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What changed in Vertex Pharmaceuticals's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Vertex Pharmaceuticals's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+787 added−738 removedSource: 10-K (2025-02-13) vs 10-K (2024-02-15)

Top changes in Vertex Pharmaceuticals's 2024 10-K

787 paragraphs added · 738 removed · 503 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

216 edited+84 added−61 removed178 unchanged
Biggest changeRESEARCH AND DEVELOPMENT PROGRAMS We invest in research and development to discover and develop transformative medicines for people with serious diseases, with a focus on specialty markets. Our research strategy is to combine transformative advances in the understanding of human disease and in the science of therapeutics to dramatically advance human health.
Biggest changeWe expect to advance VX-407 into a Phase 2 proof-of-concept study in people with ADPKD in 2025. • In addition to the programs listed above, we have additional research programs aimed at diseases that fit our research and development strategy and follow-on programs in our existing disease areas in accord with our serial innovation approach. 2 Our core strategy is to discover and develop innovative medicines by combining transformative advances in the understanding of human disease and the science of therapeutics to dramatically advance human health.
Through label expansions, approval of new medicines, and expanded reimbursement, we are focused on increasing the number of people with CF who are eligible and able to receive our medicines.
Through approval of new medicines, label expansions, and expanded reimbursement, we are focused on increasing the number of people with CF who are eligible and able to receive our medicines.
CASGEVY, our ex-vivo, non-viral CRISPR/Cas9-based gene-editing therapy, was developed for the treatment of severe SCD and TDT, with our collaborator, CRISPR Therapeutics AG (“CRISPR”). Patients first undergo a treatment at an authorized treatment center (an “ATC”) that mobilizes a population of hematopoietic stem and progenitor cells (“HSPC”) from the bone marrow into the bloodstream.
CASGEVY, our ex-vivo, non-viral CRISPR/Cas9-based gene-editing therapy, was developed for the treatment of severe SCD and TDT, with our collaborator, CRISPR Therapeutics AG (“CRISPR”). Patients first undergo a treatment at an authorized treatment center (“ATC”) that mobilizes a population of hematopoietic stem and progenitor cells (“HSPC”) from the bone marrow into the bloodstream.
We rely on third-party manufacturers to produce or process cell culture reagents, gene-editing components, such as Cas9 protein and guide RNA molecules for clinical trials and commercial supply of CASGEVY, and to generate gene-edited cells to supply CASGEVY. We continue to rely on third-party manufacturers for commercial supply of CASGEVY.
We rely on third-party manufacturers to produce or process cell culture reagents and gene-editing components, such as Cas9 protein and guide RNA molecules for clinical trials and commercial supply of CASGEVY, and to generate gene-edited cells to supply CASGEVY. We continue to rely on third-party manufacturers for commercial supply of CASGEVY.
Kewalramani has been our Chief Executive Officer and President since April 2020 and a member of our Board of Directors since February 2020. Dr. Kewalramani was our Executive Vice President and Chief Medical Officer from April 2018 through April 2020. She was our Senior Vice President, Late Development from February 2017 until April 2018.
Kewalramani has been our Chief Executive Officer and President since April 2020 and a member of our Board of Directors since February 2020. Dr. Kewalramani was our Executive Vice President and Chief Medical Officer from April 2018 through April 2020. She was our Senior Vice President, Late Development from February 2017 until April 2018. Dr.
Atkinson has been our Executive Vice President, Chief Technical Operations Officer, Head of Biopharmaceutical Sciences and Manufacturing Operations since August 2023. He previously served as our Senior Vice President, Head of Commercial Manufacturing and Supply Chain since July 2020. Prior to joining us, Dr.
Dr. Atkinson has been our Executive Vice President, Chief Technical Operations Officer, Head of Biopharmaceutical Sciences and Manufacturing Operations since August 2023. He previously served as our Senior Vice President, Head of Commercial Manufacturing and Supply Chain since July 2020. Prior to joining us, Dr.
These sanctions could include: • restrictions on marketing or manufacturing of the product; • safety alerts, Dear Healthcare Provider letters, press releases, or other communications containing warnings or other safety information about the product; • refusal to approve or delay in review of pending applications; • withdrawal of an approval or the implementation of limitations on a previously approved indication for use; • imposition of a clinical hold, a risk evaluation and mitigation strategy (“REMS”) or other safety-related limitations; • warning letters or “untitled letters;” • product seizures, recalls, or detentions, or refusal to permit the import or export of products; 23 • total or partial suspension of production or distribution; • consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; or • injunctions, fines, disgorgement, refusals of government contracts, or civil or criminal penalties.
These sanctions could include: • restrictions on marketing or manufacturing of the product; • safety alerts, Dear Healthcare Provider letters, press releases, or other communications containing warnings or other safety information about the product; • refusal to approve or delay in review of pending applications; • withdrawal of an approval or the implementation of limitations on a previously approved indication for use; • imposition of a clinical hold, a risk evaluation and mitigation strategy (“REMS”) or other safety-related limitations; • warning letters or “untitled letters;” • product seizures, recalls, or detentions, or refusal to permit the import or export of products; • total or partial suspension of production or distribution; • consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; or • injunctions, fines, disgorgement, refusals of government contracts, or civil or criminal penalties.
Pursuant to the A&R JDCA, the parties agreed to, among other things, (a) adjust the governance structure for the collaboration and adjust the responsibilities of each party thereunder; (b) adjust the allocation of net profits and net losses between the parties; and (c) exclusively license (subject to CRISPR’s reserved rights to conduct certain activities) certain intellectual property rights to us relating to the products that may be researched , developed, manufactured and commercialized under such agreement.
Pursuant to the A&R JDCA, the parties agreed to, among other things, (a) adjust the governance structure for the collaboration and adjust the responsibilities of each party thereunder; (b) adjust the allocation of net profits and net losses between the parties; and (c) 13 exclusively license (subject to CRISPR’s reserved rights to conduct certain activities) certain intellectual property rights to us relating to the products that may be researched , developed, manufactured and commercialized under such agreement.
Pursuant to the collaboration agreement, as amended, we have agreed to pay tiered royalties ranging from single digits to sub-teens on covered compounds first synthesized and/or tested during a research term on or before February 28, 2014, including ivacaftor, lumacaftor and tezacaftor and royalties ranging from low-single digits to mid-single digits on potential net sales of certain compounds first synthesized and/or tested between March 1, 2014 and August 31, 2016, including elexacaftor.
Pursuant to the collaboration agreement, as amended, we have agreed to pay tiered royalties ranging from single digits to sub-teens on covered compounds first synthesized and/or tested during a research term on or before February 28, 2014, including ivacaftor, lumacaftor and tezacaftor and royalties ranging from low-single digits to mid-single digits on net sales of certain compounds first synthesized and/or tested between March 1, 2014 and August 31, 2016, including elexacaftor.
Products we manufacture or distribute pursuant to FDA approvals are subject to continuing regulation by the FDA, including, among other things: • record-keeping requirements; • reporting of adverse experiences with the product; • providing the FDA with updated safety and efficacy information; • drug sampling and distribution requirements; • notifying the FDA and gaining its approval of specified manufacturing or labeling changes; • complying with certain electronic records and signature requirements; and • complying with FDA promotion and advertising requirements.
Products we manufacture or distribute pursuant to FDA approvals are subject to continuing regulation by the FDA, including, among other things: • record-keeping requirements; • reporting of adverse experiences with the product; • providing the FDA with updated safety and efficacy information; 23 • drug sampling and distribution requirements; • notifying the FDA and gaining its approval of specified manufacturing or labeling changes; • complying with certain electronic records and signature requirements; and • complying with FDA promotion and advertising requirements.
For example, other pharmaceutical and biotechnology companies are actively engaged in the research and development of products for T1D, including strategies to prevent the destruction of beta cells, to protect beta cell function, or to replace missing beta cells, as well as other cell therapy approaches such as immune evasive technologies to hide the cell from the immune system, micro- and macro-encapsulation technologies that potentially require no immunosuppression, and islets cell in combination with immunosuppression.
Pharmaceutical and biotechnology companies are actively engaged in the research and development of products for T1D, including strategies to prevent the destruction of beta cells, to protect beta cell function, or to replace missing beta cells, as well as other cell therapy approaches such as immune evasive technologies to hide the cell from the immune system, micro- and macro-encapsulation technologies that potentially require no immunosuppression, and islets cell in combination with immunosuppression.
The CGT Access Model was designed to provide an opportunity to accelerate and enhance broad Medicaid access for eligible patients across all 50 U.S. states by allowing state Medicaid agencies to delegate authority to CMS to coordinate and facilitate outcomes-based payment arrangements (“OBAs”) with cell and gene therapy manufacturers, such as ours.
The CGT Access Model was designed to provide an opportunity to accelerate and enhance broad Medicaid access for eligible patients across all 50 U.S. states by allowing state Medicaid agencies to delegate authority to CMS to coordinate and facilitate outcomes-based payment arrangements (“OBAs”) with cell and gene therapy 12 manufacturers, such as ours.
United States Government Regulation New Drug Application and Biologics License Application Approval Processes The process required by the FDA before a drug or biologic may be marketed in the U.S. generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies conducted according to Good Laboratory Practices (“GLP”), and other applicable regulations; • submission to the FDA of an IND, which must become effective before clinical trials in the U.S. may begin; • performance of adequate and well-controlled clinical trials according to Good Clinical Practices (“GCP”), and other clinical trial-related regulations to establish the safety and efficacy of the proposed drug for its intended use; 20 • submission to the FDA of an NDA or a BLA; • satisfactory completion of a pre-approval FDA inspection of the manufacturing facility or facilities at which the product will be produced to assess compliance with cGMP; and • FDA review and approval of the NDA or BLA.
United States Government Regulation New Drug Application and Biologics License Application Approval Processes The process required by the FDA before a drug or biologic may be marketed in the U.S. generally involves the following: • completion of preclinical laboratory tests, animal studies and formulation studies conducted according to Good Laboratory Practices (“GLP”), and other applicable regulations; • submission to the FDA of an IND, which must become effective before clinical trials in the U.S. may begin; • performance of adequate and well-controlled clinical trials according to Good Clinical Practices (“GCP”), and other clinical trial-related regulations to establish the safety and efficacy of the proposed drug for its intended use; • submission to the FDA of a New Drug Application (“NDA”) or a BLA; • satisfactory completion of a pre-approval FDA inspection of the manufacturing facility or facilities at which the product will be produced to assess compliance with cGMP; and • FDA review and approval of the NDA or BLA.
Treatment is typically focused on relieving pain and minimizing organ damage, requiring medication and, for some patients, monthly blood transfusions and frequent hospital visits. Beta thalassemia is caused by loss-of-function mutations in the β-hemoglobin gene that lead to severe anemia in patients, which causes fatigue and shortness of breath.
Treatment is typically focused on relieving pain and minimizing organ damage, requiring medication and, for some patients, monthly blood transfusions and frequent hospital visits. Beta thalassemia is caused by loss-of-function mutations in the same β-hemoglobin gene that lead to severe anemia in patients, which causes fatigue and shortness of breath.
If a manufacturing facility is not in substantial compliance with the applicable regulations and requirements imposed when the product was approved, regulatory or judicial enforcement action may be initiated, which may include a warning 22 letter, suspension of manufacturing, product seizure, or an injunction against shipment of products from the facility and/or recall of products previously shipped.
If a manufacturing facility is not in substantial compliance with the applicable regulations and requirements imposed when the product was approved, regulatory or judicial enforcement action may be initiated, which may include a warning letter, suspension of manufacturing, product seizure, or an injunction against shipment of products from the facility and/or recall of products previously shipped.
As a result, our competitors may commercialize products more rapidly or effectively than we do, which would adversely affect our 18 competitive position, the likelihood that our product candidates, if approved, would achieve and maintain market acceptance and our ability to generate meaningful revenues from our products. Future competitive products may render our products, or future products, obsolete or noncompetitive.
As a result, our competitors may commercialize products more rapidly or effectively than we do, which would adversely affect our competitive position, the likelihood that our product candidates, if approved, would achieve and maintain market acceptance and our ability to generate meaningful revenues from our products. Future competitive products may render our products, or future products, obsolete or noncompetitive.
Fast track is a process designed to facilitate the development and expedite the review of such products by providing, among other things, more frequent meetings with the FDA to discuss the product’s development plan and rolling review, which allows submission of individually completed sections of an NDA or BLA for FDA review before the entire submission is completed.
Fast track is a process designed to facilitate the development and expedite the review of such products by providing, among other things, more frequent meetings with the FDA to discuss the product’s development plan and rolling review, which allows submission of individually completed sections of an NDA or BLA for FDA review 22 before the entire submission is completed.
Clinical trials are next initiated in a limited patient population with the specified disease or condition the drug or biologic is intended to treat to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the drug or biologic candidate for the disease or condition it is intended to treat and to determine dosage tolerance and optimal dosage. • Phase 3.
Clinical trials are next initiated in a limited patient population with the specified disease or condition the drug or biologic is intended to treat to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the drug or biologic candidate for the disease or condition it is intended to treat and to determine dosage tolerance and optimal dosage. 21 • Phase 3.
State laws may also require disclosure of pharmaceutical pricing information and marketing expenditures. 25 Many of these laws and regulations contain requirements that are subject to interpretation. Outside the U.S., other countries have implemented requirements for disclosure of financial interactions with healthcare providers and additional countries may consider or implement such laws.
State laws may also require disclosure of pharmaceutical pricing information and marketing expenditures. Many of these laws and regulations contain requirements that are subject to interpretation. Outside the U.S., other countries have implemented requirements for disclosure of financial interactions with healthcare providers and additional countries may consider or implement such laws.
The manufacturing processes for cell and genetic therapies are more complex than those required for small molecule drugs and require different systems, equipment, facilities, and expertise. Additionally, we are unable to utilize a single process for all of our cell and genetic therapies; they must be customized for each program and therapy.
The manufacturing processes for biological and cell and genetic therapies are more complex than those required for small molecule drugs and require different systems, equipment, facilities, and expertise. Additionally, we are unable to utilize a single process for all of our biological and cell and genetic therapies; they must be customized for each program and therapy.
Orphan drug exclusivity, however, also could block the approval of our products for seven years if a competitor first obtains approval of the same drug, as defined by the FDA, for the same disease or condition for which we were seeking approval. KALYDECO, ORKAMBI, SYMDEKO, TRIKAFTA, and CASGEVY have been granted orphan drug exclusivity by the FDA.
Orphan drug exclusivity, however, also could block the approval of our products for seven years if a competitor first obtains approval of the same drug, as defined by the FDA, for the same disease or condition for which we were seeking approval. KALYDECO, ORKAMBI, SYMDEKO, TRIKAFTA, ALYFTREK and CASGEVY have been granted orphan drug exclusivity by the FDA.
In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.
In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product 24 was first licensed. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.
In particular, mucus builds up and clogs the airways in the lungs, causing chronic lung infections and progressive lung damage. CFTR potentiators, such as ivacaftor, increase the probability that the CFTR protein channels open on the cell surface, increasing the flow of salt and water into and out of the cell.
In particular, mucus builds up and clogs the airways in the lungs, causing chronic lung infections and progressive lung damage. CFTR potentiators, such as ivacaftor and deutivacaftor, increase the probability that the CFTR protein channels open on the cell surface, increasing the flow of salt and water into and out of the cell.
In parallel, our government affairs and public policy group advocates for policies that promote life sciences innovation and increase awareness of the diseases on which we are focusing with state and federal legislatures, government agencies, public health officials and other policymakers.
In parallel, our government affairs and public 10 policy group advocates for policies that promote life sciences innovation and increase awareness of the diseases on which we are focusing with state and federal legislatures, government agencies, public health officials and other policymakers.
The FCA prohibits knowingly and willingly presenting, or causing to be presented for payment to third-party payors (including Medicare and Medicaid), any claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed or claims for medically unnecessary items or services.
The FCA prohibits knowingly and willingly presenting or causing to be presented for payment to third-party payors (including Medicare and Medicaid), any claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed or claims for medically unnecessary 27 items or services.
For example, certain third parties, including competitors, have reported obtaining a license to rights in this patent portfolio in certain fields. In addition, patents and patent applications in this patent portfolio are the subject of adversarial proceedings in the U.S., Europe, and other 16 jurisdictions, including proceedings in the U.S.
For example, certain third parties, including competitors, have reported obtaining a license to rights in this patent portfolio in certain fields. In addition, patents and patent applications in this patent portfolio are the subject of adversarial proceedings in the U.S., Europe, and other jurisdictions, including proceedings in the U.S.
In a Phase 2 proof-of-concept clinical trial, patients with APOL1-mediated FSGS treated with inaxaplin on top of standard of care achieved a statistically significant, substantial, and clinically meaningful reduction of proteinuria. In this clinical trial, inaxaplin was well tolerated by patients.
In a Phase 2 proof-of-concept clinical trial, patients with APOL1-mediated FSGS treated with inaxaplin on top of standard of care achieved a statistically significant, substantial, and clinically meaningful reduction of proteinuria, and inaxaplin was well tolerated by patients.
Subject to the terms and conditions of the A&R JDCA, we have the right to conduct all research, 13 development, manufacturing, and commercialization activities relating to the product candidates and products under the A&R JDCA (including CASGEVY) throughout the world, subject to CRISPR’s reserved right to conduct certain activities.
Subject to the terms and conditions of the A&R JDCA, we have the right to conduct all research, development, manufacturing, and commercialization activities relating to the product candidates and products under the A&R JDCA (including CASGEVY) throughout the world, subject to CRISPR’s reserved right to conduct certain activities.
Before approving an NDA or BLA, the FDA will inspect the facility or facilities 21 where the drug or biologic is manufactured and tested. Additionally, before approving an NDA or BLA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.
Before approving an NDA or BLA, the FDA will inspect the facility or facilities where the drug or biologic is manufactured and tested. Additionally, before approving an NDA or BLA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.
None of our U.S. employees are covered by a collective bargaining agreement. A small number of employees outside the U.S. are covered by such agreements due to local law or industry requirements. We consider our relations with our employees to be good.
None of our U.S. employees are covered by a collective 28 bargaining agreement. A small number of employees outside the U.S. are covered by such agreements due to local law or industry requirements. We consider our relations with our employees to be good.
We focus on: • disease areas with known causal human biology; • targets validated by causal human biology; 5 • predictive lab assays and clinical biomarkers; • potential for transformative benefit regardless of modality; and • efficient path to registration and approval.
We focus on: • disease areas with known causal human biology; • targets validated by causal human biology; • predictive lab assays and clinical biomarkers; • potential for transformative benefit regardless of modality; and • efficient path to registration and approval.
Many other pharmaceutical and biotechnology companies are investing resources for the discovery and development of small molecules and cell and gene therapies to treat the same disease areas for which we are developing therapies in our pipeline.
Many other pharmaceutical and biotechnology companies are investing resources for the discovery and development of small molecules and biologic and cell and gene therapies to treat the same disease areas for which we are developing therapies in our pipeline.
Further, even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the product from competition 24 because orphan drug exclusivity does not prevent different drugs from being approved for the same condition.
Further, even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the product from competition because orphan drug exclusivity does not prevent different drugs from being approved for the same condition.
Altshuler earned a B.S. from MIT, a Ph.D. from Harvard University and an M.D. from Harvard Medical School. Dr. Altshuler completed his clinical training in Internal Medicine, and in Endocrinology, Diabetes and Metabolism, at the Massachusetts General Hospital. Mr. Arbuckle is our Executive Vice President, Chief Operating Officer, a position he has held since July 2021. Previously, Mr.
Altshuler earned a B.S. from MIT, a Ph.D. from Harvard University and an M.D. from Harvard Medical School. Dr. Altshuler completed his clinical training in Internal Medicine, and in Endocrinology, Diabetes and Metabolism, at the Massachusetts General Hospital. Mr. Arbuckle is our Executive Vice President, Chief Operating Officer, a position he has held since July 2021. As previously announced, Mr.
In addition, we are continuing our research and development of CFTR modulators, with the aim of developing best-in-class medicines that can help more patients achieve carrier levels of CFTR function, and we are investigating additional potential treatments for people with CF who do not make full-length CFTR protein and cannot benefit from CFTR modulators.
In addition, we are continuing our research and development of additional CFTR modulators, with the aim of developing best-in-class medicines that can help more patients achieve normal levels of CFTR function, and we are investigating additional potential treatments for people with CF who do not make full-length CFTR protein and cannot benefit from CFTR modulators.
Additionally, in August 2022, the Inflation Reduction Act (“IRA”) was enacted, establishing a Medicare Drug Price Negotiation Program, a Medicare inflationary rebate, and a redesign of the Part D benefit structure. Certain orphan drugs, including our CF medicines, are excluded from the IRA negotiation program.
Additionally, in August 2022, the Inflation Reduction Act (“IRA”) was enacted, establishing a Medicare Drug Price Negotiation Program, a Medicare inflationary rebate, and a redesign of the Part D benefit structure. Certain drugs, including our CF medicines and CASGEVY, are excluded from the IRA negotiation program.
Our collection and use of personal data as part of our business activities is subject to various privacy and data security laws and regulations, including oversight by various regulatory or other governmental bodies, in the U.S., E.U., U.K., Canada, Australia, Brazil and other jurisdictions.
Our collection and use of personal data as part of our business activities is subject to various privacy and data security laws and regulations, including oversight by various regulatory or other governmental bodies, in the U.S., E.U., U.K., Canada, Australia, Brazil, Saudi Arabia and other jurisdictions.
The FDA may require, as a condition of approval, restricted distribution and use, enhanced labeling, special packaging or labeling, expedited reporting of certain adverse events, pre-approval of promotional materials, restrictions on direct-to-consumer advertising or commitments to conduct additional research post-approval.
The FDA may require, as a condition of approval, restricted distribution and use, enhanced labeling, special packaging or labeling, expedited reporting of certain adverse events, submission of promotional materials, restrictions on direct-to-consumer advertising or commitments to conduct additional research post-approval.
In addition, third parties assist us with packaging, warehousing, and global distribution of our products. Establishing and managing this global supply chain for each of our products and product candidates requires a significant financial commitment and the creation and maintenance of numerous third-party contractual relationships.
In addition, third parties assist us with packaging, warehousing, and global distribution of our products. Establishing and managing this global supply chain for each of our products and product candidates require a significant financial commitment and the creation and maintenance of numerous third-party contractual relationships.
Thus, whether or not we obtain FDA approval for a product candidate, we must obtain approval by the comparable regulatory authorities of foreign countries or economic areas, such as the E.U., before we can commence clinical trials or market products in those countries or areas.
