Conference Transcript - VRTX 2026-07-06

Operator

Good day, and welcome to the Vertex Pharmaceuticals conference call to announce the acquisition of Crenetics Pharmaceuticals. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 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. Suzy Lisa. Please go ahead.

Suzy Lisa, Head of Investor Relations

Thanks, Chuck. Good afternoon, everyone, and thank you for joining us on short notice for this exciting announcement. I'm Suzy Lisa, and as Senior Vice President of Investor Relations, it's my pleasure to welcome you to this conference call to discuss Vertex's acquisition of Kronetix Pharmaceuticals. Making prepared remarks on today's call, we have Dr. Reshma K. Walramani, Vertex's CEO and President, Duncan McKechnit, Chief Commercial Officer, and Charlie Wagner, Chief Operating and Financial Officer. We recommend that you access the webcast slides as you listen to this call. The call is being recorded, and a replay will be available on our website. We will make forward-looking statements on this call that are subject to the risks and uncertainties discussed in detail in today's press release and in our filings with the Securities and Exchange Commission. These statements, including without limitation those regarding Vertex's marketed medicines for cystic fibrosis, sickle cell disease, beta thalassemia, and acute pain, the proposed acquisition of Krenetics and the expected benefits of the transaction, the commercial potential of Pelsanify and the clinical potential of Atumelnan and Krenetics' other pipeline assets, the expected timing of closing and associated financing, 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 guidance we discussed this evening is presented on a non-GAAP basis. Please consult our forward-looking statement on slide two and see our filings for more information. I'll now turn the call over to Reshma.

Reshma Kewalramani, CEO

Thank you, Susie, and good afternoon, everyone. We are excited to announce that we've entered into a definitive agreement to acquire Crenetics Pharmaceuticals for $85 per share in cash in a transaction with a total equity value of about $10 billion or $8.8 billion net of estimated cash acquired. Crenetics is an excellent strategic fit for Vertex with its focus on serious diseases in specialty markets with significant unmet need, well-understood causal human biology and potentially best-in-class medicines that could deliver transformative benefit to patients. Cronetics is two compelling, de-risk, potential best-in-class specialty endocrine assets. CalSatify, in the early days of its U.S. commercial launch, and ActuMelanant, in pivotal development for congenital adrenal hyperplasia, or CAH, and in Phase II for Cushing's Syndrome. There are additional preclinical and clinical programs in the Cronetics pipeline that we won't highlight today, but we'll discuss post-closing. We believe that these assets have a combined peak sales potential of more than $5 billion. Palsanify is the first and only once-daily oral therapy for adults with acromegaly. Palsanify is already FDA-approved and generating strong early momentum in the U.S. post an October 2025 launch. More recently, it was approved by the EMA. We see blockbuster potential for Palfonafide. Atumelanth is a once-daily oral ACTH receptor antagonist, currently in Phase III development for CAH. Atumelanth has additional potential in ACTH-dependent Cushing's syndrome, another rare endocrinology disease. It is currently in Phase II development for this indication. Across the indications for Atumel Nant, we see multi-billion dollar potential. Given the significant unmet medical need in acromegaly, CAH, and cushions, along with the best-in-class potential of both Palsanify and Atumel Nant for the treatment of these conditions, we see the Krenetics acquisition accelerating Vertex's revenue growth and diversification, as well as enhancing our long-term earnings profile. We are truly excited by what the Crenetics team has built in the endocrinology space over the last 18 years. Their world-class R&D capabilities are focused on their G-protein-coupled receptor drug discovery platform and differentiated small molecules. Crenetics has uniquely and successfully discovered and or developed multiple small molecule drug candidates for rare endocrine diseases where the natural line is a peptide. This is a capital-efficient model focused in rare endocrine conditions with high unmet need, where achievement of proof-of-concept benefits from evaluation of disease markers early in development and reaches patients via targeted SG&A footprint, all of which is strongly aligned with Vertex's strategy and our own strengths in development, regulatory, and specialty commercialization. As we've discussed previously, it's not only the assets, but the people and culture that factor heavily into our assessment of companies. It's no different in this instance. The Chronetics team focus is singular. Their science is rigorous. They are committed to world-class commercialization, and their culture is dedicated to excellence and patience. We value deeply this alignment on these important dimensions and believe it will ensure our combined success going forward. We are excited to work with the talented chronetics team to build on the momentum they've created and to bring these specialty endocrine medicines to more people faster. On strategic fit, we have a high bar when we evaluate acquisition opportunities, applying a consistent set of criteria that you can see detailed here on slide five. Serious diseases with high unmet need, well-understood causal human biology, validated biomarkers that enable efficient clinical and regulatory pathways, specialty markets, and first-in-class or potentially best-in-class medicines. Both Palsonify and AtumelNet meet every one of these criteria and check every one of these boxes. We believe Vertex's global infrastructure and commercial footprint will meaningfully amplify the reach of chronetics science, and we are confident that we can accelerate the trajectory of both lead assets. Let me walk you through these programs in more detail, starting with Palsonify and Acromegalib. Acromegaly is a rare chronic hormonal disease caused by the overproduction of growth hormone, most commonly due to a benign pituitary tumor, which in turn stimulates excess insulin-like growth factor 1, or IGF-1, from the liver, which is responsible for most of the overgrowth symptoms that define acromegaly. An estimated 20,000 people in the United States are diagnosed with the disease, and more than 35,000 people outside the U.S. It's a serious disease. If left untreated patients with acromegaly face enlargement of the hands and feet, serious heart and metabolic consequences reduce quality of life and shorten lifespan. Surgery is the first line of treatment, but unfortunately, only 40 to 50 percent of people achieve durable remission, and thus the majority of patients require lifelong medical therapy. The current standard of care, injectable somatostatin receptor ligands, or SRLs, are used to reduce production of growth hormone and IGF-1. However, current standard of care SRLs are viscous, require large-gauge injectables that must be administered intramuscularly or via deep subcutaneous injection. They're inconvenient, often need to be administered by a healthcare professional, and carry low patient compliance. Outside of Palfonify, oral options have limited efficacy, challenging dosing logistics, or are not indicated for treatment-naive patients. In short, there is significant unmet need to be addressed. This is where Palfonify comes in. Palfonify is an oral selective somatostatin receptor type 2 or SSTR2 non-peptide agonist. By binding to SSTR2 receptors, Palsanify suppresses growth hormone release, which in turn suppresses IGF-1 secretion. Palsanify offers multiple important features for patients. First and only, one-scale oral therapy, simpler dosing logistics, fast-acting efficacy, a well-tolerated profile with low discontinuation rates, and a broad label indicated for both SRL switch and treatment-naïve patients. The Phase 3 Palsonify data are compelling and detailed on slide 8. Pathfinder 1 on the left side of this slide enrolled patients switching from injectable SRLs. 83% of these, quote, switch patients treated with Palsonify maintained IGF-1 levels within the normal range compared to just 4% on placebo. Indeed, when you look further into the data, you'll see all but one patient in the Palsanify-treated arm had IGF-1 levels that were lower than 1.1x, the upper limit of normal. On the right-hand side of the slide is Pathfinder 2, which enrolled treatment-naive patients as well as patients who stopped treatment for four months or more, or patients who were washed out of treatment for at least three months. In this study, 56% of acromegaly-treated naive patients achieved IGF-1 normalization compared to just 5% on placebo. Both results were highly statistically significant with p-values of less than 0.0001. Palsamify was well-tolerated with no serious adverse events and low discontinuation rates. Given the differentiated mechanism of action, benefit risk profile, and significant patient dosing advantages, as well as the broad label, we see blockbuster potential for Palfonify, which I'll now ask Duncan to highlight.

