Vertex (VRTX) Q3 2026 Earnings Call Transcript

DATE

Mon, Nov. 2, 2026

CALL PARTICIPANTS

• Chief Executive Officer and President – Reshma Kewalramani
• Chief Operating Officer and Chief Financial Officer – Charles Wagner
• Chief Commercial Officer – Duncan McKechnie
• Senior Vice President of Relations – Susie Lisa

TAKEAWAYS

• Total Revenue — $3.44 billion, growing 12% driven by cystic fibrosis product performance and revenue from newer products.
• FY 2026 Revenue Guidance — $13.15 billion to $13.25 billion, representing an increase from the prior range of $13.1 billion to $13.2 billion.
• CASGEVY Revenue — $99 million, representing 30% sequential growth and nearly six times the revenue from the third quarter of 2025.
• JOURNAVX Revenue — $58 million, an 18% increase from the second quarter of 2026.
• JOURNAVX Prescriptions — 750,000, reflecting more than 40% sequential growth over the prior quarter.
• ALYFTREK Revenue — $706 million, with U.S. sales for the therapy surpassing $1 billion on a year-to-date basis.
• PALSONIFY Revenue — $10 million for the month of September, contributing to a total quarterly performance of $24 million.
• Non-GAAP Operating Expense Guidance — approximately $6 billion for the full year, updated to include $250 million in costs for the Crinetics acquisition.
• Cash and Marketable Securities — $9.8 billion as of Sept. 30, following the $9.0 billion net cash acquisition of Crinetics.
• Share Repurchases — $120 million deployed to repurchase 250,000 shares during the third quarter.
• Non-GAAP Gross Margin — 85.6%, which excludes intangible asset and inventory step-up amortization from the Crinetics transaction.
• Non-GAAP R&D Expense — $936 million, a 9% increase year over year primarily attributable to the Crinetics integration.
• Non-GAAP SG&A Expense — $556 million, up 51% due to commercial build-out for the renal, acute pain, and acromegaly franchises.
• Interest Income Impact — projected to be $60 million lower for the full year 2026 because of lower cash balances following the acquisition.
• PALSONIFY FY 2026 Guidance — $40 million to $50 million in revenue expected for the four months following the close of the Crinetics acquisition.
• Combined Non-CF Product Revenue Guidance — $500 million or greater expected from CASGEVY and JOURNAVX for the full year.
• Foreign Exchange Benefit — approximately 150 basis points expected to benefit full-year revenue growth.
• CASGEVY Patient Progress — approximately 200 infusions completed since launch and more than 750 initiations worldwide.
• Acquisition Financing — $4.5 billion raised in term loans to fund the Crinetics acquisition, currently bearing interest at approximately 4.8%.
• Non-GAAP Net Income — $1.21 billion for the quarter, or $4.76 per diluted share.

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RISKS

• McKechnie reported that “gross to net and revenue were both affected by the onetime impact of securing broad Medicare Part d access,” which resulted in a reset in net revenue for JOURNAVX.
• Wagner noted that “interest income is projected to be approximately $60 million lower than it otherwise would have been as a result of lower cash balances after the acquisition.”

SUMMARY

Vertex Pharmaceuticals Incorporated (VRTX -1.02%) reported a 12% revenue increase for the third quarter and raised its full-year revenue guidance to a range of $13.15 billion to $13.25 billion. Management noted that growth was balanced between the domestic and international cystic fibrosis franchises and new contributions from the heme, pain, and rare endocrine portfolios. The company established its fourth commercial pillar through the $9.0 billion net cash acquisition of Crinetics Pharmaceuticals and is preparing to launch a fifth in renal medicine following the upcoming Nov. 30 PDUFA date for povitacept. Non-GAAP operating expense guidance was revised to approximately $6 billion to support the integration of Crinetics and the commercial scale-up of recent product launches.

• McKechnie stated that JOURNAVX “is now the number 1 prescribed branded oral analgesic in the US,” following a 40% sequential increase in prescriptions.
• The company is prioritizing the VX-017 islet cell therapy in type 1 diabetes because it is designed for all blood types, which Kewalramani noted “doubles the eligible patient population to about 120 thousand people.”
• Management completed full enrollment in the pivotal AMPLITUDE Phase 2/3 trial for inaxaplin and expects to share interim analysis results in early 2027.
• Vertex extended its patient support program for JOURNAVX into 2027 to facilitate access for patients without current payer coverage.
• Kewalramani reported that the next-generation 3.0 CFTR corrector VX-828 triple combination delivered a 9.4 millimole reduction in sweat chloride through 28 days of treatment in a study of eight patients.
• The company intends to wait for proof-of-concept data from all three next-generation 3.0 programs before selecting a regimen to advance into pivotal development.

INDUSTRY GLOSSARY

• CFTR: Cystic fibrosis transmembrane conductance regulator, a protein that regulates the flow of salt and water in and out of cells.
• IgAN: IgA nephropathy, a chronic kidney disease caused by the buildup of immunoglobulin A in the kidneys.
• SST2: Somatostatin receptor type 2, the primary target for treating acromegaly with oral agonists like Palsonify.
• AMKD: APOL1-mediated kidney disease, a genetic condition causing rapid decline in kidney function.
• BAFF: B-cell activating factor, a cytokine that promotes the survival and maturation of B cells.
• APRIL: A proliferation-inducing ligand, a protein that plays a role in B-cell development and autoimmune diseases.
• PDUFA: Prescription Drug User Fee Act, the date by which the FDA must complete its review of a drug application.
• eGFR: Estimated glomerular filtration rate, a measure used to assess how well the kidneys are filtering waste from the blood.
• UACR: Urine albumin to creatinine ratio, a marker used to identify and monitor kidney damage.