Thus, whether or not we obtain FDA approval for a product candidate, we must obtain approval from the comparable regulatory authorities of foreign countries or economic areas, such as the E.U., before we can commence clinical trials or market products in those countries or areas.
We are investing and plan to continue to invest significant resources in expanding and strengthening our manufacturing supplies, infrastructure and capabilities, such as cGMP clinical manufacturing, both independently and through third-party networks, in an effort to develop and commercialize our cell and genetic therapies.
We are investing and plan to continue to invest significant resources in expanding and strengthening our manufacturing, infrastructure and capabilities, such as cGMP clinical manufacturing, both independently and through third-party networks, in an effort to develop and commercialize our biological and cell and genetic therapies.
For products that are combinations of two or more active ingredients, the table lists the projected expiration of the latest expiring patent covering any of the active pharmaceutical ingredients (lumacaftor for ORKAMBI, tezacaftor for SYMDEKO/SYMKEVI and elexacaftor for TRIKAFTA/KAFTRIO).
For products that are combinations of two or more active ingredients, the table lists the projected expiration of the latest expiring patent covering any of the active pharmaceutical ingredients (lumacaftor for ORKAMBI, tezacaftor for SYMDEKO/SYMKEVI, elexacaftor for TRIKAFTA/KAFTRIO and vanzacaftor for ALYFTREK).
The 340B program, which is administered by the Health Resources and Services Administration, requires participating companies to agree to charge statutorily defined covered entities no more than the 340B “ceiling price” for covered outpatient drugs. The 340B ceiling price is calculated using a statutory formula, which is based on pricing data calculated under the Medicaid Drug Rebate Program.
The 340B program, which is administered by the Health Resources and Services Administration, requires participating companies to agree to charge statutorily defined “covered entities” no more than the 340B “ceiling price” for covered outpatient drugs. The 340B ceiling price is calculated using a statutory formula, which is based on pricing data calculated under the Medicaid Drug Rebate Program.
Our CF medicines are used by patients in more than 60 countries, and TRIKAFTA/KAFTRIO is reimbursed or accessible in more than 40 of these countries outside the U.S. We expect to continue to focus significant resources to maintain reimbursement and obtain expanded reimbursement for our CF medicines and pipeline therapies in ex-U.S. markets.
Reimbursement of Approved Therapies Our CF medicines are used by patients in more than 60 countries, and TRIKAFTA/KAFTRIO is reimbursed or accessible in more than 50 of these countries outside the U.S. We expect to continue to focus significant resources to maintain reimbursement and obtain expanded reimbursement for our CF medicines and pipeline therapies in ex-U.S. markets.
CFTR correctors, such as lumacaftor, tezacaftor, and elexacaftor, increase the proper protein processing and folding of mutant CFTR proteins, such that a larger amount of 4 functional CFTR protein reaches the cell surface.
CFTR correctors, such as lumacaftor, tezacaftor, elexacaftor and vanzacaftor, increase the proper protein processing and folding of mutant CFTR proteins, such that a larger amount of functional CFTR protein reaches the cell surface.
In addition to patent protection, we have received regulatory exclusivity from U.S. and European regulatory agencies for the active pharmaceutical and biological agents and, where applicable, their approved orphan indications for a certain time period. Regulatory exclusivity runs concurrently with patent exclusivity and provides complementary protection for our products.
In addition to patent protection, we receive regulatory exclusivity from U.S. and European regulatory agencies for the active pharmaceutical and biological agents and, where applicable, their approved orphan indications for a certain time period. Regulatory exclusivity runs concurrently with patent exclusivity and provides complementary protection for our products.
He served as the Director of the Institute’s Program in 28 Medical and Population Genetics from 2003 through December 2014 and as the Institute’s Deputy Director and Chief Academic Officer from 2009 through December 2014. Dr.
He served as the Director of the Institute’s Program in Medical and 30 Population Genetics from 2003 through December 2014 and as the Institute’s Deputy Director and Chief Academic Officer from 2009 through December 2014. Dr.
Sickle Cell and Beta Thalassemia There are multiple approved small molecule and biologic treatments for SCD and beta thalassemia, including products from Novartis International AG (“Novartis”), Pfizer Inc. (“Pfizer”), and Bristol Myers Squibb together with Merck & Co. In addition, bluebird bio, Inc.
Sickle Cell and Beta Thalassemia There are multiple approved small molecule and biologic treatments for SCD and beta thalassemia, including products from Novartis International AG (“Novartis”), and Bristol Myers Squibb together with Merck & Co. In addition, bluebird bio, 19 Inc.
Corporate Information Vertex was incorporated in Massachusetts in 1989, and our principal executive offices are located at 50 Northern Avenue Boston, Massachusetts 02210. 27 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names, ages and positions held by our executive officers are as follows: Name Age Position Reshma Kewalramani, M.D. 51 Chief Executive Officer and President Jeffrey M.
Corporate Information Vertex was incorporated in Massachusetts in 1989, and our principal executive offices are located at 50 Northern Avenue Boston, Massachusetts 02210. 29 INFORMATION ABOUT OUR EXECUTIVE OFFICERS The names, ages and positions held by our executive officers are as follows: Name Age Position Reshma Kewalramani, M.D. 52 Chief Executive Officer and President Jeffrey M.
We expect to continue to rely on third parties to meet our commercial supply needs, including for TRIKAFTA/KAFTRIO and pipeline programs, and a significant portion of our clinical supply needs for the foreseeable future.
We expect to continue to rely on third parties to meet our commercial supply needs, including for TRIKAFTA/KAFTRIO, CASGEVY, ALYFTREK, JOURNAVX, and pipeline programs, and a significant portion of our clinical supply needs for the foreseeable future.
Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities, which provide coverage of outpatient prescription drugs such as our CF medicines. Unlike Medicare Part A and B, Part D coverage is not standardized.
Under “Part D,” Medicare beneficiaries may enroll in prescription drug plans offered by private entities, which provide coverage of outpatient prescription drugs such as our acute pain and CF medicines. Unlike Medicare Part A and B, Part D coverage is not standardized.
House of Representatives and practiced law at the American Chemistry Council, and subsequently at the law firm of Ropes & Gray LLP. He has served as a member of the Board of Directors of Eiger BioPharmaceuticals since April 2019. Mr. Sachdev holds a B.S from Carnegie Mellon University and a J.D. from Emory University School of Law. Dr.
House of Representatives and practiced law at the American Chemistry Council, and subsequently at the law firm of Ropes & Gray LLP. He served as a member of the Board of Directors of Eiger BioPharmaceuticals from April 2019 to September 2024. Mr. Sachdev holds a B.S from Carnegie Mellon University and a J.D. from Emory University School of Law. Dr.
Basic Product Patent Expiration Year of European Basic Product Patent KALYDECO 2027 2027 1 ORKAMBI 2030 2030 1 SYMDEKO/SYMKEVI 2027 2033 1 TRIKAFTA/KAFTRIO 2037 2037 CASGEVY 2035 2 2034 2, 3 1 Expiration date reflects SPCs granted in the five major European markets (France, Germany, Italy, Spain and the U.K.). 2 Expiration year reflects the expiration of regulatory exclusivity, which expires later than the basic product patent for this product in this market. 3 Product is approved in Great Britain with regulatory exclusivity until November 2033, which is later than the expiration of the basic product patent.
Basic Product Patent Expiration Year of European Basic Product Patent KALYDECO 2027 2027 1 ORKAMBI 2031 2030 1 SYMDEKO/SYMKEVI 2027 2033 1 TRIKAFTA/KAFTRIO 2037 2037 CASGEVY 2035 2 2034 3, 4 ALYFTREK 2039 2039 JOURNAVX 2040 2040 1 Expiration date reflects SPCs granted in the five major European markets (France, Germany, Italy, Spain and the U.K.). 2 Expiration year reflects the expiration of regulatory exclusivity, which expires later than the basic product patent for this product in this market. 3 Expiration year reflects the expiration of regulatory exclusivity in the E.U., which expires later than the basic product patent for this product in this market. 4 Product is approved in Great Britain with regulatory exclusivity until November 2033, which is later than the expiration of the basic product patent.
SCD is caused by the change of a single amino acid in the β-hemoglobin gene that causes red cells to change shape in settings of low oxygen. These sickled cells block blood flow and can lead to severe pain, organ damage, and shortened life span.
SCD is caused by the change of a single amino acid in the β-hemoglobin gene that causes red cells to change shape in settings of low oxygen. These sickled cells block blood flow and can lead to severe pain (known as vaso-occlusive crises), organ damage, and shortened life span.
SCD and TDT are hemoglobinopathies, a group of inherited blood disorders that result from gene mutations that alter hemoglobin, a protein in red blood cells that delivers oxygen throughout the body. We estimate approximately 35,000 people with severe SCD or TDT could be eligible for CASGEVY in the U.S. and Europe, with additional eligible people in Saudi Arabia and Bahrain.
SCD and TDT are hemoglobinopathies, a group of inherited blood disorders that result from gene mutations that alter hemoglobin, a protein in red blood cells that delivers oxygen throughout the body. We estimate approximately 60,000 people with severe SCD or TDT are or could become eligible for CASGEVY in the U.S., Canada, Europe, Saudi Arabia and Bahrain.
Disease Initial Approval Eligible Age Group (1) Cystic Fibrosis 2019 2 years of age and older 2020 2 years of age and older 2018 6 years of age and older 2018 6 years of age and older 2015 1 year of age and older 2012 1 month of age and older Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia 2023 12 years of age and older (1) Specifies the youngest eligible age group in any major market.
Disease Initial Approval Eligible Age Group (1) Cystic Fibrosis 2024 6 years of age and older 2019 2 years of age and older 2020 2 years of age and older 2018 6 years of age and older 2018 6 years of age and older 2015 1 year of age and older 2012 1 month of age and older Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia 2023 12 years of age and older Acute Pain 2025 adults (1) Specifies the youngest eligible age group in any major market.
Within Medicaid, we have engaged all of the Medicaid administrators in all 50 U.S. states, focused on the 25 states with the highest prevalence of SCD patients, and have confirmed pathways to reimbursement in nearly all 25 of those priority states.
Within Medicaid, we have engaged all of the Medicaid administrators in all 50 U.S. states, focused on the 25 states with the highest prevalence of SCD patients, and have confirmed pathways to reimbursement in all 25 of those priority states. In addition, in February 2023, the U.S.
Our research and development strategy has been validated through our success in moving novel product candidates into clinical trials and obtaining marketing approvals for TRIKAFTA/KAFTRIO, KALYDECO, ORKAMBI, and SYMDEKO/SYMKEVI for the treatment of CF, and CASGEVY for the treatment of SCD and TDT.
Our research and development strategy has been validated through our success in moving novel product candidates into clinical trials and obtaining marketing approvals for ALYFTREK, TRIKAFTA/KAFTRIO, KALYDECO, ORKAMBI, and 6 SYMDEKO/SYMKEVI for the treatment of CF, CASGEVY for the treatment of SCD and TDT, and JOURNAVX for the treatment of acute pain.
Even with these measures, however, we cannot guarantee compliance with the various complex laws and regulations to which we are subject now or in the future. EMPLOYEES AND HUMAN CAPITAL MANAGEMENT As of December 31, 2023, we had approximately 5,400 employees. Of these employees, approximately 4,400 were based in the U.S. and approximately 1,000 were based outside the U.S.
Even with these measures, however, we cannot guarantee compliance with the various complex laws and regulations to which we are subject now or in the future. EMPLOYEES AND HUMAN CAPITAL MANAGEMENT As of December 31, 2024, we had approximately 6,100 employees. Of these employees, approximately 5,100 were based in the U.S. and approximately 1,000 were based outside the U.S.
Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia Two global Phase 3 clinical trials evaluating CASGEVY in people 5 to 11 years of age with severe SCD (the CLIMB SCD-151 clinical trial) and TDT (the CLIMB THAL-141 clinical trial) are ongoing. We have completed enrollment in these two clinical trials.
Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia Two global Phase 3 clinical trials evaluating CASGEVY in children 5 to 11 years of age with severe SCD (the CLIMB SCD-151 clinical trial) and TDT (the CLIMB THAL-141 clinical trial) are ongoing. We have completed enrollment in these two clinical trials, and we expect to complete dosing in 2025.
Morrow Atkinson, III, Ph.D. 58 Executive Vice President, Chief Technical Operations Officer, Head of Biopharmaceutical Science and Manufacturing Operations Jonathan Biller, J.D. 60 Executive Vice President, Chief Legal Officer Carmen Bozic, M.D. 61 Executive Vice President, Global Medicines Development and Medical Affairs, and Chief Medical Officer Amit K.
Morrow “Morrey” Atkinson, III, Ph.D. 59 Executive Vice President, Chief Technical Operations Officer, Head of Biopharmaceutical Science and Manufacturing Operations Jonathan Biller, J.D. 61 Executive Vice President, Chief Legal Officer Carmen Bozic, M.D. 62 Executive Vice President, Global Medicines Development and Medical Affairs, and Chief Medical Officer Amit K.
Because the administration of CASGEVY requires specialized experience in stem cell transplantation, we are engaging with experienced hospitals to establish a network of approximately 75 authorized treatment centers (each, an “ATC”) across the U.S., Europe and the Middle East.
Because the administration of CASGEVY requires specialized experience in stem cell transplantation, we are engaging with experienced hospitals to establish a network of authorized treatment centers across the U.S., Europe and the Middle East.
The edited cellular product, called CASGEVY, is frozen and transported back to the ATC where it is stored prior to infusion into the patient. Each step must be completed successfully, and in a timely manner, requiring coordination between us, ATCs, third-party manufacturers and shipping vendors.
The edited cellular product, called CASGEVY, is frozen and transported back to the authorized treatment center where it is stored prior to infusion into the patient. Each step must be completed successfully, and in a timely manner, requiring coordination between us, authorized treatment centers, third-party manufacturers and shipping vendors.
Ambrose held roles of increasing responsibility at Boston Scientific Corporation, a medical device company, most recently as Vice President of Finance and Controller of the Global Endoscopy Division from July 2019 to March 2021 and as Vice President of Global Internal Audit from February 2017 to June 2019. Prior to Boston Scientific Corporation, Ms.
From February 2003 until she joined us, Ms. Ambrose held roles of increasing responsibility at Boston Scientific Corporation, a medical device company, most recently as Vice President of Finance and Controller of the Global Endoscopy Division from July 2019 to March 2021 and as Vice President of Global Internal Audit from February 2017 to June 2019.
In addition, the sponsor of an approved drug in the U.S. may not promote that drug for unapproved, or off-label, uses, although a physician may prescribe a drug for an off-label use in accordance with the practice of medicine. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.
In addition, the sponsor of an approved drug in the U.S. may not promote that drug for unapproved, although a physician may prescribe a drug for an unapproved use in accordance with the practice of medicine. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of unapproved uses, as well as false or misleading promotion.
We do not have any royalty obligations on compounds first synthesized and tested on or after September 1, 2016. For combination products, such as ORKAMBI, SYMDEKO/SYMKEVI and TRIKAFTA/KAFTRIO, sales are allocated equally to each of the active pharmaceutical ingredients in the combination product.
We do not have any royalty obligations on compounds first synthesized and tested on or after September 1, 2016. For combination products, such as ORKAMBI, SYMDEKO/SYMKEVI, TRIKAFTA/KAFTRIO, and ALYFTREK sales are allocated equally to each of the active pharmaceutical ingredients in the combination product, and royalties are then paid for any royalty-bearing components included in the combination.
Moreover, orphan drug exclusivity may not prevent the approval of another sponsor’s product that is considered to be the same drug for a different disease or condition, even where such product could be used off-label for the indication that is protected by orphan drug exclusivity.
Moreover, orphan drug exclusivity may not prevent the approval of another sponsor’s product that is considered to be the same drug for a different disease or condition, even where such product could be prescribed for an unapproved indication that is protected by orphan drug exclusivity.
If one or more competing therapies are successfully developed as a treatment for people with CF, our revenues from our current products and/or additional CF products, if then approved, could face significant competitive pressure.
If one or more competing therapies are successfully developed as a marketable treatment, our revenues from our current products and/or additional products, if then approved, could face significant competitive pressure.
Our investments in external innovation include our collaboration with CRISPR, which resulted in the successful development and approval of CASGEVY and the establishment and advancement of other pipeline programs, including our T1D program through our acquisition of Semma Therapeutics, Inc.
Our investments in external innovation include our collaboration with CRISPR, which resulted in the successful development and approval of CASGEVY and the establishment and advancement of other pipeline programs, including our T1D program through our acquisition of Semma Therapeutics, Inc. (“Semma”), our expansion of our renal programs through our acquisition of Alpine Immune Sciences, Inc.
In addition to the centralized procedure, the E.U. also has a nationalized procedure, which requires a separate application to and approval determination by each country; a decentralized procedure, whereby applicants submit identical applications to several countries and receive simultaneous approval; and a mutual recognition procedure, where applicants submit an application to one country for review and other countries may accept or reject the initial decision.
In addition to the centralized procedure, the E.U. also has a nationalized procedure, which requires a separate application to and approval determination by each country; a decentralized procedure, whereby applicants submit identical applications to several countries and receive simultaneous approval; and a mutual recognition procedure, where applicants submit an application to one country for review and other countries may accept or reject the initial decision. 25 Additionally, our European headquarters and European research facility are located in the U.K.
We have four approved medicines that treat the underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, and one approved therapy that treats severe sickle cell disease (“SCD”) and transfusion dependent beta thalassemia (“TDT”), life shortening inherited blood disorders.
We have seven approved medicines: five that treat the underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, one that treats severe sickle cell disease (“SCD”) and transfusion dependent beta thalassemia (“TDT”), life shortening inherited blood disorders, and one that treats moderate-to-severe acute pain.
For example, we also own and/or control U.S. and foreign patents and/or patent applications relating to the following: • Vanzacaftor, deutivacaftor, and other CF potentiators and correctors and many other related compounds, and the use of those compounds for the treatment CF. • VX-522 and other mRNA-based approaches for treating CF. • VX-548 and other compounds being studied for the potential treatment of pain. • Inaxaplin and other compounds being studied for the potential treatment of AMKD. • VX-880, VX-264, and other cell-based approaches for treating T1D. • VX-634, VX-668, and other compounds being studied for the potential treatment of AATD. • VX-670 for the treatment of DM1. • Other pre-clinical and clinical candidates and the use of such candidates to treat specified diseases. • The manufacture, pharmaceutical compositions, related solid forms, formulations, dosing regimens, and methods of use of many of the above compounds.
For example, we also own and/or control U.S. and foreign patents and/or patent applications relating to the following: • Other CF potentiators and correctors and many other related compounds, and the use of those compounds for the treatment CF. • VX-522 and other mRNA-based approaches for treating CF. • VX-993, VX-973, and other compounds being studied for the potential treatment of pain. • Inaxaplin and other compounds being studied for the potential treatment of AMKD. • Povetacicept for the treatment of IgAN. • Zimislecel, VX-264, and other cell-based approaches for treating T1D. 16 • VX-670 for the treatment of DM1. • VX-407 and other compounds being studied for the potential treatment of ADPKD. • Other pre-clinical and clinical candidates and the use of such candidates to treat specified diseases. • The manufacture, pharmaceutical compositions, related solid forms, formulations, dosing regimens, and methods of use of many of the above compounds.
From October 2019 to July 2023, he was our Executive Vice President, Chief Patient Officer. In addition, Mr. Sachdev has served in the role of Chief of Staff to the CEO since April 2020.
Sachdev is our Executive Vice President, Chief Patient and External Affairs Officer, a role he has held since July 2023. From October 2019 to July 2023, he was our Executive Vice President, Chief Patient Officer. In addition, Mr. Sachdev served in the role of Chief of Staff to the CEO from April 2020 to March 2023.
Over the last several years, this strategy has led us to expand our capabilities to include additional innovative therapeutic modalities with a focus on cell and genetic therapies, which have the potential to treat, and in some cases, cure diseases by addressing the underlying cause of the disease.
Over the last several years, this strategy has led us to expand our capabilities to include additional innovative therapeutic modalities with a focus on cell and genetic therapies, which have the potential to treat, and in some cases, cure diseases by addressing the underlying cause of the disease. CASGEVY, approved in multiple geographies, including the U.S., is one such example.
Blood cells are collected from the patient’s bloodstream and transferred to a manufacturing facility where the HSPCs are purified and CRISPR/Cas9 gene-editing is performed. The gene editing procedure results in a precise and specific gene edit in a non-coding intron of the BCL11A gene.
These cells are collected from the patient’s bloodstream and transferred to a manufacturing facility where the HSPCs are purified and CRISPR/Cas9 gene-editing is performed. The gene-editing procedure results in a precise and specific gene-edit in a non-coding intron of the BCL11A gene. Following manufacturing, the edited cells, now called CASGEVY, are transferred back to the ATC.
Pain Pain can be debilitating and develop from a variety of conditions. Patients with pain can be categorized as suffering from one of three types of pain: acute pain, chronic neuropathic pain (caused primarily by damage or dysfunction of peripheral nerves), or chronic musculoskeletal pain (caused primarily by damage to muscle, joints or bone).
Most commonly, patients with pain can be categorized as suffering from one of three types of pain: acute pain, chronic neuropathic pain (caused primarily by damage or dysfunction of peripheral nerves), or chronic musculoskeletal pain (caused primarily by damage to muscle, joints or bone).
Our marketed therapy is CASGEVY (exagamglogene autotemcel, or “exa-cel”), an ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, which has been approved in the United States (“U.S.”), the European Union (“E.U.”), the United Kingdom (“U.K.”), the Kingdom of Saudi Arabia (“Saudi Arabia”), and the Kingdom of Bahrain (“Bahrain”) for treatment of SCD and TDT.
Our marketed therapy is CASGEVY (exagamglogene autotemcel), an ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, which has been approved in the United States (“U.S.”), the European Union (“E.U.”), the United Kingdom (“U.K.”), the Kingdom of Saudi Arabia (“Saudi Arabia”), the Kingdom of Bahrain (“Bahrain”), the United Arab Emirates (the “UAE”), Canada and Switzerland for treatment of people 12 years of age and older with SCD or TDT.
COMMERCIALIZATION OF OUR MEDICINES Commercial Organization Our commercial organization focuses on supporting the appropriate use of TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI, KALYDECO and CASGEVY in the markets where these products have been approved.
COMMERCIALIZATION OF OUR MEDICINES Our commercialization efforts focus on supporting the appropriate use of ALYFTREK, TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI, KALYDECO, CASGEVY and JOURNAVX in the markets where these products have been approved.
