Michael Partridge - Senior Director, Strategic Communications Freda Lewis-Hall - EVP, Medicines Development Joshua Boger - CEO Kurt Graves - EVP, CCO and Head - Strategic Development Ian Smith - EVP and CFO

Rachel McMinn - Cowen & Company Ted Tenthoff - Piper Jaffray Michael Aberman - Credit Suisse Geoffrey Porges - Sanford Bernstein Terry Kline - J.P. Morgan Liisa Bayko - JMP Securities Steven Harr - Morgan Stanley Tom Russo - Robert W. Baird Howard Liang - Leerink Swann Terence Flynn - Lazard Capital Markets Brian Abrams - Oppenheimer and Company Jason Zhang - BMO Capital Markets Alan Carr - Needham & Company Jason Kolbert - ThinkEquity

Good afternoon. My name is Andrew and I will be your conference operator today. At this time I would like to welcome everyone to the Vertex Year End Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you. It is now my pleasure to introduce your leader for today's call, Mr. Michael Partridge. Go ahead sir.

Good afternoon. This is Michael Partridge, Senior Director of Strategic Communications. Welcome everyone to Vertex's 2008 year-end conference call. 2008 was an exceptional year for Vertex. Our highest business priority for 2008 with Telaprevir to continue our progress in clinical development and establish Telaprevir's differentiated profile and first to market opportunity. We announced today that we've completed enrollment in Phase 3 REALIZE study for treatment-failure patients. With the Phase 3 advanced study in treatment naïve patients and the supplemental illuminate study already involved, we have now completed enrollment in our registration program with approximately 2,200 patients. Telaprevir was not the only contributor to Vertex's progress in 2008. We unveiled compelling early clinical data for our cystic fibrosis drug candidate VX-770 which has clearly the opportunity for the VX-770 to move rapidly into a registration program in the first half of 2009. Telaprevir and VX-770 represents potentially significant medical advancements and are Vertex's highest priorities in 2009. Additionally, in 2008 we are fortunate to add approximately $800 million of cash through the sales of our HIV royalty and two successful financings. We ended the year with approximately $832 million in cash, cash equivalents and marketable securities. This cash position allows us to advance our core opportunities in HCV and cystic fibrosis, while maintaining an important investment into product creation. Joining me on the call today to review Vertex's business priorities for 2009 are Dr. Freda Lewis-Hall, Ian Smith and Dr. Joshua Boger. Kurt Graves is also with us and is available for Q&A following our prepared remarks. I will remind you, information discussed on this conference call may include forward-looking statements. Please the risks and uncertainties related to our business discussed in detail in our reports filed with the Securities and Exchange Commission including our 10-K. GAAP and non-GAAP financial measures will be discussed on this call. Information regarding our use of non-GAAP financial measures and a reconciliation of those measures to GAAP is available in our fourth quarter and full year 2008 financial results press release. You can visit our website vrtx.com to read the press release, listen to the conference call, view a PowerPoint presentation and/or download a podcast. We will take questions after our prepared remarks tonight. Following a call, our Investor Relations team joined by Ian and Curt will be in the office to answer any additional questions you may have. I will now turn the call over to Freda. Freda Lewis-Hall: Thank you, Michael. Our clinical progress in 2008 has positioned us for continued and important clinical advancement in 2009. We are well underway in our broad Phase 3 pivotal program for Telaprevir in both treatment naïve and treatment failure HCV patient. And we now have an opportunity to initiate a registration program with our lead cystic fibrosis drug candidate VX-770. Telaprevir and VX-770 are two late stage product candidates in serious diseases with very high unmet medical needs. First to Telaprevir the ADVANCE Phase 3 trial is evaluating 24 week regimen in treatment naïve genotype 1 HCV patients. We announced today that we have reached the point in a trial where all Telaprevir dosing is complete. This is an incremental milestone in our development, but important as it confirms the significant increase in patient and physician experience with the drug and in our safety evaluation. More than 1600 patients have now been treated with 8 or 12 weeks of Telaprevir in Phase 2 or in Phase 3. Second, we have another trial underway in treatment naïve genotype 1 patients called ILLUMINATE. We announced recently that we had completed enrollment of approximately 500 patients. ILLUMINATE was designed as a supplemental study for treatment-naïve patients. We are taking great care to build a clinical package consistent with high regulatory standards to support Telaprevir's filing. ILLUMINATE is not required for registration but we believe that it will provide additional data on 24 and 48 weeks of therapy in patients who achieve a rapid viral response. And will provide clinicians with additional information on 24 week regimens following potential approval. And third we initiated in September of last year the REALIZE Phase 3 trial in genotype 1 HCV patients who fail to achieve an FDR with prior treatment of pegylated interferon and ribavirin. This trial is differentiating for Telaprevir as it is the only Phase 3 trial to evaluate all major treatment failure groups including a difficult to treat non-responders. We announced today that we have completed enrollment in the studies. In summary during the second quarter we anticipate Telaprevir dosing in the entire Phase 3 programs which supports our timeline to an NDA filing. Also in the area of HCV we have a portfolio of additional HCV protease inhibitors in development. We created a portfolio with the goal of identifying molecules with potentially advantageous characteristics that may further advance the treatment of HCV. That mission for our second generation program to further advance treatment of HCV got harder in 2008. As Telaprevir showed very compelling FDR results in Phase 2 trial of treatment-naïve and treatment-failure patients and the challenge is even more difficult with the progression of our Phase 3 programs. Telaprevir is also setting a potentially high hurdle to beat in terms of dosing convince with interim results that we presented from the 160 patients C208 study at AASLD. In that study through the 12 weeks of Telaprevir in combination with PEGASYS and ribavirin, safety observations were not substantially different between twice and three times daily. The viral breakthrough rates were low and also not substantially different and more than 80% of patients have undetectable virus at weeks four and twelve, in both the twice daily and three times daily arms which are the best arm treatment antiviral results we have achieved. When you combine all of these data they support continued evaluation of twice daily dosing of Telaprevir and twice daily dosing maybe important for advancing a future treatment of HCV with novel combination. VX-500 was the first of three novel compounds to enter the clinic and following results of the Phase 1B dose ranging 3-day viral kinetic study in treatment naïve genotype 1 HCV patients. We have decided that VX-500 did not meet our criteria to continue development. Telaprevir has indeed set a high standard. Evaluation of other novel HCV protease inhibitors is continuing. VX-813 has completed a multi dose Phase 1A study and healthy volunteers and VX-985 is in early development. Our goal is furthering the treatment for HCV also includes priority for evaluating other combination treatments and particularly those that include two direct acting anti-viral therapies. This remains a high priority with our business and we are following the progression of STAT- C in development at other company. Now turning to cystic fibrosis, we have designed three clinical trials as part of our registration program for VX-770 with the intent to further evaluating the safety and full utility of this product candidate across different age groups and CFTR genotypes. We have recently announced the focus of each clinical trial. These trials include first: a primary trial designated to enroll patients ages 12 and older who carry the G551D mutation. Second, a trial designated to evaluate VX-770 in pediatric patients ages 6 to 11 with the G551D mutation and third a trial that will enroll CF patients with the Delta F508 mutation on both the alleles. We anticipate that the primary end-point of the two trials including patients with G551D mutation will be safety and improvement in lung function or FEV1, while we will to continue to measure sweat chloride as one of the secondary end-points. We view the third study in the Delta F508 patients as important for exploring how patients with these mutations may respond to VX-770. The primary end-point of this study in patients homozygous for the Delta F508 mutation, its safety and FEV1, sweat chloride will be one of the secondary end-points in this study as well. We will provide more details such as number of patients and duration closer to the initiation of each trial. We also continue to expand our clinical development efforts in cystic fibrosis with our corrector compound VX-809 which progressed well throughout 2008 with three Phase 1 studies now completed. The most recent was an escalating single dose pharmacokinetic and safety trial in patients who carry the Delta F508 mutation. We plan to initiate a Phase 2 study in patients with CF in the first half of 2009. The Delta F508 mutation is the most common mutation and is present on at least one allele and approximately 90% of patients with CF. If VX-809 demonstrates significant clinical activity in patients with this mutation with an acceptable safety profile it could potentially expand the opportunity in this major disease. We are energized by the progress achieved in 2008 and are very excited about the opportunity that lies ahead in 2009. I will now turn the call over to Ian.

