10-K – 2026-02-13 – vrtx-20251231.htm

scrutinized and have been the target of lawsuits and investigations alleging various problematic conduct, including
submission of incorrect pricing information, improper promotion of pharmaceutical products, payments intended to influence
the referral of health care business, submission of false claims for government reimbursement, and anticompetitive behavior.
We are required to track and disclose financial interactions with health care providers and health care organizations, which
may increase government and public scrutiny of these financial interactions. Failure to comply with these reporting
requirements could result in significant civil monetary penalties. As we commercialize products for new patient populations
and in new geographies, we will have more interactions with a broader set of healthcare providers and we must continue to
expend significant efforts to establish, maintain and enhance systems and processes to comply with laws and regulations
governing those interactions.
Government price reporting and payment regulations are also complex, requiring us to continually assess the methods by
which we calculate and report pricing in accordance with these obligations. Our methodologies for calculations are inherently
subject to assumptions and may be subject to review and challenge by various government agencies, which may disagree
with our interpretation. If the government disagrees with our reported calculations, we may need to restate previously
reported data and could be subject to additional financial and legal liability.
If we are unable to obtain, maintain and enforce our intellectual property rights, our business could be harmed.
Our success depends, in significant part, on our ability to obtain, maintain, and enforce patents and intellectual property
rights such as trademarks and copyrights that protect our products, product candidates, and technologies. In addition, we rely
upon trade secret protection and contractual arrangements to protect certain of our proprietary information. Due to the
complexity of the legal standards and factual questions relating to the patentability, validity, and enforceability of patents
covering pharmaceutical and biotechnological inventions and the scope of claims made under these patents, our ability to
obtain, maintain and enforce our patents is uncertain. The initial grant of patents or regulatory exclusivity in the U.S. and ex-
U.S. markets depends upon decisions of the patent offices, courts, and governments in those countries. We may fail to obtain,
defend or otherwise preserve patent and other intellectual property rights, including certain forms of regulatory exclusivity,
and our current intellectual property rights or protections and those we obtain in the future may not be broad enough or
sufficient to protect our commercial interests in all countries where we conduct business.
In the U.S. and ex-U.S. markets, third parties have challenged and may continue to challenge, invalidate, or circumvent
our patents and patent applications relating to our products, product candidates, and technologies. We have had and may
continue to have disputes with respect to the rights to products, product candidates, and technologies developed in
collaboration with other parties. If we cannot resolve disputes and obtain adequate intellectual property right protections, we
may not be able to develop or market our products. Settlements of such proceedings could also result in reducing the period
of exclusivity and other protections, resulting in a reduction in revenue from affected products. Any litigation, including
litigation related to Abbreviated New Drug Applications (“ANDA”), litigation related to 505(b)(2) applications, interference
proceedings to determine priority of inventions, derivations proceedings, inter partes review, oppositions to patents in foreign
countries, litigation against our collaborators, or similar actions, could harm our business.
Difficulties in, or preclusion from, protecting our intellectual property rights in foreign jurisdictions could substantially
harm our business. Third-party manufacturers may be able to sell generic versions of our products in countries that do not
provide effective mechanisms for enforcement of our patents or other intellectual property rights. For example, we have
experienced a violation of our intellectual property rights in Russia, where a copy product that infringes our patents has been
made available. In addition, many foreign countries have compulsory licensing laws under which a patent owner must grant
licenses to third parties in certain circumstances. Compulsory licenses have been used in certain countries for market access
purposes and, in some cases, as a cost-containment measure. Compulsory licenses issued for our patents may diminish or
reduce revenue from those jurisdictions and negatively affect our results of operations. Third parties may also illegally
distribute and sell counterfeit versions of our products. Copy or counterfeit products may not meet our rigorous
manufacturing and testing standards and a patient who receives such product may be at risk for a number of dangerous health
consequences. Our business and reputation could suffer harm as a result of illegally produced and distributed generic versions
of our products, as well as counterfeit products sold under our brand name. The diversion of products from their authorized
market into other channels may result in reduced revenues and negatively affect our profitability.