Full Conference Call Transcript

Operator: Good day and welcome to the Vertex Pharmaceuticals Third Quarter 26 Earnings Call. All participants will be in a listen only mode. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touch tone phone. And to withdraw your question, please press star then 2. 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: Evening, all. My name is Susie Lisa, and as the senior vice president of relations, it is my pleasure to welcome you to our third quarter 26 financial results conference call. On tonight’s call, making prepared remarks, we have Dr. Reshma Kewalramani, Vertex CEO and president, Charles Wagner, chief operating officer and chief financial officer and Duncan McKechnie, chief commercial officer. Given the January 1 transition by Charles to the COO role solely, please note that this is his last quarterly earnings call and is successor, Jonathan Pool, our current SVP of finance, will join us for our Q4 26 call in February. 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 Merck marketed medicines for cystic fibrosis, sickle cell disease, beta thalassemia, moderate to severe acute pain, and acromegaly, our pipeline, the recently completed acquisition of Crinetics Pharmaceuticals and the expected benefits of that transaction, 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. I will now turn the call over to Reshma.

Reshma Kewalramani FASN: Thanks, Susie. Good evening all, and thank you for joining us on the call today. I am pleased to note that Vertex achieved another quarter of excellent commercial results and pipeline advancement. Third quarter total revenue grew 12% year on year. Revenue growth was nicely balanced coming from both The US and international, from CF and from our 2 more recently launched medicines, CASGEVY and JOURNAVX, as well as a contribution from PALSONIFY for the month of September post close of the Crinetics acquisition. Rare endocrine is now our fourth commercial pillar. And with the PDUFA date later this month for povitacept in immunoglobulin A nephropathy or IGAN, we plan to soon establish our fifth in renal.

Before turning to the R&D update, I want to acknowledge Charles’s final and 30 first earnings call as CFO. Charles’ leadership, integrity, judgment, and intellectual rigor are unparalleled. He has deftly helped lead our transition from a CF only company with $4 billion in revenue in 2019 to a company soon to be commercialized in 5 disease areas, with more than triple the revenue with our guidance for over 13 billion in 2026. I look forward to continuing to work with Charles in his role as COO, driving forward the Crinetics integration and our key priorities as we grow and scale the company. I can think of no better successor to Charles than Jonathan Pool.

Our SVP and current head of finance, who will take over as CFO on 01/01/2027. Moving now to the R&D update for the quarter. I will cover 4 disease areas CF, endocrinology, both rare endocrine disorders and type 1 diabetes, and renal in detail. But first, let me start with quick highlights. from 4 other programs. In severe sickle cell disease and transfusion dependent beta thalassemia, we were pleased to have recently received approval for CASGEVY in patients ages 2 to 11 in the US, UAE, Bahrain, as well as in patients ages 5 to 11 in the UK.

In pain, along with the strong growth in prescriptions, we are also seeing fast growth in the body of compelling JOURNAVX real world data emerge, such as a recent paper detailing 80% of freedom from opioid use following total knee replacement when the pain management regimen included JOURNAVX. In chronic pain, both phase 3 studies in painful diabetic peripheral neuropathy remain on track to complete enrollment by the end of this year. And for us to be able to share results by mid-2027. In myotonic dystrophy type 1 or DM1, we remain on track to share interim results from the Galileo global phase 1/2 clinical trial of VX-670 before the end of the year.

And in generalized myasthenia gravis, we have completed enrollment of the Aetna Phase 2 dose ranging study of povitacept and expect to share proof of concept data in the first half of 2027. Moving on to the more detailed R&D review, starting with cystic fibrosis. We see ALYFTREK as the most effective medicine approved for CF. With once daily dosing, ALYFTREK can treat up to 95% of people with CF, and in our trials, more than 75% of ALLE treated patients ages 12 and older achieved sweat chloride levels in the range of CF carriers. That is to say, ALYFTREK-treated patients are achieving sweat chloride levels associated with no manifestation of CF disease. nor reduced life expectancy.

On the regulatory front, we continue our work to expand to treating younger patients and have initiated global submissions for ALYFTREK approval in children ages 2 to 5. Lastly, in CF, an update on our next generation 3.0 correctors. We studied VX-828 as part of a triple combination in a cohort of 8 people with CF and as a dual therapy in another cohort of 8. All 16 patients had FMF mutations, which is a more challenging population to treat than patients with FF mutations. In this, FF the VX-8 28 dual combination did not alter sweat chloride relative to the Trikafta baseline.

In the triple combination versus a baseline on Trikafta, the 28 delivered a 6.6 millimole per liter reduction in sweat chloride at day 28 and a 9.4 millimole reduction through day 28. The VX-828 regimen is oral once daily with a good safety tolerability, and DDI profile. In short, these are excellent results. However, given the very high bar set by ALYFTREK, we intend to wait for all the data from the next gen 3.0 family before determining next steps, namely advancement into pivotal development. VX-581 and VX-272, the other next gen 3.0 correctors are currently in first in human studies, and the NexGen 4.0 molecules are in late preclinical development. Moving to our newest pillar, rare endocrinology.

With the Crinetics acquisition now closed, for Palsonify, and Duncan will provide details on the ongoing U. S. Launch. On the R&D side, the most advanced molecule after Palsonify is Atumelnant in congenital adrenal hyperplasia or CAH. Which has orphan drug designation in the US, EU, and Japan, and where the phase 3 pivotal trial is well underway. The primary efficacy endpoint for this Phase 3 study is the proportion of patients achieving the combination of normalization of androgens and physiologic glucocorticoid dose levels. This is the true goal in CAH therapy. And it is what was demonstrated in the phase 2 trial. It is also what no other CAH medicine to date has attempted to achieve.

In adult CAH, we are targeting completion of enrollment in the phase 3 study in Q1 2027. The study then calls for 32 weeks of dosing. In pediatric CAH, Atrumelnant is in a phase 2 dose ranging study. Our goal is to rapidly advance the pediatric program into pivotal development following planned regulatory interactions. In addition, the adaptive Phase 2/3 global study of Atumelnant in ACTH dependent Cushing syndrome is already underway outside the US and was recently granted orphan drug designation in The US. We have planned engagements with the FDA to confirm their expectations for this program and look forward to updating you in the coming months. Let me now turn to T1D.