Thank you, Freda. Today I will cover our 2009 financial guidance and how we are managing the investment in our business to protect our financial position in these difficult economic times, while supporting our core development opportunities and product creation, and also compare this guidance to our 2008 financial results. We issued full 2009 guidance today consistent with our strategies to support the advancement of telaprevir and VX-770 our two registration stage compounds. ACV has always been our priority, however, in 2008 we made significant progress with VX-770 and are now investing to support a major opportunity in cystic fibrosis. As a result, this guidance fully funds our broad Phase 3 program for telaprevir and the registration program for VX-770, while also investing to prepare the company commercially. It takes into account our current expectations for 2009 revenue based on the ongoing business development activities, while respecting our strong balance sheet position. We have recognized the inherent change of managing our investment according to our need to maintain financial strength. Now to our 2009 guidance, our plan just to manage a 2009 non-GAAP loss excluding certain charges and gains in the range of $400 million to $435 million, slightly higher than our full year 2008 non-GAAP loss of $398 million. In 2009, we are fully funding our opportunities in HCV, CF and research product creation. And the other areas of our business we are tailoring investment levels to reflect data from ongoing studies in our balance sheet profile. These decisions which are focused primarily on the earlier stage development assets mainly to choices that could drive revenue and capital through business development activities. This is a strategy, we have utilized effectively in prior years to manage our cash investment profile. We expect full-year 2009 GAAP loss in the range of $495 million to $530 million, which is slightly higher than our 2008 GAAP loss of $460 million. The 2009 GAAP loss includes approximately $95 million of stock-based compensation and restructuring expense. The 2008 GAAP loss included $62 million of stock-based compensation and restructuring expense. That’s a little more detail on our guidance, we are forecasting total 2009 revenue in the range of $140 million to $150 million. This compares to 2008 revenues of approximately $176 million, which was generated primarily from R&D collaborative revenues and revenue from the amortization of our 2008 royalty monetization. As a component of our revenue forecast, we anticipate new collaborative revenue from business development activities in the range of $60 million to $80 million. This revenue will be primarily driven by our business development activities focused on our earlier stage programs. Now to the R&D investment, we forecast in 2009, that our R&D investment will be in the range of $500 million to $530 million for the full-year, which includes approximately $75 million the stock-based compensation. This is similar to our 2008 R&D expense of approximately $516 million and this is primarily driven by Phase 3 clinical trails spend for telaprevir. Investment in telaprevir commercial supply an investment into CF registration program while also supporting an investment into product creation which remains relatively similar to prior years. We expect SG&A expenses to be in the range of $130 million to $140 million in 2009, including $16 million of stock-based compensation. This is an increase of 2008 SG&A expense which was approximately $102 million, commensurate with our commercial expansion to supporting HCV and CF, and the internal organizational development for the progression of our business. Now to our balance sheet, we entered 2009 with cash and equivalence position of approximately $832 million. With this strong cash position and potential to additional cash inflow from new collaborations we are well positioned to invest in to two registration programs in parallel and prepare for commercialization in HCV and cystic fibrosis. In summary, we are investing in telaprevir where we believe we can set a high competitive hurdle, and also advancing our clinical development in another important disease, cystic fibrosis. These are our key business priorities for 2009 and our financial strength provides support in these objectives and moves us close to our ultimate goal of commercializing our first therapeutic products. I will now turn the call over to Joshua.