INTELLECTUAL PROPERTY Patents and other intellectual property rights such as trademarks, trade secrets, and copyrights are critical to our business. We actively seek protection for our products and proprietary information by means of U.S. and foreign patents, trademarks, and copyrights, as appropriate.
INTELLECTUAL PROPERTY Patents and other intellectual property rights such as trademarks, trade secrets, and copyrights are critical to our business. We actively seek protection for our products and proprietary information by means of U.S. and foreign patents, trademarks, and copyrights, as appropriate. In addition, we rely upon trade secret protection and contractual arrangements to protect certain of our proprietary information.
Based on this positive Phase 2 data, we initiated pivotal development of inaxaplin in a single Phase 2/3 adaptive clinical trial in patients with AMKD in 2022. E nrollment in the Phase 2B portion of the Phase 2/3 clinical trial has completed.
Based on this positive Phase 2 data, we initiated pivotal development of inaxaplin in a single Phase 2/3 adaptive clinical trial in patients with AMKD in 2022. We completed t he Phase 2B portion of the Phase 2/3 clinical trial and initiated the Phase 3 portion of the study in 2024.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

194 edited+53 added−48 removed207 unchanged
Biggest changeSuch statements may relate to: • our expectations regarding the amount of, timing of, and trends with respect to our financial performance, including revenues, costs and expenses, and other gains and losses; • our expectations regarding clinical trials, including expectations for patient enrollment, development timelines, the expected timing of data from our ongoing and planned clinical trials, and regulatory authority filings and other submissions for our therapies; • our ability to maintain and obtain adequate reimbursement for our products and product candidates, our ability to launch, commercialize and market our products or any of our other therapies for which we obtain regulatory approval, including CASGEVY, and our ability to obtain label expansions for existing therapies; • our expectations regarding our ability to continue to grow our CF business by increasing the number of people with CF eligible and able to receive our medicines and providing improved treatment options for people who are already eligible for one of our medicines; 60 • the data that will be generated by ongoing and planned clinical trials and the ability to use that data to advance compounds, continue development or support regulatory filings, including from the multiple ascending dose portion of the Phase 1/2 clinical trial of VX-522, the durable efficacy and effectiveness of CASGEVY as one-time functional cure for people with SCD and TDT, and the benefit risk profile supporting VX-548 as a transformative option for acute pain as compared to existing agents, and that our triple combinations of vanzacaftor/tezacaftor/deutivacaftor will provide additional clinical benefits to people with CF who have at least one mutation in their CFTR ; • our beliefs and plans with respect to the potential near-term launch of our triple combinations of vanzacaftor/tezacaftor/deutivacaftor for treatment of CF and for VX-548 for the treatment of acute pain; • our beliefs regarding the support provided by clinical trials and preclinical and nonclinical studies of our therapies for further investigation, clinical trials or potential use as a treatment; • our plans to continue investing in our research and development programs, including anticipated timelines for our programs, and our strategy to develop our pipeline programs, alone or with third party-collaborators; • our beliefs regarding the approximate patient populations for the disease areas on which we focus; • the potential benefits and therapeutic scope of our acquisitions and collaborations, including our acquisition of ViaCyte and its potential to accelerate development of our stem-cell based T1D programs, and our collaboration with CRISPR for their gene-editing technology to accelerate the development of our hypoimmune cell therapies for T1D; • potential business development activities, including the identification of potential collaborative partners or acquisition targets; • the establishment, development and maintenance of collaborative relationships, including potential milestone payments or other obligations; • our ability to expand and protect our intellectual property portfolio and otherwise maintain exclusive rights to products; • potential fluctuations in foreign currency exchange rates and the effectiveness of our foreign currency management program; • our expectations regarding the amount of cash to generated by operations, our cash balance and expected generation and interest income; • our expectations regarding our provision for or benefit from income taxes and the utilization of our deferred tax assets; • our ability to use our research programs to identify and develop new product candidates to address serious diseases and significant unmet medical needs; • the effectiveness of our governance, plans and strategy with respect to managing cybersecurity risks and other threats to our information technology systems; • our plans to expand, strengthen, and invest in our global supply chains and manufacturing infrastructure and capabilities, including for cell and gene therapies; • our ability to attract and retain skilled personnel; • our expectations involving governmental cost containment and other regulatory efforts; • our expectations surrounding the competitive landscape facing our products and product candidates; and • our liquidity and our expectations regarding the possibility of raising additional capital.
Biggest changeSuch statements may relate to: • our expectations regarding the amount of, timing of, and trends with respect to our financial performance, including revenues, costs and expenses, and other gains and losses; • our expectations regarding clinical trials, including expectations for patient enrollment, development timelines, the expected timing of data from our ongoing and planned clinical trials, and regulatory authority filings and other submissions for our therapies; • our beliefs, expectations, and plans with respect to the commercial launches of CASGEVY for the treatment of SCD and TDT, ALYFTREK for the treatment of CF, and JOURNAVX for the treatment of moderate-to-severe acute pain; • our ability to maintain and obtain adequate reimbursement for our products and product candidates, our ability to launch, commercialize and market our products or any of our other therapies for which we obtain regulatory approval, and our ability to obtain label expansions for existing therapies; • our expectations regarding our ability to continue to grow our CF business by increasing the number of people with CF eligible and able to receive our medicines and providing improved treatment options for people who are already eligible for one of our medicines; • the data that will be generated by ongoing and planned clinical trials and the ability to use that data to advance compounds, continue development, support regulatory filings, or accelerate regulatory approval, including our plans to share data in 2025 from the ongoing clinical trial of VX-522 in patients with CF and from Part B of the ongoing clinical trial evaluating VX-264 in patients with T1D, and our plans to file for accelerated regulatory approvals based on interim analyses from the AMPLITUDE study in AMKD and the RAINIER study in IgAN; • our beliefs that ALYFTREK will provide additional clinical benefits to eligible people with CF, regarding the durable efficacy and effectiveness of CASGEVY as one-time functional cure for people with SCD and TDT, and regarding the clinical benefits of JOURNAVX without the evidence of the limitations of other available therapies; • our beliefs regarding the support provided by clinical trials and preclinical and nonclinical studies of our therapies for further investigation, clinical trials or potential use as a treatment; • our plans to continue investing in our research and development programs, including anticipated timelines for our programs, and our strategy to develop our pipeline programs, alone or with third party-collaborators; • our beliefs regarding the approximate patient populations for the disease areas on which we focus; • the potential benefits and therapeutic scope of our acquisitions and collaborations, including our acquisition of Alpine and its lead asset, povetacicept, its potential to become a pipeline-in-a-product, and our expectations regarding the Zai collaboration; • our expectations regarding the lower royalty burden for ALYFTREK; • our plans to expand, strengthen, and invest in our global supply chains and manufacturing infrastructure and capabilities, including for biologic and cell and gene therapies; • potential business development activities, including the identification of potential collaborative partners or acquisition targets; • our ability to expand and protect our intellectual property portfolio and otherwise maintain exclusive rights to products; • the establishment, development and maintenance of collaborative relationships, including potential milestone payments or other obligations; • potential fluctuations in foreign currency exchange rates and the effectiveness of our foreign currency management program; • our expectations regarding the amount of cash to generated by operations, our cash balance and expected generation and interest income; 64 • our expectations regarding our provision for or benefit from income taxes and the utilization of our deferred tax assets; • our ability to use our research programs to identify and develop new product candidates to address serious diseases and significant unmet medical needs; • the effectiveness of our governance, plans and strategy with respect to managing cybersecurity risks and other threats to our information technology systems; • our ability to attract and retain skilled personnel; • our expectations involving governmental cost containment and other regulatory efforts; • our expectations surrounding the competitive landscape facing our products and product candidates; and • our liquidity and our expectations regarding the possibility of raising additional capital.
Risks Related to Business Development Activities • Our ability to execute on our long-term strategy depends in part on our ability to engage in transactions and collaborations with other entities that add to our pipeline or provide us with new commercial opportunities. • We face risks in connection with existing and future collaborations with respect to the development, manufacture and commercialization of our products and product candidates. • We may not realize the anticipated benefits of existing or future acquisitions of businesses or technologies, and the integration following any such acquisition may disrupt our business and management.
Risks Related to Business Development Activities • We face risks in connection with existing and future collaborations with respect to the development, manufacture and commercialization of our products and product candidates. • Our ability to execute on our long-term strategy depends in part on our ability to engage in transactions and collaborations with other entities that add to our pipeline or provide us with new commercial opportunities. • We may not realize the anticipated benefits of existing or future acquisitions of businesses or technologies, and the integration following any such acquisition may disrupt our business and management.
Additionally, private payors, including health maintenance organizations and pharmacy benefit managers in the U.S., are adopting more aggressive utilization management techniques and are increasingly applying restrictive plan designs that can impact patients and manufacturers, and they continue to push for significant discounts and rebates from manufacturers. Additionally, on August 16, 2022, the IRA was enacted.
Additionally, private payors, including health maintenance organizations and pharmacy benefit managers in the U.S., are adopting more aggressive utilization management techniques and are increasingly applying restrictive plan designs that can impact patients and manufacturers, and they continue to push for significant discounts and rebates from manufacturers. On August 16, 2022, the IRA was enacted.
The law also requires manufacturers to pay a rebate to Medicare if the price of a Medicare drug (under both Part B and Part D) increases faster than the rate of inflation. The law also redesigns the Part D benefit.
The law also requires manufacturers to pay a rebate to Medicare if the price of a Medicare drug (under both Part B and Part D) increases faster than the rate of inflation and redesigns the Part D benefit.
Achieving the anticipated benefits of any transaction and successfully integrating acquired businesses or technologies involves a number of risks, including: • failure to successfully develop and commercialize the acquired products, product candidates or technologies or to achieve other strategic objectives; • delays or inability to progress preclinical programs into clinical development or unfavorable data from clinical trials evaluating the acquired or licensed product or product candidates; • difficulty in integrating the products, product candidates, technologies, business operations and personnel of an acquired asset or company; • disruption of our ongoing business and distraction of our management and employees from daily operations or other opportunities and challenges; • the potential loss of key employees of an acquired company; • entry into markets in which we have no or limited direct prior experience or where competitors in such markets have stronger market positions; • potential failure of the due diligence processes to identify significant problems, liabilities or challenges of an acquired company, or acquired or licensed products, product candidate or technology, including problems, liabilities or challenges with respect to intellectual property, clinical or non-clinical data, safety, accounting practices, employee, or third-party relations and other known and unknown liabilities; • liability for activities of the acquired company or licensor before the acquisition or license, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; • exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of an acquisition or license, including claims from terminated employees, customers, former equity holders or other third parties; and • difficulties in the integration of the acquired company’s departments, systems, including accounting, human resource and other administrative systems, technologies, books and records, and procedures, as well as in maintaining uniform standards, controls, including internal control over financial reporting required by the Sarbanes-Oxley Act of 2002 and related procedures and policies.
Achieving the anticipated benefits of any transaction and successfully integrating acquired businesses or technologies, including Alpine, involves a number of risks, including: • failure to successfully develop and commercialize the acquired products, product candidates or technologies or to achieve other strategic objectives; • delays or inability to progress preclinical programs into clinical development or unfavorable data from clinical trials evaluating the acquired or licensed product or product candidates; • difficulty in integrating the products, product candidates, technologies, business operations and personnel of an acquired asset or company; • disruption of our ongoing business and distraction of our management and employees from daily operations or other opportunities and challenges; • the potential loss of key employees of an acquired company; • entry into markets in which we have no or limited direct prior experience or where competitors in such markets have stronger market positions; • potential failure of the due diligence processes to identify significant problems, liabilities or challenges of an acquired company, or acquired or licensed products, product candidate or technology, including problems, liabilities or challenges with respect to intellectual property, clinical or non-clinical data, safety, accounting practices, employee, or third-party relations and other known and unknown liabilities; • liability for activities of the acquired company or licensor before the acquisition or license, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities; • exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of an acquisition or license, including claims from terminated employees, customers, former equity holders or other third parties; and • difficulties in the integration of the acquired company’s departments, systems, including accounting, human resource and other administrative systems, technologies, books and records, and procedures, as well as in maintaining uniform standards, controls, including internal control over financial reporting required by the Sarbanes-Oxley Act of 2002 and related procedures and policies.
Among the factors that could delay our development programs are: 41 • ongoing discussions with the FDA or comparable foreign authorities regarding the scope or design of our clinical trials and the number of clinical trials we must conduct; • failure or delay in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites; • failure to add or delay in adding a sufficient number of clinical trial sites and obtaining institutional review board or independent ethics committee approval at each clinical trial site; • suspension or termination of clinical trials of product candidates for various reasons, including non-compliance with regulatory requirements; • clinical trial sites deviating from clinical trial protocol or dropping out of a clinical trial; • delays in enrolling volunteers or patients into clinical trials, including as a result of low numbers of patients that meet the eligibility criteria for the trial; • a lower than anticipated retention rate of volunteers or patients in clinical trials; • the need to repeat clinical trials as a result of unfavorable or inconclusive results, unforeseen complications in testing or clinical investigator error; • inadequate supply or deficient quality of product candidate materials or other materials necessary for the conduct of our clinical trials; • unfavorable FDA or foreign regulatory authority inspection and review of a manufacturing facility that supplied clinical trial materials or its relevant manufacturing records or a clinical trial site or records of any clinical or preclinical investigation; • unfavorable or inconclusive scientific results from clinical trials; • serious and unexpected treatment-related side-effects experienced by participants in our clinical trials or by participants in clinical trials being conducted by our competitors to evaluate product candidates with similar mechanisms of action or structures to therapies that we are developing; • favorable results in testing of our competitors’ product candidates, or FDA or foreign regulatory authority approval of our competitors’ product candidates; or • action by the FDA or a foreign regulatory authority to place a clinical hold or partial clinical hold on a trial or compound or deeming the clinical trial conduct as problematic.
Among the factors that could delay our development programs are: • ongoing discussions with the FDA or comparable foreign authorities regarding the scope or design of our clinical trials and the number of clinical trials we must conduct; • failure or delay in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites; • failure to add or delay in adding a sufficient number of clinical trial sites and obtaining institutional review board or independent ethics committee approval at each clinical trial site; • suspension or termination of clinical trials of product candidates for various reasons, including non-compliance with regulatory requirements; • clinical trial sites deviating from clinical trial protocol or dropping out of a clinical trial; • delays in enrolling volunteers or patients into clinical trials, including as a result of low numbers of patients that meet the eligibility criteria for the trial; • a lower than anticipated retention rate of volunteers or patients in clinical trials; • the need to repeat clinical trials as a result of unfavorable or inconclusive results, unforeseen complications in testing or clinical investigator error; • inadequate supply or deficient quality of product candidate materials or other materials necessary for the conduct of our clinical trials; • unfavorable FDA or foreign regulatory authority inspection and review of a manufacturing facility that supplied clinical trial materials or its relevant manufacturing records or a clinical trial site or records of any clinical or preclinical investigation; • unfavorable or inconclusive scientific results from clinical trials; • serious and unexpected treatment-related side-effects experienced by participants in our clinical trials or by participants in clinical trials being conducted by our competitors to evaluate product candidates with similar mechanisms of action or structures to therapies that we are developing; 44 • favorable results in testing of our competitors’ product candidates, or FDA or foreign regulatory authority approval of our competitors’ product candidates; or • action by the FDA or a foreign regulatory authority to place a clinical hold or partial clinical hold on a trial or compound or deeming the clinical trial conduct as problematic.
Risks Related to Intellectual Property • If our patents do not protect our products and our products infringe third-party patents, we could be subject to litigation which could result in injunctions preventing us from selling out products, substantial damages, or circumvention of our patents by third parties. • Uncertainty over intellectual property in the pharmaceutical and biotechnology industry has been the source of litigation and other disputes that are inherently costly and unpredictable. • We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.
Risks Related to Intellectual Property • If our patents do not protect our products and our products infringe third-party patents, we could be subject to litigation which could result in injunctions preventing us from selling our products, substantial damages, or circumvention of our patents by third parties. • Uncertainty over intellectual property in the pharmaceutical and biotechnology industry has been the source of litigation and other disputes that are inherently costly and unpredictable. • We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.
The risks that we face in connection with our current collaborations, including with CRISPR, Moderna, and Entrada, and any future collaborations, include the following: • Collaborators may develop and commercialize, either alone or with others, drugs or therapies that are similar to or competitive with the products or product candidates that are the subject of their collaborations with us. • Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities or costs for us with respect to product candidates, or might result in litigation or arbitration.
The risks that we face in connection with our current collaborations, including with CRISPR, Moderna, Entrada, and Zai, and any future collaborations, include the following: • Collaborators may develop and commercialize, either alone or with others, drugs or therapies that are similar to or competitive with the products or product candidates that are the subject of their collaborations with us. • Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities or costs for us with respect to product candidates, or might result in litigation or arbitration.
Other federal activities seeking to specifically address drug pricing and reimbursement include: • rulemaking related to importation of prescription drugs from Canada, as well as guidance related to importation of prescription drugs from other foreign countries; • attempts to establish reference pricing for certain physician-administered drugs; • executive orders relating to drug pricing that are intended to broadly impact the pharmaceutical industry; • changes to the federal anti-kickback statute safe harbors that eliminate anti-kickback statute discount safe harbor protection for certain manufacturer rebate arrangements; and • legislation relating to drug pricing, including enhanced transparency measures into drug pricing.
Other federal activities seeking to specifically address drug pricing and reimbursement include: • rulemaking related to importation of prescription drugs from Canada, as well as guidance related to importation of prescription drugs from other foreign countries; • attempts to establish reference pricing for certain physician-administered drugs; • executive orders relating to drug pricing that are intended to broadly impact the pharmaceutical industry; • changes to the federal anti-kickback statute safe harbors that eliminate anti-kickback statute discount safe harbor protection for certain manufacturer rebate arrangements; and 40 • legislation relating to drug pricing, including enhanced transparency measures into drug pricing.
Moreover, adverse developments in clinical trials conducted by others of cell and genetic therapy products or products created using similar technology, or adverse public perception of the field of cell and genetic therapies, may cause the FDA and other regulatory bodies to revise the requirements for approval of any cell or genetic therapy product candidates we may develop or limit the use of products utilizing technologies such as ours, either of which could materially harm our business.
Moreover, adverse developments in clinical trials conducted by others of cell and genetic therapy products or products created using similar technology, or adverse public perception of the field of cell and genetic therapies, may cause the FDA and other regulatory bodies to revise the requirements for approval of any cell or genetic therapy product 45 candidates we may develop or limit the use of products utilizing technologies such as ours, either of which could materially harm our business.
In the U.S., various states, including Nevada, Maryland, Louisiana, New York, California, Washington, Massachusetts, New Jersey, Connecticut, Vermont, New Hampshire, Utah, Minnesota, Oregon, Colorado, New Mexico, Virginia, Maine, Texas, North Dakota, West Virginia, Florida, and New Jersey have passed legislation requiring companies to disclose extensive 37 information relating to drug prices, drug price increases, and spending on research, development, and marketing, among other things.
In the U.S., various states, including Nevada, Maryland, Louisiana, New York, California, Washington, Massachusetts, New Jersey, Connecticut, Vermont, New Hampshire, Utah, Minnesota, Oregon, Colorado, New Mexico, Virginia, Maine, Texas, North Dakota, West Virginia, Florida, and New Jersey have passed legislation requiring companies to disclose extensive information relating to drug prices, drug price increases, and spending on research, development, and marketing, among other things.
For example, while we are not directly subject to the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HIPAA”), we could be subject to penalties, including criminal penalties if we knowingly obtain or disclose individually identifiable health information from a HIPAA-covered health care provider or 46 research institution that has not complied with HIPAA’s requirements for disclosing such information.
For example, while we are not directly subject to the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HIPAA”), we could be subject to penalties, including criminal penalties if we knowingly obtain or disclose individually identifiable health information from a HIPAA-covered health care provider or research institution that has not complied with HIPAA’s requirements for disclosing such information.
Massachusetts state law also prohibits us from engaging in specified business combinations with an interested stockholder, subject to certain exceptions, unless the combination is approved or consummated in a prescribed manner, places restrictions on voting by any shareholder who acquires 20% or more of the aggregate shareholder voting power without approval by non-interested shareholders.
Massachusetts state law also prohibits us from engaging in specified business combinations with an interested stockholder, subject to certain exceptions, unless the combination is approved or consummated in a prescribed manner, and places restrictions on voting by any shareholder who acquires 20% or more of the aggregate shareholder voting power without approval by non-interested shareholders.
Although we believe that our safety procedures for handling and disposing of these materials comply with the standards prescribed by state, federal and foreign regulations, the risk of loss of, or accidental contamination or injury from, these materials cannot be eliminated. If an accident occurs, we could be held liable for resulting damages, which could be substantial.
Although we believe that our safety procedures for handling and disposing of these materials comply with the standards prescribed by state, federal and foreign regulations, the risk of loss of, or accidental contamination 49 or injury from, these materials cannot be eliminated. If an accident occurs, we could be held liable for resulting damages, which could be substantial.
For example, Clinical Trial Regulation (EU) No. 536/2014, and the EMA policy on publication of clinical data 40 for medicinal products for human use, both permit the EMA to publish clinical information submitted in marketing authorization applications. Third party review and scrutiny could result in public misconceptions regarding our drugs and product candidates.
For example, Clinical Trial Regulation (EU) No. 536/2014, and the EMA policy on publication of clinical data for medicinal products for human use, both permit the EMA to publish clinical information submitted in marketing authorization applications. Third party review and scrutiny could result in public misconceptions regarding our drugs and product candidates.
Starting in 2025, manufacturers of brand drugs and biologics will be required to provide a 10% discount during the initial 36 phase and a 20% discount during the catastrophic phase of the Part D benefit. The IRA continues a trend in the U.S. toward reducing drug prices and limiting spending by the federal health care programs on drugs.
Starting in 2025, manufacturers of brand drugs and biologics will be required to provide a 10% discount during the initial phase and a 20% discount during the catastrophic phase of the Part D benefit. The IRA continues a trend in the U.S. toward reducing drug prices and limiting spending by the federal health care programs on drugs.
These product candidates are in various stages of development and must satisfy rigorous standards of safety and efficacy before they can be 39 approved for sale by the FDA or comparable foreign regulatory authorities. To satisfy these standards, we must allocate resources among our various development programs and must engage in expensive and lengthy testing of our product candidates.
