Vertex Pharmaceuticals Incorporated Presents at Goldman Sachs 34th Annual Global Healthcare Conference, Jun-11-2013 10:00 AM

| About: Vertex Pharmaceuticals (VRTX)

Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX)

June 11, 2013 1:00 pm ET

Executives

Ian F. Smith - Chief Financial Officer and Executive Vice President

Analysts

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Great. Good morning, everyone. Thanks for joining us I'm Terence Flynn, one of the biotech analysts here at Goldman Sachs. We're very pleased to welcome this morning Vertex Pharmaceuticals. With us this morning from the company is Ian Smith, Executive Vice President and CFO. Thanks for your time, Ian. Definitely appreciate you guys taking a trip out here.

First, to start, we're required to make certain disclosures and public appearances about Goldman Sachs' relationships with the companies that we discuss. Disclosures relate to investment banking relationships, compensation received or 1% or more ownership. I'm prepared to read disclosures for any issuer now or at the end of this call, if anyone would like me to. However, these disclosures are available in our most recent reports available to U.S. clients on our firm portals. In addition, update to those disclosures are available by ticker on the firm's public website at www.gs.com/research/hedge.html.

With that, I think Ian wanted to make some opening remarks, and then we'll launch into questions.

Ian F. Smith

Yes, thanks, Terence. So just as Terence provided disclosures, we need to refer you to our Safe Harbor statement. Risks in our business are more fully disclosed in our SEC filings.

I just want to summarize, really, just the last 12 months of Vertex, and -- just very briefly, and then go to Q&A. I'll go back to about January, February of last year when we launched our second medicine. That was in the area of cystic fibrosis. That was our initial medicine to treat a subset of people with cystic fibrosis, and then since then, we progressed with that launch. We're looking to expand the label of that drug, that's KALYDECO, and treat as many people possible with cystic fibrosis around the world. And more recently, in the area of cystic fibrosis, we've had some very good results that suggest we're on the right track to get into a larger number of patients by using combination therapy to address certain kind of patients with cystic fibrosis. And then also, over the last 12 months, we're fast following in, in a disease area that is an older disease area for us, and that's the area of HCV. And we have a drug on the market right now that's doing very well financially for the company and also for the patient. But we're looking to maintain a presence in HCV by creating an all-oral regimen. It might be short duration and high viral cure. And we've made great progress over the last year in that area, too.

And then I'll just conclude by saying, financially, the company is strong. We have over $1 billion of cash on the balance sheet. And at this point in time, we're in the process of converting $400 million of debt into equity. And I anticipate we're going to be in a position where we have significant cash on the balance sheet with no convertible debt outstanding come the end of this quarter. So financially, we're in very strong shape. And it's been a rare period for the company and the progress that we've made for the disease areas and the patients, and it's been a lot of fun.

Question-and-Answer Session

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Great. Well, congrats on all the progress. And maybe to start, you mentioned you have launched 2 drugs within the last 3 years or so. And you've kind of been in the middle of this ongoing discussion about just drug pricing. There have been a lot of austerity measures across the globe here, pricing differential on U.S. versus Europe. Maybe just provide your perspective on kind of the future of drug pricing here in the industry and maybe how that relates back to innovation. And more specifically, on the orphan drug side, that has been an increasing area of focus, I think, among both companies and the investor base.

Ian F. Smith

So it's an interesting area, and it's a fascinating area right now as there is kind of like a challenging economic and geopolitical environment. And -- but I come back to the kind of principles of health care, which is the benefits of the drug for the patient. And my thought is that as you look into the future, you must be working in areas that have significant value to a patient to the health care system. That's what true innovation is. I'm happy to say that I believe that's where Vertex is focused, whether it was our first drug in hepatitis C significantly increasing cure rates or whether we're addressing cystic fibrosis, which is a disease that can affect young children and cause early death. And we're addressing these in highly innovative ways. And I think we're bringing a large amount of value or medical benefit to these patient communities. And to me, that's the future of health care. And if you're in an area that's outside true breakthrough medicines for patients, I do believe value capture is more difficult. And I don't think I'm saying anything that people don't understand, but I think days are gone when you can just price a drug and that's not the true benefit to the price. And so that's how we think about it. That's how we'll think about it going forward. And the fact that you're in an orphan disease indication or not an orphan disease indication, I just still think the principle is the value and benefit to the patient.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Okay. And how about the differential between U.S. and Europe? I mean, I know you guys have made the case that you see the value of KALYDECO, for example. The value to a patient is the same, whether it's in U.S. or Europe. How does that factor in here going forward? And I guess you guys have been successful on that front. I guess it comes back to your comments on innovation and drug, but maybe just touch on that and how you see that evolving.