Thanks Ian. A few days ago, we announced the leadership transition at Vertex. This is a key step in the evolution of the company and recognizes how closely we are to bringing two very significant medicines to the market. Those medicines have the potential to represent major advancements in the health of million of patients and our sharp focus is on realizing these possibilities. Matt Emmens, who has been our Vertex Board member since 2004 has been appointed President of Vertex and he will assume the roles of Chairman and CEO in May. I will be stepping down as CEO but retaining an active role on the Board. As Vertex nears its next major jump in its upward trajectory, the transition to commercially driven growth I wanted to bring in a new leader ready to take Vertex to the next level. That leader is Matt. Matt has been an active and involved director of Vertex for the past four years. He was most recently CEO at Shire and has an exemplary track record of leading companies through major product launches and making great companies greater. Matt possesses the qualities that we need now and will need to move towards that single objective of bringing normal medicines to patients and their families. His accomplishments are many. I welcome Matt to resume role as President of Vertex and I look forward to his leadership, his re-complete late stage development, file our NDAs and prepare for the market. Before I close, I would like to thank the dedicated team at Vertex for the excellent work they have put in to create this company. For those of you, who supported us along the way, I salute your efforts and thank you for giving me the opportunity to lead this company for the past 20 years. Vertex's future is very bright, never brighter and I am very proud of what we have achieved together. Michael, back to you.

Thank you, Joshua. We will now open up the call for questions.

(Operator Instructions) Your first question comes from the line of Rachel McMinn from Cowen & Company. Go ahead. Rachel McMinn - Cowen & Company: Thanks very much. Two questions, one on the financial and may be you can talk a little bit more about the $60 million to $80 million in collaborative revenues from business development activity. Second, how confident are you in this level for 2009? And then just a totally separate question on C208, you're talking about data in 2009, is it fair to assume that you are going to wait for all the data from the study, even in a few patients receiving 48 weeks of therapy, so that should be later in the year as oppose to earlier in the year?

Thanks for the question, Rachel. I am actually going to turn the first question over to Kurt, who has responsibility for Business Development and then I will take the second question on the C208 data?

Hi, Rachel, it's Kurt. Thanks for your question on the collaborative revenue guidance that Ian gives. We feel really confident about our position now Rachel as we have said with JAK3, first half of this year, we are entering the point where we are going to have Phase 2-ready asset, an asset that we feel is really differentiated. There is a lot of interest in that particular asset right now and our program in the area. On top of that tough, we also have obviously other early-stage compounds; a second major bucket without getting into detail is ongoing collaborations or new collaborations that we are looking to initiative this year in 2009 that can bring in additional sources of non-dilutive capital. And thirdly, it's very important to remind you that we also have geographic rates to our 2G program, our second-generation ACV program as well as our CF assets outside the US, and across those multiple opportunities. I think we are in real good spot to deliver on the guidance that Ian was just talking about.

Thanks, Kurt. To your second question, Rachel, regarding C208 data. The way we look at this, is we haven't actually pinpoint exact time when we will disclose such data. I think the disclosure that where most key would be, how that data drives the next decision of the study. So I think that would be the appropriate time, but picking a specific event or medical conference it's too early to do that as this point. But it would be in 2009 and it would be coincident also to the progression within BID. Rachel McMinn - Cowen & Company: And can you may be just elaborate a little bit more on what you need to see. So let's assume that the SBR data supports, you've already seen that EVR are you willing to go in and find a very large non-inferiority study, is that really the next step or is there some other avenue to develop [choice there].

So again a question that we can't be specific on the answer with that. We will have to take a look at the data, or have a discussion with FDA and in conjunction with the FDA will make a decision on when and how to run that study. Rachel McMinn - Cowen & Company: Okay, thanks.

Your next question comes from the line of Ted Tenthoff from Piper Jaffray. Go ahead sir. Ted Tenthoff - Piper Jaffray: Hey, thank you very much and congrats on a tremendous year and Joshua, the very best. Question as you are looking at the landscape now, incremental data coming out of other oral direct impact virals, can you give us some guidance of what this plan has to start to evaluate telaprevir in combination with other studies. Do you guys want to drive that path, I am sure you have folks a lot of folks who are talking to you about potential combination studies. Just give me a flavor of what your thought on that.