These product candidates are in various stages of development and must satisfy rigorous standards of safety and efficacy before they can be approved for sale by the FDA or comparable foreign regulatory authorities. To satisfy these standards, we must allocate resources among our various development programs and must engage in expensive and lengthy testing of our product candidates.
Furthermore, results from our clinical trials may not meet the level of statistical significance or otherwise provide the level of evidence or safety and efficacy required by the FDA or other regulatory authorities for approval of a product candidate. Finally, clinical trials are expensive and require significant operational resources to implement and maintain.
Furthermore, results from our clinical trials may not meet the level of statistical significance or otherwise 42 provide the level of evidence or safety and efficacy required by the FDA or other regulatory authorities for approval of a product candidate. Finally, clinical trials are expensive and require significant operational resources to implement and maintain.
As a result, currency fluctuations among our reporting currency, the U.S. dollar, and the currencies in which we 58 do business may affect our operating results, often in unpredictable ways. Our quarterly results also could be materially affected by significant charges, which may or may not be similar to charges we have experienced in the past.
As a result, currency fluctuations among our reporting currency, the U.S. dollar, and the currencies in which we do business may affect our operating results, often in unpredictable ways. Our quarterly results also could be materially affected by significant charges, which may or may not be similar to charges we have experienced in the past.
Our products and any products that we develop in the future may not be able to compete effectively with marketed 34 therapies or new therapies that may be developed by competitors. The risk of competition is particularly important to our company because substantially all of our revenues are related to the treatment of people with CF.
Our products and any products that we develop in the future may not be able to compete effectively with marketed therapies or new therapies that may be developed by competitors. The risk of competition is particularly important to our company because substantially all of our revenues are related to the treatment of people with CF.
These publications could also result in the disclosure of information to our competitors that we might otherwise deem confidential, which could harm our business. If we are unable to obtain or are delayed in obtaining regulatory approval, we may incur additional costs, experience delays in commercialization, or be unable to commercialize our product candidates.
These publications could also result in the disclosure of information to our competitors that we might otherwise deem confidential, which could harm our business. If we are unable to obtain or are delayed in obtaining regulatory approval, we may incur additional costs, experience delays, or be unable to commercialize our product candidates.
Such standards, particularly with respect to newer cell and genetic therapies, will continue to evolve and subject us and third parties to new or changing requirements. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be 48 required to replace them.
Such standards, particularly with respect to newer cell and genetic therapies, will continue to evolve and subject us and third parties to new or changing requirements. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be required to replace them.
Challenges could adversely affect our operations and financial results if we do not have sufficient staff to perform necessary functions. In addition, the 55 available pool of skilled employees would be further reduced if immigration laws change in a manner that increases restrictions on immigration.
Challenges could adversely affect our operations and financial results if we do not have sufficient staff to perform necessary functions. In addition, the available pool of skilled employees would be further reduced if immigration laws change in a manner that increases restrictions on immigration.
Similar risks relating to inappropriate disclosure of sensitive information or inaccurate information appearing in the public domain may also apply from our employees engaging with and use of new artificial intelligence tools, such as ChatGPT. Risks Related to Financial Results and Holding Our Common Stock Our stock price may fluctuate.
Similar risks relating to inappropriate disclosure of sensitive information or inaccurate information appearing in the public domain may also apply from our employees engaging with and use of new artificial intelligence tools, such as ChatGPT. 60 Risks Related to Financial Results and Holding Our Common Stock Our stock price may fluctuate.
Any such forward-looking statements are made on the basis of our views and assumptions as of the date of the filing and are not estimates of future performance. Except as required by law, we undertake no obligation to publicly update any forward-looking statements. The reader is cautioned not to place undue reliance on any such statements. 61 ITEM 1B.
Any such forward-looking statements are made on the basis of our views and assumptions as of the date of the filing and are not estimates of future performance. Except as required by law, we undertake no obligation to publicly update any forward-looking statements. The reader is cautioned not to place undue reliance on any such statements. ITEM 1B.
The manufacturing and logistics for cell and genetic therapies are highly complex, short lead time operations that require partnership with an extensive network of third parties to deliver product. These manufacturing and logistics operations require significant investment by us to secure capacity at third parties with expertise to meet our requirements.
The manufacturing and logistics for cell and genetic therapies are highly complex, often short lead time operations that require partnership with an extensive network of third parties to deliver product. These manufacturing and logistics operations require significant investment by us to secure capacity at third parties with expertise to meet our requirements.
The regulatory approval process and clinical trial requirements for cell and genetic therapies can be more expensive and take longer than for other, better known or more extensively studied product candidates, and regulatory requirements 45 governing cell and genetic therapy products have changed frequently and may continue to change in the future.
The regulatory approval process and clinical trial requirements for cell and genetic therapies can be more expensive and take longer than for other, better known or more extensively studied product candidates, and regulatory requirements governing cell and genetic therapy products have changed frequently and may continue to change in the future.
Additionally, establishing, managing and expanding our global manufacturing and supply chain requires a significant financial commitment and the creation and maintenance of our numerous third-party contractual relationships. We may not be able to agree on contractual terms with third parties as needed for manufacturing of our products.
Additionally, establishing, managing and expanding our global manufacturing and supply chain requires a significant financial commitment and the creation and maintenance of our numerous third-party contractual relationships. We may not 50 be able to agree on contractual terms with third parties as needed for manufacturing of our products.
In addition to Broad, other third parties have filed patent applications claiming CRISPR/Cas9-related inventions and may allege that they invented one or more of the inventions claimed by the CVC Group. Thus, the USPTO may, in the future, declare an interference between certain CVC Group patent applications and one or more patent applications.
In addition to Broad, other third parties have filed patent applications claiming CRISPR/Cas9-related inventions and may allege that they invented one or more of the inventions claimed by the CVC Group. Thus, the USPTO may, in the future, 55 declare an interference between certain CVC Group patent applications and one or more patent applications.
The subsequent discovery of previously unknown or underestimated problems with a product could negatively affect commercial sales of the product, result in restrictions on the product or lead to the withdrawal of the product from the market. Each of our CF products shares at least one active pharmaceutical ingredient with another of our products.
The subsequent discovery or appearance of previously unknown or underestimated problems with a product could negatively affect commercial sales of the product, result in restrictions on the product or lead to the withdrawal of the product from the market. Each of our CF products shares at least one active pharmaceutical ingredient with another of our products.
If we borrow under our current credit agreement or any future credit agreements, such indebtedness could have important consequences to our business, including increasing our vulnerability to general adverse financial, business, economic and industry conditions, as well as other factors that are beyond our control.
If we borrow under our current credit agreement or any future credit agreements, such indebtedness could have important consequences to our business, including increasing our vulnerability to general adverse financial, business, economic and industry conditions, 62 as well as other factors that are beyond our control.
Most of our operations, including our research and development activities, are conducted in a limited number of facilities. If any of our major facilities were to experience a catastrophic loss, due to an earthquake, severe storms, fire or similar event, our operations could be seriously harmed.
Most of our operations, including our research and development activities, are conducted in a limited number of facilities. If any of our major facilities were to experience a catastrophic loss, due to an earthquake, flood, severe storms, fire or similar event, our operations could be seriously harmed.
We invested significant resources in the research and development of CASGEVY. While we have previously successfully commercialized several small molecule drugs, we have limited experience with the commercialization of cell and genetic therapies. Manufacturing and commercialization of CASGEVY is subject to similar risks and uncertainties as small molecules.
We have invested significant resources in the development and commercialization of CASGEVY. While we have previously successfully commercialized several small molecule drugs, we have limited experience with the commercialization of cell and genetic therapies. Manufacturing and commercialization of CASGEVY is subject to similar risks and uncertainties as small molecules.
If U.S. payors were to adopt such assessments and make negative coverage determinations or utilize value-based contracts that result in penalties to, or lower rates of, reimbursement, it could adversely affect our product revenues.
If U.S. payors were to adopt such assessments and make negative coverage determinations or utilize value-based contracts that result in penalties to, or lower rates of, reimbursement, it could adversely affect our product 39 revenues.
The lawsuit follows our receipt of a Notice Letter on June 9, 2022, advising that Lupin had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of KALYDECO granules in 52 the U.S.
The lawsuit follows our receipt of a Notice Letter on June 9, 2022, advising that Lupin had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of KALYDECO granules in the U.S.
There is considerable uncertainty within our industry about the validity, scope, and enforceability of many issued patents in the U.S. and elsewhere in the world, and, to date, the law and practice remains in flux both in the agencies that grant 51 patents and in the courts.
There is considerable uncertainty within our industry about the validity, scope, and enforceability of many issued patents in the U.S. and elsewhere in the world, and, to date, the law and practice remains in flux both in the agencies that grant patents and in the courts.
The future market price of our securities could be significantly and adversely affected by factors such as: • the information contained in our quarterly earnings releases, including updates regarding our commercialized products or our product candidates, our net product revenues and operating expenses for completed periods and financial guidance regarding future periods; • announcements of FDA actions with respect to our therapies or those of our competitors, or regulatory filings for our therapies or those of our competitors, or announcements of interim or final results of clinical trials or nonclinical studies relating to our therapies or those of our competitors; • announcements we make or commentary by public equity analysts with respect to clinical development of the product candidates in our pain program; • developments in domestic and international governmental policy or regulation, for example, relating to drug pricing and tax reform; • technological innovations or the introduction of new drugs by our competitors; • government regulatory action; 57 • public concern as to the safety of drugs developed by us or our competitors; • developments in patent or other intellectual property rights or announcements relating to these matters; • information disclosed by third parties regarding our business or products; • developments relating specifically to other companies and market conditions for pharmaceutical and biotechnology stocks or stocks in general; • business development, capital structuring or financing activities; and • general worldwide or national economic, political and capital market conditions, including as a result of inflation and rapid fluctuations in interest rates.
The future market price of our securities could be significantly and adversely affected by factors such as: • the information contained in our quarterly earnings releases, including updates regarding our commercialized products or our product candidates, our net product revenues and operating expenses for completed periods and financial guidance regarding future periods; • announcements of FDA actions with respect to our therapies or those of our competitors, or regulatory filings for our therapies or those of our competitors, or announcements of interim or final results of clinical trials or nonclinical studies relating to our therapies or those of our competitors; • announcements we make or commentary by public equity analysts with respect to clinical development of the product candidates in our pain program; • developments in domestic and international governmental policy or regulation, for example, relating to drug pricing and tax law changes; • technological innovations or the introduction of new drugs by our competitors; • government regulatory action; • public concern as to the safety of drugs developed by us or our competitors; • developments in patent or other intellectual property rights or announcements relating to these matters; • information disclosed by third parties regarding our business or products; • developments relating specifically to other companies and market conditions for pharmaceutical and biotechnology stocks or stocks in general; • business development, capital structuring or financing activities; and • general worldwide or national economic, political and capital market conditions, including as a result of inflation and rapid fluctuations in interest rates.
Risks Related to Development and Clinical Testing of Our Products and Product Candidates • Our product candidates remain subject to clinical testing and regulatory approval, and our future success is dependent on our ability to successfully develop additional product candidates for both CF and non-CF indications. • If we are unable to obtain or are delayed in obtaining regulatory approval, we may incur additional costs, experience delays in commercialization, or be unable to commercialize our product candidates. • If clinical trials are prolonged or delayed, our development timelines for the affected development program could be extended, our costs to develop the product candidate could increase and the competitive position of the product candidate could be adversely affected. 31 • Difficulty in enrolling patients could delay or prevent clinical trials of our product candidates, and ultimately delay or prevent regulatory approval. • Enrollment for clinical trials for our cell and gene therapies may face additional and unique challenges and adverse developments associated with these clinical trials could result in action by regulatory bodies, including revised requirements for approval.
Risks Related to Development and Clinical Testing of Our Products and Product Candidates • Our product candidates remain subject to clinical testing and regulatory approval, and our future success is dependent on our ability to successfully develop additional product candidates for both CF and non-CF indications. • If we are unable to obtain or are delayed in obtaining regulatory approval, we may incur additional costs, experience delays, or be unable to commercialize our product candidates. • If clinical trials are prolonged or delayed, our development timelines for the affected development program could be extended, our costs to develop the product candidate could increase and the competitive position of the product candidate could be adversely affected. • Difficulty in enrolling patients could delay or prevent clinical trials of our product candidates, and ultimately delay or prevent regulatory approval. 33 • Enrollment for clinical trials for our cell and gene therapies may face additional and unique challenges and adverse developments associated with these clinical trials could result in action by regulatory bodies, including revised requirements for approval.
Our concentrated source of revenues presents a number of risks to our business, including: • that one or more competing therapies may be developed successfully as a treatment for people with CF; • that reimbursement policies of payors and other third parties may make it difficult to obtain reimbursement or reduce the net price we receive for our products; • that we may experience manufacturing or supply disruptions for our CF medicines; and • that we may experience adverse developments with respect to development or commercialization of our CF medicines.
Our concentrated source of revenues presents a number of risks to our business, including: • that one or more competing therapies may be developed successfully by others as a treatment for people with CF; • that reimbursement policies of payors and other third parties may make it difficult to obtain reimbursement or may reduce the net price we receive for our products; • that we may experience manufacturing or supply disruptions for our CF medicines; and • that we may experience adverse developments with respect to development or commercialization of our CF medicines.
Any later discovery of previously unknown problems or safety issues with approved drugs or manufacturing processes, or failure to comply with regulatory requirements, may result in restrictions on such drugs or manufacturing processes, withdrawal of drugs from the market, the imposition of civil or criminal penalties or a refusal by the FDA and/or other regulatory bodies to approve pending applications for marketing approval of new drugs or supplements to approved applications, any of which could have a material adverse effect on our business.
Any later discovery of previously unknown problems or safety issues with approved products or manufacturing processes, or failure to comply with regulatory requirements, may result in restrictions on such products or manufacturing processes, withdrawal of products from the market, the imposition of civil or criminal penalties or a refusal by the FDA and/or other regulatory bodies to approve pending applications for marketing approval of new products or supplements to approved applications, any of which could have a material adverse effect on our business.
Even with the relevant experience and expertise, manufacturers of cell and genetic therapy products often encounter difficulties in production, including difficulties with production costs and yields, quality control, and compliance with federal, state and 47 foreign regulations.
Even with the relevant experience and expertise, manufacturers of cell and genetic therapy products often encounter difficulties in production, including difficulties with production costs and yields, quality control, and compliance with federal, state and foreign regulations.
Risks Related to Government Regulation • If regulatory authorities interpret any of our conduct, including our marketing practices, as being in violation of applicable health care laws, including fraud and abuse laws, laws prohibiting off-label promotion, disclosure laws or other similar laws, we may be subject to civil or criminal penalties. • If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental pricing programs in the U.S., we could be subject to additional reimbursement requirements, penalties, sanctions, and fines that could have a material adverse effect on our business, financial condition, results of operations and growth prospects. • If our processes and systems are not compliant with regulatory requirements, we could be subject to restrictions on marketing our products or could be delayed in submitting regulatory filings seeking approvals for our product candidates. • The regulatory approval process for our cell and genetic therapies involves additional consultations with regulatory agencies, costs, and potentially longer timelines as compared to those for small molecules.
Risks Related to Government Regulation • If regulatory authorities interpret any of our conduct, including our marketing practices, as being in violation of applicable health care laws, including fraud and abuse laws, laws prohibiting false and misleading promotion, disclosure laws or other similar laws, we may be subject to civil or criminal penalties. • If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental pricing programs in the U.S., we could be subject to additional reimbursement requirements, penalties, sanctions, and fines that could have a material adverse effect on our business, financial condition, results of operations and growth prospects. • If our processes and systems are not compliant with regulatory requirements, we could be subject to restrictions on marketing our products or could be delayed in submitting regulatory filings seeking approvals for our product candidates. • The regulatory approval process for our cell and genetic therapies involves additional consultations with regulatory agencies, costs, and potentially longer timelines as compared to those for small molecules.
The enrollment of patients further depends on many factors, including: • the proximity of patients to clinical trial sites; • the size of the patient population, the nature of the protocol, and the design of the clinical trial; 42 • our ability to recruit clinical trial investigators with the appropriate competencies and experience; • the number of other clinical trials ongoing and competing for patients in the same indication; • our ability to obtain and maintain patient consents; • reporting of the preliminary results of any of our clinical trials; • the availability of effective treatments for the relevant disease and eligibility criteria for the clinical trial; • the risk that patients enrolled in clinical trials will drop out of the clinical trials before clinical trial completion; and • factors we may not be able to control, such as current or potential pandemics that may limit patients, principal investigators or staff or clinical site availability.
The enrollment of patients further depends on many factors, including: • the proximity of patients to clinical trial sites; • the size of the patient population, the nature of the protocol, and the design of the clinical trial; • our ability to recruit clinical trial investigators with the appropriate competencies and experience; • the number of other clinical trials ongoing and competing for patients in the same indication; • our ability to obtain and maintain patient consents; • reporting of the preliminary results of any of our clinical trials; • the availability of effective treatments for the relevant disease and eligibility criteria for the clinical trial; • the risk that patients enrolled in clinical trials will drop out of the clinical trials before clinical trial completion; and • factors we may not be able to control, such as pandemics that may limit patients, principal investigators or staff or clinical site availability.
Additionally, the IRA requires manufacturers to pay rebates for Medicare Part B and Part D drugs with prices that increase faster than the rate of inflation.
Additionally, the IRA requires manufacturers to pay rebates for Medicare Part B and Part D drugs with prices that increase 47 faster than the rate of inflation.
In addition, numerous other federal and state laws, including state security breach notification laws, state health information privacy laws and federal and state consumer protection laws, govern the collection, use, disclosure and security of personal information.
In addition, numerous other federal and state laws, including state security breach notification laws, state health information privacy laws and federal and state consumer protection laws, govern the collection, use, disclosure and security 48 of personal information.
To ensure the stability of our supply chains, we continue to develop alternative suppliers for our manufacturing processes. However, there can be no assurance that we will be able to establish and maintain additional manufacturers or capacity for all of our product candidates and products on a timely basis or at all.
To ensure the stability of our supply chains, we continue to develop alternative suppliers for our manufacturing processes and key materials. However, there can be no assurance that we will be able to establish and maintain additional manufacturers or capacity for all of our product candidates and products on a timely basis or at all.
The scope of this and other laws may expand in ways that make compliance more difficult and expensive. The FDA and other regulatory agencies closely regulate the post-approval marketing and promotion of products to ensure that they are marketed only for the approved indications and in accordance with the provisions of the approved labeling.
The scope of this and other laws may expand in ways that make compliance more difficult and expensive. The FDA and other regulatory agencies closely regulate the post-approval marketing and promotion of products to ensure that they are marketed only for the approved indications and in accordance or consistent with the provisions of the approved labeling.
UNRESOLVED STAFF COMMENTS We did not receive any written comments from the Securities and Exchange Commission prior to the date 180 days before the end of the fiscal year ended December 31, 2023 regarding our filings under the Securities Exchange Act of 1934, as amended, that have not been resolved.
UNRESOLVED STAFF COMMENTS We did not receive any written comments from the Securities and Exchange Commission prior to the date 180 days before the end of the fiscal year ended December 31, 2024 regarding our filings under the Securities Exchange Act of 1934, as amended, that have not been resolved.
The increasing availability and use of innovative specialty pharmaceuticals for rare diseases, combined with their higher cost as compared to other types of pharmaceutical products, is generating significant third-party payor interest in developing cost-containment strategies targeted to this sector.
The increasing availability and use of innovative specialty pharmaceuticals for rare or other diseases or conditions, combined with their higher cost as compared to other types of pharmaceutical products, is generating significant third-party payor interest in developing cost-containment strategies targeted to this sector.
We market our products to eligible people with CF, SCD, and TDT for whom the applicable product has been approved and provide promotional materials and informational programs to physicians regarding the use of each product in these patient populations. These eligible people do not represent all people with CF, SCD, and TDT.
We market our products to eligible people with CF, SCD, TDT, and acute pain for whom the applicable product has been approved and provide promotional materials and informational programs to physicians regarding the use of each product in these patient populations. These eligible people do not represent all people with CF, SCD, TDT, and acute pain.
While we have developed internal capabilities to supply product candidates for use in our clinical trials as well as our products for commercial sale, a majority of the manufacturing steps needed to produce our medicines, product candidates, and drug products are performed through a third-party manufacturing network.
While we have developed internal capabilities to supply product candidates for use in our clinical trials as well as some of our products for commercial sale, a majority of the manufacturing steps needed to produce our medicines, therapies, product candidates, and drug products are performed through a third-party manufacturing network.
If we discover safety issues with any of our products or if we fail to comply with continuing U.S. and applicable foreign regulations, commercialization efforts for the product could be negatively affected, the approved product could lose its approval or sales could be suspended, and our business could be materially harmed.
If we discover safety issues with any of our products or if we fail to comply with continuing U.S. and applicable foreign regulations, commercialization efforts for the product could be negatively affected, the approved product could lose its approval, and our business could be materially harmed.
In some cases, such as with the Medicaid Drug Rebate Program, the rebates are based on pricing and rebate calculations that we report on a monthly and quarterly basis to the government agencies that administer the programs. The terms, scope and complexity of these government pricing programs change frequently.
In some cases, such as with the Medicaid Drug Rebate Program, the rebates are based on pricing and rebate calculations that we report on a monthly and quarterly basis to the government agencies that administer the programs. The terms, scope and complexity of these government pricing programs may change.
If our collaborators or third-party manufacturers do not fulfill these regulatory obligations, any drugs for which we or they obtain approval may be subject to later restrictions on manufacturing or sale, which could have a material adverse effect on our business.
If our collaborators or third-party manufacturers do not fulfill these regulatory obligations, any products for which we or they obtain approval may be subject to later restrictions on manufacturing or sale, which could have a material adverse effect on our business.
Similarly, a disruption in the clinical supply of product candidates could delay the completion of clinical trials and affect timelines for regulatory filings. We have a limited number of critical steps in our manufacturing process that are single sourced, including for commercialized products.
Similarly, a disruption in the clinical supply of product candidates could delay the completion of clinical trials and affect timelines for regulatory filings. We have a limited number of critical steps and key materials for our manufacturing process that are single sourced, including for commercialized products.
Although we believe that there are a number of other third-party contractors we could engage to continue the activities, it may result in a delay of the affected clinical trial, drug development program or applicable activity.
Although we believe that there are a number of other third-party contractors we could engage to continue the activities, it may result in a delay of the affected clinical trial, product development program or applicable activity.