After careful analysis, we have chosen to prioritize acceleration of VX-017 as our lead program. Recall, VX-017 is an allogeneic off the shelf glucose responsive insulin producing fully differentiated islet cell therapy. It has a similar target product profile to Zemila Cell but is designed for people with all blood types. This doubles the eligible patient population to about 120 thousand people. The potential to bring transformative benefit to even more patients is the key reason to focus on VX-017 given the resource intensity, complexity and manufacturing demands of cell therapy programs. We have already begun dosing patients with VX-017 in a Phase 1/2 study.

Our near term goals are to demonstrate proof of concept, and to scale up manufacturing with the goal of moving to pivotal development next year. Finally, we continue to progress our serial innovation work in T1D. Focused on improved immunosuppression and on generating hypoimmune islets with the goal of making this potentially curative therapy available to even more people. Turning now to renal where we have 4 programs in mid and late stage development. Starting with Pove and IgAN, we are both excited and ready for our PDUFA date on November 30th, just weeks away. Duncan will address our launch readiness.

We just wrapped up a sparkling ASN annual meeting with the RAINIER Phase III interim analysis Presentation and publication in the New England Journal of Medicine supporting what we believe is a differentiated potentially best in class profile for povitacept in IgAN. Simply put, Povitacept will offer a trifecta of excellence in efficacy, tolerability, and patient centric administration features. I will focus tonight just on the patient centric features. The commercial presentation of povitacept is clearly differentiated with a small volume 0.46 mL once every 4 weeks subcutaneously dosed via auto injector at home.

On this point, this advantage is reflected in the poster presented by If et al. at the recent ASN of a qualitative survey study of about 25 adults with IgAN in the US. That revealed 96% of patients preferred an auto injector relative to injection via a prefilled syringe and 80% preferred dosing every 4 weeks versus weekly. Our ambition is to launch povitacept globally. To that end, we have already completed our filing for potential accelerated approval in the Kingdom of Saudi Arabia, where it has been granted breakthrough status. We estimate KSA represents an incremental 7 thousand-patient opportunity.

And we are planning forward for our regulatory submissions in other regions, including Europe and Asia, when the study completes and the 2-year eGFR data are available. On povitacept in membranous nephropathy, our OLYMPUS Phase 2/3 pivotal trial is ongoing with Phase 3 enrollment and dosing well underway. at the selected dose of 80 milligrams subcutaneously every 4 weeks. Recall this study has a 104-week endpoint. On anoxaplin in AMKD, we have 2 pieces of news since our last earnings call. First, to recap the exciting results from the AMPLIFIED study.

In cohort 1 of patients with AMKD and modest proteinuria, treatment with anaxaplin on top of optimized standard of care led to a 42.7% reduction in urine albumin to creatinine ratio or UACR. At week 13 compared to baseline with a 44.7% reduction. This is remarkably consistent with the treatment effect previously shared in the Phase II data in AMKD published in the New England Journal of Medicine. In cohort 2 of people with AMKD in type 2 diabetes, treatment with anaxaplin led to a 17.3% reduction in UACR. And a 25 point 4 percent reduction in UPCR at week 13. Of note, the majority of patients in both cohorts did not have a diagnosis of FSGS.

Anaxaplin was generally safe and well tolerated with no serious adverse events related to anaxaplin. All adverse events were mild or moderate in severity. We look forward to discussing these results with regulators in the context of the AMPLITUDE study next year. The second key milestone was that we completed full enrollment in the pivotal AMPLITUDE Phase 2/3 trial and we are fully on track to share the results from the interim analysis of AMPLITUDE early next year. If positive, this interim analysis will support potential accelerated approval in the US. Rounding out on renal enrollment in the VX407 AGLOW phase 2 study in ADPKD completed enrollment and we are now on track for study readout next year.

With that, I will turn the call over to Duncan for a commercial update.

Analyst: Thanks very much, Reshma. Our commercial story continues to be 1 of excellence in launch execution across CF, heme, pain, and most recently, rare endocrinology. Through the first 9 months of the year, our ongoing launches of ALYFTREK, CASGEVY, and JOURNAVX have generated over $2 billion in revenue led by over 1.7 billion in ALYFTREK sales and more than 350 million in combined CASGEVY and JOURNAVX sales. To give you a brief overview and put Q3 revenue, patient, and prescription growth in context, In CF, we delivered $3.3 billion in revenue with strong switching to ALYFTREK and over 18 thousand patients benefiting from ALYFTREK around the world.

In heme, CASGEVY achieved $99 million in quarterly revenue with approximately 200 infusions completed since launch and a fourth consecutive quarter with more than 100 patient initiations. In moderate to severe acute pain, JOURNAVX reported over $58 million in revenue. More than 1.6 million patients have now been treated with JOURNAVX in The US, and JOURNAVX is now the number 1 prescribed branded oral analgesic in the US. And in rare endocrinology, Palsonify contributed $10 million in revenue for the month of September following the close of the acquisition. For the full third quarter, Palsonify revenue was approximately $24 million. I will now cover these disease areas in more detail starting with CF.

The Q3, $3.3 billion in global CF revenue represents 8% year-over-year growth. Global growth overall was led by ALYFTREK, which delivered $706 million in worldwide sales in Q3. In the US, ALYFTREK sales year to date have now surpassed $1 billion. In both the US and outside The US, ALYFTREK sales continue to build primarily from patients switching from Trikafta and new patients with rare mutation. Outside The US, we now have ALYFTREK reimbursement in 31 countries. Looking ahead, our CF growth drivers remain consistent and clear. Label expansions in rare mutations, penetration into younger age groups, additional geographies, and by the underlying survival benefit of patients on CFTR modulators.