Duncan McKechnie, Analyst — Other

Thanks, Reshma. The left side of the chart details the unmet need and significant gaps in the current standard of care. At three years, less than 20% of patients remain on SRLs given the painful monthly injections with large gauge needles and end-of-dose symptom breakthrough. The right-hand side of the slide highlights the market research that indicates high target physician awareness and very positive perception for Palsonify. Physician awareness is building quickly. Market research conducted in Quarter 1, 2026, shows approximately 80% unaided awareness amongst endocrinologists, and approximately 70% indicated a high intention to prescribe. Physicians perceive Palsonify as equivalent to injectable SRLs in IGF-1 reduction, symptom control, safety, and best-in-class for speed of onset, duration of response, route of administration, and dose inconvenience. This physician awareness, the broad label in both switch and treatment-naive patients, and the quality of the product profile are a compelling combination. In the context of the depth of unmet need in acromegaly, this has led to strong early launch dynamics for Palsonify. Based on quarter one, 2026 data, as previously disclosed on May 7th, Palsonify generated $10.3 million in net product revenue with strong patient enrollment forms and good breadth of prescribers. Overall, in just its second quarter of launch, Palsonify achieved an impressive 40% to 50% share of new-to-brand prescriptions with broad uptake across both pituitary centers and community endocrinologists, and across all patient segments, injectable SRL switch, treatment naive, switch patients from other therapies, and patients who have discontinued therapy entirely. With respect to reimbursement, this market is 60% private pay and the remainder of Medicare and Medicaid. The Crenetics team have made excellent progress securing reimbursement. Payer coverage currently stands at 60% through either formal coverage or medical exceptions. Crenetics have emphasized that they are on track to achieve 75% coverage by quarter three, 2026. And on the next slide, let me double-click and give some more details on Palsonify. Overall, given the unique attributes Palsonify offers to physicians and patients, we believe it is positioned to become first-line therapy in a growing specialty disease area with a high unmet need. We see multiple target patient populations totaling 10,000 in the U.S., including patients on injectable SRLs or other therapies, those who are post-surgery, actively managed by an endocrinologist who may now need treatment, those who have discontinued therapy, and those patients who are new to treatment annually. While switch patients represent the majority of the patient opportunity, Talsonify has a uniquely broad label and is the only oral therapy with data and a label in treatment-naive patients. Market research confirms that HCPs would start the majority of treatment-naive patients on Palsonify. We believe Vertexix's experience in commercializing medicines for rare genetic diseases around the globe, combined with the extremely strong foundation Chronetics has built in endocrinology, positions Palsonify to become the standard of care in acromegaly, and our expectation is that Palsonify holds the promise to be a blockbuster