Ted it's Kurt Graves, I will fill the question. It's a good question internally we have been talking about for a little while, and it's still a top priority for the company to really be at the forefront of not only leading with telaprevir getting to the market first is the first specifically targeted direct acting in a viral, but also to be in a lead position to shape the evolution of next regiments if thy happen. We have had ongoing discussions with multiple parties, small company as well as through big pharma companies about assets that we feel could be complementary to telaprevir. And honestly, as soon as we make good progress on that, the biggest things that's preventing us from a getting into studies right now is the stage of development of some of those assets and being able to get a good read on the safety profile in, particular of those assets. As you might imagine, having something that is really safe is important to us while we are still in late stage development of telaprevir here, but we have got our criteria very clear, we feel we have got a good handle on a few attractive opportunities in the space and we are hopeful that if those compounds continue to progress that we can enter into studies in 2009. Ted Tenthoff - Piper Jaffray: Excellent. That's helpful thanks.

Your next question, sir, comes from the line of Michael Aberman from Credit Suisse, go ahead. Michael Aberman - Credit Suisse: Great, thank you very much. I had a question on the VX-770, I wonder if you could give any more color on top, And that you mentioned of three trials, that duration of the trials and number of patients that you are contemplating? Freda Lewis-Hall: Yes, actually I have mentioned earlier that we were planning to disclose that information the closer we get to fielding each of those three trials. Michael Aberman - Credit Suisse: So, not yet? Freda Lewis-Hall: Not quite. Michael Aberman - Credit Suisse: Okay, great. You mentioned this new terms of combination waiting for the right asset. Do we think we did see any activity in that front this year based on the discussions you have had with some of these companies for combination studies?

Yeah, it's a good question thanks. It is possible this year that we could see that activity. If we find the right asset that's got the right kind of profile it would be our intention to do that. It's really right now solely based finding the assets that meets our criteria that's far enough for long in development that we can initiate their work. Michael Aberman - Credit Suisse: Okay, that's great. Thanks.

Your next question, sir, comes from the line of Geoffrey Porges from Bernstein Geoffrey Porges - Sanford Bernstein: Thanks for taking the question, and Joshua I would also like to congratulate you on the success you have for the company. We'll miss the scientific focus you have brought to Vertex and to the industry. Couple of questions, Ian, could you give us a sense of what do you expect cash to be at the end of the year given your guidance. And secondly on the stock option expense, could you gives us a little bit of the context, around why it appears to be going up as a percentage of your discretionary expenses so much? Back of the envelope, it looks if that was around 8% in '08 and about 14% in '09. And then I just wanted to also get, the REALIZE trial you didn't tell us when you expected to get results in the press release, but you did for the other two trials, could you just give us a sense whether that is also first half of 2010, or whether that should be determined, thanks.

Why don't we do REALIZE first? Freda Lewis-Hall: Yeah, we can do REALIZE first, because that one is pretty quick and easy. We do expect further data to deliver from REALIZE in the first half of 2010 as well. Geoffrey Porges - Sanford Bernstein: Great, thanks.

So Geoff, to the cash question, our non-GAAP loss number is a very good proxy for our cash burn number. That's one of the reasons that we give the non-GAAP number. Clearly, there is always non-cash items in your P&L such as stock compensation, depreciation other things. And then there is also offsetting things that provide cash. But the way to look at our burn for the year, we start with $832 million of cash and equivalents and our burn can be $400 million to $435 million through the year. And that gives you an idea of where we would expect to be at the end of the year. Geoffrey Porges - Sanford Bernstein: Well thanks

Yeah. And then secondly, you were asking about the increase in the stock compensation expense and just to be specific in 2008, our stock-based compensation including the restructuring was around $66 million and the guidance that we have given for 2009 is approximately $95 million. The increase is mainly driven by stock compensation expense, not the underlying restructuring pieces within that. And that's primarily, because we are significantly increasing the number of employees at Vertex. We added nearly 300 to 350 people in 2008 to a base that was closer to a 1,000, so nearly a 20% to 30% increase in our employee base. And also, additionally the way the stock compensation charge works, it is the function of the Black-Scholes valuation. And the Black-Scholes valuation of $33 stock price versus $18 and some lower prices in other years is increasing our stock compensation expense. And there also is another aspect to that stock compensation expense this year, which rise to our leadership transition, which we have to take a charge at this point in time for. Geoffrey Porges - Sanford Bernstein: Okay. Thanks very much.

Yes.

Your next question, sir, comes from Geoffrey Meacham from J.P. Morgan. Go ahead, sir. Terry Kline - J.P. Morgan: Hi guys this is Terry Kline for Geoff today. Thanks for taking the question. Actually I have another question for you, or two more questions for you on the combo therapy. Just broadly speaking is, what you guys say is there is a particular class that you are most excited about. And then just in terms of moving forward with a combo therapy is it your buyers to in license the other component or to move forward jointly with the partner? Thanks.