It also is possible that other federal, state, or foreign enforcement authorities might take action if they believe that the alleged improper promotion led to the submission and payment of claims for an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.
It also is possible that other federal, state, or foreign enforcement authorities might take action if they believe that the alleged improper promotion led to the submission and payment of claims for an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.
In addition, non-profit organizations may be willing to provide capital to the companies that control additional products, product candidates or technologies, which may provide incentives for companies to advance these products, product candidates or technologies independently.
In addition, investors and non-profit organizations may be willing to provide capital to the companies that control additional products, product candidates or technologies, which may provide incentives for companies to advance these products, product candidates or technologies independently.
For example, the removal of the current statutory 100% of Average Manufacturer Price per-unit cap on Medicaid rebate liability for single source and innovator multiple source drugs, effective as of January 1, 2024, under the American Rescue Plan Act of 2021 may affect the amount of rebates paid on prescription drugs under Medicaid and the prices that are required to be charged to covered entities under the 340B Drug Discount Program.
For example, the removal of the current statutory 100% of Average Manufacturer Price per-unit cap on Medicaid rebate liability for single source and innovator multiple source drugs, effective as of January 1, 2024, under the American Rescue Plan Act of 2021, may affect the prices that are required to be charged to covered entities under the 340B Drug Discount Program.
If a claim is brought against us, we might be required to pay legal and other expenses to defend the claim, as well as pay uncovered damage awards resulting from a claim brought successfully against us and these damages could be significant and have a material adverse effect on our financial condition.
If a claim is brought against us, we might be required to pay legal and other expenses to defend the claim, as well as pay uncovered damage awards and these damages could be significant and have a material adverse effect on our financial condition.
Supply disruptions may result from a number of factors, including shortages in product raw materials, labor or technical difficulties, regulatory inspections or restrictions, shipping or customs delays, general global supply chain disruptions, or any other performance failure by us or any third-party manufacturer on which we rely.
Supply disruptions may result from a number of factors, including shortages in product raw materials, labor or technical difficulties, regulatory inspections or restrictions, shipping or customs delays, general global supply chain disruptions, events beyond our control, or any other performance failure by us or any third-party manufacturer on which we rely.
Risks Related to Government Regulation If regulatory authorities interpret any of our conduct, including our marketing practices, as being in violation of applicable health care laws, including fraud and abuse laws, laws prohibiting off-label promotion, disclosure laws or other similar laws, we may be subject to civil or criminal penalties.
Risks Related to Government Regulation If regulatory authorities interpret any of our conduct, including our marketing practices, as being in violation of applicable health care laws, including fraud and abuse laws, laws prohibiting false and misleading promotion, disclosure laws or other similar laws, we may be subject to civil or criminal penalties.
Pharmaceutical companies have been prosecuted under these laws for a variety of alleged promotional and marketing activities, such as providing free product to customers with the expectation that the customers would bill federal programs for the product; reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates; engaging in promotion for uses that the FDA has not approved, known as “off-label” uses, that caused claims to be submitted to Medicaid for those off-label uses; submitting inflated “best price” information to 43 the Medicaid Rebate Program; and certain manufacturing-related violations.
Pharmaceutical companies have been prosecuted under these laws for a variety of alleged promotional and marketing activities, such as providing free product to customers with the expectation that the customers would bill federal programs for the product; reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates; engaging in promotion for uses that the FDA has not approved, that caused claims to be submitted to Medicaid for those unapproved uses; submitting inflated “best price” information to the Medicaid Rebate Program; and certain manufacturing-related violations.
Although physicians are generally permitted, based on their medical judgment, to prescribe products for indications other than those approved by the applicable regulatory agency, manufacturers are prohibited from promoting their products for such off-label uses.
Although physicians are generally permitted, based on their medical judgment, to prescribe products for indications other than those approved by the applicable regulatory agency, manufacturers are prohibited from promoting such unapproved uses.
Risks associated with operating a global biotechnology company include: • differing regulatory requirements for drug approvals and regulation of approved drugs in foreign countries; • varying reimbursement regimes and difficulties or the inability to obtain reimbursement for our products in foreign countries in a timely manner; • differing patient treatment infrastructures, particularly since our business is focused on the treatment of serious diseases that affect relatively smaller numbers of patients and are typically prescribed by specialist physicians; • collectability of accounts receivable; • changes in tariffs, trade barriers, and regulatory requirements, the risks of which appear to have increased in the current political environment; 54 • economic weakness, including recession and inflation, or political instability in particular foreign economies and markets; • differing levels of enforcement and/or recognition of contractual and intellectual property rights; • complying with local laws and regulations, which can change significantly over time; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in reduced revenues or increased operating expenses, and other obligations incident to doing business or operating in another country; • workforce uncertainty in countries where labor unrest is more common than in the U.S.; • reliance on third-party vendors, distributors and suppliers; • import and export licensing requirements, tariffs, and other trade and travel restrictions; • global or regional public health emergencies that could affect our operations or business; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geo-political actions, including war and terrorism.
Risks associated with operating a global biotechnology company include: • differing regulatory requirements for drug approvals and regulation of approved drugs in foreign countries; • varying reimbursement regimes and difficulties or the inability to obtain reimbursement for our products in foreign countries in a timely manner; • differing patient treatment infrastructures, particularly since our business is focused on the treatment of serious diseases that affect relatively smaller numbers of patients and are typically prescribed by specialist physicians; • collectability of accounts receivable; • changes in tariffs, trade barriers, and regulatory requirements, the risks of which appear to have increased in the current political environment; • economic weakness, including recession and inflation, or political instability in particular foreign economies and markets; • differing levels of enforcement and/or recognition of contractual and intellectual property rights; • circulation of unauthorized copy versions of our medicines that infringe our intellectual property rights; • governments seeking to override our intellectual property rights through the introduction of compulsory license or similar mechanisms; • complying with local laws and regulations, which can change significantly over time; • foreign taxes, including withholding of payroll taxes; • foreign currency fluctuations, which could result in reduced revenues or increased operating expenses, and other obligations incident to doing business or operating in another country; • workforce uncertainty in countries where labor unrest is more common than in the U.S.; • reliance on third-party vendors, distributors and suppliers; • import and export licensing requirements, tariffs, and other trade and travel restrictions; • global or regional public health emergencies that could affect our operations or business; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and • business interruptions resulting from geo-political actions, including war and terrorism.
Contract manufacturers may supply us with raw materials, convert these raw materials into drug substance and/or convert the drug substance into final dosage form. Third parties are used for packaging, warehousing and distribution of products.
Contract manufacturers may supply us with raw materials, convert these raw materials into drug substance and/or convert the drug substance into final dosage form. We also use third parties are used for packaging, warehousing, and distribution of products.
Physicians may elect not to prescribe our products or recommend our cell or genetic therapies, and patients may elect not to take them or receive them or they may discontinue use of our products after initiation of treatment, for a variety of reasons including: • prevalence and severity of adverse side effects; • lack of reimbursement availability from third-party payors, including governmental entities; • lower demonstrated efficacy, safety and/or tolerability compared to alternative treatment methods; • lack of cost-effectiveness; • a decision to wait for the approval of other therapies in development that have significant perceived advantages over our product; 35 • convenience and ease of administration; • limitations or warnings contained in the labeling; • the timing of market introduction of our product as well as competitive products; • other potential advantages of alternative treatment methods; and • inadequate sales, marketing and/or distribution support.
Physicians may elect not to prescribe or recommend our therapies, and patients may elect not to take them or receive them or they may discontinue use of our products after initiation of treatment, for a variety of reasons including: • prevalence and severity of adverse side effects; • lack of reimbursement availability from third-party payors, including governmental entities; • lower demonstrated efficacy, safety and/or tolerability compared to alternative treatment methods; • lack of cost-effectiveness; • a decision to wait for the approval of other therapies in development that have significant perceived advantages over our product; • inconvenience of, or burdens associated with, administration or treatment; • limitations or warnings contained in the labeling; • the timing of market introduction of our product as well as competitive products; • other potential advantages of alternative treatment methods; and • inadequate sales, marketing and/or distribution support.
Additional factors that have caused quarterly fluctuations to our operating results in recent years include variable amounts of revenues; expenses resulting from our significant investments in research and development, acquired in-process research and development, and commercialization activities; changes in the fair value of our strategic investments, derivative instruments and contingent consideration liabilities; charges for excess and obsolete inventories, interest income, interest expenses; and our provision for income taxes.
Additional factors that have caused quarterly fluctuations to our operating results in recent years include variable amounts of revenues; expenses resulting from our significant investments in research and development, acquired in-process research and development, and commercialization activities; changes in the fair values of our strategic investments, and contingent consideration liabilities; charges for excess and obsolete inventories; and our provision for income taxes.
Compliance with the GDPR is a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection with any activities falling within the scope of the GDPR.
Compliance with the these laws and regulations is a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection with any activities falling within the scope of the GDPR or other privacy laws or regulations.
In addition: • the manufacturing process for CASGEVY is more complex than the manufacturing processes for our CF medicines and we may encounter difficulties in the production of CASGEVY and ensuring that the product meets required 33 specifications; • there are multiple steps along the CASGEVY patient treatment journey, many of which involve significant clinical complexities performed by third parties, including the collection of blood cells from patients, transfer of those cells to and from a manufacturing facility, and other procedures either before or after delivery of CASGEVY; • the commercial success of CASGEVY will depend in part on the medical community, patients, governments, and third-party or governmental payors accepting and providing adequate reimbursement of CASGEVY products, and recognizing the applicable medicine as medically useful, cost-effective, ethical, and safe; and • market acceptance will be dependent in part on the prevalence and severity of side effects associated with the procedure by which CASGEVY is administered, the prevalence and severity of any side effects resulting from the myeloablative preconditioning regime.
In addition: • the manufacturing process for CASGEVY is more complex than the manufacturing processes for our small molecule medicines and we may encounter difficulties in the production of CASGEVY and ensuring that the product meets required specifications; • there are multiple steps along the CASGEVY patient treatment journey, many of which involve significant clinical complexities performed by third parties, including the collection of blood cells from patients, transfer of those cells to and from a manufacturing facility, and other procedures either before or after delivery of CASGEVY; • the commercial success of CASGEVY continues to depend in part on the medical community, patients, governments, and third-party or governmental payors accepting it as a medically useful, cost-effective, ethical, and safe, and providing adequate reimbursement; and • global market acceptance continues to be dependent in part on the prevalence and severity of side effects associated with the procedure by which CASGEVY is administered, including the prevalence and severity of any side effects resulting from the myeloablative preconditioning regime.
Our business also may be materially harmed by impaired sales of our products, denial or withdrawal of regulatory approvals, non-renewal of conditional regulatory approvals, required label changes or additional clinical trials, reputational harm, or government investigations or lawsuits brought against us.
Our business also may be materially harmed by reduced coverage or reimbursement by payors, impaired sales of our products, denial or withdrawal of regulatory approvals, non-renewal of conditional regulatory approvals, required label changes or additional clinical trials, reputational harm, or government investigations or lawsuits brought against us.
For example, the ACA required manufacturers of Medicare Part D brand name drugs to provide discounts on those drugs to Medicare Part D beneficiaries during the coverage gap; increased the rebates paid by pharmaceutical companies to state Medicaid programs on drugs covered by Medicaid; and imposed an annual fee, which increases annually, on sales by branded pharmaceutical manufacturers.
For example, the Affordable Care Act (“ACA”) required manufacturers of Medicare Part D brand name drugs to provide discounts on those drugs to Medicare Part D beneficiaries during the coverage gap; increased the rebates paid by pharmaceutical companies to state Medicaid programs on drugs covered by Medicaid; and imposed an annual fee, which increases annually, on sales by branded pharmaceutical manufacturers.
If we are unable to continue to increase revenues from sales of our CF medicines, our business would be materially harmed and the market price of our common stock would likely decline. • If we are not successful in commercializing CASGEVY, our revenue growth could be limited and our business could be materially harmed. • If we are unable to successfully develop, obtain approval, and commercialize treatments for acute and neuropathic pain, our business could be materially harmed. • If our competitors bring products with superior product profiles to market, our products may not be competitive, and our revenues could decline. • If we discover safety issues with any of our products or if we fail to comply with continuing U.S. and applicable foreign regulations, commercialization efforts for the product could be negatively affected, the approved product could lose its approval or sales could be suspended, and our business could be materially harmed. • If physicians and patients do not accept our products, or if patients do not remain on treatment or comply with their prescribed dosing regimen, our product revenues would be materially harmed in future periods. • Cell and genetic therapies face increased scrutiny from the public and medical communities and commercial success will depend, in part, upon the acceptance of those communities.
These risks include, among others, the following key risks: Risks Related to Our Business • If we are unable to successfully develop and commercialize additional products, our business could be materially harmed. • If we are unable to sustain and grow revenues from sales of our CF medicines, our business would be materially harmed and the market price of our common stock would likely decline. • If we are unable to successfully develop, obtain approval and commercialize treatments for acute and neuropathic pain, our business could be materially harmed. • If we are not successful in commercializing CASGEVY, our revenue growth could be limited and our business could be materially harmed. • If our competitors bring products with superior product profiles to market, our products may not be competitive, and our revenues could decline. • If we discover safety issues with any of our products or if we fail to comply with continuing U.S. and applicable foreign regulations, commercialization efforts for the product could be negatively affected, the approved product could lose its approval, and our business could be materially harmed. • If physicians and patients do not accept our products, or if patients do not remain on treatment or comply with their prescribed dosing regimen, our product revenues would decline in future periods. • Cell and genetic therapies face increased scrutiny from the public and medical communities and commercial success will depend, in part, upon the acceptance of those communities.
In August 2023, the Colorado PDAB selected five drugs for an affordability review, including TRIKAFTA; in December, it found TRIKAFTA to be not unaffordable, and thus not eligible for an upper payment limit.
In August 2023, the Colorado PDAB selected five drugs for an affordability review, including TRIKAFTA; later that year, it found TRIKAFTA to be not unaffordable, and thus not eligible for an upper payment limit.
If a regulatory agency determines that our promotional materials, or other activities constitute off-label promotion, it could request that we modify our promotional materials or other activities, conduct corrective advertising, or subject us to regulatory enforcement actions, such as the issuance of a warning or untitled letter, injunction, seizure, civil fines and criminal penalties.
If a regulatory agency determines that our promotional materials, or other activities constitute promotion of unapproved uses or otherwise false and misleading promotion, it could request that we modify our promotional materials or other activities, conduct corrective advertising, or subject us to regulatory enforcement actions, such as the issuance of a warning or untitled letter, injunction, seizure, civil fines and criminal penalties.
Adverse pricing limitations or a delay in obtaining coverage and reimbursement would decrease our future net product revenues and harm our business. Insurance coverage and reimbursement of cell and genetic therapies is uncertain. There is significant uncertainty related to the insurance coverage and reimbursement of cell or genetic therapy products, including gene therapies that are potential one-time treatments (e.g., CASGEVY).
Adverse pricing limitations or a delay in obtaining coverage and reimbursement would decrease our future net product revenues and harm our business. Insurance coverage and reimbursement of cell and genetic therapies is uncertain. There is uncertainty related to the insurance coverage and reimbursement of cell or genetic therapies, including those gene therapies that are potential one-time treatments.
Litigation may be necessary to defend against these claims. 53 In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own.
In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own.
Risks Related to Business Development Activities Our ability to execute on our long-term strategy depends in part on our ability to engage in transactions and collaborations with other entities that add to our pipeline or provide us with new commercial opportunities.
Our ability to execute on our long-term strategy depends in part on our ability to engage in transactions and collaborations with other entities that add to our pipeline or provide us with new commercial opportunities.
The Notice Letter indicated that Lupin submitted a “Paragraph IV” certification to the FDA in which Lupin asserts that the ’481 patent, the ’206 patent, and the ’046 patent are invalid or would not be infringed by Lupin’s generic product.
The Notice Letter indicated that Lupin submitted a “Paragraph IV” certification to the FDA in which Lupin asserts that the ’481 patent, the ’206 patent, and the ’046 patent are invalid or would not be infringed by Lupin’s generic product. On February 28, 2023, U.S.
If we or our third-party manufacturers become unable or unwilling to continue manufacturing product and we are not able to promptly identify another manufacturer, we could experience a disruption in the commercial supply of our then-marketed medicines, which would have a significant effect on patients, our business, and our product revenues.
If we or our third-party manufacturers become unable (including potentially through governmental actions or legislation targeted toward them) or unwilling to continue manufacturing product and we are not able to promptly identify another manufacturer, we could experience a disruption in the commercial supply of our then-marketed medicines, which would have a significant effect on patients, our business, and our product revenues.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Chief Information Security Officer (“CISO”) and the Information Security function advises, consults with, or provides input to each of these programs to ensure that material risks from cybersecurity threats are appropriately assessed, identified, and managed.
Biggest changeOur Chief Information Security Officer (“CISO”) and the Information Security function advises, consults with, or provides input to each of these programs to ensure that material risks from cybersecurity threats are appropriately assessed, identified, and managed. 65 As of the date of this report, there have been no cybersecurity threats that have materially affected or are reasonably likely to materially affect our business, operations, or financial condition.
At the same time, primary responsibility for assessing, monitoring, and managing our cybersecurity risks lies with our CISO, Michael Daly. Mr. Daly has more than 35 years of experience in security and information systems and spent 25 years with Raytheon Technologies, most recently as Chief Technology Officer of Cybersecurity, Special Missions, Training & Services. Mr. Daly supported the U.S.
At the same time, primary responsibility for assessing, monitoring, and managing our cybersecurity risks lies with our CISO, Michael Daly, who has more than 35 years of experience in security and information systems and spent 25 years with Raytheon Technologies, most recently as Chief Technology Officer of Cybersecurity, Special Missions, Training & Services. Our CISO supported the U.S.
Daly oversees a team of skilled cybersecurity professionals who have Certified Information Systems Security Professional (“CISSP”) credentials, Global Information Assurance Certification from the SANS Institute, and other security and network certifications. The cybersecurity team monitors and evaluates our cybersecurity posture and performance on an ongoing basis, including through regular vulnerability scans, penetration tests, and threat intelligence feeds.
Our CISO oversees a team of skilled cybersecurity professionals who have Certified Information Systems Security Professional (“CISSP”) credentials, Global Information Assurance Certification from the SANS Institute, and other security and network certifications. The cybersecurity team monitors and evaluates our cybersecurity posture and performance on an ongoing basis, including through regular vulnerability scans, penetration tests, and threat intelligence feeds.
Our CISO provides periodic updates to the Audit Committee in this regard, and covers the state of our cybersecurity program, supported by key performance indicators across the range of cybersecurity functions related to risk management and governance, identity and information asset protection, core security and endpoint security, and cyber threat operations.
Our CISO provides quarterly updates to the Audit Committee in this regard, and covers the state of our cybersecurity program, supported by key performance indicators across the range of cybersecurity functions related to risk management and governance, identity and information asset protection, core security and endpoint security, and cyber threat operations.
Our cybersecurity program includes systems and processes for assessing, identifying and managing material risks from cybersecurity threats and include maintenance and monitoring of information security policies aligned with global regulatory controls; user and employee awareness of cyber policies and practices; information systems configuration management; third-party risk management systems; identity and information asset protection; infrastructure security systems; and cyber threat operations with continuous monitoring and threat hunting.
Our cybersecurity program includes systems and processes for assessing, identifying and managing material risks from cybersecurity threats and include maintenance and monitoring of information security policies aligned with global regulatory controls and aligned with National Institute of Standards and Technology Cybersecurity Framework; user and employee awareness of cyber policies and practices; information systems configuration management; third-party risk management systems; identity and information asset protection; infrastructure security systems; and cyber threat operations with continuous monitoring and threat hunting.
President's National Security Telecommunications Advisory Committee for more than 20 years, is a member of the Massachusetts Cybersecurity Strategy Council, and is Chair of the Kogod Cybersecurity Governance Center at American University. Formerly, he served on the Rhode Island Homeland Security Advisory Board and was a member of various commercial cyber product councils. Mr.
President's National Security Telecommunications Advisory Committee for more than 20 years, is a member of the Massachusetts Cybersecurity Strategy Council, and previously served as Chair of the Kogod Cybersecurity Governance Center at American University. He also served on the Rhode Island Homeland Security Advisory Board and was a member of various commercial cyber product councils.
The cybersecurity team uses various tools and methodologies to manage cybersecurity risk that are tested on a regular cadence, 62 and assesses and evaluates cybersecurity incidents, escalating certain cybersecurity incidents to Mr. Daly according to protocol. Mr.
The cybersecurity team uses various tools and methodologies to manage cybersecurity risk that are tested on a regular cadence, and assesses and evaluates cybersecurity incidents, escalating certain cybersecurity incidents to the CISO according to protocol.
This program includes processes to oversee and identify material risks from cybersecurity threats associated with our use of third-party service providers. We also engage a range of third-party experts in connection with various development, implementation, and maintenance activities related to our cybersecurity program.
This program includes processes to oversee and identify material risks from cybersecurity threats associated with our use of third-party service providers. We also engage a range of third-party experts in connection with various development, implementation, and maintenance activities related to our cybersecurity program, including audit and compliance, threat hunting, monitoring, and end-user support.
Daly is continually informed regarding the performance of the cybersecurity program, as well as the latest developments in cybersecurity, including potential threats and innovative risk management techniques.
The CISO is continually informed regarding the performance of the cybersecurity program, as well as the latest developments in cybersecurity, including potential threats and innovative risk management techniques aligned with industry standards. The CISO reports to our Chief Scientific Officer (“CSO”).
Removed
As of the date of this report, there have been no cybersecurity threats that have materially affected or are reasonably likely to materially affect our business, operations, or financial condition.
Added
Similar to other companies, we have experienced cybersecurity incidents, including temporary service interruptions of third-party suppliers. As of the date of this report, however, known cybersecurity incidents, individually or in aggregate, have not had a material impact on our company.
Added
Over the last three years, net expenses incurred from any information security breaches, including any penalties and settlements, are not material relative to our total revenue.
Added
For additional discussion on cybersecurity risks we face, see Item 1.A Risk Factors — A breakdown or breach of our information technology systems could subject us to liability or interrupt the operation of our business .
Added
Our CSO is an executive officer and leads internal research and external innovation, corporate data strategy, technology and data sciences, and reports directly to our CEO.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Corporate Headquarters We lease approximately 1.1 million square feet of office and laboratory space at our corporate headquarters in Boston, Massachusetts in two buildings pursuant to two leases that we entered into in May 2011. These leases commenced in December 2013 and extend until December 2028.