Reshma Kewalramani, CEO

medicine. Back to you, Reshma. Thanks, Duncan. Let me now turn to Atumel Nance and congenital adrenal hyperplasia, or CAH. Classic CAH is a rare chronic genetic disorder affecting about 17,000 people in the U.S., with an additional 15,000 or more outside the U.S. In about 95% of cases, is caused by mutations in the SIF21A2 gene, resulting in a deficiency of the adrenal enzyme 21-hydroxylase. That enzyme deficiency means people can't produce adequate cortisol. Low cortisol levels lead to increases in ACTH production, which in turn causes steroid precursor buildup. Ultimately, this leads to excess production of adrenal androgens. To manage the disease, at minimum, patients must take glucocorticoids for life. Glucocorticoids are administered to these patients to replace the missing cortisol, and patients are often given high or super physiologic doses in order to suppress the androgen production. This creates a dual burden for patients. High androgen levels drive abnormal growth, early puberty, infertility, and long-term physical and emotional consequences. High-dose glucocorticoids can cause heart disease, obesity, diabetes, bone loss, and persistent quality-of-life issues. There has been limited therapeutic innovation in this field for the last 50-plus years. No currently approved medicine can both normalize androgens and allow people to be maintained on physiologic glucocorticoid doses. A recent market entrant works upstreet in the pituitary gland and has shown it can reduce glucocorticoid doses modestly, but it does not concurrently improve androgens with physiologic glucocorticoid dosing, leaving both the steroid burden and androgen excess incompletely addressed for many people. Atumelan takes a fundamentally different approach. This is the key point. It's an ACTH receptor antagonist that acts directly at the adrenal cortex. By blocking ACTH signaling at the adrenal level, Atumelan suppresses excess androgen production while concurrently enabling people to reduce their glucocorticoid doses to physiologic levels, the true goal of CAH management. In terms of program status, Atumelan is currently enrolling a Phase 3 CALM-CAH study of 150 adults. CALM-CAH is a 2-to-1 randomized placebo-controlled study with a primary endpoint of proportion of participants with A4, that's the androgen level, at or below the upper limit of normal, while on physiologic glucocorticoid replacement therapy at week 32. To be clear, no other drug for CAH has ever evaluated this, control of androgens and maintenance of physiologic GC replacement, glucocorticoid replacement, as the primary endpoint. The study enrolled its first patient in December of last year and is currently enrolling and dosing patients. So, too, is a phase 2-3 pediatric study in CAH. Atumel NAND has also demonstrated therapeutic potential in ACTH-dependent Cushing's syndrome, where a phase 2 trial has initiated. I'll turn it back over to Duncan to recap the phase 2 atumel NAND data in CAH, which is a major value driver and one of the primary reasons we are so excited about this acquisition.

Duncan McKechnie, Analyst — Other

Thanks, Reshma. As Reshma alluded to, the true goal of therapy in CAH is to normalize androgen levels and simultaneously enable patients to be managed with physiologic levels of glucocorticoids to replace their missing cortisol. Currently, this means seeking an almost impossible balance between androgen suppression and glucocorticoid treatment to avoid adrenal crisis while also preventing the metabolic and cardiovascular consequences of excess glucocorticoids. Essentially, physicians and their patients are currently forced to choose between androgen excess or supraphysiologic doses of glucocorticoids. As a result, there are two important points to share regarding the phase 2 data from the Atumelnat 2CAM study. Firstly, the impact of Atumelnat on androgen levels, and secondly, the impact of Atumelnat on glucocorticoid dose. To that end, the phase 2 cohort 4 data demonstrated both rapid reduction in A4 and down titration to physiologic levels of glucocorticoids. Specifically, there was an unprecedented 67% reduction from baseline in mean A4 androgen levels, even with tapering of glucocorticoid dosing. 87% of patients achieved physiologic glucocorticoid dosing while A4 reduction was maintained. In summary, we believe Atumelma achieves the previously unattainable holy grail of CAH management. It has the transformative potential to concurrently and durably normalize androgen levels while also allowing physiologic doses of glucocorticoids, as well as being well tolerated and given through once-daily oral dosing. In addition, market research with target endocrinologists confirms high awareness of these impressive phase 2 data, and the top reason physicians select Atumelman's profile in research is efficacy. Specifically, 75% of respondents cite the data on androstenedione and glucocorticoid reduction. Physicians see Atumelnut as the future standard of care for people with classic CAH. We believe Atumelnut has multi-billion dollar potential in the CAH market alone and meaningful additional opportunity in Cushing's syndrome. Before I turn it back over to Reshma to cover Cushing's, let me take one moment to step back and summarize the commercial opportunity. Going back to the strategic fit of the deal, these rare endocrine diseases are all managed by specialty endocrinologists that can be reached with a small commercial footprint. As an example, Crenetics currently serves the acromegaly market with a roughly 40-person field sales team. In total, there are approximately 8,000 endocrinologists in the U.S., and each of these diseases is managed by a subset of approximately 3,000 to 4,000 specialty endocrinologists, where we also see opportunity for synergy across these rare endocrine diseases. I'll now turn the call back to Reishma to describe the additional opportunity for Atumelnut in Cushing's syndrome.