Turning to CASGEVY in severe sickle cell disease and transfusion dependent beta thalassemia, where $99 million in Q3 revenue reflects 30% sequential growth. We have infused twice as many patients in the first 9 months of 2026 as all of 2025. Since launch, we have initiated over 750 patients worldwide on CASGEVY, and with 4 consecutive quarters of initiation numbers exceeding 100 patients we now have patients at all stages of the treatment journey. We have also continued to enhance the patient journey shortening the overall time from referral to infusion, and decrease the number of mobilizations.

We have excellent visibility into the number of infusions which is when we recognize revenue, for the rest of this year as well as into 2027. That said, infusion timing reflects patient choice with some expected seasonality in Q4 so I would encourage you to focus on the strong annual performance rather than any single quarter. CASGEVY will contribute meaningfully to our greater than $500 million non CF revenue goal this year and is on its way to achieving its own blockbuster potential. With generics in moderate to severe acute pain, we are building a franchise for the long term and are focused on the following critical markers of success.

Broad payer coverage, prescription growth, breadth and depth of prescribing, the addition of JOURNAVX to hospital pathways, and revenue. These are the building blocks of a sustainable, long term, multibillion dollar pain business. Let me start with prescriptions because that is the best indicator of underlying physician and patient demand. In the third quarter, JOURNAVX prescriptions totaled over 750 thousand up more than 40% sequentially from Q2 2026. At the end of Q2 2026, we are well on our way to achieving our guidance of more than 3x the number of prescriptions in 2020 versus 2025. Prescriptions continue to split roughly 50/50 between hospital and retail channels.

Third quarter JOURNAVX revenue of $58 million, up 18% quarter-over-quarter, reflects continued high gross to net with the patient support savings program remaining on. Let me walk you through the revenue growth dynamics. A significant driver of gross to net is continued utilization of our patient support program. We have chosen to leave the PSP in place and extend it into 2027 so that people who are prescribed JOURNAVX but whose plans do not yet cover it can receive the therapy. Accordingly, when we sunset the PSP mid next year, we continue to expect gross to net to stabilize at a level close to other mass market brands in the range of 50% to 60%.

In addition, in Q3, gross to net and revenue were both affected by the onetime impact of securing broad Medicare Part d access in July. As that access came online, previously uncontracted prescriptions to contracted rebated pricing resulting in a 1-time reset in net revenue. This is in line with our overall strategy to secure broad sustained access across commercial and government plans so we can successfully convert physician practices to JOURNAVX for all their patients. This quarter marks our first opportunity to speak about Palsonify as part of Vertex following the deal close at the beginning of September, and we are pleased with the launch trajectory to date.

Let me briefly describe the disease, the unmet need, and frame the key metrics at this stage in the launch. Acromegaly is a symptomatic disease that affects approximately 20 thousand patients in the US and a similar number in the 5 largest European markets plus Japan. Although surgery is the first line of treatment, only 40% to 50% of people achieve durable remission, so the majority of patients need lifelong treatment. In the US, they are treated by approximately 3 thousand endocrinologists. Until the launch of Palsonify, the main option has been monthly injections with somatostatin receptor ligands or SRLs delivered using large gauge needles. These treatments have 3 limitations.

Firstly, they can cause painful injection site reactions at the beginning of the month. Secondly, the efficacy tends to taper off in the latter part of the month leading to breakthrough symptoms such as joint pain, swelling and fatigue, and thirdly, the recurring logistical challenges and burden of chronic depot therapy. The unmet need is therefore significant. The ideal treatment for patients would be a highly effective, easy to take, well tolerated, oral medicine that provides sustained control of the disease and 1 that has a broad indication for both naive and switch patients. This is the exact profile of Palsonify as the first and only once daily oral SST 2 selective agonist.

As we integrate the Crinetics business, there are 3 areas of focus for the success of Palsonify, building on the excellent base of 80% reimbursed coverage. Firstly, build a broad base of repeat HCP writers for Palsonify; secondly, drive growth in both the new and switch settings; and thirdly, deliver on our revenue goals. We are very pleased with the progress that the Crinetics team and now the integrated Vertex team are making against these goals. Approximately 500 endocrinologists are writing Palsonify, and there was a significant increase in the number of repeat writers in Q3 compared to the first half of 2026. Palsonify now has the leading brand share of over 40% among patients initiating or switching therapy.

And lastly, we see continued strong growth in patient enrollment. Leading to $10 million in revenue in September, $24 million in Q3, and approximately $60 million for the first 3 quarters of 2026. Our focus is on excellence in execution to further accelerate the US performance and prepare for international launches. Let me conclude with an update on our commercial readiness for povitacept in IgAN. Reshma has already highlighted the trifecta of efficacy safety and patient centric dosing of povitacept. Put simply, with the PDUFA date just days away now, we are 100% ready, and we are incredibly excited to bring povitacept to patients with IgAN. Our field team is fully hired trained and ready to go.

Over 90% of the team have deep nephrology experience, and many of them have been engaging with nephrologists in IgAN disease education activities since early this year. We also know that the patient experience is of supreme importance in biologics, and IgAN is no different. Based on years of providing comprehensive patient support to our CF patients, we have built a people based and tech enabled patient support program to facilitate patients to get their povitacept as fast and as easily as possible. In addition, our payer conversations continue to proceed very well. Payers understand the significant unmet need, are very familiar with povitacept’s clinical profile, and have responded positively to its differentiation and overall value proposition.

We have had many engagements with nephrologists over the last few months, including at the excellent ASN Kidney Week meeting last month. They are looking for treatments that meaningfully and rapidly reduce proteinuria, have a favourable tolerability profile and offer convenient dosing, alongside a seamless treatment experience built on access and patient support. Our discussions with physicians over the last quarter have increased increasingly revealed the importance of dosing frequency, dose volume and viscosity and method of administration. We continue to believe that in addition to an excellent efficacy and safety profile, the low dose easy to use, at home auto injector will be an important differentiator for povitacept. I will now turn the call over to Charles.