Ian F. Smith

Yes. So separating Europe from the U.S., the European environment is definitely challenging. Not only is it challenging because it appears as though there is more financial restrictions, but it's also challenging because you're dealing with -- although it's Europe, it sounds like it's one continent, you're dealing with many different countries and many different, let's say, approval processes for reimbursement. And so it is a much more challenging environment out there. But as we see it, again, what is the value? What is the benefit to the patient? Stay true to that, and that's how we've progressed with KALYDECO in Europe. And we're really pleased with our progression over there. And I think it's helped because of the support and the advocacy that we have for the drug in the patient community and the benefit that the drug is seen to provide.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Great. Maybe moving on to KALYDECO and some of the growth drivers. So you guys obviously have a bunch of initiatives here to broaden the population base both in U.S. and Europe. Can you just give us an update on where things stand on the European launch side for the 551D patients, and then higher level, the other trials that you guys are conducting to broaden that label beyond 551D? And what's the ultimate piece of that pie look like?

Ian F. Smith

Yes. So maybe step back for those that aren't as familiar as yourself, Terence, of how we're progressing. So we have two, let's say, differential approaches to address this, at this point, a large number of CF patients. One is with monotherapy, and that's with KALYDECO. KALYDECO is already approved and launched on the market in the U.S. and also in some of the European markets already. It's treating a subset of patients with a certain mutation, and that's called the G551 mutation. And it's for patients that are 6 and older. So in the U.S., we're treating the vast majority of the patients with that mutation, and that's around 1,000. We estimate it's around 1,000. We're treating the vast majority of those in the U.S. When we look to Europe, we believe that population is a similar size. And as we go through each country, the major countries within -- in Europe, we have been approved, and we're getting reimbursement for the drug. And the launch is going very well in Europe, and we're very pleased with it. Now, ultimately, when we've addressed the majority or the vast majority of the G551 patients in the U.S. and Europe, we think that's around 2,000 of the, let's say, the total 70,000 CF patients. So as you can see, it is a subset of patients. So the next step for us is how we can potentially cause KALYDECO monotherapy to be labeled to treat the other patients that it may be effective in. And there are other mutations that are similar, not the same, but are similar to that of the G551. It's known as a gating mutation. So we're running studies right now, Phase III registration label expansion studies for these other mutations. And there's basically 3 areas, which is a gating mutation, which is very similar to the G551 mutation, that will add about another maybe 500 to 1,000 patients in U.S. and Europe. There is a residual function known mutation, which is similar to a gating function. It has some form of channel on the cell surface, so KALYDECO may be appropriate for those patients. And then there's what's known as an R117H mutation, which is some -- it's a form of residual function mutation. If we're successful in these Phase III and Phase II studies that we're performing in these mutations, we have the potential to take what is around 3%, 4% in the G551 patient population, all the way to maybe 10% to 15% of the 70,000 patients with KALYDECO monotherapy. First data from these studies should start to come in the second half of this year. And as we look into 2014, that's when we hope and look to see the label updated to expand KALYDECO into these patients. And ultimately, 10% to 15% of the 70,000 translates to 7,000 to 10,000 patients being treated with KALYDECO instead of the current estimated 2,000. So that progress is going very nicely. We're on track. And we look forward to updating you as the clinical day rolls out from the studies that we're currently engaged in because that would give an indication to the total population with KALYDECO.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

And you guys have breakthrough status for those monotherapy indications. So would you anticipate -- because I don't know that any companies have gone through the sNDA process on their breakthrough. But do you anticipate the turnaround time at the FDA? Let's say, the data looks good, reproducible versus the 551D patient population, would the turnaround time in FDA be quicker given breakthrough? Or have you just not had those discussions yet because the data is not yet mature?