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If we are not able to operate without infringing upon intellectual property rights of third parties, our business could be
harmed.
Our competitors seek to protect their products, product candidates and proprietary information through patents,
trademarks, trade secrets, and copyrights. T hird parties have claimed and may claim in the future that our products or other
activities infringe their intellectual property rights or that our employees have misappropriated their intellectual property
rights . See also Item 1., Business – Intellectual Property of this Annual Report on Form 10-K. Resolving an intellectual
property infringement or other claim can be costly and time consuming and may require us to enter into license agreements,
which may not be available on commercially reasonable terms. A successful claim of patent infringement or other violation
or misappropriation of intellectual property rights by a third party could subject us to significant damages and/or an
injunction preventing the manufacture, sale, or use of the affected product or products, and/or require us to pay royalties or
redesign our infringing products, which may be impossible or require substantial time and monetary expenditure.
Our business has a substantial risk of product liability claims and other litigation liability.
The testing, manufacturing, marketing and use of our products and product candidates involve substantial risk of product
liability claims. These claims may be made directly by consumers, patients, healthcare providers, or others. Product liability
claims and lawsuits and safety alerts or product recalls, regardless of their ultimate outcome, may decrease demand for our
products or any product candidate for which we obtain marketing approval, and may have a material adverse effect on our
business, results of operations, reputation, and our ability to market our products. Our product liability and clinical trial
insurance may not provide adequate coverage against all potential liabilities.
There continues to be a significant volume of government and regulatory investigations and litigation against companies
operating in our industry, a s well as robust regulatory enforcement and whistleblower claims. Investigations into aspects of
our business include inquiries, subpoenas, and other types of information demands from government and regulatory
authorities. We are also involved in and are subject to other various legal proceedings, including litigation, and other dispute-
related proceedings. These activities require significant financial and internal resources. This includes the arbitration initiated
by the third party to whom the CFF has assigned its ALYFTREK royalty rights. Please see Item 7. Management’s Discussion
and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for more information.
The outcome of such legal proceedings, investigations or any other dispute-related proceedings are inherently uncertain and
adverse developments or outcomes can result in significant expenses, monetary damages, penalties, injunctions, or other
relief against us, and in the ALYFTREK arbitration, could result in higher future costs of goods if royalty fees are higher than
anticipated. For a description of our litigation, investigation and other dispute-related matters, see Note P., Commitments and
Contingencies — Legal Matters and Other Contingencies, included in this Annual Report on Form 10-K.
We are subject to various and evolving laws and regulations governing the privacy and security of personal data.
We are subject to a variety of evolving and developing data privacy and security laws and regulations in various
jurisdictions related to the collection, storage, use, sharing, and security of personal data, including health information.
Regulators globally are imposing data privacy and security requirements, such as the E.U.’s GDPR and other domestic data
privacy and security laws, such as the California Consumer Privacy Act and the California Privacy Rights Act. These and
other similar types of laws and regulations that have been or may be passed often include requirements with respect to
personal information. Compliance with privacy 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. Failure to comply may result in liability
through government enforcement, private actions, civil and criminal fines and penalties, litigation, and reputational harm.
Although we are not directly subject to HIPAA, we could face penalties, including criminal liability, for knowingly obtaining
or disclosing protected health information from non-compliant HIPAA-covered entities. The commercialization of cell and
genetic therapies involves processing more personal data than traditional therapies, increasing our risk exposure.
Furthermore, the number of government investigations, enforcement actions, and class action lawsuits related to data security
incidents and privacy violations, particularly focused on online data sharing, continue to increase. Government investigations
typically require significant resources and generate negative publicity, which could harm our business and reputation.