Thanks, two good questions on the combination things and I am understand where they coming from, I can tell you from all of the work that we have done and the data we have seen. It's not a simple of an answer to nail it down to one class versus the other, each disease such a different, I personally do not think at this stage that we can say one Class has clearly got edge over the other class based on other profiles that we see. So it's not quite that simple on the Class piece of it. As it relates to the second part of your question, I do not really think that we are approaching this as a bias toward acquisition or licensing, we really are trying to find the best top two or three assets out there. I think we are in a great position, at Vertex because its telaprevir being so far ahead. And with the profile has it most people if not all of them we talk to want collaborate with us. And once we find the top two or three assets that are far enough along we intend to, get into collaborative work and whether that might be a small targeted acquisition or whether it's a licensing depending and probably what the other side wants to do. We will move forward on that basis. Terry Kline - J.P. Morgan: Okay. Thanks can I ask just an additional follow up on VX-770. Just in terms of the end point, you guys had said previously that it looks like your FEV (1) will be the primary end point just wondering if you can talk at all about whether you approach the FDA about using so many additional end point from the prior study. As a primary end point and what sort of that dialog was like to the extent that you can elaborate on that? Freda Lewis-Hall: Thank you, that's an excellent question. One of the things that I am often reminded when people ask question about the development of 770 is that this is really a first. It's a first for us and it's a first for the FDA in evaluating a disease modifying compound in the areas of CF. And so we really have worked hard in the partnership for devising what the appropriate development strategy is and as well what the end points are. So, not having had this experience before this sweat chloride and MPD which are good signals if you would for CFTR activity impact. Which seems to be markers or endpoints that we could essentially swap out for the variable FEV(1) as indicator at lung function improvement. But I am not sure that collectively we are there yet. There is certainly not enough experience with the sweat chloride. In this area, and in fact we are hoping that the development program as we have it designed. Will help to begin to established some of these alternative end points or additional end points as meaningful ones moving forward in the development of treatments with the CF. Terry Kline - J.P. Morgan: Thanks a lot.

: Liisa Bayko - JMP Securities: Wanted to just, can you remind us what you are doing in FDA for CF program? Freda Lewis-Hall: Interesting, lots of interest in 770 today. So we are actually in ongoing discussion with the FDA and other regulatory authorities, and had not committed yet to doing in FDA. So we are still in negotiations around the overall design, but we are so comfortable that we are still on track to a first half of the year start with our pivotal program. Liisa Bayko - JMP Securities: What will be the rationale for not pursuing an FPA? Freda Lewis-Hall: Well, I think that there are a number of pros and cons that you can consider around an FPA. And in fact, the comments that I just made earlier around a novelty, if you would, fielding a development program for disease modifying therapy that have not been tested before, might be a place that you want some flexibility as you evolve the development paradigm. And I'm assuming that because you're really familiar with the spot which means you know that they are not flexible instruments. So, we do not know yet whether or not the pros for using it as by word out weighs the cons for that. Liisa Bayko - JMP Securities: Okay. And then can you just qualify FDAs comfortability or comfort level with using FEV (1), I mean that’s a pretty standard endpoint in CF, correct? Freda Lewis-Hall: Absolutely, and I think that they are clearly comfortable with FEV (1) as an endpoint. Again, the point of negotiation and the work that we are doing together with them is defining additional endpoints that are meaningful for both in this development program but could be meaningful moving forward in the development of compounds for the treatment of, or disease modifying compound for the treatment of CF. Liisa Bayko - JMP Securities: Would that be more as a co-primary endpoint or are you just kind of pursue a single primary endpoint? Freda Lewis-Hall: Still in discussion at this point, so as we have those discussions and start to solidify where we are we will be able to report those things out to you along with the duration and the exact sizes of the trial. Liisa Bayko - JMP Securities: Okay. And then that's great. Can you just give us a little bit of brief description of the evidence you have that 809 may work in the Delta 508 population? Freda Lewis-Hall: So, we do have some preclinical data that suggest that there may be some activity in the Delta 508 population. Translating that into the clinical arena is what we are grappling with. And we are not certain at this point how that will translate meaningfully and we are actually excited on both 770 and 809, 770 with the opportunity in the third trial that I described earlier to test of the work of 770 or the proposed success of 770 in this population. And then also an 809 to be able to move in that this year to begin to take a look at this population as well. Liisa Bayko - JMP Securities: Okay. Thank you. And then quick question for, Ian, you mentioned business development activities in your burn rate, we do assume that you will likely not access the capital market for this year directly, or is it something that you would consider opportunistically?

I think the last point opportunistically I think in this business you always should be opportunistic. But the way that we put our business plan together for 2009 is really acknowledging what is going on around us. We are fortunate that in 2008 we were engaged in number of capital raising activities and we take a very strong balance sheet into 2009 with $832 million of capital. And then we put together a plan this year where we can support our major activities engage in some business development activities to provide us capital. And in summary the plan positions us to go through 2009 which looks like it will be a tough time in the market. So assuming a position where we are not required to go in to the market which has been a little different in the Vertex of the past. But I think in this business you should always remain opportunistic. Liisa Bayko - JMP Securities: Okay great thank you very much.

Your next question comes from Steve Harr from Morgan Stanley. Go ahead. Steven Harr - Morgan Stanley: You guys now that you have completed dosing in attributed portions of your hepatitis telaprevir programs in the treatment-naïve populations. Is there anything you could comment about dropout rates from those studies? Freda Lewis-Hall: No, that's the short answer. It's a very good question and there is certainly lots of curiosity around that. We monitor the trials as you know on the ongoing way from a safety perspective but would not have a data that would be available to discuss around dropouts at this time. Steven Harr - Morgan Stanley: Great, thank you.