Reshma Kewalramani, CEO

There are several additional areas of opportunity within the crinetics pipeline, both clinically and preclinically. Tonight, I'll highlight just one, ACTH-dependent Cushing's syndrome, or ADCS. ADCS is another serious rare endocrine disease with high unmet need affecting about 10,000 patients in the U.S. and about 15,000 patients outside the U.S. Surgery is first-line therapy, but many patients will require chronic medical management. Excess cortisol secretion from a benign pituitary adenoma accounts for 80% to 90% of ADCF, while another 10% to 20% comes from ectopic ATTA secretion. This prolonged excess cortisol can lead to high patient morbidity, including heart disease, obesity, diabetes, and more. By directly blocking ACTH signaling, atumelanat reduces cortisol production and thus holds transformative potential for this disease. The data in Cushing's syndrome are impressive. The phase 1-2 study of atumelanat in patients with ADCF treated with 40 mg showed at day 10 a rapid lowering of urine-free cortisol, or UFC, with three of six patients having UFC within the normal range while on physiologic doses of glucocorticoids. Data from the 80 milligram cohort also demonstrated rapid lowering of UFC with five of six patients, or 83%, achieving normalization of urine-free cortisol on physiologic doses of glucocorticoids. With regard to program status, the Phase II study has been initiated, and we are excited about taking this program into pivotal development and further. Post-closing, we look forward to sharing more on the other Cronetics Pipeline programs. For now, let me reiterate our excitement for the lead assets, CalSanify and Atumelna, our admiration for the Crenetics team's deep scientific expertise in endocrinology, GPCR biology, and their drug discovery platform, as well as the culture they have built. I'll now turn over the call to Charlie for highlights of the transaction and our outlook for the combined companies.

Charlie Wagner, CFO

Thank you, Reshma. Vertex will acquire all outstanding shares of Crenetics common stock for $85 per share in cash. The total equity value is approximately $10 billion, or $8.8 billion net of estimated cash acquired. To finance the transaction, Vertex expects to use a combination of cash on hand and debt supported by $4.5 billion of fully committed bridge financing. The transaction is subject to customary closing conditions, including approval by Krenetix shareholders and receipt of regulatory approvals. We currently anticipate closing in the third quarter of 2026. In terms of financial impact, this transaction is consistent with Vertex's capital allocation priorities, which remain focused on internal and external innovation in disease areas where we can deliver transformative benefit to people and sustainable value for shareholders. The financial case is straightforward and compelling. Palsonify is already generating revenue and building momentum with the potential to be a blockbuster drug in acromegaly. At 2 mil net has the potential to be a multi-billion dollar opportunity in CAH, with meaningful additional upside from the market opportunity in Cushing's syndrome. At peak, these assets have the potential to deliver more than $5 billion in combined annual revenue. That revenue profile furthers Vertex's goal of sustained double-digit revenue growth and is expected to be margin accretive over time. Oral small molecules in specialty endocrinology markets carry attractive commercial profiles, and Krenetic's capital-efficient development model is well aligned with Vertex's own approach to operating leverage. The transaction is expected to become accretive to non-GAAP operating income in 2029. On guidance, given the anticipated Q3 2026 closing, the impact to 2026 revenue and non-GAAP operating expenses is expected to be modest. We will provide updated 2026 guidance at the time of closing. I'll take a minute now to frame what this acquisition means for Vertex's long-term growth story. Beginning in 2023, we've spoken about our goal of five launches in five years. With this transaction, not only do we reach that goal more than two years ahead of schedule, we're also adding a fifth pillar, endocrinology, to our disease area and commercial framework alongside cystic fibrosis, heme, acute pain, and our emerging renal area. Across each of those five areas, we have a uniquely attractive product portfolio and pipeline. In CF, Eliftrek and Trikafta continue to generate strong revenue, with growth driven by approvals in younger patients, geographic expansion, and patients living longer. In heme, Casjevi is approved for both sickle cell disease and transfusion-dependent beta-thalassemia, and importantly, just last week, Kaschevi received supplemental approval in the U.S. for patients ages two years and older with either SCD or TDT. In acute pain, Gernavix is in year two of its launch and on track to triple prescriptions in 2026 versus 2025. Additional pain programs are in development. In renal, Povetacicept is advancing rapidly in IGAN with a November 30th pidufidate and is also in a Phase III study in primary membranous nephropathy and a Phase II study in myasthenia gravis. To this mix, we now add endocrinology as a fifth pillar with Palsonify already on the market and a two-month in pivotal development plus the vertex internal endoassets of our type 1 diabetes programs. We also see value in Krenetix's additional pipeline assets, and we'll discuss that post-close. We believe this combination makes Vertex a stronger, more diversified company with a long runway of growth while staying true to the strategy that's driven our success. To reiterate the investment thesis behind the acquisition, Krenetix is an excellent strategic fit for Vertex. Both Pelsonify and Atulm element meet every element of our strategic acquisition criteria. Serious diseases with high end-met need, well-understood causal biology, validated biomarkers, specialty markets, and best-in-class potential. Together, these assets add more than $5 billion in combined peak sales potential, and they do so in a disease area, specialty endocrinology, where Chronetics has built deep, durable expertise and exactly fits our commercialization framework. We're excited about this combination, and we look forward to sharing more details as we progress toward closing and beyond. With that, we're happy to take your

Operator

questions. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. And our first question for today will come from Jessica Fye with J.P. Morgan. Please go ahead.