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Risks Related to Our Operations
We may face manufacturing, supply, and distribution delays, difficulties, and disruptions, among other challenges,
including at our third-party providers.
We could be subject to significant supply interruptions for our commercial products or product candidates as a result of
disruptions to our internal manufacturing capabilities or those of our suppliers or partners. Supply disruptions may result from
a variety of factors, including shortages in product raw materials or labor, technical difficulties, regulatory inspections or
restrictions, delays in construction, regulatory approval, and inspection of new facilities or the expansion of existing facilities,
shipping or customs delays, inability to maintain compliance with quality or other regulations, including cGMP requirements,
general global supply chain disruptions, and performance failures by us or any third-party manufacturer on which we rely.
Disruption in our supply chain or manufacturing capabilities can result in shipment delays, inventory shortages, lot failures,
product withdrawals, recalls and other interruptions in the commercial and clinical supply of our products and product
candidates. Any such disruption with respect to our commercial products could result in a failure to meet market demand,
could negatively affect our patients, could reduce our net product revenues and/or increase our costs. Any such disruption in
the supply of product candidates to our clinical trials could negatively affect the subjects enrolled in our clinical trials and/or
cause delays in our clinical trials and applications for regulatory approval.
Additionally, unfavorable geopolitical events could affect our ability to interact with or conduct business with specific
vendors within our global supply network or could prevent or delay the transportation of supplies or products to their planned
destination. For example, we depend on China-based suppliers for portions of our supply chain. Finding alternative suppliers
due to geopolitical developments or otherwise may not be feasible or could take a significant amount of time and involve
significant expense due to the nature of our products and the need to obtain regulatory approvals.
If we are unable to maintain and expand our supply chain and manufacturing capabilities, our ability to develop our
product candidates and manufacture our products would be harmed.
We continue to invest in and expand our manufacturing capabilities and supplier relationships to ensure the stability of
our supply chains and to support the anticipated demand for our products. Establishing, managing and expanding our global
manufacturing capabilities and supply chain, particularly as we enter new therapeutic modalities, requires significant
financial commitment. This includes the creation and maintenance of numerous third-party contractual relationships upon
which we rely. There can be no assurance that we will be able to identify, establish and maintain additional manufacturers or
capacity for our product candidates and products on a timely basis, on commercially reasonable terms, or at all. The
foregoing risks may be heightened where our products and the materials that we utilize in our operations are manufactured by
only one supplier or at only one facility. In addition, in the course of providing its services, a contract manufacturer may
develop process technology related to the manufacture of our products or product candidates that the manufacturer owns,
either independently or jointly with us. This would increase our reliance on that manufacturer or require us to obtain a license
from that manufacturer to have our products or product candidates manufactured by other suppliers utilizing the same
process.
In addition, we and our CMOs and corporate partners are subject to cGMP, as well as comparable regulations in other
jurisdictions. Manufacturing operations are also subject to routine inspections by regulatory agencies. Even after a supplier is
qualified by the regulatory authority, the supplier must continue to expend time, money and effort in the area of production
and quality control to maintain full compliance with applicable regulatory requirements, including cGMP. If, as a result of
these inspections, a regulatory authority determines that the equipment, facilities, laboratories or processes do not comply
with applicable regulations and conditions of product approval, the regulatory authority may suspend the manufacturing
operations. There can be no assurance that we or our CMOs and corporate partners will be able to remedy any deficiencies
cited by FDA or other regulatory agencies in their inspections.
Furthermore, the manufacturing and logistics for drug products are highly complex and can require significant
investment, including to scale-up manufacturing processes and to secure capacity at third parties with expertise to meet our
requirements. This capacity may be limited by the number of other clinical trials and commercial manufacturing ongoing for
other companies seeking similar support. There are many risks that could result in delays and additional costs, including the
need to hire and train qualified employees and obtain access to necessary equipment and third-party technology. Additionally,
even with relevant experience and expertise, drug manufacturers often encounter difficulties in scale-up and production,
including difficulties with production costs and yields, quality control, and compliance with federal, state and foreign