Steve its Kurt just to build on what Freda is saying obviously with the Phase 3 pivotal studies it's all blinded information to us in the studies are ongoing. But I think your question is a good one and I just wanted to add a point to what Freda said that, we are pretty optimistic right now based on feedback we are getting from clinical investigators about the patient, management, the rash management program that we have. Going on in our clinical studies and I thinks as a proxy you can look at the results we are seeing in study C208. Because in the study C208 not only are we seeing the highest on treatment response rates that we have ever seen with telaprevir to date over 80% for weeks. We are seeing the lowest discontinuation rates that we have seen in the study with telaprevir so far and that's because when we entered the study we see to it and our Phase 3 programs we have implemented the rash management program in those studies and are feeling good and hearing good things for investigators about how they are implementing that in the studies.

Next question please.

Your next question comes from the line of Tom Russo from Baird. Go ahead. Tom Russo - Robert W. Baird: Ian your comments on cash burn, based on the timelines for different programs in Phase 3, is there any reason why the cash burn in 2010 should go up versus 2009?

Difficult to hold up to see where the forecast is for our cash burn in 2010, Tom, a lot of that is a function of the opportunity and developments and I will give you a one specific example. We might be running combination studies with telaprevir at this point in time to forecast that and therefore, to give you a burn for that period in time is very difficult. So, I can’t give a forecast at this point in time. It's going to be a function of development and product opportunity as we go into 2010. Tom Russo - Robert W. Baird: Okay. And then do you have any visibility at all into how things are looking in study 2008 beyond week 12 and if the data is blind is there anything that looks different than what we expected?

We are not opening up that trial to take a look into this ongoing at this point. So there is nothing further to act in the data we disclosed at ASLD in November of last year. Tom Russo - Robert W. Baird: Okay, thank you.

Yes.

Your next question comes from the line of Howard Liang with Leerink Swann. Go ahead Howard Liang - Leerink Swann: For telaprevir what is the minimal package needed to file and knowing where your competitor is, how important it is for you to be first on market, there is know where you would consider filing without all three trials again of small time edge? Freda Lewis-Hall: Hi. Yes, thank you for the question. Right now what we are looking at is the second-half of 2010 file that is based on the treatment naïve and the treatment failure data. And we are excited about that possibility because we think that it gives us the broadest label in both the naïve and the treatment there with your patients. Howard Liang - Leerink Swann: So, we will be filing all of all three Phase 3 trials? Freda Lewis-Hall: So, the core of our file is actually the advanced trial and treatment naives and the realized trial C216 which is in treatment failure patients. And the study 1, 11 trial which I am assuming you are referring to is really a supplemental study that’s designed to help to further inform us about clinical data that we expect would be needed after approval. Howard Liang - Leerink Swann: The question around the CF program, we have 809 Phase 2a data this year, and also regarding 770 could there be data from the supportive trials from the pediatric and Delta 508 trials, before the completion of the trials, (inaudible) on those two trials?

Howard you are asking a disclosure question. And I will take it. At this point in time it is difficult to pin-point at that time given that we don’t approximately know the start of the studies, so it’s very difficult but it would be towards the end of the year beginning of next year based on our expectations if the study starts at this point in time. Howard Liang - Leerink Swann: What about the 770 supporting trials, I know those are registration trials, but can we see the date before the end of the study.

Highly unlikely, for the 770. Howard Liang - Leerink Swann: Thank you.

Your next question comes from the line of Terence Flynn from Lazard Capital Markets. Go ahead, sir. Terence Flynn - Lazard Capital Markets: Good afternoon. Thanks for taking the question, just two quick follow-up to Howard’s first question. I know you guys have laid out kind of three filing scenarios in the past for telaprevir and given some probabilities around those. Can we assume now that you are essentially going to file on data from ADVANCE, REALIZE and ILLUMINATE and that’s your go forward strategy as oppose to based on the earlier strategies that you guys have proposed in the past.

So Terrence thanks for the question, it's a question that’s frequently been asked and more recently has been asked because a lot of people are asking about the earlier filing opportunity with a narrow label targeting treatment-failure patients. We are still going to ask the question with the FDA in terms of presenting them the data. But as we just said we are mainly focused on the second half of 2010 in a broad label filing. Terence Flynn - Lazard Capital Markets: Okay. And when would you have a potential discussion with FDA regarding say PROVE 3 and study 107 data?

In the first half of this year. Terence Flynn - Lazard Capital Markets: First half. Okay, thanks a lot.

Your next question comes from the line of [Brian Abrams] from Oppenheimer and Company. Go ahead. Brian Abrams - Oppenheimer and Company: Hi, and thanks for taking my question. I was wondering if you could, maybe elaborate a little bit more on the Phase 1 data that you saw for the VX-809 and CF patients. And I was just wondering if there were any dose dependent safety signals and whether or not you took any efficacy measures.

I will just take it, just to clarify the question first. You are asking about 809. Brian Abrams - Oppenheimer and Company: Correct

Because it was a single ascending dose indications. So, single ascending dose studies, it’s a case of moving up the dose curve with high dose levels to allow us to move into a Phase 2 study. So, that the key end point there was a safely dose in a single dose and we achieved end point to move into a Phase 2a type study. What was your further question, I am sorry, I just wanted to try and clarify? Brian Abrams - Oppenheimer and Company: Yes, I just wondering if you had seen any dose dependant safety signals in that study there was a maximum tolerated dose that you reached with a single ascending doses.