Biggest changeITEM 2. PROPERTIES Corporate Headquarters We lease approximately 1.1 million square feet of office and laboratory space at our corporate headquarters in Boston, Massachusetts in two buildings pursuant to two leases that we entered into in May 2011 and amended in August 2024 to, among other terms, extend the lease termination dates from December 2028 to June 2044.
This space includes logistical, laboratory, commercial and manufacturing operations, as well as laboratory and office space to support our research and development organizations. We also own approximately 213,000 square feet at our continuous manufacturing facility in Massachusetts. ITEM 3. LEGAL PROCEEDINGS We are not currently subject to any material legal proceedings. ITEM 4.
This space includes logistical, laboratory, commercial and manufacturing operations, as well as laboratory and office space to support our research and development organizations. We also own approximately 213,000 square feet at our continuous manufacturing facility in Massachusetts. 66 ITEM 3. LEGAL PROCEEDINGS We are not currently subject to any material legal proceedings. ITEM 4.
We have an option to extend the term of the leases for an additional ten years. Additional United States and Worldwide Locations In addition to our corporate headquarters, we lease an aggregate of approximately 840,000 square feet of space globally.
We have the option to extend the term of the leases for up to two additional ten-year periods. Additional United States and Worldwide Locations In addition to our corporate headquarters, we lease an aggregate of approximately 850,000 square feet of space globally.
MINE SAFETY DISCLOSURES Not applicable. 63 PART II
MINE SAFETY DISCLOSURES Not applicable. 67 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer Repurchases of Equity Securities In February 2023, our Board of Directors approved a share repurchase program (the “Share Repurchase Program”) pursuant to which we are authorized to repurchase up to $3.0 billion of our common stock. Our Share Repurchase Program does not have an expiration date and can be discontinued at any time.
Biggest changeDividends We have never paid any cash dividends on our common stock, and we do not anticipate paying any in the foreseeable future. 68 Issuer Repurchases of Equity Securities In February 2023, our Board of Directors approved a share repurchase program (the “Share Repurchase Program”) pursuant to which we are authorized to repurchase up to $3.0 billion of our common stock.
Such purchases may be made pursuant to Rule 10b5-1 plans or other means as determined by our management and in accordance with the requirements of the Securities and Exchange Commission. ITEM 6. [RESERVED] 65
Such purchases may be made pursuant to Rule 10b5-1 plans or other means as determined by our management and in accordance with the requirements of the Securities and Exchange Commission. ITEM 6. [RESERVED] 69
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on The Nasdaq Global Select Market under the symbol “VRTX.” Shareholders As of February 9, 2024, there were 106 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on The Nasdaq Global Select Market under the symbol “VRTX.” Shareholders As of February 7, 2025, there were 101 holders of record of our common stock.
Performance Graph Our performance graph includes the NASDAQ Biotechnology Index, which we believe is a comparable index consisting of companies with similar industry classifications, and which we plan to use in our future performance graphs. 64 Dividends We have never paid any cash dividends on our common stock, and we do not anticipate paying any in the foreseeable future.
Performance Graph Our performance graph includes the NASDAQ Biotechnology Index, which we believe is a comparable index consisting of companies with similar industry classifications, and which we plan to use in our future performance graphs.
The table set forth below shows repurchases of securities by us during the three months ended December 31, 2023 under our Share Repurchase Program.
Our Share Repurchase Program does not have an expiration date and can be discontinued at any time. The table set forth below shows repurchases of securities by us during the three months ended December 31, 2024 under our Share Repurchase Program.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs (1) Oct. 1, 2023 to Oct. 31, 2023 179,000 $ 360.95 179,000 $ 2,651,316,977 Nov. 1, 2023 to Nov. 30, 2023 172,552 $ 362.50 172,552 $ 2,588,767,489 Dec. 1, 2023 to Dec. 31, 2023 46,464 $ 352.39 46,464 $ 2,572,394,027 Total 398,016 $ 360.62 398,016 $ 2,572,394,027 (1) Under our Share Repurchase Program, we are authorized to purchase shares from time to time through open market or privately negotiated transactions.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs (1) Oct. 1, 2024 to Oct. 31, 2024 230,000 $ 472.77 230,000 $ 1,699,865,374 Nov. 1, 2024 to Nov. 30, 2024 221,000 $ 471.15 221,000 $ 1,595,740,301 Dec. 1, 2024 to Dec. 31, 2024 510,129 $ 420.46 510,129 $ 1,381,251,940 Total 961,129 $ 444.63 961,129 $ 1,381,251,940 (1) Under our Share Repurchase Program, we are authorized to purchase shares from time to time through open market or privately negotiated transactions.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

64 edited+143 added−43 removed22 unchanged
Biggest changeOur net product revenues from the U.S. and from ex-U.S. markets were as follows: 2023 % Change 2022 % Change 2021 (in millions, except percentages) United States $ 6,040.4 6% $ 5,699.3 8% $ 5,287.3 ex-U.S. 3,828.8 18% 3,231.4 41% 2,286.1 Product revenues, net $ 9,869.2 11% $ 8,930.7 18% $ 7,573.4 We expect that our CF net product revenues will increase in 2024 as a result of the continued performance of TRIKAFTA/KAFTRIO, label expansions into younger age groups for our previously approved products, and expanded access to our medicines.
Biggest changeOur net product revenues from the U.S. and from ex-U.S. markets were as follows: 2024 % Change 2023 % Change 2022 (in millions, except percentages) United States $ 6,684.9 11% $ 6,040.4 6% $ 5,699.3 ex-U.S. 4,335.2 13% 3,828.8 18% 3,231.4 Product revenues, net $ 11,020.1 12% $ 9,869.2 11% $ 8,930.7 In 2025, we expect our net product revenues to increase due to the approval of ALYFTREK for CF in the U.S., continued demand globally for TRIKAFTA/KAFTRIO, including in younger age groups and from label expansions, increased CASGEVY patient infusions, and contribution from the launch of JOURNAVX. 78 Operating Costs and Expenses 2024 % Change 2023 % Change 2022 (in millions, except percentages) Cost of sales $ 1,530.5 21% $ 1,262.2 17% $ 1,080.3 Research and development expenses 3,630.3 15% 3,162.9 25% 2,540.3 Acquired in-process research and development expenses 4,628.4 ** 527.1 356% 115.5 Selling, general and administrative expenses 1,464.3 29% 1,136.6 20% 944.7 Change in fair value of contingent consideration (0.5) ** (51.6) ** (57.5) Total costs and expenses $ 11,253.0 86% $ 6,037.2 31% $ 4,623.3 ** Not meaningful Cost of Sales Our cost of sales primarily consists of third-party royalties payable on net sales of our CF products as well as the cost of producing inventories.
We plan to continue to engage in discussions with numerous commercial insurers and managed health care organizations, along with government health programs that are typically managed by authorities in the individual states, to ensure that payors recognize the significant benefits that our therapies provide and provide patients with appropriate levels of access to our medicines and therapies now and in the future.
We plan to continue to engage in discussions with numerous commercial insurers and managed health care organizations, along with government health programs that are typically managed by authorities in the individual states, to ensure that payors recognize the significant benefits that all our therapies provide and provide patients with appropriate levels of access to our medicines and therapies now and in the future.
The processes for cell and genetic therapies can be more complex than those required for small molecule drugs and require additional investments in different systems, equipment, facilities and expertise. We are focused on ensuring the stability of the supply chains for our current products, as well as for our pipeline programs.
The processes for biological and cell and genetic therapies can be more complex than those required for small molecule drugs and require additional investments in different systems, equipment, facilities and expertise. We are focused on ensuring the stability of the supply chains for our current products, as well as for our pipeline programs.
We cannot, however, predict how recent changes in the law, including through the Inflation Reduction Act of 2022 and passage of state laws (e.g., transparency laws and prescription drug affordability boards), will affect our ability to negotiate successfully with third-party payors and distribute our products.
We cannot, however, predict how changes in the law, including through the Inflation Reduction Act of 2022 and passage of state laws (e.g., transparency laws and prescription drug affordability boards), will affect our ability to negotiate successfully with third-party payors and distribute our products.
Pursuant to our agreement with the Cystic Fibrosis Foundation, our tiered third-party royalties on sales of TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, KALYDECO, and ORKAMBI, calculated as a percentage of net sales, range from the single digits to the sub-teens, with lower royalties on sales of TRIKAFTA/KAFTRIO than for our other products.
Pursuant to our agreement with the Cystic Fibrosis Foundation, our tiered third-party royalties on sales of ALYFTREK, TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, KALYDECO, and ORKAMBI, calculated as a percentage of net sales, range from the single digits to the sub-teens, with lower royalties on sales of ALYFTREK and TRIKAFTA/KAFTRIO than for our other products.
We expect to continue to focus significant resources to expand and maintain reimbursement for our CF medicines, CASGEVY and, ultimately, pipeline therapies, in U.S. and ex-U.S. markets.
We expect to continue to focus significant resources to expand and maintain reimbursement for our CF medicines, CASGEVY, JOURNAVX, and, ultimately, our pipeline therapies, in U.S. and ex-U.S. markets.
Contingent Consideration In 2023, the fair value of our contingent consideration decreased by $51.6 million primarily due to our determination that additional pre-clinical studies of the delivery system for our gene-editing components for Duchenne muscular dystrophy (“DMD”) will be required.
In 2023, the fair value of our contingent consideration decreased by $51.6 million primarily due to our determination that additional pre-clinical studies of the delivery system for our gene-editing components for Duchenne muscular dystrophy (“DMD”) would be required.
This process can result in rapid changes in focus and priorities as new information becomes available and as we gain additional understanding of our ongoing programs and potential new programs, as well as those of our competitors. Our business also requires ensuring appropriate manufacturing and reimbursement of our products.
This process can result in rapid changes in focus and priorities as new information becomes available and as we gain additional understanding of our ongoing programs and potential new programs, as well as those of our competitors. Our business also requires ensuring appropriate manufacturing and supply of our products.
For a discussion of our financial condition and results of operations for 2022 as compared to 2021, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 Annual Report on Form 10-K, except as set forth below.
For a discussion of our financial condition and results of operations for 2023 as compared to 2022, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2023 Annual Report on Form 10-K, except as set forth below.
Over the last several years, we entered into collaboration agreements with a number of companies, including CRISPR, Entrada, and Moderna, Inc. Generally, when we in-license a technology or product candidate, we make upfront payments to the collaborator, assume the costs of the program and/or agree to make contingent payments, which could consist of milestone, royalty and option payments.
Over the last several years, we entered into collaboration agreements with a number of companies, including CRISPR Therapeutics AG (“CRISPR”), Entrada, and Moderna. Generally, when we in-license a technology or product candidate, we make upfront payments to the collaborator, assume the costs of the program and/or agree to make contingent payments, which could consist of milestone, royalty and option payments.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our discussion and analysis of our financial condition and results of operations for 2023 as compared to 2022 are discussed below.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our discussion and analysis of our financial condition and results of operations for 2024 as compared to 2023 are discussed below.
Over the last several years, our cost of sales has been increasing due to increased net product revenues. Our cost of sales as a percentage of our net product revenues was 13% and 12% in 2023 and 2022, respectively.
Over the last several years, our cost of sales has been increasing due to increased net product revenues. Our cost of sales as a percentage of our net product revenues was 14% and 13% in 2024 and 2023, respectively.
Over the past three years, we have incurred $9.4 billion in total research and development and AIPR&D expenses associated with product discovery and development. The successful development of our product candidates is highly uncertain and subject to a number of risks.
Over the past three years, we have incurred $9.3 billion in research and development expenses associated with product discovery and development. The successful development of our product candidates is highly uncertain and subject to a number of risks.
These amounts related primarily to net unrealized gains or losses resulting from changes in the fair value or sales of certain of our strategic equity investments, which consist of investments in our collaborators that may be public or private companies.
These amounts primarily related to net unrealized losses resulting from changes in the fair value of certain of our strategic equity investments, which consist of investments in our collaborators that may be public or privately-held companies.
Acquired In-Process Research and Development Expenses In 2023 and 2022, our AIPR&D included $527.1 million and $115.5 million, respectively, related to upfront, contingent milestone, or other payments pursuant to our business development transactions, including the collaborations, licenses of third-party technologies, and asset acquisitions described above.
Acquired In-Process Research and Development Expenses In 2024 and 2023, our AIPR&D included $4.6 billion and $527.1 million, respectively, related to upfront, contingent milestone, or other payments pursuant to our business development transactions, including the asset acquisitions, collaborations, and licenses of third-party technologies described above.
We are evaluating our CF medicines in additional patient populations, including younger children, with the goal of having small molecule treatments for all people who have at least one mutation in their cystic fibrosis transmembrane conductance regulator (“CFTR”) gene that is responsive to our CFTR modulators.
In addition, we are evaluating our CF medicines in additional patient populations, including younger children, with the goal of having small molecule treatments for all people who have at least one mutation in their CFTR gene that is responsive to our CFTR modulators.
Our future interest income is dependent on the amount of, and prevailing market interest rates on, our outstanding cash equivalents and available-for-sale debt securities. Interest Expense Interest expense was $44.1 million in 2023, as compared to $54.8 million in 2022.
Our future interest income is dependent on the amount of, and prevailing market interest rates on, our outstanding cash equivalents and available-for-sale debt securities. Interest Expense Interest expense was $30.6 million in 2024, as compared to $44.1 million in 2023.
We rely on a global network of third parties and our internal capabilities to manufacture and distribute our products for commercial sale and post-approval clinical trials and to 70 manufacture and distribute our product candidates for clinical trials.
We rely on a global network of third parties, including some in China, and our internal capabilities to manufacture and distribute our products for commercial sale and post-approval clinical trials and to manufacture and distribute our product candidates for clinical trials.
Similarly, in ex-U.S. markets, we seek government reimbursement for our medicines on a country-by-country or region-by-region basis, as required. This is necessary for each new medicine, as well as for label expansions for our current medicines. We are beginning to work with ex-U.S. payors with respect to CASGEVY.
Similarly, in ex-U.S. markets, we seek government reimbursement for our medicines on a country-by-country or region-by-region basis, as required. This is necessary for each new medicine, as well as for label expansions for our current medicines. We are working with ex-U.S. payors with respect to CASGEVY, and we are pursuing long-term reimbursement agreements.
We have four approved medicines that treat the underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, and one approved therapy that treats severe sickle cell disease (“SCD”) and transfusion dependent beta thalassemia (“TDT”), life shortening inherited blood disorders.
We have seven approved medicines: five that treat the underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, one that treats severe sickle cell disease (“SCD”) and transfusion dependent beta thalassemia (“TDT”), life shortening inherited blood disorders, and one that treats moderate-to-severe acute pain.
Our CF strategy involves continuing to develop and obtain approval and reimbursement for treatment regimens that will provide benefits to all people with CF and increasing the number of people with CF eligible and able to receive our medicines, including through label expansions, expanded reimbursement, and the development of new medicines.
Our CF strategy involves continuing to develop and obtain approval and reimbursement for treatment regimens that will provide benefits to all people with CF and increasing the number of people with CF eligible and able to receive our medicines.
Our investments in product candidates are subject to considerable risks. We closely monitor the results of our discovery, research, clinical trials and nonclinical studies and frequently evaluate our product development programs in light of new data and scientific, business and commercial insights, with the objective of balancing risk and potential.
Our investments in product candidates are subject to considerable risks. We closely monitor our research and development activities, and frequently evaluate our pipeline programs in light of new data and scientific, business and commercial insights, with the objective of balancing risk and potential.
We dedicate substantial management and other resources to obtain and maintain appropriate levels of reimbursement for our products from third-party payors, including governmental organizations in the U.S. and ex-U.S. markets.
We dedicate substantial management and other resources to obtain and maintain appropriate levels of reimbursement for our products from third-party payors, including governmental organizations in the U.S. and ex-U.S. markets. 75 In the U.S., we have worked successfully with third-party payors to promptly obtain appropriate levels of reimbursement for our CF medicines.
To the extent that we continue to hold strategic equity investments in publicly traded companies, we expect that due to the volatility of the stock price of biotechnology companies, our other income (expense), net will fluctuate in future periods based on increases or decreases in the fair value of our strategic equity investments.
To the extent that we continue to hold strategic equity investments in publicly traded biotechnology companies, we expect that our other income (expense), net will continue to fluctuate in future periods due to the volatility in the stock prices of these companies that impacts the fair value of our investments.
Research Expenses 2023 Change % 2022 Change % 2021 (in millions, except percentages) Research Expenses: Salary and benefits $ 184.1 15% $ 159.5 17% $ 136.7 Stock-based compensation expense 92.4 10% 84.0 9% 77.3 Outsourced services and other direct expenses 237.0 25% 189.6 19% 160.0 Intangible asset impairment charge — ** 13.0 ** — Infrastructure costs 192.1 6% 180.6 31% 138.3 Total research expenses $ 705.6 13% $ 626.7 22% $ 512.3 ** Not meaningful Our research expenses have been increasing over the last several years as we have invested in our pipeline and expanded our cell and genetic therapy capabilities, resulting in increased headcount, outside services and other direct expenses, and infrastructure costs associated with our research facilities.
Research Expenses 2024 Change % 2023 Change % 2022 (in millions, except percentages) Research Expenses: Salary and benefits $ 210.7 14% $ 184.1 15% $ 159.5 Stock-based compensation expense 112.1 21% 92.4 10% 84.0 Outsourced services and other direct expenses 271.4 15% 237.0 25% 189.6 Intangible asset impairment charge — ** — ** 13.0 Infrastructure costs 210.3 9% 192.1 6% 180.6 Total research expenses $ 804.5 14% $ 705.6 13% $ 626.7 ** Not meaningful Our research expenses have been increasing over the last several years as we invested in our pipeline and expanded our cell and genetic therapy capabilities, resulting in increased headcount and stock-based compensation expense, and outsourced services, other direct expenses, and infrastructure costs.
Research and Development Expenses 2023 % Change 2022 % Change 2021 (in millions, except percentages) Research expenses $ 705.6 13% $ 626.7 22% $ 512.3 Development expenses 2,457.3 28% 1,913.6 34% 1,425.5 Total research and development expenses $ 3,162.9 25% $ 2,540.3 31% $ 1,937.8 Our research and development expenses include internal and external costs incurred for research and development of our products and product candidates.
Research and Development Expenses 2024 % Change 2023 % Change 2022 (in millions, except percentages) Research expenses $ 804.5 14% $ 705.6 13% $ 626.7 Development expenses 2,825.8 15% 2,457.3 28% 1,913.6 Total research and development expenses $ 3,630.3 15% $ 3,162.9 25% $ 2,540.3 Our research and development expenses include internal and external costs incurred for research and development of our products and product candidates.
CASGEVY (exagamglogene autotemcel or “exa-cel”), an ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, was recently approved in the U.S., the E.U., the United Kingdom (“U.K.”), the Kingdom of Saudi Arabia (“Saudi Arabia”), and the Kingdom of Bahrain (“Bahrain”) for the treatment of people 12 years of age and older with SCD and TDT.
CASGEVY (exagamglogene autotemcel), our ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, is approved in the U.S., the European Union (“E.U.”), the United Kingdom (“U.K.”), the Kingdom of Saudi Arabia (“Saudi Arabia”), the Kingdom of Bahrain (“Bahrain”), the United Arab Emirates (the “UAE”), Switzerland and Canada for the treatment of people 12 years of age and older with SCD or TDT.
Strategic Transactions Acquisitions As part of our business strategy, we seek to acquire technologies, products, product candidates and other businesses that are aligned with our corporate and research and development strategies and complement and advance our ongoing research and development efforts. We have engaged in a number of acquisitions of privately held biotechnology companies over the last several years.
Strategic Transactions Acquisitions As part of our business strategy, we seek to acquire technologies, products, product candidates and other businesses that are aligned with our corporate and research and development strategies and complement and advance our ongoing research and development efforts.
Any estimates regarding development and regulatory timelines for our product candidates are highly subjective and subject to change. Until we have data from Phase 3 clinical trials, we cannot make a meaningful estimate regarding when, or if, a clinical development program will generate revenues and cash flows.
Until we have data from Phase 3 clinical trials, we cannot make a meaningful estimate regarding when, or if, a clinical development program will generate revenues and cash flows.
We are reimbursed by CRISPR for its 40% share of these research and development activities, subject to certain adjustments, and we continue to record this reimbursement from CRISPR within “Research and development expenses.” We also share with CRISPR 40% of the net commercial profits or losses incurred with respect to CASGEVY, subject to certain adjustments.
We are reimbursed by CRISPR for its 40% share of these research and development activities, subject to certain adjustments, and we record this reimbursement from CRISPR as a credit within “Research and development expenses.” We also share with CRISPR 40% of the net commercial profits or losses incurred with respect to CASGEVY, subject to certain adjustments, which is recorded to “Cost of sales.” The net commercial profits or losses equal the sum of the product revenues, cost of sales and selling, general and administrative expenses that we have recognized related to the CRISPR JDCA.
Subsequent to receiving marketing approval for CASGEVY, we continue to lead the research and development activities under the A&R JDCA, subject to CRISPR’s reserved right to conduct certain activities.
We are recording intangible asset amortization expense to “Cost of sales” related to this intangible asset. Subsequent to receiving marketing approval for CASGEVY, we continue to lead the research and development activities under the CRISPR JDCA, subject to CRISPR’s reserved right to conduct certain activities.
Acquired In-process Research and Development Expenses 2023 % Change 2022 % Change 2021 (in millions, except percentages) Acquired in-process research and development expenses $ 527.1 356% $ 115.5 (90)% $ 1,113.3 AIPR&D in 2023 was primarily related to our $225.1 million upfront payment to Entrada, $100.0 million upfront 75 payment and $70.0 million T1D research milestone to CRISPR, $47.5 million acquisition of a novel GPCR program from Septerna, and various other payments.
In 2023, AIPR&D consisted of our $225.1 million upfront payment to Entrada, $100.0 million upfront payment and $70.0 million T1D research milestone to CRISPR, $47.5 million acquisition of a novel GPCR program from Septerna, and various other payments.
We have completed Part A of the clinical trial and Part B has been initiated in multiple centers and countries. • Our hypoimmune islet cell program uses CRISPR/Cas9 technology to gene-edit the same allogeneic stem cell-derived, fully differentiated islets used in the VX-880 and VX-264 programs.
We expect to share Part B full-dose data from this clinical trial in 2025. • Our hypoimmune islet cell program uses CRISPR/Cas9 technology to gene-edit the same allogeneic stem cell-derived, fully differentiated islets used in the zimislecel and VX-264 programs.