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regulations, which can prevent manufacturers from completing clinical trials or commercializing products on a timely or
profitable basis, if at all.
Reliance on third-party relationships could adversely affect our business.
Our business depends on relationships with third parties, including activities critical to research, development,
manufacturing, commercialization, and technology. For example, we rely on third parties such as CROs for the day-to-day
management and oversight of our clinical trials, on CMOs for active ingredient manufacturing and finishing operations, and
on logistics providers for the distribution of our products. We are expanding our relationships with CROs, CMOs, and other
third parties as we enter markets in which we have no or limited experience. Failure by any of our third parties to meet their
contractual, regulatory, or other obligations, any disruption in the relationship between Vertex and a third party upon whom
we rely, or the failure of a third party to conduct activities in accordance with our expectations, could adversely affect the
relevant research, development, manufacturing, commercial, or administrative activity and our business. The foregoing risks
may be heightened as a result of the limited number or specialized nature of certain third parties, as we may not be able to
replace such third party in a timely manner, on commercially reasonable terms, or at all.
The third parties upon which we rely are subject to their own operational and financial risks, as well as other difficulties,
which, if realized, could negatively affect our business. If any of our third parties violate, or are alleged to have violated, any
laws or regulations, including anti-corruption or anti-bribery regulations, the GDPR, or other laws and regulations, during the
performance of their obligations to us, we could suffer financial and reputational harm or other negative outcomes, including
possible legal consequences.
If we fail to scale our operations to accommodate growth, our business may suffer.
As we continue to expand our global operations and capabilities, we face increasing demands on our management and
infrastructure. To effectively manage our growing business, we need to:
• implement and clearly communicate corporate-wide strategies and effectively prioritize resources;
• enhance our operational and financial infrastructure, including data and information controls;
• effectively leverage technology and automation where appropriate to enable efficient growth and remain
competitive;
• improve our administrative, financial and management processes, including decision-making processes and budget
prioritization;
• effectively grow, train and manage our global employee base; and
• expand our compliance and legal resources.
A variety of risks associated with operating in foreign countries could materially adversely affect our business.
Our global operations subject us to risks that could adversely affect our business and revenue. In addition to the ex-U.S.
risks we face with respect to compliance with local laws and regulatory requirements, pricing and reimbursement, intellectual
property, manufacturing capabilities and supply chain, foreign exchange risks, and reliance on third parties, risks associated
with operating a global biotechnology company include the potential for:
• economic weakness, including recession and inflation, or political instability globally or with respect to particular
foreign economies and markets;
• business interruptions resulting from geo-political actions, including war and terrorism;
• import and export licensing requirements, tariffs, trade barriers, and other trade and travel restrictions, the risks of
which appear to have increased in the current political environment;
• credit risks related to our customers, which may be higher in less developed markets; and
• global or regional public health emergencies.

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If any of the above risks were to occur, our revenues, results of operations, financial condition or business could be
materially harmed.
Current or future U.S. legislation, including executive orders, or other new changes in laws, regulations or policies in the
U.S. or other countries could negatively impact our business by increasing costs, decreasing demand for our products, and
increasing government cost controls, among other risks. For example, U.S. legislation has been introduced to limit certain
U.S. biotechnology companies from using equipment or services from select Chinese biotechnology companies, and others in
Congress have advocated for limitations on those Chinese service providers’ ability to engage in business in the U.S. We
cannot predict what actions may ultimately be taken with respect to trade relations between the United States and China or
other countries, what products and services may be subject to such actions, the effective date or duration of such actions, or
what actions may be taken by the other countries in response to actions by the United States. If we are unable to obtain or use
services from existing service providers or become unable to export or sell our products to any of our customers or service
providers, our business could be materially and adversely affected.
A breakdown or breach of our information technology systems, or unauthorized access to confidential information could
adversely affect our business.
We maintain and rely extensively on information technology systems and network infrastructures, internally and with
third parties for the effective operation of our business. We collect, store, and transmit confidential information, including
personal information, financial information and intellectual property . Disruption, infiltration, or failure of our information
technology systems because of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or
misuse, power disruptions, natural disasters or accidents could cause breaches of data security and/or loss of critical data,
which in turn could materially adversely affect our business.
Cyber-attacks and incidents are increasing in their frequency, sophistication, and intensity, and are difficult to detect.
Cyber-attacks are carried out by well-resourced groups and individuals with a wide range of motives and expertise. Due to
the nature of some cyber-attacks and incidents, there is a risk that they may remain undetected for a period of time. Recent
developments in the threat landscape include the use of adversarial artificial intelligence techniques and machine learning, as
well as an increased number of cyber extortion attacks with higher financial ransom demand amounts and increasing
sophistication and variety of ransomware techniques. Cyber-attacks and incidents also include manufacturing, hardware or
software supply chain attacks, which could cause disruption to or a delay in the manufacturing of our products or product
candidates, or lead to data privacy or security breach. We use cloud technologies and any failure by cloud or other technology
service providers to adequately safeguard their systems and prevent cyber-attacks or data privacy incidents could disrupt our
operations and result in misappropriation, corruption, or loss of confidential or proprietary information. The third parties
upon which we rely face similar risks and when they experience a security breach of their systems, our security can be
adversely affected.
Like many companies, we have experienced immaterial cybersecurity incidents, including temporary service
interruptions of third-party suppliers. There can be no assurance that our efforts to protect our data and information systems
will prevent breakdowns or breaches in our systems that could adversely affect our business. While we maintain cyber
liability insurance, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may
result from an interruption or breach of our systems and those of critical third parties. Cybersecurity incidents can cause the
loss of critical or sensitive information, including personal information, and could give rise to legal liability and regulatory
action under data protection and privacy laws.
In addition, we face certain risks as we seek to leverage artificial intelligence to optimize productivity and efficiency in
various aspects of the organization. Flaws, biases, or malfunctions in these systems could lead to operational disruptions, data
loss, or erroneous decision-making, impacting our operations, financial condition, and reputation. Ethical and legal
challenges may arise, including biases or discrimination in generated outcomes, non-compliance with data protection
regulations and laws specifically governing the use of artificial intelligence systems and tools, and lack of transparency.
Furthermore, the deployment of artificial intelligence systems could expose us to increased cybersecurity threats, such as data
breaches and unauthorized access. We also face competitive risks if we do not implement artificial intelligence or other
machine learning technologies in a timely fashion.