Jessica Fye, Analyst — J.P. Morgan

Hey, guys. Good afternoon. Thanks so much for taking my question. Curious on the $5 billion peak projection for Poulsonify and Etchimelnin. How do you break that out between the assets, and does it factor in carcinoid for Poulsonify, too? And then related to Etchimelnin specifically, how much diligence were you able to conduct on the clinical profile? Did you see any safety data from ongoing trials? Thank you. Hey, Jess, it's

Reshma Kewalramani, CEO

Racheva. Let me take those two questions. I'll take the second one first. We were able to do the kind of diligence you would expect from Virtex, and everything we've seen, including efficacy, safety, makes us feel really good about what atumelanat could do for patients, not only in CAH, but in ACTH mediated Cushing's syndrome as well. On the $5 billion, one of the reasons we like this deal so much is that there are many paths to the $5 billion in revenue that we outlined. Maybe the most visible and straightforward path is just focusing on the two lead assets. We see Palsanify in acromegaly as blockbuster medicine. And then we have multibillion-dollar potential for atrium malhams in CAH. And then add on to that, really significant opportunity in ACTH-mediated Cushing syndrome. You add that all up and that's the $5 billion revenue we outlined. But there are many other pathways. As you mentioned, there's a program in phase three in carcinoid. Based on mechanism of action, I have every reason in the world to believe it will be successful. There are very interesting preclinical programs in other rare endocrine diseases that are of interest to us. I'll just call one out, Graves' disease and thyroid eye disease. So many paths to the $5 billion that we outlined. The most straightforward forward is the focus on two-lead assets. Thank you. The next question will come from

Operator

Salveen Richter with Goldman Sachs. Please go ahead. Thank you. Good afternoon. With regard

Speaker 14

to a two-moment, could you speak to how we think about the ramp of the drug and the sales outlook in the context of what's played out with New York and the drug here? And then secondly, for or Palsanify, maybe speak to the ex-US launch outlook here, given the recent EMA approval.

Reshma Kewalramani, CEO

Yeah, sure, thanks, Alvin. Let me take the first question on how we see the Act to Milnet ramp, and then I'll ask Duncan to comment on Palsanify and commercialization. Let me just make a top-line comment for both. Obviously, we're just announcing the merger agreement today. The deal still has to close, so I'm going to be thoughtful about not going too far forward before the deal closes. That being said, as you heard Duncan say, the awareness for action malnance in CAH is very high. And this idea that you can have a drug that can control both physiologic levels of GC, glucocorticoid, and concurrently manage the androgens, that is the holy grail of what physicians and patients want. And so we see a lot of opportunity, a lot of awareness, and it's an oral small molecule for this opportunity to play out in a nice launch uptake. But I won't go further than that until the deal closes. Duncan, do you want to say a couple of words about Palsonify and where you would take that once the deal closes?

Duncan McKechnie, Analyst — Other

Yeah. Hi, Salveen. Briefly, Palsonify has been approved in Europe in April, earlier this year. And without sort of prejudging exactly what we would do, our plan would be to conduct a global launch of Palsonify beyond, of course, the excellent launch that the Chronetics team are executing here in the U.S. right now.

Operator

The next question will come from Corey Kasimov with Evercore ISI.

Reshma Kewalramani, CEO

Hi, this is Josh on for Corey. Thanks for taking our question. In regards to Atomal Nant, what data did you see to make you feel comfortable that there won't be a liver safety signal as was a concern that was brought up by investors previously? And we'll leave it at that. Thanks. Yeah. We've looked at the totality of available data generated to date with ACTIMELNAND in all of the indications. So that means CAH, as well as in the early study in ACTH-dependent Cushing's. What we see is minor elevations. I believe there were a handful of cases, I think seven actually to be exact, of minor elevations in LFTs. There are no cases of LFTs plus bilirubin. Most of the cases, six of the seven, resolved without any intervention on continued therapy. So, we feel really good about the safety profile, not only in the liver dimension, which you asked about, but as we reviewed the data, we felt really good about the profile overall.

Speaker 14

Thank you.

Operator

The next question will come from Andy Chin with Wolf Research. Please go ahead.

Andy Chin, Analyst — Wolfe Research

Hey, thank you for taking the question. And I think you mentioned that the deal is going to be accredited by 2029 based on your internal assumptions. Would this largely be driven by Palsonify, or is it possible for Atomelden to launch before then? If you can provide some metrics on timing of Phase III data, that would be great.

Reshma Kewalramani, CEO

Charlie, do you want to comment on that?

Charlie Wagner, CFO

Yeah, thanks for the question. Obviously, the commentary about this becoming accretive to operating margins in 2029 factors in both our view on revenue ramp as well as OPEX trajectory over the next couple of years. We'll be more specific about that at the time of close.

Operator

The next question will come from Jeff Meacham with Citibank. Please go ahead.

Jarway (on for Jeff Meacham), Analyst — Citibank

Hey, guys. Thanks for taking the question. This is Jarway on for Jeff. Maybe two from us. First, on Pulse 7.5, what gives you confidence that the Phase 2 CAH profile would be reproducible in a larger, you know, more heterogeneous Phase 3 population? And then on Atumel Nant, what's the one risk you're most focused on as you move through the Phase 3 study?