Charles F. Wagner Jr.: Thanks, Duncan. Vertex delivered strong third quarter results with total revenue growth of 12% year-over-year, reflecting revenue growth of 10% in the US and 16% internationally. Results include an approximate 1 percentage point favorable impact from foreign exchange and 10 million of revenue from Crinetics following the close of the transaction. Globally, CF revenue grew 8% year-over-year with 5% growth in the US and 12% outside the U.S. or 10% on a constant currency basis. On a non-GAAP basis, third quarter gross margin was 85.6%, On a GAAP basis, gross margin of 84.7% includes intangible asset and inventory step up amortization resulting from the purchase accounting for the Crinetics acquisition.

Turning to Q3 operating expenses, which include approximately $60 million of Crinetics operating and integration related expenses in September. Third quarter non GAAP R&D expense was $936 million, an increase of $74 million or 9% year over year. Approximately $30 million of the increase was attributable to Crinetics. Non GAAP s g and a expense was $556 million, an increase of $187 million or 51% year over year. Nearly 80% of the incremental spend was to enhance our commercial capabilities. Within the increase in commercial spend, the biggest drivers were povitacept in renal and JOURNAVX, and then Palsonify. $30 million of the incremental SG&A spend is related to Crinetics.

We also recorded $41 million in acquired IPR&D expense in Q3, including a $28 million upfront payment for new business development agreement with AbCellera. During Q3, we incurred approximately $50 million in non operating costs associated with the Crinetics transaction financing, including higher interest expense due to the new bank loans and other related costs. In addition, interest income was $15 million lower than it otherwise would have been as a result of lower cash balances after the acquisition. Our third quarter non GAAP effective tax rate was 18%, up approximately 40 basis points compared to Q3 25. Third quarter 26 non GAAP net income was $1.21 billion and third quarter 2026 non-GAAP earnings per share of $4.76.

Turning to the balance sheet. We ended the quarter with approximately $9.8 billion in cash and investments, following the close of the Crinetics acquisition. Note that we raised $4.5 billion of term loans to fund a portion of the acquisition currently bearing interest at approximately 4.8%. Even with a busy period for BD, we also deployed approximately $120 million during the quarter to repurchase roughly 250 thousand shares. Year to date, we have repurchased approximately 2 million shares for $921 million. Our strategy for capital deployment remains unchanged with the priority on investing in innovation, including external innovation, and an additional allocation for share repurchases. Now turning to guidance.

Total revenue guidance, we are raising our prior range of $13.1 billion to $13.2 billion to a revised range of $13.15 billion to $13.25 billion. The increase reflects the addition of Crinetics, which we expect to contribute $40 million to $50 million to full year 2026 revenue. The underlying drivers of our revenue outlook are unchanged. Continued CF performance, including the ongoing ALYFTREK launch together with growing contributions from heme, pain, and now rare endocrinology. We continue to expect more than $500 million in revenue from CASGEVY and JOURNAVX with additional contribution from 4 months of Palsonify. Consistent with prior guidance, our outlook continues to include an expected full year benefit from foreign exchange of roughly 150 basis points.

Given our visibility into the drivers of our business and with just 2 months of the year remaining, we have a high degree of certainty in our revenue guidance range. We continue to expect full year gross margins slightly below 86%. On operating expenses, we are revising our prior combined non GAAP operating expense guidance of $5.65 billion to $5.75 billion to a revised estimate of approximately $6 billion. The standalone Vertex business remains at the high end of our prior range, and the increase in guidance is attributable to the inclusion of approximately $250 million of Crinetics operating expenses and integration related costs.

This updated operating expense guidance reflects continued investment in our late stage clinical pipeline and the commercial infrastructure supporting our launch and revenue diversification. For the full year of 2026, we expect total nonoperating costs of $105 million related to the financing of Crinetics including higher interest expense and other related costs. In addition, interest income is projected to be approximately $60 million lower than it otherwise would have been as a result of lower cash balances after the acquisition. Please see slide 23 of the earnings presentation for full details on the impact of Crinetics upon Q3 results and full year 2026 guidance.

We continue to expect our full year non GAAP effective tax rate to be between 19.5% and 20.5%. In summary, Vertex delivered strong third quarter results with 12% revenue growth and increasing revenue diversification beyond our leading CF business. The integration of Crinetics is well underway, and with the strong commitment of the Crinetics team, we are accelerating commercial, clinical, and valuable preclinical programs. Our continued leadership in CF, the increasing contribution of CASGEVY and JOURNAVX, momentum in rare endocrinology, and with the PDUFA date for povitacept in IgAN on November 30th, we are on the verge of launching our fifth commercial pillar in renal. I will now ask Susie to begin the Q&A period.

I will now ask Susie to begin the Q&A period.

Susie Lisa: Thanks, Charles. Chuck, can you please open it up to questions?

Operator: Will do. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And today’s first question will come from Cory Kasimov with Evercore. Please go ahead.

Cory Kasimov: And Charlie, congrats on the new role. it is very well deserved. So on Pove, I wanted to ask about the recent citizen petition that raises the question of whether RAINIER’s IgG monitoring and dose hold rules need to be carried into clinical practice. So I guess how frequently did patients actually fall below the IgG threshold or require treatment interruptions? And what do those data support or potentially indicate in terms of monitoring requirements in the commercial label? Thank you.

Reshma Kewalramani FASN: Hey, Cory. it is Reshma. Let me take that 1. With regard to the citizen’s petition, thereabout 200 or so of these that happen every year. About 80% or so of them are from named individuals or companies, and about 20% of them are anonymous. This 1, as you know, was anonymous. If the question behind your question is how do we feel about the label, Where are conversations with the agency? Everything that you would expect to be happening with the FDA is happening. And we are really looking forward to our PDUFA date.

On the specific of how can we think about what values IgG levels can achieve The bottom line is, before this wave of B cell modulating therapies, the way a lot of folks thought about IgG levels were from congenital diseases of immunologic basis. And that is where a lot of these values came from. So in this day and age, what numbers could IgG levels get to? I think the best examples to look at are the clinical trials. In our example, we studied over 500 people We measured every 4 weeks. If the IgG was going to go down, we certainly would have found it because we looked and we considered a single excursion, to be worth noting.