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Our operations may be disrupted by the occurrence of a natural disaster, catastrophic event, or by other serious accidents
occurring at our facilities.
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 would be seriously harmed. For example, our corporate headquarters, as well as additional
leased space that we use for certain logistical and laboratory operations and manufacturing, are located in a flood zone along
the Massachusetts coast. If we are unable to effectively implement our business continuity plans, we may experience delays
in recovery of data and/or an inability to perform vital corporate functions, which could result in a significant disruption in
our operations, large expenses to repair or replace the facility and/or the loss of critical data. Additionally, we use hazardous
materials in some of our facilities, and any accident, injury or other loss related thereto could result in substantial liability.
Our property or other relevant insurance may not be sufficient to cover all potential losses that may result from an
interruption to our operations or damage resulting from these risks.

Strategic and Financial Risks
Our business development strategy, including strategic transactions and collaborations, may not be successful, and there
may be delays or failures in realizing the anticipated benefits of these activities.
As part of our business strategy, we seek to enter into strategic transactions to acquire, license, or collaborate with other
entities, in each case that have potential to complement and advance our ongoing research, development, manufacturing, and
commercialization efforts. Over the last several years we have engaged in a number of strategic transactions and
collaborations, including our acquisition of Alpine and its lead asset, povetacicept, as well as several smaller transactions and
collaboration arrangements. See also Item 1. , Business – Strategic Transactions of this Annual Report on Form 10-K. Our
future transactions and collaborations may be similar to prior transactions, may be structured differently from prior
transactions, or may involve larger transactions or later-stage assets. We face significant competition for potential strategic
transactions and collaborations from a variety of other companies, some of which have significantly more financial resources
and experience in business development activities. We may not complete future transactions in a timely manner, or at all,
including due to the possibility that a governmental entity or regulatory body may delay or refuse to grant approval for the
consummation of the transaction.
We may not realize the anticipated benefits of our completed or future strategic transactions. The product candidates or
products contemplated by those transactions may be delayed or terminated at any point during research or clinical
development. Even if a product is approved, we may not be able to successfully commercialize it. As a result, we may fail to
generate expected revenue growth or income contribution within the anticipated timeframe or at all. We also face risks that
we:
• may not effectively integrate acquired assets or businesses into our ongoing business;
• may incur additional expenses or fail to achieve anticipated cost savings related to the strategic transactions;
• may incur impairment charges related to assets acquired in any such transactions; or
• may acquire unanticipated liabilities.
In addition, future strategic transactions could result in potentially dilutive issuances of equity securities or the incurrence
of debt.
We continue to collaborate with outside partners on research, development, manufacturing, and/or commercialization
activities with respect to product candidates and products. We face the same research, development, manufacturing, and
commercialization risks with respect to product candidates and products that are subject to collaborations as with product
candidates and products that we have developed ourselves. We face additional risks in connection with our current and future
collaborative arrangements, including with respect to the performance of the collaborator and their compliance with
contractual obligations.