The duration and cost of 74 discovery, nonclinical studies and clinical trials may vary significantly over the life of a project and are difficult to predict. Therefore, accurate and meaningful estimates of the ultimate costs to bring our product candidates to market are not available.
The duration and cost of discovery, nonclinical studies and clinical trials may vary significantly over the life of a project and are difficult to predict.
We expect to continue to identify and evaluate collaboration and licensing opportunities that may be similar to or different from the collaborations and licenses that we have engaged in previously.
We expect to continue to identify and evaluate collaboration and licensing opportunities that may be similar to or different from the collaborations and licenses that we have engaged in previously. 76 Joint Development and Commercialization Agreement with CRISPR In 2017, we entered into a joint development and commercialization agreement with CRISPR (the “CRISPR JDCA”), which we amended and restated in 2021.
Collectively, our four medicines are being used to treat nearly three quarters of the approximately 92,000 people with CF in North America, Europe, and Australia.
Collectively, our five medicines, led by TRIKAFTA/KAFTRIO (elexacaftor/tezacaftor/ivacaftor and ivacaftor), are being used to treat nearly three quarters of the approximately 94,000 people with CF in the U.S., Europe, Australia, and Canada.
Selling, General and Administrative Expenses 2023 % Change 2022 % Change 2021 (in millions, except percentages) Selling, general and administrative expenses $ 1,136.6 20% $ 944.7 12% $ 840.1 Selling, general and administrative expenses increased by 20% in 2023 as compared to 2022, primarily due to the continued investment to support the commercialization of our medicines, including increased commercial headcount, outsourced services to support our pipeline product candidates and stock-based compensation expense.
Selling, General and Administrative Expenses 2024 % Change 2023 % Change 2022 (in millions, except percentages) Selling, general and administrative expenses $ 1,464.3 29% $ 1,136.6 20% $ 944.7 Selling, general and administrative expenses increased by 29% in 2024 as compared to 2023, primarily due to increased commercial investments to prepare for the launch of JOURNAVX and support the launch of CASGEVY, and stock-based compensation expense.
APOL1-Mediated Kidney Disease • Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”), including APOL1-mediated focal segmental glomerulosclerosis (“FSGS”). We completed enrollment in the Phase 2B dose-ranging portion of the pivotal program for inaxaplin, a single Phase 2/3 clinical trial in patients with AMKD.
APOL1-Mediated Kidney Disease • Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”). We continue to enroll and dose people with AMKD in the Phase 3 portion of the global Phase 2/3 pivotal clinical trial (“AMPLITUDE”).
Most of these collaboration payments are expensed as AIPR&D, including, in 2023, our total payments of $242.6 million to Entrada and our total upfront and milestone payments of $170.0 million to CRISPR related to T1D, because they are primarily attributable to acquired in-process research and development for which there is no 71 alternative future use.
Most of these collaboration payments are expensed as AIPR&D, including, a $75.0 million milestone paid to Entrada in 2024, and, in 2023, total payments of $242.6 million to Entrada and total upfront and milestone payments of $170.0 million to CRISPR related to T1D.
The goal is to cloak the cells from the immune system to explore another possible path to eliminate the need for immunosuppressive therapy. This program continues to progress through the research stage. 69 Myotonic Dystrophy Type 1 • We have established a collaboration with Entrada Therapeutics, Inc.
The goal is to cloak the cells from the immune system to explore another possible path to eliminate the need for immunosuppressive therapy. This program continues to progress through the research stage. We are also pursuing alternative approaches to immunosuppression that could be used with zimislecel.
We are advancing our pipeline of product candidates for the treatment of serious diseases outside of CF, including CASGEVY, which recently received marketing approvals in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain for the treatment of SCD and TDT.
We are continuing to progress commercialization of CASGEVY, which has received marketing approvals in the U.S., the E.U., the U.K., Saudi Arabia, Bahrain, the UAE, Switzerland and Canada for the treatment of SCD and TDT.
We expect to initiate a Phase 2 clinical trial evaluating the oral formulation of VX-993 for the treatment of moderate-to-severe acute pain in the second half of 2024. • We anticipate completing IND-enabling studies and filing an Investigational New Drug Application (“IND”) for an intravenous formulation of VX-993 for the treatment of moderate-to-severe acute pain in 2024. • We are advancing multiple NaV1.7 inhibitors, including in combination with NaV1.8 inhibitors, through research and earlier stages of development for both acute and peripheral neuropathic pain.
Acute Pain • We are enrolling and dosing patients in a Phase 2 clinical trial evaluating an oral formulation of VX-993, a next-generation selective NaV1.8 pain signal inhibitor, for the treatment of moderate-to-severe acute pain following bunionectomy surgery. • We are enrolling and dosing healthy volunteers in a Phase 1 clinical trial evaluating an intravenous formulation of VX-993. • The FDA has granted Fast Track Designation to VX-993 in moderate-to-severe acute pain in both the oral and intravenous formulations. • We are advancing multiple NaV1.7 inhibitors, including in combination with NaV1.8 inhibitors, through research and earlier stages of development for both acute and peripheral neuropathic pain.
Sickle Cell Disease and Beta Thalassemia • We have completed enrollment in two global Phase 3 clinical trials evaluating CASGEVY in children 5 to 11 years of age with SCD or TDT. • We continue to work on preclinical assets for myeloablative conditioning agents that would have milder side-effects and could be used in connection with CASGEVY, which could broaden the eligible patient population. 68 Peripheral Neuropathic Pain • We have completed the Phase 2 dose-ranging clinical trial evaluating VX-548 in patients with diabetic peripheral neuropathy, a common form of chronic peripheral neuropathic pain, and announced positive results from this clinical trial.
We also are investigating additional potential treatments for people with CF who do not make full-length CFTR protein and cannot benefit from CFTR modulators. 72 Sickle Cell Disease and Beta Thalassemia • We have completed enrollment of children 5 to 11 years of age with SCD or TDT in two global Phase 3 clinical trials evaluating CASGEVY, and we expect to complete dosing of this age group in 2025. • We continue to advance preclinical assets for myeloablative conditioning agents that would have milder side-effects and could be used in connection with CASGEVY, which could broaden the eligible patient population.
Other Non-Operating Income (Expense), Net Interest Income Interest income increased to $614.7 million in 2023, as compared to $144.6 million in 2022, primarily due to increased market interest rates and increased cash equivalents and available-for-sale debt securities.
Other Non-Operating Income (Expense), Net Interest Income Interest income decreased from $614.7 million in 2023 to $598.1 million in 2024, primarily due to decreased cash equivalents and available-for-sale debt securities following our acquisition of Alpine in the second quarter of 2024.
Expenses Our total research and development (“R&D”), acquired in-process research and development (“AIPR&D”), and selling, general and administrative (“SG&A”) expenses increased to $4.8 billion in 2023 as compared to $3.6 billion in 2022. The increase was primarily due to increased AIPR&D, the progression of several product candidates in mid- to late-stage clinical development and costs to support global launches.
Expenses Our total research and development (“R&D”), and selling, general and administrative (“SG&A”) expenses increased to $5.1 billion in 2024 as compared to $4.3 billion in 2023, primarily due to continued investment to support additional therapies in mid-to-late stage development and increased commercial investments to support launches of our therapies globally.
Upon this approval, we made a $200.0 million milestone payment to CRISPR, which we recorded within “Other intangible assets, net” on our consolidated balance sheet as of December 31, 2023. We also recorded an immaterial amount of intangible asset amortization expense to “Cost of sales” in the fourth quarter of 2023 related to this intangible asset.
CASGEVY was approved by the FDA in December 2023 for the treatment of SCD. In connection with this approval, we made a $200.0 million milestone payment to CRISPR in January 2024, which we accrued to “Other current liabilities” and recorded within “Other intangible assets, net” on our consolidated balance sheet as of December 31, 2023.
In 2024, we expect our total cost of sales, including as a percentage of our net product revenues, will increase due to expected increases in our CF net product revenues and costs associated with CASGEVY.
In 2025, we expect our total cost of sales to increase due to expected increased net product revenues, CASGEVY contract manufacturing costs, and costs associated with JOURNAVX, partially offset by lower royalties due to sales of ALYFTREK.
This clinical trial will evaluate VX-548 in patients with lumbosacral radiculopathy, a second type of peripheral neuropathic pain. Screening, enrollment and dosing are underway in this clinical trial. • We expect to initiate a Phase 2 clinical trial evaluating the oral formulation of VX-993, a next generation NaV1.8 inhibitor, for the treatment of peripheral neuropathic pain in 2024.
We plan to initiate a Phase 3 clinical trial evaluating suzetrigine in LSR, pending discussions with regulators on the regulatory package and optimized trial design. • We are enrolling and dosing patients in a Phase 2 clinical trial evaluating the oral formulation of VX-993, a next generation NaV1.8 pain signal inhibitor, for the treatment of diabetic peripheral neuropathy.
Development Expenses 2023 Change % 2022 Change % 2021 (in millions, except percentages) Development Expenses: Salary and benefits $ 590.9 24% $ 475.1 37% $ 347.6 Stock-based compensation expense 262.5 23% 213.9 12% 191.0 Outsourced services and other direct expenses 1,238.7 36% 912.9 45% 629.4 Infrastructure costs 365.2 17% 311.7 21% 257.5 Total development expenses $ 2,457.3 28% $ 1,913.6 34% $ 1,425.5 Our development expenses increased by $543.7 million, or 28%, in 2023 as compared to 2022, primarily due to increased costs to support clinical trials and drug supply associated with our advancing pipeline programs, including pain and T1D, and our stock-based compensation expense.
Development Expenses 2024 Change % 2023 Change % 2022 (in millions, except percentages) Development Expenses: Salary and benefits $ 686.7 16% $ 590.9 24% $ 475.1 Stock-based compensation expense 313.7 20% 262.5 23% 213.9 Compensation expense for cash-settled unvested Alpine equity awards 151.9 ** — ** — Outsourced services and other direct expenses 1,239.1 0% 1,238.7 36% 912.9 Infrastructure costs 434.4 19% 365.2 17% 311.7 Total development expenses $ 2,825.8 15% $ 2,457.3 28% $ 1,913.6 ** Not meaningful Our development expenses increased by $368.5 million, or 15%, in 2024 as compared to 2023, due to continued investments in internal headcount and related expenses and infrastructure to support advancement of additional therapies into mid-to-late-stage development, including our T1D program.
In 2023 and 2022, we also acquired programs that were accounted for as asset acquisitions resulting in $47.5 million and $60.0 million of AIPR&D, respectively. Please refer to our critical accounting policies, “Acquisitions,” for further information regarding the significant judgments and estimates related to our acquisitions.
Please refer to our critical accounting policies, “Acquisitions,” for further information regarding the significant judgments and estimates related to our acquisitions.
Type 1 Diabetes • VX-880 is an allogeneic stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy, using standard immunosuppression to protect the implanted cells. We are evaluating VX-880 as a potential treatment for type 1 diabetes (“T1D”) in a sequential, three-part Phase 1/2 clinical trial. We have completed enrollment in Part C of the clinical trial.
Both of these trials are ongoing , and we expect data in some of these conditions in 2025. Type 1 Diabetes • Zimislecel is an allogeneic stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy, using standard immunosuppression to protect the implanted cells.
In the U.S., the FDA has granted Fast Track designation for VX-522. • We are investigating a portfolio of other small molecules targeting the underlying cause of CF with the aim of achieving carrier levels of CFTR function.
In the U.S., the FDA has granted Fast Track designation for VX-522. • We continue to advance new oral small molecule combination therapies through preclinical and clinical development with the aim of achieving normal levels of CFTR function.
We estimate approximately 35,000 people with severe SCD or TDT could be eligible for CASGEVY in the U.S. and Europe, with additional people in Saudi Arabia and Bahrain. In addition, we are preparing for near-term launches of potential new products in CF and acute pain.
We estimate approximately 60,000 people with severe SCD or TDT are or could become eligible for CASGEVY in the U.S., Canada, Europe, Saudi Arabia, and Bahrain. In January 2025, the FDA approved JOURNAVX, our selective non-opioid NaV1.8 pain signal inhibitor, for the treatment of people with moderate-to-severe acute pain.
Sickle Cell Disease and Beta Thalassemia • CASGEVY is now approved in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain for people 12 years of age and older with SCD or TDT. • The French National Authority for Health (“HAS”) approved our request for the implementation of an early access program (“EAP”) for the use of CASGEVY to treat eligible people with TDT from 12 to 35 years of age.
Sickle Cell Disease and Beta Thalassemia • CASGEVY is now approved in the U.S., the E.U., the U.K., Saudi Arabia, Bahrain, the UAE, Canada and Switzerland for people 12 years of age and older with SCD or TDT. • We have activated more than 50 authorized treatment centers globally, and more than 50 patients have initiated cell collection.
Recent and anticipated progress in activities supporting these efforts is included below: Cystic Fibrosis • In collaboration with Moderna, we are developing VX-522, a CFTR mRNA therapeutic for the treatment of people with CF who do not produce full-length CFTR protein.
(“Moderna”), we are developing VX-522, a CFTR mRNA therapeutic for the treatment of people with CF who do not produce full-length CFTR protein. The multiple ascending dose portion of the Phase 1/2 clinical trial for VX-522 is underway, with data expected in the first half of 2025.
We have placed the clinical trial on a protocol-specified pause, pending review of the totality of the data by an independent data monitoring committee and global regulators, following two patient deaths, both unrelated to VX-880. • Our second Phase 1/2 program in T1D evaluates VX-264, which encapsulates the same VX-880 cells in a novel device designed to eliminate the need for immunosuppression.
In addition, we have initiated a clinical trial evaluating zimislecel in people with T1D who have had a kidney transplant. • Our second program in T1D evaluates VX-264, which encapsulates zimislecel in a novel device designed to eliminate the need for immunosuppression. The Phase 1/2 clinical trial is evaluating the safety, tolerability and efficacy of VX-264.
Cash Our total cash, cash equivalents and marketable securities increased to $13.7 billion as of December 31, 2023 as compared to $10.9 billion as of December 31, 2022 primarily due to our income from operations driven by our net product revenues, and interest income, partially offset by our income tax payments and repurchases of our common stock. 66 Note: Charts above may not add due to rounding.
Cash Our total cash, cash equivalents and marketable securities decreased to $11.2 billion as of December 31, 2024 as compared to $13.7 billion as of December 31, 2023 primarily due to cash paid to acquire Alpine and repurchases of our common stock, partially offset by cash flows provided by other operating activities.
Please refer to Note B, “Collaboration, License and Other Arrangements,” for further information regarding our collaboration, in-license agreements and asset acquisitions. 72 RESULTS OF OPERATIONS 2023 % Change 2022 % Change 2021 (in millions, except percentages and per share amounts) Revenues $ 9,869.2 11% $ 8,930.7 18% $ 7,574.4 Operating costs and expenses 6,037.2 31% 4,623.3 (4)% 4,792.3 Income from operations 3,832.0 (11)% 4,307.4 55% 2,782.1 Other non-operating income (expense), net 547.8 ** (75.0) 45% (51.7) Provision for income taxes 760.2 (16)% 910.4 134% 388.3 Net income $ 3,619.6 9% $ 3,322.0 42% $ 2,342.1 Net income per diluted common share $ 13.89 $ 12.82 $ 9.01 Diluted shares used in per share calculations 260.5 259.1 259.9 ** Not meaningful Revenues 2023 % Change 2022 % Change 2021 (in millions, except percentages) TRIKAFTA/KAFTRIO $ 8,944.7 16% $ 7,686.8 35% $ 5,697.2 KALYDECO 475.5 (14)% 553.2 (19)% 684.2 ORKAMBI 326.0 (36)% 510.7 (34)% 771.6 SYMDEKO/SYMKEVI 123.0 (32)% 180.0 (57)% 420.4 Product revenues, net 9,869.2 11% 8,930.7 18% 7,573.4 Other revenues — ** — ** 1.0 Total revenues $ 9,869.2 11% $ 8,930.7 18% $ 7,574.4 ** Not meaningful Product Revenues, Net In 2023, our net product revenues increased by $938.5 million, or 11%, as compared to 2022.
As noted above, in January 2025, we entered into a collaboration agreement with Zai for the development and commercialization of povetacicept in mainland China, Hong Kong SAR, Macau SAR, Taiwan region and Singapore. 77 RESULTS OF OPERATIONS 2024 % Change 2023 % Change 2022 (in millions, except percentages and per share amounts) Product revenues, net $ 11,020.1 12% $ 9,869.2 11% $ 8,930.7 Acquired in-process research and development expenses 4,628.4 ** 527.1 356% 115.5 Other operating costs and expenses 6,624.6 20% 5,510.1 22% 4,507.8 (Loss) income from operations (232.9) (106)% 3,832.0 (11)% 4,307.4 Other non-operating income (expense), net 481.4 (12)% 547.8 ** (75.0) Provision for income taxes 784.1 3% 760.2 (16)% 910.4 Net (loss) income $ (535.6) (115)% $ 3,619.6 9% $ 3,322.0 Net (loss) income per diluted common share $ (2.08) $ 13.89 $ 12.82 Diluted shares used in per share calculations 257.9 260.5 259.1 ** Not meaningful Revenues 2024 % Change 2023 % Change 2022 (in millions, except percentages) TRIKAFTA/KAFTRIO $ 10,238.6 14% $ 8,944.7 16% $ 7,686.8 Other product revenues 781.5 (15)% 924.5 (26)% 1,243.9 Total revenues $ 11,020.1 12% $ 9,869.2 11% $ 8,930.7 Product Revenues, Net In 2024, our net product revenues increased by $1.2 billion, or 12%, as compared to 2023.
We anticipate broad access with government and commercial payors for CASGEVY in the U.S., and we anticipate early access programs initially, such as the recently approved early access program for TDT in France, and are pursuing long-term reimbursement agreements outside of the U.S.
In addition, we are working with U.S. government and commercial payors with respect to CASGEVY and JOURNAVX. We anticipate broad access with government and commercial payors for CASGEVY in the U.S., and we have recently entered into multiple agreements with government and commercial health insurance providers to provide such access.
Our pipeline includes clinical-stage programs in CF, sickle cell disease, beta thalassemia, acute and neuropathic pain, APOL1-mediated kidney disease, type 1 diabetes, myotonic dystrophy type 1 and alpha-1 antitrypsin deficiency. Our triple combination regimen, TRIKAFTA/KAFTRIO (elexacaftor/tezacaftor/ivacaftor and ivacaftor), was approved in 2019 in the United States (“U.S.”) and in 2020 in the European Union (“E.U.”).
Our clinical-stage pipeline includes programs in CF, SCD, beta thalassemia, acute and peripheral neuropathic pain, APOL1-mediated kidney disease, IgA nephropathy and other autoimmune renal diseases and cytopenias, type 1 diabetes, myotonic dystrophy type 1, and autosomal dominant polycystic kidney disease. In December 2024, the U.S.
Food and Drug Administration (“FDA”), the European Commission, the Medicines and Healthcare Products Regulatory Agency (“MHRA”), and Health Canada approved TRIKAFTA/KAFTRIO for the treatment of children with CF 2 to 5 years of age who have at least one F508del mutation in the CFTR gene. • The European Medicines Agency (“EMA”) validated the Marketing Authorization Application (“MAA”) extension for KAFTRIO in combination with ivacaftor to include people with CF who have a rare mutation in the CFTR gene that is responsive based on clinical and/or in vitro data, including the N1303K mutation.
In December 2024, the FDA approved the expanded use of TRIKAFTA for the treatment of people with CF 2 years of age and older who have at least one F508del mutation in the cystic fibrosis transmembrane conductance regulator (“CFTR”) gene or a mutation that is responsive to TRIKAFTA.
The increase was primarily due to the continued strong uptake of TRIKAFTA/KAFTRIO in ex-U.S. markets and label extensions in younger age groups, and the continued performance of TRIKAFTA in the U.S., following the launch of TRIKAFTA in children with CF 2 to 5 years of age.
Increases in our TRIKAFTA/KAFTRIO product revenues were due to strong performance and demand globally, including expansions into younger age groups and label extensions, and higher net realized pricing in the U.S. The decrease in our “Other product revenues” was primarily the result of CF patients switching to TRIKAFTA/KAFTRIO from our other CF products.
The majority of our interest expense in these periods was related to imputed interest expense associated with our leased corporate headquarters in Boston. Other Income (Expense), Net Other income (expense), net was expenses of $22.8 million and $164.8 million in 2023 and 2022, respectively.
As a result, we expect our interest expense to decrease in future periods because operating lease expenses are recorded within operating expenses in our consolidated statements of operations. 81 Other Income (Expense), Net Other income (expense), net was expenses of $86.1 million and $22.8 million in 2024 and 2023, respectively.
In the U.S., we have worked successfully with third-party payors to promptly obtain appropriate levels of reimbursement for our CF medicines and are currently working with U.S. government and commercial payors with respect to CASGEVY.
For JOURNAVX in the U.S., we have been working with government and commercial payors pre- and post-approval to support rapid and broad access.
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Financial Highlights Revenues In 2023, our net product revenues increased to $9.9 billion as compared to $8.9 billion in 2022.
Added
Food and Drug Administration (the “FDA”) approved ALYFTREK (vanzacaftor/tezacaftor/deutivacaftor), our once-daily next-in-class triple combination for the treatment of people with CF 6 years of age and older, and our fifth CF medicine.
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Cost of sales was 13% and 12% of our net product revenues in 2023 and 2022, respectively.
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Through approvals of new medicines, label expansions, and expanded reimbursement, we are focused on increasing the number of people with CF who are eligible and able to receive our medicines.
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Business Updates Marketed Products Cystic Fibrosis We expect to grow our CF business with (i) continued uptake by patients in countries where we are early in our launch, such as those with recently achieved reimbursement agreements, (ii) label expansions, including into younger patient groups, and (iii) growth in the number of people living with CF.
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With this approval, 94 additional non-F508del CFTR mutations have been added to the TRIKAFTA label, and approximately 300 additional people with CF in the U.S. are now eligible for TRIKAFTA.
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Recent progress in activities supporting continued uptake and label expansions is included below: • The U.S.
Added
We have begun our commercial launch of JOURNAVX in the U.S. for eligible adults. In addition, we are enrolling and dosing patients in a Phase 3 clinical trial evaluating suzetrigine for the treatment of diabetic peripheral neuropathy, a common form of peripheral neuropathic pain.
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We plan to submit regulatory filings for these mutations in Australia, Brazil, Canada, New Zealand and Switzerland, and we plan to submit for regulatory approval of a subset of these mutations not currently included in the U.S.
