that would be additionally beneficial and something that we would obviously be very pleased about. However, I don't want people to take away anything other than if you have opioid-like efficacy without the baggage, that is a very very attractive treatment option.

And I think that would be very commercially successful option.

Jessica Fye -- JPMorgan Chase and Company -- Analyst

Thanks. And if I could just sneak in a follow-up, are there any side effects that we should be keeping an eye out for with this mechanism as we approach that phase 3 readout?

Reshma Kewalramani -- President and Chief Executive Officer

Yes, this is Reshma. If you look at the phase 2 data, both in abdominoplasty and bunionectomy, the benefit-risk profile looks very good. And when you look specifically at safety and tolerability, it compares very very well to placebo. So, a really good-looking side-effect profile.

Jessica Fye -- JPMorgan Chase and Company -- Analyst

Thank you.

Operator

The next question will come from Colin Bristow with UBS. Please go ahead.

Colin Bristow -- UBS -- Analyst

Hey, good afternoon, and congrats on the quarter and all the progress. Maybe, first, on the pipeline and CRISPR-based DMD therapy, could you give us any more color on the progress of the IND filing? And is it reasonable for us to expect any clinical data in 2024? And then, secondly, on VX-880, what should we expect to see at ADA in terms of patient numbers and cohorts? And then, just a follow-on from that, with regards to 264, now the IND is cleared, could you give us any more color in terms of the materials or the design of the device? Thank you.

Reshma Kewalramani -- President and Chief Executive Officer

Sure, Colin. There were a couple of questions in there. Let me talk about the type 1 diabetes questions first, and I'll come back around to -- to DMD. With regard to the type 1 diabetes portfolio at Vertex, we really have three programs.

The first is VX-880, that's the naked cell program that uses off-the-shelf immunosuppressants. That's the program that has completed, and I'm very pleased to share completed part A and part B. And that's the program where we're going to share the results at multiple congresses through the year, starting with ADA. What you should expect there is the full cohort of part A and part B patients, and you should expect that -- that is to say more patients' worth of data than we've previously shared and longer-term data, including some patients that are out more than a year.

Those same cells, VX-880 cells, are the foundation for program 2 which is the cells plus device program. And those same cells are the foundation for program three which is the hypoimmune program. And that's really important because, as you know, there are two parts to this. The first is having cells that are fully differentiated and insulin-producing, we've got that.

And the second is how to evade the immune system. In the 264 program, we evade the immune system with a device. I'm not going to share any more details than we have in the past, but I will say that it's a proprietary device that has particular materials, geometry, and structure that allow for oxygenation and nutrient transport, as well as sensing of glucose and release of insulin without worry of the immune system coming into the cells. And from what we've seen to date in large animal models and small, no fibrosis.

And of course, the third is the cells with the edits so that the edited cells evade the immune system. With regard to when we can see data from VX-264, we haven't guided to that, but we are very pleased with the clearance of the CTA and IND. And we expect the trial to start dosing patients in the near future. With regard to the DMD program, you'll recall that our approach is different than the approach being taken by many in the field, that is to say, our approach is grounded in human genetics.

And what we see is that if you have near-full length or full-length dystrophin, which is the goal of our program, you have a very mild version of the disease. There is no such human genetic validation for an approach using micro-dystrophin. We're excited about the program. It is in its IND-enabling studies, and we are on track to complete those studies and get the IND filed toward the second half of this year.

Susie Lisa -- Senior Vice President, Investor Relations

Thanks, Colin. That brings us to time, so can you wrap this up, please?

Operator

Yes, ma'am. That will conclude our question-and-answer session as well as our conference call for today. A replay of today's event will be available shortly after the call concludes by dialing 1-877-344-7529 or 1 ( 412 ) 317-0088, and you can use the replay access code 8384718. Everyone, have a great day.

Duration: 0 minutes

Call participants:

Susie Lisa -- Senior Vice President, Investor Relations

Reshma Kewalramani -- President and Chief Executive Officer

Stuart Arbuckle -- Chief Operating Officer

Charlie Wagner -- Chief Financial Officer

Salveen Richter -- Goldman Sachs -- Analyst

David Risinger -- SVB Securities -- Analyst

Mohit Bansal -- Wells Fargo Securities -- Analyst

Geoff Meacham -- Bank of America Merrill Lynch -- Analyst

Phil Nadeau -- Cowen and Company -- Analyst

Andrew Tsai -- Jefferies -- Analyst

Will Pickering -- AllianceBernstein -- Analyst

Jessica Fye -- JPMorgan Chase and Company -- Analyst

Colin Bristow -- UBS -- Analyst

More VRTX analysis

All earnings call transcripts