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Our effective tax rate fluctuates, and changes in tax laws, regulations and treaties, unfavorable resolution to the tax
positions we have taken, and exposure to additional income tax liabilities could have a material impact on our future
taxable income.
Our effective tax rate is derived from a combination of applicable tax rates in the various places that we operate globally.
Our effective tax rate may be different than experienced in the past due to numerous factors, including:
• changes in the mix of our profitability from country to country;
• tax authority examinations/audits of our tax filings;
• adjustments to the value of our uncertain tax positions;
• changes in accounting for income taxes; and
• changes in tax laws or modifications of treaties in various jurisdictions.
Any of these factors could cause us to experience an effective tax rate that is significantly different from previous periods
or our current expectations. For example, actions taken with respect to tax-related matters by associations such as the
Organisation for Economic Co-operation and Development and the European Commission could influence tax laws in
jurisdictions in which we operate, such as the enactments by both E.U. and non-E.U. member countries of a global minimum
tax. We are subject to ongoing tax audits in various jurisdictions, and local tax authorities may disagree with certain positions
we have taken and assess additional taxes. We regularly assess the probable outcomes of these audits to determine the
appropriateness of our tax provision, and we have established contingency reserves for material tax exposures. However,
there can be no assurance that we will accurately predict the outcomes of these disputes or other tax audits or that issues
raised by tax authorities will be resolved at a financial cost that does not exceed our related reserves and the actual outcomes
of these disputes and other tax audits could have a material impact on our results of operations or financial condition.
Changes in foreign currency rates, interest rate risks, the value of our investment portfolio, and inflation affect our results
of operations and financial condition.
Fluctuations in currency exchange rates and interest rates, changes in the value of our investment portfolio, and inflation
have affected and will continue to affect our cash flows, results of operations, and financial condition. The exchange rates
among our reporting currency, the U.S. dollar, and the currencies in which we do business are volatile and our efforts to
mitigate against these risks may not be successful. We invest our available cash in a range of investments, including
investments in cash equivalents and debt securities, and fluctuations in interest rates, among other factors, could materially
negatively affect the value of this investment portfolio. In addition, systemic economic downturns, as well as inflationary
pressures, such as those observed in recent periods, may adversely impact our business and financial results. See also Item
7A., Quantitative and Qualitative Disclosures About Market Risk of this Annual Report on Form 10-K.
Future indebtedness could materially and adversely affect our financial condition, and the terms of our credit agreements
impose restrictions on our business.
If we borrow under our current credit agreement or any future credit agreements, or otherwise issue or incur additional
debt, such indebtedness could have important consequences to our business. The credit agreement requires that we comply
with certain financial covenants, including a consolidated leverage ratio covenant and negative covenants, restricting or
limiting our ability and the ability of our subsidiaries to, among other things, incur additional indebtedness, grant liens,
engage in certain investment, acquisition and disposition transactions, and enter into transactions with affiliates. As a result,
we may be restricted from engaging in business activities that may otherwise improve our business. Failure to comply with
the covenants could result in an event of default that could trigger acceleration of our indebtedness. If we incur additional
indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.
There can be no assurance that we will repurchase shares of common stock or that we will repurchase shares at favorable
prices.
In May 2025, our Board of Directors approved a share repurchase program pursuant to which we are authorized to
repurchase up to $4.0 billion of our common stock from time to time through open market or privately negotiated
transactions, of which $618.5 million has been repurchased as of December 31, 2025 . Our stock repurchases will depend

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upon, among other factors, market conditions, our cash balances and potential future capital requirements, results of
operations, financial condition, and other factors that we may deem relevant. We can provide no assurance that we will
repurchase stock at favorable prices, if at all.