We did not, no. Brian Abrams - Oppenheimer and Company: Okay. And then a question for Ian, with respect to the R&D, we expected R&D for 2009 versus 2008, I am just wondering to what extent is the R&D being flat to down driven by decrease commercial supply investment in telaprevir?

That’s not a significant driver of year-on -year comparison, one of the things that is affecting the year-on-year comparison, is that we shared development activities, with Tibotec so for example, Tibotec is running the REALIZE study, that’s the registration study in treatment failure patients. They actually carry the cost of that study and then we have to reimburse them for 50% of that study. Because of our contractual relationship that charge of 50% goes to our revenue line as a decrease revenue number. But there is one thing that’s affecting our R&D line and passing year-on-year is the Tibotec that are actually doing more development activities in 2009 then they were in 2008. Brian Abrams - Oppenheimer and Company: That’s very helpful. Thanks for taking my questions.

Your next question comes from the line of Jason Zhang from BMO Capital Markets. Go ahead. Jason Zhang - BMO Capital Markets: Two questions, first is on VX-500 and you said that 3-day viral kinetic study did not meet the prior criteria. Could you be a little more specific is that mainly (inaudible) or are there parameters that you look at that let you make this decision? Freda Lewis-Hall: Well, thank you for your follow-up question on VX-500. Let me take a second to contextualize what we are doing with the second generation program. So, first of all I want to remind you that we are taking a portfolio approach that is we have three HCV protease inhibitors. Different in structure to telaprevir and different from each other in profile we expect. And our intent is to select the most attractive candidate to move forward to advance development. As I mentioned earlier, we are doing that against the bar if you would that telaprevir set high and move higher in 2008. And so, if we think of this aggregate of three in the context of furthering the advancement of hepatitis C treatment that is a backdrop that we use for evaluating 500 and also the one that we will use for evaluating 813 and 985. So, VX-500 was a first that kind of moved forward and we use those recent results to determine that if hadn’t met our overall criteria for advancement in this scenario. So, our plan right now is as previously planned to evaluate VX-813 and 985 in order to select one to advance to further development. Jason Zhang - BMO Capital Markets: Anything that you could refer to pre-clinic study that time got you or you really have to rely on human I assume mostly [viralol] reduction data to design?

I will jump in Jason. There are number of hepatitis that we're testing with the portfolio of assets. We don't want to align all those different hepatitis with each individual assets for the obvious reasons at this point. I'll ask Kurt to comment on why we're running this kind of portfolio approach with next-generation protease. But it is about where we might see the market in 2015. So, when we evaluate VX-500, it doesn't reach that high bar. We think that other ways to get to better combination therapies, come 2015, and telaprevir remains in a very, very strong position. Kurt, do you want to comment on the market?

Yeah. Just to pick up on what Ian said, Jason, and to comment a little bit about the market and how we look at this, so I think if you back up and you look at the strategy, we're looking at it as a company right now, and hepatitis C, we've got three shots on go, that the way we look at it internally with our second-generation protease inhibitors. And with telaprivir setting the bar so high, especially in the BID part of the profile in 2008, we now get to look at those three internal shots on go with really clear parameters around dosing, efficacy, safety, combinability, its chance of ultimately maybe being a fix dose combination in the future. Those are the kinds of criteria we look at. And we get to make I think well-founded go-no-go decision in each of those assets and our determination on VX-500 was of the three shots on go we have, to not move forward with that one and continue to progress the other two assets. As it relates to where we see the market going, we are really talking about a timeframe here if you go as fast as possible. 2015 plus, and for our competitors behind us, even later than that. And we look at it from that perspective not only do we have a couple of shots and go internally, but we think we have multiple shots on go externally. And that's a work we doing to find other novel agents to combine our own telaprevir and between both of those strategies that we are deploying, we feel we are in a really strong spot and making good solid decision as we go. Jason Zhang - BMO Capital Markets: Then financial a question for Ian, your SG&A increased about 30% in 2009 compared to 2008, but we are not at position to see any major commercialization activity yet in 2009, so I was just wondering what's the main reason for that 30% increase in SG&A?

Actually, Jason the assumptions are incorrect. As you might imagine with a product opportunity in hepatitis C and potentially being less than two years away from the market, we are actually significantly during 2009 investing commercially to prepare the company, and that's what drives that increase. A way to think about this, as we end 2009, we may be less than a year away from launching a product. So, yes, there is an investment that we are ramping up into the commercial infrastructure of this company during 2009. I don't know whether Kurt want to add to that in the areas we are.

No, I think Ian gave the important message there, we are taking calculated, but very conscious decisions to build our commercial organization not just commercial, really even beefing up areas of our medical affairs organization. Our pricing and reimbursement organization, how are dealing with policy markers in Washington, so it's broad comprehensive approach to prepare the market, prepare the product and prepare the organization for launch. The one thing I would add to what Ian said is, we are also taking measured and calculated steps to get ready for, I think what became the new surprise in 2008 that's hitting us in 2009, and that's the chance that we could be launching two products in the same 6 to 12 month window, VX-770 progresses and that's some incremental pieces of readiness that we have to take on as a company. Jason Zhang - BMO Capital Markets: Okay thanks.