I would say the most important point to think about is infections. And on that note, there are no opportunistic infections, as you know, in the povitacept program. The SAEs of infection are balanced. it is exactly 0.5% in povitacept and 0.5% in the placebo group. And the rest of the infections are mild to moderate. You put this together, and you can see why we are so excited about, the PDUFA date. that is very helpful, Reshma. I appreciate it. You bet. You bet.

Operator: The next question will come from Jessica Fye with JPMorgan. Please go ahead.

Jessica Fye: Hey, guys. Good afternoon. Thanks for taking my question. Can you help set expectations for what would represent a win coming out of AMPLITUDE on both proteinuria and eGFR? Thank you.

Reshma Kewalramani FASN: Yep. Just on the AMPLITUDE study, that is the 1 that is completed full enrollment and it completed the interim analysis cohort enrollment last year. Setting us up for the interim analysis early 2027. A win would be a statistically significant result on the GFR slope. And I say that because, of course, we are going to measure proteinuria and GFR. But our agreement with the FDA, on what would be acceptable for accelerated approval is GFR. that is where they are on the disease, AMKD. I expect the phase 3 to look a whole hell of a lot like the phase 2 in terms of proteinuria. But the key element here is GFR.

And it is a statistically significant difference between the anaxaplin-treated group and the placebo on top of standard of care. Now, I will not share with you the, power analysis and such, but that is what we are looking for because GFR is what the accelerated approval agreement with the FDA is based on.

Operator: The next question will come from Salveen Richter with Goldman Sachs. Please go ahead.

Salveen Richter: Thank you. Good afternoon. Just a follow-up on Cory and Jessica’s questions. With regard to povitacept, can you speak to your comfort and history with the manufacturer? And then with regard to anaxaplin, can you just walk through further for the reasons for confidence into the 48-week interim data early next year specifically how we get comfortable thinking about the separation between drug and placebo at that time point? And just the read through from some of the data sets that you have generated to date? You bet.

Reshma Kewalramani FASN: So, Salveen, let’s do Pove first, and then let’s get to anaxaplin. On povitacept, the specific question you had is how is it going with manufacturing? We have been with the same manufacturer. All through phase 3 and through to the lead-up for our PDUFA date. We feel really good about where we are. And as you know, in addition to the review of, safety and efficacy, ClinPharm there is also a review of the manufacturing package. All of the interactions that you would expect us to be having with the FDA are occurring. So overall, I feel very good about where we are.

Moving then to aanaxaplin but staying within renal, 1 way to think about the anaxaplin program and GFR because to date, in both the original phase 2 a study that we published in the New England, that was the 1 that had the 47.6% reduction in proteinuria. And the more recent amplified results, which were from the more cohort 1, the more modest proteinuria, that 1 was a 44.7% reduction in UPCR. I think the best way to think about that in terms of GFR, which is the end point we have agreed upon with FDA is in these 2 ways.

1, substantial reductions in proteinuria in homogeneous proteinuria kidney disease have timing and, again, been linked to improvements in GFR. that is 1 general statement. Maybe a second way to look at this is by talking about IgA nephropathy. We used to talk about IgA nephropathy as a fairly indolent disease. But as you can see from the placebo arm of IGAN trials, those patients are losing about 5 cc’s per mL per year. Right? AMKD is a rapidly progressive disease, so more than that. 6, 7, 8 cc’s per mil per year. And the FDA themselves have said in IGAN, that they are going to be comfortable accepting 1-year GFR differences.

So when I put that all together, it adds to my confidence level of what we are going to see with Amplitude. But I would say those are 2 ways to think about, anaxaplin in AMKD.

Operator: The next question will come from Geoffrey Meacham with Citibank. Please go ahead.

Geoffrey Meacham: Guys, thanks for the question. I also want to offer up some congrats to Charles. Just have a couple of quick ones. On povitacept, Reshma, you mentioned data should continue to mature post approval, including the 2-year eGFR data. I guess the question is how much of a factor do you think this will play in your competitive position ultimately was not sure if you looked at this as maybe a tipping point in terms of what the payer and physician community is going to look at the second 1 real quick on pain, I know it looks like the trials are continuing to enroll midyear data next year.

Maybe just at a high level, give us some context for kind of what you think at this point a win would look like kind of in DPN for versus suzetrigine? Thank you.

Reshma Kewalramani FASN: Yeah. Let’s do DPN first, and then I will split the Pove question with, Duncan. On DPN, we are fully on track to complete enrollment in both the 2 Phase 3 suzetrigine trials and on track to complete the enrollment in the VX-993 DPN trial. That would put us for results somewhere mid of next year And a win would be the suzetrigine arm beating placebo treatment in the 2 DPN studies. You know, in 1 of the studies, we have a gabapentin arm to give us context, but a win would be beating placebo. that is the regulatory-enabling endpoint. On povitacept, I will just give you a top line comment.

We are gonna go to the 2-year eGFR full completion of the trial as originally designed because our ambition is to launch povitacept around the globe. The FDA has, said that they are comfortable with 1-year GFR. But other regulators have different, expectations. So that is why we are going to full, completion. And I do think the results, are fully mature at that point, and that is another advantage for all of us to fully mature 2-year data. Duncan, do you wanna talk a little bit about differentiation, GFR, and the povitacept launch in The US?

Analyst: Indeed. Hi, Geoffrey. So we thought about this question quite a bit. As you can imagine, we have discussed it with nephrologists and I would encourage you to think about it this way. Nephrologists already had a very strong level of conviction in the connection between proteinuria and EGFR, in IgAN. And I would say the data that has come out from the April BAF inhibitors over the last couple of months has only served to strengthen that conviction. So we believe on the basis of that, povitacept continues to have best in class potential. Through its excellent efficacy profile, impact on proteinuria hematuria, and Gd-IgA1 in just 36 weeks.