General Risk Factors
Our stock price is volatile.
Our stock price is subject to significant fluctuations. From January 1, 2025 to December 31, 2025 , our common stock
traded between $362.50 and $519.68 per share. Our future stock price could be significantly and adversely affected by:
• announcements o r investor analyst commentary regarding the clinical development of our product candidates a s new
information, including efficacy and safety information becomes available;
• our financial guidance and/ or financial results, including quarterly and annual fluctuations resulting from factors
such as the timing and amount of our revenues and expenses ; and
• other factors including the risks described in these “ Risk Factors .”
Fluctuations in our stock price can result in substantial losses for shareholders. Following periods of volatility in the
market price of a company’s securities, shareholder derivative lawsuits and securities class action litigation are common.
Such litigation, if instituted against us or our officers and directors, could result in substantial costs and other harm to our
business.
If we fail to attract and retain skilled employees, our business could be materially harmed.
We must attract and retain highly qualified and trained scientists, as well as employees with experience in the
development, manufacture, and commercialization of medicines, including biologic and cell and genetic therapies. We face
intense competition for such talent from our competitors, other companies, academic institutions, and other organizations
throughout our industry, especially with respect to employees with expertise in cell or genetic therapies. Our compensation
program, including equity awards, may not be sufficient to retain employees, especially if our stock price declines or other
employers offer more attractive opportunities. Our ability to commercialize our products and achieve our research and
development objectives depends on our ability to respond effectively to these demands. If we are unable to hire and retain
qualified personnel, our ability to advance our pipeline, commercialize our products, and achieve our business objectives
could be materially adversely affected.
The use of social media platforms presents risks and challenges.
Social media is increasingly used by patients, advocacy groups, and other third parties to discuss our products and
product candidates. Social media posts may include statements about efficacy or adverse events that could create reporting
obligations or regulatory scrutiny. Our employees’ use of social media also presents risks, including potential noncompliance
with legal or regulatory requirements, inappropriate disclosure of confidential information or personal information, and loss
of intellectual property. In addition, misinformation, negative sentiment, or impersonation of our business on social media
could cause reputational damage or otherwise harm our business. Failure to appropriately manage these risks could result in
regulatory actions, liability, or other adverse consequences.
We have adopted provisions in our articles of organization and by-laws and are subject to Massachusetts corporate laws
that may frustrate any attempt to remove or replace members of our board or to effectuate certain types of business
combinations involving us.
Provisions of our articles of organization, by-laws and Massachusetts state laws may frustrate any attempt to remove or
replace members of our current Board of Directors and may discourage certain types of business combinations involving us.
Our by-laws allow the Board of Directors to adjourn any meetings of shareholders prior to the time the meeting has been
convened. We may issue shares of any class or series of preferred stock in the future without shareholder approval and upon
such terms as our Board of Directors may determine. The rights of the holders of common stock will be subject to, and may
be adversely affected by, the rights of the holders of any class or series of preferred stock that may be issued in the future.
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

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restrictions on voting by any shareholder who acquires 20% or more of the aggregate shareholder voting power without
approval by non-interested shareholders. As a result, shareholders or other parties may find it difficult to remove or replace
our directors or to effectuate certain types of business combinations involving us.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, including the descriptions of our Business set forth in Part I, Item 1, our Risk Factors
set forth in Part I, Item 1A, and our Management’s Discussion and Analysis of Financial Condition and Results of Operations
set forth in Part II, Item 7, contains forward-looking statements. Forward-looking statements are not purely historical and
may be accompanied by words such as “anticipates,” “may,” “forecasts,” “expects,” “intends,” “plans,” “potentially,”
“believes,” “seeks,” “estimates,” and other words and terms of similar meaning. Such 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, and the anticipated launch of povetacicept for the treatment of IgAN ;
• 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, and our beliefs that t he majority of people with CF will transition to ALYFTREK
over time ;
• 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, including with respect to povetacicept as a
pipeline-in-a-product and as a potential best-in-class approach for the treatment of IgAN, pMN, and gMG;
• 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 complete the full submission for potential accelerated approval of povetacicept in IgAN in the first half of 2026
and to share data from the interim analysis of the Phase 2/3 clinical trial of inaxaplin in AMKD in late 2026 or early
2027 and from the Phase 2 trial in people with AMKD in mid-2026;
• 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 several limitations of other available
therapies;
• 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 our agreements with Zai, Ono and WuXi;
• 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;
• the effects of import and export licensing requirements, tariffs, trade barriers, and other trade and travel restrictions;
• potential business development activities, including the identification of potential collaborative partners or
acquisition targets;