Reshma Kewalramani, CEO

Sure thing. I think you mean Atumel Nant in CAH. and what gives us confidence that we're going to recapitulate the results in Phase 3 as seen in Phase 2. You know, one of the things we like so much about this platform is that disease biology is extremely well understood. The manifestation of the disease is clear. You can tell if the medicine is working. as I said in my prepared remarks early on, because these are exactly the biomarkers that we study as you're developing proof of concept, as is the endpoint in Phase 3. So, based on the mechanism of action, the presentation of the disease, it is a rare genetic endocrine disease, and the strength of the data, the magnitude of the treatment effect, I have high confidence in the Phase 3 program. You also ask about what risks are we looking for. There's nothing special that I would call out here. The risks for any program that is transitioning between Phase 2 and Phase 3 is simply to ensure that the safety and tolerability profile is the same in Phase 3 as was in Phase II, and we already talked about the efficacy. But I see no unique risks that concern me here.

Operator

The next question will come from Evan Siegerman with BMO Capital Markets. Please go ahead.

Evan Siegerman, Analyst — BMO Capital Markets

Hi, guys. Thank you so much for taking my question, and congrats on the proposed acquisition. So mechanistically, when you think about the kind of competition out there, Walk me through why you think the Crenetics asset is potentially better than Crenicity. I know you had some data in the slides, but when you did your diligence, what was it that was striking that caused you to decide to acquire the company or to propose the acquisition of the company? Thank you.

Reshma Kewalramani, CEO

Yeah, you bet, Evan, and thanks for your kind words. So the key here, Evan, if we just focus on CAH, is that the longstanding and very well known to the field. So this is a rare endocrine disease taken care of by a small number of endocrinologists. Endocrinologists, in any case, there's only 8,000, 9,000 endocrinologists in the U.S., kind of the same number as nephrologists, so it's a small specialty. And of that, only like 4,000 or so take care of this kind of rare endocrine disease. When you look at the disease itself, it's very clear that it's this dual burden of needing to supplement with glucocorticoids. But the best outcome would be using physiologic doses of glucocorticoids or GCs. But that's not really possible. People end up using super physiologic doses of GCs because without doing so, the androgens, which have a whole host of complexities, as I described in my prepared remarks, growth challenges, hirsutism, virilization, a whole host of excess androgen challenges. so you use more GCs. And when you do that, you're constantly teetering between too much glucocorticoids and the downstream negative consequences of that, or too little glucocorticoids and then having excess androgens. So I think Duncan described it exactly right. The holy grail has been, can we have a medicine that allows glucocorticoids at physiologic levels while suppressing androgens? And when you look at the Phase II data, and we shared some of it on the slides, that is exactly what you get. And I would say, Evan, the key thing to look at is look at the end of the trial period, where you have GCs at physiologic levels, and look at that point at the androgen or A4 level. That's the key data. When we saw that data, we were floored. That is very, very important to this field. I'm going to ask Duncan to see if he wants to make any additional comments.

Duncan McKechnie, Analyst — Other

My only additional comment to that is, and we believe that's unique, that there is no other companies that have data that has shown the ability to achieve that holy grail of both managing androgen levels as well as and simultaneously enable patients to be treated with physiologic doses of glucocorticoids. And that is unique, and no one else has shown that.

Operator

The next question will come from Michael I with UBS. Please go ahead.

Mike, Analyst — UBS

Mike from UBS. Two questions. One is just thinking about the premium on the acquisition approximately 100% and appreciating that nearly every deal I think year to date nearly has been a much more modest premium speaking to sort of bid-ask spreads and where we are in the market. So talk a little bit about either was this a very competitive situation or how did we arrive at such a high premium. The second question is more scientific and competitive in nature, and in understanding the difference between your drug and chronicity, it looks like your, well, cronetics is using quite a different endpoint in phase three, and perhaps is it that endpoint that speaks to exactly what you're trying to address in terms of normalizing.

Reshma Kewalramani, CEO

Yeah, hey, Michael, this is Rachel. Let me take the second question first, and then I'll turn it over to Charlie to tell you more about how we think about value. You are exactly right about the endpoint, and I do think that the phase three endpoint of the Acumelmant CAH study tells you exactly what you need to know about what we think is most important in this disease. And to reiterate that, it is physiologic doses of glucocorticoids and at physiologic levels of glucocorticoids getting the androgens under control. So you're spot on on that. With regard to value, let me top line it by saying we see significant intrinsic value in this acquisition, and I'll ask Charlie to give you some more color.

Charlie Wagner, CFO

Yeah, Mike, thanks for the question. Listen, there are obviously a lot of ways to think about value, both absolute and relative. You know, to Reishma's point, as we looked at the opportunity to acquire Krenetics, what we saw was the potential for best-in-class products with transformative benefit. We top-lined for you the potential for $5 billion in peak sales, as well as a meaningful addition to profitability after a few years. So it's a very attractive fit, both strategic and financial. And on those merits, we see a lot of intrinsic value that justifies the price. Maybe if you think about other measures, you know, if you think about the value relative to peak sales, so roughly 2X, those measures are right in line with, if you think about other deals of really high-quality assets, either commercial or near commercial, I think it's right in line. So we feel great about this. The price reflects the value that we see, and we look forward to both growing and accelerating this business once the deal closes.

Operator

The next question will come from Brian Abraham with RBC Capital Markets. Please go ahead.