Ian F. Smith

So we do have breakthrough designation with KALYDECO. It's interesting breakthrough designation, and it's nice to have it. But if you talk to other companies as well that have it around drugs, the clarity of what it actually means is not completely clear. What we can tell you is it allows us to have an ongoing dialogue with the FDA. It allows a greater attention and greater resources at the FDA to be applied to the development of KALYDECO, which -- whether that ultimately results in a faster, let's say, access to the patients, we'll see. But it does allow us to be creative and work in concert, so to speak, with the FDA about filing strategies, registration strategies. And we know that the resources are being devoted for a review of the program. The ultimate results of that, I can't give clarity to, but we do have ongoing dialogues of how we may get the drug to the patient as fast as possible, pending clinical results.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Okay. And I guess breakthrough is a good segue into the next program. So we talked about KALYDECO monotherapy. Obviously, the other bigger picture piece of the puzzle here is moving into this broader patient population with combo. Your first combo that you're going after is KALYDECO, plus 809, for the homozygous F508del patients. That Phase III program is going on. You've got it to data next year. Maybe just orient us in terms of that trial design, any update on enrollment, when we could expect data first half of the year, second half of the year. Maybe we'll start there.

Ian F. Smith

Yes. So I'll keep putting just back into the context of kind of a schematic that I have in my head, which is, so you've got KALYDECO monotherapy on the market and approved with the G551 patients. And then you've got label expansion that may take us to 10% to 15% of the 70,000. The next step-up for us is this other type of treatment that I was just commenting on, which is a combination therapy, which uses 2 compounds. One of them is KALYDECO. The idea here is if we can address this -- what's known as the F508 homozygote patient population, that we have the potential to add maybe another 50% of the 70,000 to the, let's say, 10% to 15%, taking this all the way up to 60 or more percent of the patients with CF by addressing it with either monotherapy or this combination therapy we're currently developing in Phase III. These patients are more difficult to treat. The Delta 508 homozygote patients, they're more difficult to treat. They don't have the channel and the cell surface. So therefore, you need -- first need a molecule that can traffic the channel to the cell surface. That's what VX-809 does, we believe. If you can get channel to the cell surface and then add KALYDECO, KALYDECO can open up that channel, just as it does with the G551 patient. That's the concept of using combination therapy for these patients. We've got really encouraging data from Phase II from 2 programs now that suggest that this is the right way to address these patients. So we're in Phase III. The update on the Phase III progress is that we are enrolling patients into the Phase III program. It -- there are 2 programs, Phase III programs, of 500 patients each. So we're enrolling patients into those studies. And we'd anticipate data next year to pass, whether it's first half, second half. I think we'll know better when we fully enroll the studies. So we'll provide an update later in the year when we're fully enrolled. The study design, for us, is kind of -- this is a benefit of getting the breakthrough designation, as you pointed out before, Terence, which is, we're very excited about study design. We've got 2 doses that we believe are effective in the Phase III, and those will be compared to placebo. The study is 6 months duration. Typically, chronic dosing, you would look at 12 months duration. But we have an agreement with the FDA for a 6-month duration, Phase III program. And the endpoints or the measurements of the study are beyond just an FEV. FEV is the pulmonary function test, how well a patient can breathe, how well their breathing improves. That's the primary endpoint. But part of the excitement of our Phase III program is we get chance over a 6-month period to measure other endpoints, such as pulmonary exacerbations, weight gain, in terms of how the patient feels and is able to process nutrients and so on. To us, the excitement is being able to see what the result could be over a 6-month duration. The clinical results we have so far are over 28-day period. And we're very excited and somewhat surprised that the results were so good in the Phase II program, but that led us to this longer duration study in Phase III. So we'll see how that progresses. And the study is ongoing.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

And I know there have been questions about would -- given the unmet need here, would one trial be sufficient to gain approval here for the 508del homozygous if you had some supportive data from the second trial? Or do you think the bar is really 2 STAT-C trials here for approval?

Ian F. Smith

Very difficult to answer with a committed answer, to be honest. I like the fact that we're in a disease area where we have got breakthrough designation. We're running a large study. We're collecting -- we have 2 large studies. We're collecting a lot of data. I look at that as the opportunity to discuss the data. There are primary endpoints. There are secondary endpoints. But there is a lot of education that's ongoing all the time with how we're treating these patients. And therefore, the collection of the data from all of these 1,000 patients will allow us to have a good discussion with the FDA when we have all that data next year.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Okay. And then I know another topic point of discussion is pricing. Obviously, you have KALYDECO in that $300,000 price point on a gross basis. But when you think about the combo, maybe walk us through -- I know you're not going to comment on pricing specifically. But just what are some of the factors that go into that decision? I know, historically, the physicians used to quote reduction exacerbations. Leading to hospitalization is one of the kind of key pharmacoeconomic elements that you think about as you think about the benefit of these drugs. But as you kind of pull everything together from these trials when the data comes out, what are the most important ones that we should focus on as we think about what the price point might be here relative to KALYDECO for the combo?