As well as being well tolerated and as Reshma alluded to in her prepared remarks, an incredible profile from a patient point of view with a low volume, low viscosity at home once a month auto injector. So when we have been engaging with nephrologists on this topic, which we have done a lot over the last couple of months, including of course, ASN week. They are very excited in the profile of povitacept and looking forward to trying it post approval. So we are very happy with where we are at. Great. Thank you.

Operator: The next question will come from Evan Seigerman with BMO Capital Markets. Please go ahead.

Evan Seigerman: Hi, Thank you so much for taking my question. So we are seeing some good traction with Jornavix. But you are keeping the PSP on through the rest of the year and now pointing to gross-to-net around mid-2027. You help us think about kind of the bridge between prescription growth and eventually reported revenue as the PSP rolls off and whether you expect revenue growth to inflect as normalization occurs? Thank you so much.

Reshma Kewalramani FASN: Sure thing. Duncan, maybe you could take that 1 for us.

Analyst: Yeah. So just to step back a little bit, Evan. Just to make a. Couple of points and then I will dive into the PSP program gross to net and revenue. We are very pleased with the performance of JOURNAVX This is hard work. We are changing decades of ingrained prescribing behavior and seeking to convert practices over to the use of generics. So 750 thousand prescriptions in 1 quarter, 1.6 million Americans treated, the number 1 oral branded analgesic, that would all indicate that we are making great progress.

As far as the gross to net is concerned, I would make the comment that obviously negotiated agreements to secure access for the full population with payers are important to the long term sustainable growth of the product. And so it is important that we are able to get those plans in place. For example, the 2 Medicare Part D plans that came in place in July this year. At this point, we have about 82% managed lives covered. But that does mean that there are patients who are yet to be covered, and we want to make sure that those patients have a great experience. So we are taking the strategic decision to keep the PSP program switched on.

We will sunset it by the middle of 2027. And at that point, you can expect, as we have said before, gross-to-net to stabilize at the sort of normal oral branded level of 50 to 60% and revenue growth to grow commensurately. Great. Thank you.

Operator: The next question will come from Brian Abrahams with RBC Capital Markets. Please go ahead.

Brian Abrahams: Hey, good afternoon. Thanks for taking our question and congrats to Charles from us as well. On the povitacept launch, it sounds like you guys have had great engagement with physicians and payers. I am just wondering what is the right way to think about how initial uptake might balance both the growing awareness and enthusiasm versus the potential that a lot of nephrotic patients may have already come on to therapy with a drug in the class? And then just secondarily, a ALYFTREK conversion looks like it is been picking up steam in last few quarters. Just wondering the right way to think about the continued trajectory there. You bet.

Reshma Kewalramani FASN: Brian, I am going to ask Duncan to comment on both.

Analyst: Let’s do a second question first, and then we will go back to povitacept. Yes, Brian. ALYFTREK has been driven predominantly by new reimbursement agreements out Obviously outside The US, we have had another slew of those agreements in Q3. And it is also being driven by the new rare mutation indications which obviously offer a de novo patient population to the CF modulator class, writ large in some cases and certainly ALI specifically. So those are essentially the 2 main drivers of ALYFTREK growth over the last couple of months which we are particularly happy with. In terms of povitacept, and a couple of comments there.

Firstly, as with, say, CASGEVY, and we will be providing you with the metrics that we think are most useful to look at in our earnings call at the beginning of 27. I would say you make a great point. The physician enthusiasm for the new BAF inhibitor or APRIL/BAFF inhibitors has been incredible, and that is certainly driving success in the market. And the numbers are a little bit unclear at this point, but let’s say let’s say. sorry, not povitacept. VOXZALL and Truqap and Taclonex closed the year with about 3 thousand patients on medicine, which is probably roughly where they are going to end up. That leaves us with 163 thousand yet to go.

So with the level of nephrology enthusiasm for advanced therapy and treating early in the disease, For the nephrologist, enthusiasm for povitacept specifically, both its clinical profile and the patient experience and that vast number of patients who still need treatment. Remember 75% of patients with IgAN have a proteinuria above 1 gram. We think there is a huge opportunity here. Thanks.

Operator: The next question will come from Michael Wei with UBS. Please go ahead.

Michael Yee: Hey, guys. Michael Yee at UBS. 2 questions on anaxaplin. Reshma, you made some great comments about some of the previous data we already know in Phase 2. I guess 1 new thing that has come out is obviously some of the IGAN data that shows significant eGFR benefits even at 9 months on just a couple mL per minute deltas and similar proteinuria reductions you are seeing with anaxaplin. So my question is, given the significant benefits you are seeing and given a 12-month time point, our math suggests that a 2 mL per minute benefit should be stat sig. Just wanted to understand your view about the IGAN data and how that translates here.

Given the deltas you see? And the second question is, on PARASOL, I think the working group has been trying to push proteinuria as an endpoint. Was there any color that you got out of their working group how that may be an accelerated endpoint. Thank you.

Reshma Kewalramani FASN: Yeah. Mike, first, let’s do PARASOL. PARASOL is a very important and influential group. You know, they have come together multiple times over time and work with the FDA to evolve endpoints. And FSGS and their work with the agency, I do think help to move the agency to a proteinuria-based endpoint. We are members of the broader PARASOL community. The thing that I am paying most attention to is the community clearly seem interested in moving to a proteinuria endpoint for AMKD? And at the same time, the FDA and our agreement is indeed with GFR. So, given that, we are focused on GFR. On your math for GFR, I will not argue with your math. Seems reasonable enough.

The thing to say, Mike, is I think what we are learning from the example of IgA nephropathy, because there is so many different classes now that have been used in IgAN, it matters not only that you get the proteinuria down. It matters how you get the proteinuria down. And decreasing proteinuria by way of APRIL/BAFF inhibition has more beneficial impact on GFR than perhaps other methods of reducing proteinuria.