Nevin (on for Brian Abraham), Analyst — RBC Capital Markets

Hi, everyone. This is Nevin on for Brian. Thank you so much for taking our questions. Just wanted to touch on and expand on what you think the commercial dynamics may look like in the event that atumelanin is approved. So some of the patient feedback that we've gotten on CAH patients, from CAH patients, can indicate that there might be some hesitancy for those who are currently on cronicity to switch just given the potential need to re-equilibrate their glucocorticoids. So how are you thinking about this as a potential barrier to switching off of cronicity in the case that atumelanin is approved? Would you look to pursue a switch study, and what specific profile do you think could, you know, potentially demonstrate a compelling enough profile to incentivize switching?

Reshma Kewalramani, CEO

Yeah. Hey, this is Reshma. Maybe I'll just answer with a top line. I don't want to go further than where we are at the moment, that the deal hasn't closed yet. We'll have more to say on this. But what we have heard from patients and physicians, and as you heard Duncan outline, is high awareness of the possibility of action melanin in CAH. Very, very clear goals from physicians and patients that they want to have both their glucocorticoids at physiological doses with control of androgens. And there's high awareness that that's not happening. This is not an asymptomatic disease. It's actually a very pronounced and symptomatic disease and troubling to patients because they feel the excess of the glucocorticoids or the excess of androgen. So it doesn't go by quietly or unnoticed, and both physicians and patients want these measures under control. The point that you raised about switch studies is a very good idea. I'll just leave it at that, and we'll talk more after the deal closes.

Operator

The next question will come from Phil Nadeau with TD Calwin. Please go ahead.

Speaker 10

Good evening. Thanks for taking our question. I guess our question is on the timing of the deal. Why is this the right time for Vertex to add a fifth pillar? I think you have a lot going on in your early-stage pipeline or early-stage launches with Jernovex, Castravity in the early stages of their commercial uptake, COVID-19 has passed the set in an accident, not yet making it to market, but being pretty close. So, a skeptic would say you have plenty going on already. What are you trying to diversify away from? Why is this the right time to add a fifth pillar to Vertex's commercial strategy? Thank you. Thanks for the question,

Reshma Kewalramani, CEO

Phil. We see ourselves as a company that is looking to bring transformative medicines to patients around the globe. We see ourselves as a growth company. We see ourselves as a company that has the ability, bandwidth, resources, judgment, taste, commercial prowess to do this in many areas. And when we saw the data from Krenetics, met the team from Krenetics, looked at the pipeline, looked at the potential, this is absolutely the kind of deal that fits us perfectly. And the timing is now because the company is available now, the data are available now, and we believe that we're the right group to take on Palsonify, add to what the Chronetics team has done, and take this around the globe, accelerate the launch in the U.S., and start the launch ex-U.S., and we feel really terrific about what they designed in Phase 3, and we feel like this is the right time to get to the company with the Phase three program well underway so we can now help shape how that launch is going to go. So we're doing this now because we are interested in ensuring that we remain the kind of company that when we see wonderful assets in our own pipeline or outside, we take full advantage of it and we thrive hard. This is exactly the kind of deal that fits us perfectly.

Speaker 10

Thank you. That's very helpful.

Operator

You bet. The next question will come from Tazeen Amid with Bank of America. Please go ahead.

Tazeen Ahmad, Analyst — Bank of America

Hey, guys. Thanks for taking my question. I wanted to get a sense of the synergy that you think these group of assets will have on your already established commercial infrastructure. Sure. And also this particular focus on endocrinology, can you just talk about why that makes sense, just given everything else that's already been mentioned that you're developing in the pipeline? And do you think there's opportunities to leverage that in the future beyond the assets that you're requiring?

Reshma Kewalramani, CEO

Tadeem, I couldn't hear the end of your question, but I think the fundamental point was why endocrine and do we see synergies? I'll ask Duncan to comment, but I'll just top line it by saying, of course, we have our T1D cell therapy-based program in endocrine, and so that's an important thing to consider. And I'll ask Duncan to comment on that, as well as the synergies we see between these various assets in the chronetics portfolio. And lastly, to talk a little bit about why we like the endocrine space so much and why it reminds us of CF. Duncan.

Duncan McKechnie, Analyst — Other

Yeah, so just to cover a couple of points here. So there clearly will be synergies between the different diseases in the chronetics portfolio. They're essentially all treated by about a total of 8,000 endocrinologists in the U.S., but each of those diseases is probably treated by about 3,000 or 4,000 physicians, and there's going to be significant synergy and significant overlap between those patients. sorry, between those physician groups. There's certainly plenty of synergy with the endocrinology space. And as we've talked about before, it's a space where there is an incredible and significant patient unmet need in the disease that we're talking about. They are symptomatic diseases, and they are serious diseases for patients. And we have highly differentiated best-in-class molecules in each of those diseases. So we see that candidly very similarly to how we think about our CF portfolio. So certainly there's plenty of synergy in that area. I think the first part of your question might have been about synergy on these assets across the rest of our commercial infrastructure. And with regard to that question, I think it's a little bit early to be making any comments on in that regard at this point. The next question will come from Brian Scorning

Operator

with Beard. Please go ahead. Hey, good afternoon.

Speaker 11

Thanks for taking the question, and congrats on the deal. I guess, how do you think about the market opportunity for Pulsanify in acronegaly versus carcinoid syndrome versus sort of non-symptomatic NEPs? I think the market for injectable SRLs is more heavily weighted towards your ender consumer. So do you have a perspective on how that market is currently split up for the injectables, and do you think ultimately at peak Palsonify has a different market dynamic in terms of the ratio of acromegaly versus neuroendocrine.