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In December 2024, we announced Phase 2 clinical trial results showing that treatment with suzetrigine demonstrated a statistically significant and clinically meaningful within-group reduction in pain on the numeric pain rating scale for people with lumbosacral radiculopathy (“LSR”), a form of peripheral neuropathic pain. The clinical trial also included a placebo reference arm, which showed a similar within-group reduction.
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TRIKAFTA label to the FDA. • The FDA and the European Commission approved the use of ORKAMBI for children with CF 12 to less than 24 months of age who are homozygous for the F508del mutation in the CFTR gene. • The FDA and MHRA approved KALYDECO in children with CF from 1 month to less than 4 months of age.
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Suzetrigine was safe and generally well-tolerated in the Phase 2 clinical trial. We hypothesize that a high placebo response in this clinical trial led to a lack of separation of the suzetrigine and placebo response curves. We believe we can innovate in pain clinical trial design to better control the placebo effect, and succeed in pivotal development with suzetrigine.
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We are also pursuing an EAP submission for SCD in France and we expect to receive the outcome of this decision in the coming months. • Our regulatory submission for CASGEVY in both SCD and TDT is currently under review in Switzerland.
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We plan to advance suzetrigine into pivotal development in LSR, pending discussions with regulators on trial design and the regulatory package. 70 Financial Highlights Revenues In 2024, our net product revenues increased to $11.0 billion as compared to $9.9 billion in 2023, primarily due to increased TRIKAFTA/KAFTRIO product revenues resulting from strong performance and demand globally, including expansions into younger age groups and label extensions, and higher net realized pricing in the U.S.
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We expect to submit for regulatory approval of CASGEVY in Canada in the first half of 2024. 67 • We have activated 12 authorized treatment centers (“ATCs”) in the U.S. and three ATCs in Europe. We are aiming to activate approximately 50 ATCs in the U.S. and 25 in Europe.
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In 2024, total acquired in-process research and development expenses (“AIPR&D”) of $4.6 billion included $4.4 billion related to our acquisition of Alpine Immune Sciences, Inc. (“Alpine”). Cost of sales were 14% of our net product revenues in 2024 as compared to 13% in 2023, with the increase primarily due to costs associated with CASGEVY.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDollars and none are held for trading purposes. All of our interest-bearing securities are subject to interest rate risk and could change in value if interest rates fluctuate.
Biggest changeThese investments are primarily denominated in U.S. Dollars and none are held for trading purposes. All of our interest-bearing securities are subject to interest rate risk and could change in value if interest rates fluctuate.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Financial Instruments As part of our investment portfolio, we own financial instruments that are sensitive to market risks. The investment portfolio is used to preserve our capital, provide adequate liquidity and earn returns commensurate with our risk appetite.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Financial Instruments As part of our investment portfolio, we own financial instruments that are sensitive to market risks. The investment portfolio is used to preserve our capital, provide adequate liquidity and earn returns commensurate with our risk appetite.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this Item 8 is contained on pages F-1 through F-46 of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this Item 8 is contained on pages F-1 through F-49 of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable.
As of December 31, 2023, we had no principal or interest outstanding under our credit facility. A portion of our “Interest expense” in 2024 will be dependent on whether, and to what extent, we borrow amounts under this facility.
As of December 31, 2024, we had no principal or interest outstanding under our credit facility. A portion of our “Interest expense” in 2025 will be dependent on whether, and to what extent, we borrow amounts under this facility.
We invest in instruments that meet the credit quality standards outlined in our investment policy, which also limits the amount of credit exposure to any one issue or type of instrument. These instruments primarily include securities issued by the U.S. government and its agencies, investment-grade corporate bonds and commercial paper, and money market funds. These investments are denominated in U.S.
We invest in instruments that meet the credit quality standards outlined in our investment policy, which also limits the amount of credit exposure to any one issue or type of instrument. These instruments primarily include securities issued by the U.S. government and its agencies, investment-grade corporate bonds and commercial paper, and money market funds.
However, since these contracts hedge a specific portion of our forecasted product revenues denominated in certain foreign currencies, any change in the fair value of these contracts is recorded in “Accumulated other comprehensive (loss) income” on our consolidated balance sheets and is 84 reclassified to earnings in the same periods during which the underlying product revenues affect earnings.
However, since these contracts hedge a specific portion of our forecasted product revenues denominated in certain foreign currencies, any change in the fair value of these contracts is recorded in “Accumulated other comprehensive income (loss)” on our consolidated balance sheets and is reclassified to earnings in the same periods during which the underlying product revenues affect earnings.
The fair value of our equity investments in publicly traded companies was less than $50.0 million as of December 31, 2023.
The fair value of our equity investments in publicly traded companies was less than $50.0 million as of December 31, 2024.
As of December 31, 2023, we held foreign exchange forward contracts that were designated as cash flow hedges with notional amounts totaling $2.4 billion representing a net liability of $31.9 million on our consolidated balance sheet. Although not predictive in nature, we believe a hypothetical 10% threshold reflects a reasonably possible near-term change in exchange rates.
As of December 31, 2024, we held foreign exchange forward contracts that were designated as cash flow hedges with notional amounts totaling $2.9 billion representing a net asset of $142.5 million on our consolidated balance sheet. 89 Although not predictive in nature, we believe a hypothetical 10% threshold reflects a reasonably possible near-term change in exchange rates.
If the December 31, 2023 exchange rates were to change by a hypothetical 10%, the fair value recorded on our consolidated balance sheet related to our foreign exchange forward contracts that were designated as cash flow hedges as of December 31, 2023 would change by approximately $239.2 million.
If the December 31, 2024 exchange rates were to change by a hypothetical 10%, the fair value recorded on our consolidated balance sheet related to our foreign exchange forward contracts that were designated as cash flow hedges as of December 31, 2024 would change by approximately $286.0 million.
In 2023 and 2022, we recorded net losses of $0.6 million and $149.1 million, respectively, to “Other Income (Expense), Net” in our consolidated statements of income to reflect changes in the fair value of equity investments with readily determinable fair values (including publicly traded securities).
In 2024 and 2023, we recorded net losses of $9.5 million and $0.6 million, respectively, to “Other income (expense), net” in our consolidated statements of income to reflect changes in the fair value of equity investments with readily determinable fair values (including publicly traded securities).
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Item 7a. Quantitative and Qualitative Disclosures About Market Risk. 76 Income Taxes Our effective tax rate fluctuates from year to year due to the global nature of our operations.
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The factors that most significantly impact our effective tax rate include changes in tax laws, variability in the allocation of our taxable earnings among multiple jurisdictions, the amount and characterization of our research and development expenses, the levels of certain deductions and credits, adjustments to the value of our uncertain tax positions, acquisitions and third-party collaboration and licensing transactions.
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Our provision for income taxes was $760.2 million for 2023 and $910.4 million for 2022.
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Our effective tax rate of 17.4% for 2023 was lower than the U.S. statutory rate primarily due to a benefit from a research and development tax credit study that was completed in 2023 and excess tax benefits related to stock-based compensation, partially offset by changes in uncertain tax positions.
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Our effective tax rate of 21.5% for 2022 was higher than the U.S. statutory rate primarily due to an increase in our uncertain tax positions associated with intercompany transfer pricing matters partially offset by excess tax benefits related to stock-based compensation, tax credits, and changes in our estimated prior-year tax liabilities.
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LIQUIDITY AND CAPITAL RESOURCES The following table summarizes the components of our financial condition as of December 31, 2023 and 2022: 2023 2022 % Change (in millions, except percentages) Cash, cash equivalents and marketable securities: Cash and cash equivalents $ 10,369.1 $ 10,504.0 Marketable securities 849.2 274.5 Long-term marketable securities 2,497.8 112.2 Total cash, cash equivalents and marketable securities $ 13,716.1 $ 10,890.7 26% Working Capital: Total current assets $ 14,144.2 $ 13,234.8 7% Total current liabilities (3,547.4) (2,742.1) 29% Total working capital $ 10,596.8 $ 10,492.7 1% Working Capital Our total working capital of $10.6 billion as of December 31, 2023 was similar to our total working capital of $10.5 billion as of December 31, 2022 primarily due to $3.8 billion of income from operations mostly offset by net purchases of long-term marketable securities of $2.4 billion, income tax payments and repurchases of our common stock of $427.6 million.
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Cash Flows 2023 2022 2021 (in millions) Net cash provided by (used in): Operating activities $ 3,537.3 $ 4,129.9 $ 2,643.5 Investing activities $ (3,141.7) $ (321.1) $ (340.9) Financing activities $ (562.2) $ (67.7) $ (1,478.0) Operating Activities Cash provided by operating activities was $3.5 billion in 2023 as compared to $4.1 billion in 2022.
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The largest driver of 77 the decrease in cash provided by operating activities in 2023 as compared to 2022 was an increase in cash paid for income taxes. Investing Activities Cash used in investing activities was $3.1 billion and $321.1 million in 2023 and 2022, respectively.
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In 2023, our investing activities primarily related to net purchases of available-for-sale debt securities of $2.9 billion. In 2022, our investing activities included a net payment of $295.9 million to acquire ViaCyte and $204.7 million in purchases of property and equipment, partially offset by net sales and maturities of available-for-sale debt securities of $227.3 million.
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Financing Activities Cash used in financing activities was $562.2 million and $67.7 million in 2023 and 2022, respectively. In 2023, our financing activities primarily related to repurchases of our common stock pursuant to our share repurchase program and payments related to our employee stock benefit plans.
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In 2022, the largest portions of our financing activities were payments related to our employee stock benefit plans and payments on finance leases. Sources and Uses of Liquidity As of December 31, 2023, we had current cash, cash equivalents, and marketable securities of $11.2 billion, which represented an increase of $439.8 million from $10.8 billion as of December 31, 2022.
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We intend to rely on our existing cash, cash equivalents and current marketable securities together with cash flows from product sales as our primary source of liquidity. We expect that cash flows from our product sales together with our cash, cash equivalents and current marketable securities will be sufficient to fund our operations for at least the next twelve months.
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The adequacy of our available funds to meet our future operating and capital requirements will depend on many factors, including our future product sales, and the potential introduction of one or more of our other product candidates to the market, our business development activities and the number, breadth, cost and prospects of our research and development programs.
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Credit Facilities & Financing Strategy We may borrow up to a total of $500.0 million pursuant to a revolving credit facility that we entered into in July 2022 and could repay and reborrow amounts under this revolving credit agreement without penalty.
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Subject to certain conditions, we could request that the borrowing capacity be increased by an additional $500.0 million, for a total of $1.0 billion. Negative covenants in our credit agreement could prohibit or limit our ability to access this source of liquidity. As of December 31, 2023, the facility was undrawn, and we were in compliance with these covenants.
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We may also raise additional capital by borrowing under credit agreements, through public offerings or private placements of our securities, or securing new collaborative agreements or other methods of financing. We will continue to manage our capital structure and will consider all financing opportunities, whenever they may occur, that could strengthen our long-term liquidity profile.
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There can be no assurance that any such financing opportunities will be available on acceptable terms, if at all.
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Future Capital Requirements We have significant future capital requirements, including: • Expected operating expenses to conduct research and development activities, manufacture and commercialize our existing and future products, and to operate our organization. • Cash that we pay for income taxes. • Royalties we pay related to sales of our CF products. • Facility, operating and finance lease obligations as described below. • Firm purchase obligations related to our supply and manufacturing processes.
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In addition, other potential significant future capital requirements may include: 78 • We have entered into certain business development-related and strategic agreements with third parties that include the funding of certain research, development, manufacturing and commercialization efforts.
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Certain of our transactions, including collaborations, licensing arrangements, and asset acquisitions, include the potential for future milestone and royalty payments by us upon the achievement of pre-established developmental and regulatory targets and/or commercial targets. Other transactions include the potential for future lease-related expenses and other costs.
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Our obligation to fund these research and development and commercialization efforts and to pay these potential milestones, expenses and royalties is contingent upon continued involvement in the programs and/or the lack of any adverse events that could cause their discontinuance.
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We may enter into additional business development transactions and strategic agreements, including acquisitions, collaborations, licensing arrangements and equity investments, which require additional capital. • To the extent we borrow amounts under our existing credit agreement, we would be required to repay any outstanding principal amounts in 2027. • As of December 31, 2023, we had $2.6 billion remaining authorization available under our $3.0 billion Share Repurchase Program that our Board of Directors approved in February 2023.
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We expect to fund repurchases of our common stock through a combination of cash on hand and cash generated by operations. This program does not have an expiration date and can be discontinued at any time. Additional information on several of our future capital requirements is provided below.
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Research and Development Costs At any point in time, we have several ongoing clinical trials at various stages of clinical development. Our clinical trial costs are dependent on, among other things, our research activities advancing to later-stage clinical development as well as the size, number, and length of our clinical trials.
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Leases Finance Leases Our corporate headquarters is in two buildings that we lease at Fan Pier in Boston, Massachusetts. We commenced lease payments on these buildings in 2013 and the initial lease periods end in December 2028. We also lease office and laboratory space in San Diego, California.
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We commenced lease payments for this building in 2019 pursuant to an initial 16-year lease term. We account for each of these buildings as finance leases. Operating Leases We account for our remaining real estate leases as operating leases, including office and laboratory space at the Jeffrey Leiden Center for Cell and Genetic Therapies near our corporate headquarters.
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Base rent payments commenced in 2021 pursuant to an initial 15-year lease term for this building.
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Our total future minimum lease payments for our finance and operating leases for each of the next five years and in total are included in Note L, “Leases.” The total future undiscounted minimum lease payments were $583.0 million and $436.1 million related to our finance and operating leases, respectively, as of December 31, 2023.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements prepared in accordance with generally accepted accounting principles in the U.S.
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The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reported periods.
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These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are reflected in reported results for the period in which the change occurs.
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We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
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Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. 79 We believe that our application of the following accounting policies, each of which requires significant judgments and estimates on the part of management, are the most critical to aid in fully understanding and evaluating our reported financial results: • revenue recognition; • acquisitions, including intangible assets, goodwill and contingent consideration; and • income taxes.
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Our accounting policies, including the ones discussed below, are more fully described in Note A, “Nature of Business and Accounting Policies.” Revenue Recognition CF Product Revenues, Net We generate CF product revenues from sales in the U.S. and in international markets.
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We sell our CF products principally to a limited number of specialty pharmacy and specialty distributors in the U.S., which account for the largest portion of our total revenues. Our customers in the U.S. subsequently resell our products to patients and health care providers.
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We contract with government agencies so that our products will be eligible for purchase by, or partial or full reimbursement from, such third-party payors. We make international sales primarily through distributor arrangements and to retail pharmacies, as well as to hospitals and clinics, many of which are government-owned or supported customers.
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We recognize net CF product revenues from sales of our products when our customers obtain control of our products, which typically occurs upon delivery to our customers. Revenues from our CF product sales are recorded at the net sales price, or transaction price, which requires us to make several significant estimates regarding the net sales price.
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The most significant estimate we are required to make for our CF product revenues is related to government and private payor rebates, chargebacks, discounts and fees, collectively rebates. The values of the rebates provided to third-party payors per course of treatment vary significantly and are based on government-mandated discounts and our arrangements with other third-party payors.
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To estimate our total rebates, we estimate the percentage of prescriptions that will be covered by each third-party payor, which is referred to as the payor mix.
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We track available information regarding changes, if any, to the payor mix for our products, to our contractual terms with third-party payors and to applicable governmental programs and regulations and levels of our products in the distribution channel. We adjust our estimated rebates based upon new information as it becomes available, including information regarding actual rebates for our products.
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Claims by third-party payors for rebates are submitted to us significantly after the related sales, potentially resulting in adjustments in the period in which the new information becomes known.
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The following table summarizes activity related to our CF product revenue accruals for rebates for 2023, 2022 and 2021: (in millions) Balance as of December 31, 2020 $ 775.6 Provision related to 2021 sales 2,126.1 Adjustments related to prior year(s) sales (27.6) Credits/payments made (2,035.5) Balance as of December 31, 2021 $ 838.6 Provision related to 2022 sales 2,977.2 Adjustments related to prior year(s) sales (10.4) Credits/payments made (2,514.0) Balance as of December 31, 2022 $ 1,291.4 Provision related to 2023 sales 3,481.4 Adjustments related to prior year(s) sales (6.5) Credits/payments made (3,064.7) Balance as of December 31, 2023 $ 1,701.6 80 We have also entered into annual contracts with government-owned and supported customers in international markets that limit the amount of annual reimbursement we can receive for our CF products.
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Upon exceeding the annual reimbursement amount provided by the customer’s contract with us, products are provided free of charge, which is a material right.
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If we estimate that the annual reimbursement amount under a contract will be exceeded for an annual period, we defer a portion of the consideration received, which includes upfront payments and fees, for shipments made up to the annual reimbursement limit as “Other current liabilities.” Once the annual reimbursement limit has been reached, we recognize the deferred amount as revenue when we ship the free products.
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To estimate the portion of the consideration received to be recognized as revenue and the portion of the amount to be deferred, we rely on our forecast of the number of units we will distribute during the applicable annual period in each international market in which our contracts with government-owned and supported customers limit the amount of annual reimbursement we can receive.
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Our forecasts are based on, among other things, our historical experience. The preceding estimates and judgments materially affect our recognition of net CF product revenues. Changes in our estimates of net CF product revenues could have a material effect on net CF product revenues recorded in the period in which we determine that change occurs.
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Acquisitions As part of our business strategy, we seek to acquire products, product candidates and other technologies and businesses that are aligned with our corporate and research and development strategies and complement and advance our ongoing research and development efforts.
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If we determine that substantially all the fair value associated with an acquisition is concentrated in a single asset, and the acquisition does not constitute a business, we account for it as an asset acquisition.
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For an asset acquisition involving rights to intellectual property related to in-process research and development that is not yet associated with a product that has achieved regulatory approval, we generally record our upfront payment to AIPR&D, because there is no alternative future use for the asset that was acquired.
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For example, we accounted for our A&R JDCA with CRISPR in 2021 as an asset acquisition of rights to in-process research and development for which we did not have any alternative future use and recorded the associated $900.0 million upfront payment to AIPR&D.
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If the fair value that we acquired in an acquisition is distributed among more than one asset, and the acquisition constitutes a business, we account for it as a business combination.
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We are required to make several significant judgments and estimates to calculate the purchase price for our business combinations and then allocate it to the assets that we have acquired and the liabilities that we have assumed on our consolidated balance sheet.
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The most significant judgments and estimates relate to the fair value of the in-process research and development assets and contingent consideration liabilities related to these business combinations. Based on these judgments and estimates, the fair value of the goodwill that we record as a result of these business combinations may be material.
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In-process Research and Development Intangible Assets As of each of December 31, 2023 and 2022, we had $603.6 million of in-process research and development assets on our consolidated balance sheet within “Other intangible assets, net.” Most recently, we recorded a $216.6 million in-process research and development intangible asset related to our acquisition of ViaCyte on our consolidated balance sheet in 2022.
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We characterize in-process research and development assets on our consolidated balance sheets as indefinite-lived intangible assets until either the project underlying it is completed or the asset becomes impaired and is subsequently written-off.
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We test our in-process research and development intangible assets for impairment on an annual basis, and more frequently if indicators are present or changes in circumstances suggest that impairment may exist.
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When we determine that an indefinite-lived intangible asset has become impaired or we abandon the associated research and development project, we write down the carrying value to its fair value and record an impairment charge in the period in which the impairment occurs.
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For example, we recorded a $13.0 million impairment of an in-process research and development intangible asset to “Research and development expenses” in 2022 due to a decision to revise the scope of certain acquired gene-editing programs.
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If one of our product candidates achieves regulatory approval, the in-process research and development intangible assets associated with the product candidate become finite-lived intangible assets as described below. To determine the fair value of our in-process research and development assets, we have utilized either the multi-period excess earnings or the relief from royalty methods of the income approach.
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Each method requires us to estimate the probability of technical and regulatory success, revenue projections and growth rates, and appropriate discount and tax rates. 81 The multi-period excess earnings method also requires us to estimate development and commercial costs.
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The relief from royalty method also requires us to estimate the after-tax royalty savings expected from ownership of the asset that we acquired.
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Contingent Consideration As of December 31, 2023 and 2022, we had $77.4 million and $129.0 million, respectively, of liabilities on our consolidated balance sheets attributable to the fair value of the contingent development and regulatory payments that we may owe to Exonics’ former equity holders upon the achievement of certain events associated with research programs focused on DMD and other severe neuromuscular diseases, including DM1.
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We record an increase or a decrease in the fair value of the contingent consideration liabilities on our consolidated balance sheet and in our consolidated statement of income on a quarterly basis.
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We determine the fair value of our contingent consideration liabilities using a probability weighted discounted cash flow method of the income approach, which requires us to make estimates of the timing of regulatory and commercial milestone achievement and the corresponding estimated probability of technical and regulatory success rates.
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We use significant judgment in determining the appropriateness of these assumptions during each reporting period. Reasonable changes in these assumptions can cause material changes to the fair value of our contingent consideration liabilities. Due to the early stage of Exonics’ programs, these significant assumptions could be affected by future economic and market conditions.
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In November 2023, we determined that additional pre-clinical studies of the delivery system for our gene-editing components for DMD will be required. As a result, we revised our estimates regarding the timing of the development and regulatory milestones and the probability of achieving those milestones, which reduced the estimated fair value of our contingent consideration as of December 31, 2023.
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Goodwill As of December 31, 2023 and 2022, we had goodwill of $1.1 billion on our consolidated balance sheets. During 2023, we did not have any business combinations. In 2022, we recorded $85.8 million of goodwill on our consolidated balance sheet related to our acquisition of ViaCyte.
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Goodwill reflects the difference between the fair value of the consideration transferred and the fair value of the net assets acquired. Thus, the goodwill that we record is dependent on the significant judgments and estimates inherent in these fair values. We have one reporting unit for goodwill reporting purposes.
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We evaluate our goodwill for impairment on an annual basis, and more frequently if indicators are present or changes in circumstances suggest that impairment may exist. We have not identified any goodwill impairment to date.
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Finite-lived Intangible Assets As of December 31, 2023, we had $236.3 million of finite-lived intangible assets on our consolidated balance sheet within “Other intangible assets, net.” These finite-lived intangible assets, which were recorded during 2023, relate to $208.0 million of CASGEVY regulatory approval milestones, including $200.0 million we paid to CRISPR pursuant to the A&R JDCA, and $30.0 million for a non-exclusive sublicense of developed technology related to CASGEVY.

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