And the thing that I take away from it is targeting the underlying cause of disease is always a better move than going upstream or downstream. it is actually another reason I have confidence in Amplitude because it is another example of a proteinuria kidney disease where we are targeting the underlying biology. So I think both in the dimension of quantity of protein reduction, but also the how. The quality of protein reduction. In IgAN, APRIL/BAFF,, upstream in the forehead hypothesis has beneficial effect. I think that is what we are gonna see with amplitude because anaxaplin is equally targeting that underlying cause. Perfect. Thank you.

Operator: The next question will come from Tazeen Ahmad with Bank of America. Please go ahead.

Tazeen Ahmad: Hi, thanks for taking my question. Let’s go back to the CF franchise for a second. You just give us your thoughts, Reshma, on how the data for VX-828 compared to your expectations just based on the preclinical data that you looked at? And then if you think about the other CFTR modulators that you have, where do you think is the biggest unmet need at this point? And where is the most room for improvement over what you have with ALYFTREK. Thanks.

Reshma Kewalramani FASN: You have such a good question, Tazeen. What is the unmet need? So let me just take a step back and tell you about VX-828 and then where we are going. If you look. And I think we provided it on the slide If you look at the range of outcomes, the decrease in sweat chloride, certainly, the range of covers, our expectations. On sweat chloride reduction that is. But it is obviously a small study. It says n equals 8. The reason we are not advancing VX-828 in and of itself Although the results are excellent, if you were at a different company, you would just be over the moon with results like this. Right?

At 28 days, we are more than 6 points of sweat chloride improvement. And through 28 days, we are catching 10 points of sweat chloride. Those are good numbers. Especially when you take into account it is versus Trikafta. This is not versus a placebo baseline. So those are excellent results. And it is once a day, good DDI, favorable safety. The thing for us is we have 3 medicines in this NG 3.0 family. And we want to pick the best 1. We are gonna have the results from the other 2 medicines, VX-571 and VX-272, next year. When we have all of those results, we will pick the 1 that is best suited to move forward.

And if you say, what is the residual unmet need? I think Tazeen, that is a very, very hard question to answer because when we look at the data with ALYFTREK, we are almost superimposable onto the Gaussian distribution of sweat chloride of normals, of non-CF people. So really, it is a matter of now not almost being superimposable, but being fully superimposable. So a little bit more sweat chloride, more patients getting to less than 30. that is what we are looking for.

Operator: The next question will come from Akash Tewari with Jefferies. Please go ahead.

Analyst: Hey, thanks so much. Can you talk a bit more about your decision to file on 2-year eGFR data? I know you were going to make a decision. I was anticipating sometime next year. It sounds like you are making the call now. And just from a statistical perspective, if a patient on placebo starts another APRIL/BAFF drug during that kind of 1- to 2-year window how are they actually accounted for statistically? Are they included in the eGFR final analysis? Thank you.

Reshma Kewalramani FASN: Yeah. I just wanna make sure I understood your question about the decision for 2-years. I think you were saying why continue to 2-year GFR. Did I understand correctly? Right. Why make the calls now? Because I know you had previously talked about regulators in a global setting 1 or 2-year data, but we already knew that. So what led to the decision to go forward to 2-year today? Yeah. Obviously, we can decide if we wish to cut the data and do a 1 year cut. We could do that at any time.

But our decision to, indicate that we are going to continue to 2-years is because people have asked us the question, including our clinical trial sites, about what our goal is and how we see this. So to allow preparation for everyone, we have let folks know that our intention is and our ambition is global filings, and that is gonna require 2-year GFR because ex US, not all the regulators have agreed to 1-year GFR. So that is the rationale for that.

With regard to how our patients manage, there are clear rules in the statistical analysis plan that not only the FDA, but global regulators have set forward for management of dropouts, missing data, and how to handle if patients are no longer in the study. So we are simply going to follow the rules that are very clearly laid out. I will not go through all of them in excruciating detail, but they are in excruciating detail.

Operator: The next question will come from Terence Flynn with Morgan Stanley. Please go ahead.

Terence Flynn: Great. Thanks so much for taking the question. I guess 1 more on anaxaplin. I was just wondering on the amplified data. I know there is been some questions about the breadth of response in the moderate proteinuria cohort. So just maybe, Reshma, you could provide a little bit more detail just want to ensure that there was not a small subset of FSGS patients that was driving that proteinuria reduction that was broader based. Maybe you could talk about kind of the response rate across the population in that Cohort 1. Thank you.

Reshma Kewalramani FASN: Yeah. So Terence, on Cohort 1, that let’s call it the modest proteinuria group because this was the 0.3 to 0.7 UPCR proteinuria cohort. The majority of patients did not have FSGS. So they did not have a biopsy, and they did not have FSGS, which you would expect because their proteinuria is modest and you are correct. The response therefore was not driven by an FSGS cohort because there were not many of them. Most people in the study were non FSGS patients.

Operator: 1 more question, please, Chuck. And the next question will come from Mohit Bansal with Wells Fargo. Please go ahead.

Mohit Bansal: Hey, thank you very much for taking my question. Congrats on all the progress. My question is circling back to povitacept manufacturing. And 1 concern is around the potential use of continuous in this process. Which is relatively new for biologics at this point. So the question is, like, should we worry about it at all, or do you think the FDA has been involved enough from the beginning here for us to feel comfortable about this? Thank you.

Reshma Kewalramani FASN: Hi, Mohit. On whether the agency has been involved, yes. The agency has been involved, and we are now coming towards the end of the review, right? So we are at the point where all data has been submitted. there is an entire module on CMC and manufacturing. And, you know, we filed towards the end of March of this year. So they have had all that data now for a long time. All of the discussions that you expect us to be having, we are having. And, if you ask me if I was feeling good about, the filing, all included, including manufacturing, I would say yes. I feel good about the filing. Beautiful. Thank you. You bet.

Operator: Operator, please wrap us up. Will do. And this will conclude our question and answer session as well as our conference call for today. A replay will be available shortly after the call concludes by dialing +1 (855) 669-9.66 thousand or +1 (412) 317-0088 using replay access code 10.2 million. Thank you for your attendance today. You may now disconnect.