Reshma Kewalramani, CEO

Brian, I think you're asking how do we see the market for Palsonify for acromegaly versus neuroendocrine tumors, maybe including carcinoid. I think that's what you're asking. It was a little hard to hear.

Speaker 11

Yep, that's exactly right.

Reshma Kewalramani, CEO

I'll ask Duncan to comment. I don't think we're going to have any specific comments on the split between the market. But what I can tell you is we see real opportunity for Palsonify as best in class for acromegaly. And we'll hold on the neuroendocrine tumors and carcinoids for after the deal closes. But I will ask Duncan to comment on Palsonify and acromegaly.

Duncan McKechnie, Analyst — Other

So, Brian, as far as acromegaly is concerned, just to repeat some of the comments we made earlier, This is about 20,000 patients in the U.S., about 35,000 patients around the world. As we've talked about before, there's a very significant unmet need for these patients, and Palsonify offers a unique oral once-daily dosing with rapid and sustained up to 22-months symptom control, which compares very favorably with the current sort of standard of care after surgery, which is sort of large-gauge intramuscular injections that are given once a month. They're fairly viscous injections, cause a number of painful injection site reactions, and tend to have a tapering of symptom control towards the end of the month. So you sort of start the month with the injection-type reaction, and you end the month with limited symptom control. So we think Palsonify in acromegaly for sure has the opportunity to become best-in-class, as I say, as an oral once-daily treatment. And as you know, it's priced at around about $290,000 here in the U.S. So we're very excited about the opportunity for Acromegaly and very excited about the work that the cronetics team have already done in order to drive physician awareness, uptake, patient enrollment forms, and really nice broad market access this early in launch.

Operator

Thank you. The next question will come from Ellie Neural with Barclays. Please go ahead.

Jasmine (on for Ellie Nurrel), Analyst — Barclays

Hi, this is Jasmine on for Ellie. Thank you for taking our question, and congratulations. So a couple on Pelthonify. First, how would you segment the addressable acromegaly market across switch versus naive patients? Where do you expect the strongest initial uptake for Pelthonify, and how do you expect to work to gain share across both segments? And secondly, can you talk a little bit about the level of motivation across these rare endocrinologist prescribers to actually switch to new therapies like Palsana 5? Thank you.

Reshma Kewalramani, CEO

Yep, you bet. I'm going to ask Duncan to comment on the – let's just narrow down the buckets and maybe Duncan will expand. But there's the switched population, and then there is naives, discontinued, as well as the group who have just recently had surgery but are not yet on medicine. And then to talk a little bit about the new prescriptions that we're seeing, which I think speaks directly to your point about comfort of physicians.

Duncan McKechnie, Analyst — Other

Yeah. Thank you for the question, Elliot. I'm not going to go into too much detail in providing sort of guidance on where we expect the business to come from. But safe to say, as I mentioned in our prepared remarks, we do expect, at least initially, the vast majority of Palsonify business to continue to come from switch patients, as I alluded to in my answer to the last question. These are patients that are on very unpalatable injectable SRLs. And so we see a significant opportunity for the switch patients. But there are also, as Reishma alluded to, patients who are treatment naive. There's about 500,000 new patients a year. There's also patients who... 500, I think. 500,000, sorry.

Reshma Kewalramani, CEO

Just N equals 500.

Duncan McKechnie, Analyst — Other

And there are also about a number of patients that have treatment discontinuers. continues, as I showed in the presentation, there's a lot of patients that start on these therapies, but because of either the challenges in taking them or lack of symptom control, they tend to come off those therapies. There's plenty of patients who have discontinued existing treatments for existing available treatments who we think would be great candidates for our sonifying. I would say in terms of the level of motivation from HCPs, both the engagements that we've had with physicians, the market research we've done, and the data that Krenetics have themselves communicated, there is incredibly high awareness of Palsonify. There is incredibly high awareness amongst the target endocrinologists of the Krenetics organization and Palsonify. And we've seen really nice uptake in terms of new physicians prescribing each month, patient start forms, and as I alluded to before, a strong pay of coverage, all of which I think are good indicators of A, the significant and visible unmet need in the disease, and B, the clinical impact of palsonifying. Chuck, we'll take one final question, please.

Operator

The next question will come from Carter Gold with Cantor. Please go ahead.

Carter Gold, Analyst — Cantor

Great. Good afternoon. Congrats on the deal. Follow on to an earlier question around adding a fifth vertical, what are the implications for future BDE, both in terms of capacity and areas of focus? Should we expect downshifting in BDE as you rebuild cash balances? And I guess, should we rule out you adding a sixth or seventh pillar in the near term with this recent deal? Hey, this is Rachel.

Reshma Kewalramani, CEO

Thanks for the question. First things first, super excited about announcing the merger agreement today. We have a close still to go. As you heard Charlie say we are very serious about our R&D strategy. We're very serious about our capital allocation approach, that it goes to innovation. Nothing changes on that front, and you should not expect

Suzy Lisa, Head of Investor Relations

any change going forward. Thank you. Chuck, can you give the replay info, please?

Operator

Will do. That 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 1-855-669-9658 or 1-412-317-0088 using replay access code 173-4853. Thank you for attending today's presentation. You may now disconnect.