Ian F. Smith

Yes. My comments go back to your original question, actually, which is, what's the environment today for pharmaceuticals and biotech in terms of pricing and austerity measures? I just go back to the principle of we're thinking about this as a company. What is the value of the drug to the patient? And the Phase III program has multiple endpoints, lots of data that we collect. And we'll have a better understanding when we've run these studies. And at that point, we'll be in a better position to comment on pricing. And so to us, the simplistic answer is it's too early, but it's too early because we're running a study that's very different in terms of its duration and its collection of data when compared to the Phase II program. But we'll be happy to talk to you when we have that data in hand next year.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Okay. Great. Maybe moving on to the next portion of patient population, which is the heterozygous F508dels. Obviously, you guys will have some data at the upcoming ECFS conference here for the second corrector program that you're running, so 661, plus KALYDECO. Maybe just give us a highway of what to look for as we head into ECFS. I know you're not going to give us any data, but just what are the key presentations that we should be looking for? And then what are the next steps here on 661, specifically? And I know you have another molecule behind there. I'm sorry, for the homozygous patient population. We can talk about hetero after that. Sorry.

Ian F. Smith

Okay. No. So if I miss any of those questions, just [indiscernible]. So what I heard in that list was, first of all, we are at a medical conference in a couple of days from now. It's European Cystic Fibrosis Conference. And that's on Thursday, where we'll be presenting, let's say, 3 pieces of data. I'll just summarize, first of all, that data for those 3 data presentations, which is, they are in relation to VX-809, the Phase III drug that I just described. That presentation of data is very similar to what you've seen before. There is some additional analysis in there that compares a Cohort 3 that was the BID dosing of VX-809. So it compares Cohort 3 to a placebo group, which is pulled. But the conclusions are the same and the findings, supporting going to Phase III. So that's a presentation that's over there, which is the Phase II of VX-809. There is 661 data, so the data we haven't yet spoken about here today. But we have provided the data of VX-661. To me, the data is similar to what we presented in the past before and how 661 applies to 809 as well. And they're both corrector-type compounds. And so 661, it was a different clinical study, and it was a combination approach where we dose from day 1 so we could truly see the FEV improvement measured from day 1 of dosing instead of having to deal with lead-in period of monotherapy. So 661 was interesting because it was also validating of the principle of combination therapy for these patients that data will be presented as well. And then, for us, a fascinating part of Thursday's presentation is going a little earlier and deeper into the science where we have efforts in next-generation correctors, where we believe that combining our first-generation corrector and our second-generation corrector, that might actually approach the folding pathway in a different way, that the combination of those 2 corrector compounds could lead to an enhanced benefit to the patient. And so we'll be providing some in vitro data and some background to our discussions there. And maybe other ways of how we might think about heterozygous-type patients, heterozygous being that they have a Delta 508 and one allele and a mutation on the other allele. So -- but that's -- it's mainly in vitro work, but so far, the in vitro work that we've done has actually paved the way to where we've gone in development. And so we've been following the early signs very nicely. So it's -- that will be on Thursday.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Okay. And so 661, so I guess next steps here, is that an end of Phase II meeting with the FDA? And then how do we think about that relative to timelines on 809?

Ian F. Smith

Yes. So I'll start with VX-809. VX-809, our estimate is 1 year to 18 months ahead of 661. So 809 is in a Phase III. It's focused on the Del 508 patient, and that is progressing very nicely. As I said, we're recruiting patients. Then as we come further back to the earlier-stage corrector compounds, we have VX-661 and VX-983 that are similar. Now the 2 compounds are similar, but they're both different than VX-809. VX-809, unfortunately, has a PK or a drug interaction that causes us to have to extrapolate the dosing levels of any drug that's combined with VX-809. The 2 earlier-stage compounds don't have that. Now if we look into the future, how we want to treat patients, we are thinking about combination therapy still. That's how we get to the Delta 508 patient or the heterozygote patient, potentially, and it might be with triple combination. So the advantages of VX-983 and VX-661 is we don't believe they have this PK interaction. So you progress both 983 and 661, make a choice between either 1 of these compounds, and the probable route for each one of these is to actually go into the heterozygous through triple combination therapy or potentially triple combination for enhanced benefit of the Delta 508 patient. So that's how we think about the progress forward. In terms of the next steps for each one of those compounds, we should be doing a 1-month study in patients with VX-983 starting later this year, data to come next year in combination with KALYDECO. And the next steps for VX-661 is a discussion with the FDA about what study we may be able to run with 661. And we've got lots of different ideas that we'll discuss later in the year once we've had that discussion with the FDA. But it is the key moving forward to expand the patient population. That's how I describe it, which is choosing which patients to go for, first of all, once we've had the discussions with the FDA.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Right. So it's the right way to think about it. So we have 661, 983, different metabolic pathways, break those down, is the decision which to carry forward more driven by, actually, the second-gen corrector, which you're still in the process of kind of optimizing in terms of that drug's profile so that you don't have interactions with 661 and 983? Is that the right way to think about one of the gating factors maybe to which of those molecules goes forward? Is it actually being driven the second-gen corrector that's yet to be determined?