Your next question comes from Alan Carr from Needham & Company. Go ahead. Alan Carr - Needham & Company: Good afternoon everyone. Couple of questions about your earlier stage programs, and also want to follow-up, but first on the VX-500, I think you brought up a couple of times the dosing is something that was a particularly a high bar set by telaprevir, so does that mean that's the particular challenge that you are running in to with VX-500 as opposed to potency or safety profile? And then also can you clarify the status of VX-985 is that one in the clinic, or is that pre-clinical?

Its Kurt, as it relates to VX-985, it is preclinical. We anticipate that will be moving in to the clinic in 2009. As it relates to your question around VX-500 in dosing, we right now feel that, I mean, our planning assumptions internally are that we likely have telaprevir as a BID drug. This decision around VX-500 was not related to dosing, it's more related to the high bar telaprevir second every dimension of its profile and what we need to see to make a significant advancement beyond that. Alan Carr - Needham & Company: Okay, and then quickly around the JAK3 program, are you going to move that into Phase 2, even if you don’t have a partner is that something that's dependant on having a partner?

That's a really good question. We plan to have a partner onboard when we make that decision. We think that's best for the development of the compound together with whatever partner we choose. There is a lot of interest in this, we are having multiple discussions during those line, so I am hopeful for that that can be taken care by itself and the partnering discussion we are having. Alan Carr - Needham & Company: Okay. And I think I understood this probably, I just want to make sure I did. I think one of the first questions was relating to your guidance for the year in terms of revenues, is that the partnership revenue included some potential new deals for the year, right?

That's correct. Alan Carr - Needham & Company: Okay, great. Thanks very much.

Okay.

Your next question comes from Jason Kolbert from ThinkEquity. Go ahead. Jason Kolbert - ThinkEquity: Great, thank you. I would just like to go back to the top line revenue question for a second, because you have talked about the fact that the expenses associated with, and I believe you said was that the eliminate trail or the advance trail are hitting the revenue line. And I guess change your reimbursement rates, because in '08 we know we have total revenue $175 million, a substantial amount of which was reimbursements. In '09 if I include $60 million to $80 million in new revenues from new in-license programs like the JAK3 inhibitors then the total collaborative revenue line actually goes down and I guess that's because expenses associated with the trail that Tibotec is running or being subtracted out the of the total reimbursement, so is that the right way to think about this?

So Jason it maybe I could try to simplify if you don't mind. Jason Kolbert - ThinkEquity: Thank you.

It is actually a lot more straight-forward than that and that broadly the studies and activities that have been performed by Tibotec, of that cost, but we do have to refund them effectively or fund them 50% to their costs. That funding that we provide to them goes as negative revenue, so it does reduce our revenue line. It really is just as simple as that. Whereas in the past, if we have activities that we perform that hits we take that cost through our R&D line and they reimburse as 50% of our activities and that goes to our revenue line. It's really straightforward as that. Jason Kolbert - ThinkEquity: Okay, but it’s a little bit like shifting the R&D expenses really out of R&D through the revenue line so.

Yeah. That's a simple concept, yeah. Jason Kolbert - ThinkEquity: Okay, great. And another question about milestone payments, what kind of milestones should we be looking at in '09 as these trials wrap up?

In the revenue guidance, we provided in 2009 there are no significant milestones. The milestones come more towards filing and approval in 2010, so the predominant amount of revenue we are guiding to in 2009 is actually R&D cost sharing from Tibotec, then also the amortization of our royalty from the disposition of the royalties stream last year. Jason Kolbert - ThinkEquity: As well as the original $165 million payment, which continues?

Yes Jason Kolbert - ThinkEquity: Okay, terrific. Thank you so much.

Your next question is a follow-up question from Geoffrey Porges from Bernstein. Go ahead sir. Geoffrey Porges - Sanford Bernstein: Thank you very much. Ian, I Just wanted to go back to something you said on the call first, you said it maybe less than a year from launching a product at the end of 2009. And perhaps you could just clarify that. And then just for Freda a follow-up question on the CF program. Could you confirm whether those three Phase 3 trials, it seem to be quite different patient population are all necessary for registration or is the principal strategy for an older and G551D population. Thanks. Freda Lewis-Hall: So, now thank you for that and that deserves some clarification, right now we consider the registration package the totality of the three trials. Remember we are dealing with an, ultra orafin indication here so very small patient population overall to deal with. The first study which is the 12 in order patient population, certainly acts as the core of that but in our work with the FDA it's clear that additional data or information on the pediatric population given the nature of CF is really important and also to have data that supplements our overall safety data in terms of the number of patients. And then last but not least using that Delta 508 study to supplement our understanding as well as supplementing the safety data for the registration. So it's all three and each of them plays a different part if you would in providing a data in support of registration.

And Jeff, I appreciate keeping me honest so from the end of 2009 and 12 months marking yes we are probably not quite into the launch of telaprevir but it would fall shortly after. Geoffrey Porges - Sanford Bernstein: Okay thanks.

And sir this time we have no further questions.

Okay, thanks everyone for joining us tonight. If you do have further questions we are in the office and available for taking your call bye for now.

This concludes today’s presentation. You may now disconnect your lines.