Ian F. Smith

I'd actually say, no, not necessarily. It's about 661 and 983. It's about the profiles of those drugs. They are different molecules, although they're similar. And when you get different but similar, you sometimes get different responses, whether that's on an efficacy side or a safety side. So the choice will be between 661 and 983. And then we will look at how they may combine with the second generation. So we're trying to bring the 661 and 983 together. In 2014, we'll be able to make that choice to then think about doing 3-drug combinations using the second generation as well.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Okay. And so you said, at ECFS, we will get some data from your second-gen program in vitro side. How much longer before you can guys -- think you guys can put one of those drugs into the clinic on the second-generation side?

Ian F. Smith

So using the crystal ball, because it still is in preclinical development lead optimization, we would hope to be in the clinic before the end of 2014 with second-generation corrector.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Okay, great. Any questions from the audience before we move on to hep C? Okay. Great. Well, maybe you guys obviously are -- we're at the forefront here of changing the paradigm on hep C. We've obviously seen the paradigm is in the midst of shifting again. Maybe just walk us through kind of what you're seeing now in terms of the marketplace on current treatment rates, the type of patient that's coming in and then this warehousing phenomenon. And how difficult is it to actually ascertain that -- the size of that warehouse? Because I know that's something that you guys have done work on the past. And obviously, there's a lot of focus on the investor side in terms of trying to gauge what's going on in the market dynamics.

Ian F. Smith

Yes. So I wish I had a whiteboard behind me because I could just draw you the shape of the curve that has been dominant every time there's been, let's say, a therapy, a medicine launch for hepatitis C, so whether this was interferon or whether it's pegylated-interferon or whether it's pegylated-interferon with a direct antiviral, whether it's the next generation of drugs. But if I was drawing a curve, you have this rapid uptake, which the treatment rates are far more accelerated than where they settle in at the normal, and that's because of this warehousing phenomena that you speak to, Terence. And so you do -- you should anticipate that there will be this rapid uptake as new therapies are introduced. And it's because they're collecting the patients that chose to defer treatment while they were expecting the new treatment. However, it does decline. And it's declined every time there has been a new therapy introduced, whether it's because of the expectation of a future therapy or whether it's just you burn through or you actually treat those patients that were deferring their treatment for the new therapy that came along. So in terms of treatment rates, yes, I think they will pick up again because the patient is deferring treatment in the hope that they'll be able to take a, let's say, a 1 pill once a day for 12 weeks, which is the hope in this area today. So treatment rates are declining today. They'll pick up again. And then when you look out into the future, we'd say that -- I think the most important thing to try and understand the number of people who will be treated for hepatitis C is actually to understand the diagnosis rate. People go straight to how many patients are actually being treated. The hepatitis C patient population, it's kind of like an iceberg that tips out of the water and then how many people are underneath the water in terms of having the disease but don't know it. And if there's 4 million people with hepatitis C in the U.S., there may be 1 million that have been diagnosed. And most of those -- or some of those are being treated. But there might be 3 million that just don't know it. So to try and understand the scale of this market is what is the diagnosis rate will give you a leading indicator to how many people will ultimately be treated. If you go undiagnosed, obviously, you don't become treated. So as we look into the future, we do look at diagnosis rates picking up. We do think this is a significant patient population, that if you can provide an all-oral therapy, a short duration and high viral cure to a disease that is significant as it progresses in the body, then this is just a significant patient population that should be treated.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

And what's the biggest driver of moving that diagnosis rate? Is it really just screening programs at the national level that's going to drive that? Or is there anything from a company-specific side that you guys and other companies there can really do to move the needle?

Ian F. Smith

I think there's a combination of things. First of all, it starts with the belief that there's effective therapies. Because then even if there is a diagnostic, then people might go and use the diagnostics to be diagnosed. And then there is the awareness. And then there are -- let's say, the awareness is enhanced by government programs. And we've seen all of those different 3 areas progress over the last 10, 15 years, pending the patient's need to be treated if it's an effective therapy, also, the government's interest in supporting, let's say, public awareness for the disease and how you may be treated and the availability of good drugs. And so as we look into the future on all of those, the future is bright. The therapies that are being developed and coming along are very good for hepatitis C. There are diagnostics and there are diagnostic companies that are focused in hepatitis C, just as they once were in HIV, because they're aware these new therapies are coming along. And in terms of awareness, the government has shown nice progression with how people should think about being treated for hepatitis C. So I do see that confluence coming together over the next few years and this still being a significant patient population that should be treated.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

And do you think -- I mean, if we look at HIV, I guess there's 80% of patients that are actually diagnosed now versus hep C. It's 20% to 30% of patients. So do you see that moving towards that 80%? Or do you think that's an unrealistic goal, given what you know about the hep C market?

Ian F. Smith

It's a really challenging patient population to understand. So to put a number on it, I don't think it's the same as HIV. But to say what the number is, I -- we just don't know. I mean, also, it's a disease that you can carry the disease, but you don't have any -- it's asymptomatic. So it's so different that it's very difficult to predict.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Okay. And maybe, specifically, on your program, the last few minutes, just walk us through the profile of 135 that we know right now. We're going to learn a lot more in the safety front, a number of ongoing 12 weeks studies. What's the disclosure plan for those studies? I think there's 3 to 4 of them that are going to read out now. Maybe just help us understand the different pieces here that we should be looking for as we head into the back half of the year.

Ian F. Smith

Yes. So I have to -- having the market discussion, you might say why is Vertex in hep C, as well as cystic fibrosis? Well, as we look at the hep C opportunity, it's still significant. Whether it ramps and then it declines, for us, for the company, we are -- today, as we go into hep C, as we look at our knowledge and our institutional knowledge of the disease area and the molecules that we're developing, we think we can get a really good read of whether we can participate in this significant opportunity. And that cost of investment, the molecules that we're developing and, let's say, the perceived risk of developing those molecules, we think, is a really good, I'm going to say, equation for investment into this area for the company, because we do believe the market opportunity is significant and participation will provide the company a significant return, as well as treating patients. So that said, we have what's known as a nucleotide VX-135, and we're combining with other direct antivirals. The beauty of a nucleotide inhibitor is it has a high barrier to resistance, it has high potency. And when combined with another direct antiviral, you have the possibility of causing this goal of -- or achieving this goal of 1 pill once a day to maybe 8 or 12 weeks to treat a significant disease, to cure a significant disease. So we have that opportunity and that we do have a nucleotide inhibitor, and we are combining it with other potent direct antivirals. We're combining it with an NS5A inhibitor and also a protease -- another protease inhibitor. And so we're playing kind of the optionality of each one of these regimens that might result in this goal of 1 pill once a day for a short period and a high viral cure. And that's the progress. That's what we're doing in Phase II. As we go into 2014, we'll look at the results from these various studies we're performing and proceed forward with the best regimen possible.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

And will you guys kind of put this data out as the study is complete? Or is the plan to present to the street are kind of here's the data package in total from these 3 or 4 Phase II studies on the safety side?

Ian F. Smith

To me, it's -- we'll see how it goes chronologically and provide the database on that. They are staggered, the studies. So right now, we're in the midst of a 12-week study of VX-135 with ribavirin. That's progressing. And the data will be available shortly. And then another study that we're just commencing is the combination of VX-135 into class V, which is BMS' NS5A inhibitor. That one is just about to commence. So these are -- and the -- we're doing a study with VX-135 and the protease inhibitor. And that's probably -- even though we're doing drug-drug interaction studies there, we'll start the combination study for the patients after -- as a third progress. So they'll come at different times, and I think, as we see the data, we'll be providing it.

Terence C. Flynn - Goldman Sachs Group Inc., Research Division

Great. Well, thank you very much, Ian. I appreciate the time.

Ian F. Smith

Yes. Thank you. Thanks for listening.

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