39

• our ability to expand and protect our intellectual property portfolio and otherwise maintain exclusive rights to
products;
• our expectations or beliefs regarding any legal proceedings in which we are involved, including any litigation,
arbitration or other similar proceedings involving our products, product candidates or activities;
• 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;
• 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 effectively implement artificial intelligence systems and tools;
• 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.
Forward-looking statements are subject to certain risks, uncertainties, or other factors that are difficult to predict and
could cause actual events or results to differ materially from those indicated in any such statements. These risks,
uncertainties, and other factors include, but are not limited to, those described in our Risk Factors, set forth in Part I, Item 1A,
and elsewhere in this report and those described from time to time in our future reports filed with the Securities and Exchange
Commission.
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. 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, 2025 regarding our filings under the Securities Exchange Act of 1934,
as amended, that have not been resolved.

ITEM 1C. CYBERSECURITY
Risk Management and Strategy
We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to
maintain the security, confidentiality, integrity, and availability of our business systems and confidential information,
including personal information and intellectual property. 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 and System and Organization Controls 2. The program includes 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. T his program also includes processes to oversee and identify material risks from
cybersecurity threats associated with our use of third-party service providers. We 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.

40

Our cybersecurity program is integrated into our overall risk management systems, including our annual enterprise risk
management program, internal audit program, business continuity and crisis management programs, third-party risk
management program, insurance risk management program, and employee compliance programs. As part of our overall risk
management program, we maintain a global insurance portfolio with comprehensive cyber coverage. Our 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.
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. 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. 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. For additional discussion on cybersecurity risks we face, see Item 1.A, Risk
Factors – “A breakdown or breach of our information technology systems, or unauthorized access to confidential
information could adversely affect our business.” of this Annual Report on Form 10-K
Governance
While our board of directors has oversight responsibility for risk management generally, the Audit and Finance
Committee (“Audit Committee”) is specifically responsible for overseeing our cybersecurity risk management program to
ensure that cybersecurity risks are identified, assessed, managed, and monitored. 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. These updates include descriptions of
cybersecurity incidents of interest, including those associated with our third-party service providers; the board will be
informed promptly of material risks from cybersecurity threats.
We strive to create a culture of cybersecurity resilience and awareness and believe that cybersecurity is the responsibility
of every employee and contractor. A t the same time, primary responsibility for assessing, monitoring, and managing our
cybersecurity risks lies with our CISO. Our CISO 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. 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.
Our CISO oversees a team of skilled cybersecurity professionals who have Certified Information Systems Security
Professional 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. 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. 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 Digital and Information Officer, who is a Senior Vice President of the Company and reports
directly to our Chief Operating and Financial Officer (“COFO”). Our COFO is an Executive Vice President and an executive
officer of the Company, and reports directly to our CEO.

ITEM 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. We have the option to extend the
term of the leases for up to two additional ten-year periods.

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Additional United States and Worldwide Locations
In addition to our corporate headquarters, we lease an aggregate of approximately 865,000 squar e feet of space globally.
This space includes logistical, laboratory, commercial and manufacturing operations, as well as laborator y 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. Additionally, we are constructing the second building of our Leiden Campus in
Massachusetts (“Leiden II”), which will include approximately 348,000 square feet of office and laboratory space. We expect
Leiden II to be operational in late 2026 .

ITEM 3. LEGAL PROCEEDINGS
Other than as described in Note P, “Commitments and Contingencies,” to our consolidated financial statements, we are
not currently subject to any material legal proceedings.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

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PART II

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 6, 2026 , there were 94 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.

43

Dividends
We have never paid any cash dividends on our common stock, and we do not anticipate paying any in the foreseeable
future.
Issuer Repurchases of Equity Securities
In May 2025, our Board of Directors approved a share repurchase program (our “2025 Share Repurchase Program”),
pursuant to which we are authorized to repurchase up to $4.0 billion of our common stock. The 2025 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, 2025 under
our 2025 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, 2025 to Oct. 31, 2025

256,788

$ 409.11

256,788

$ 3,381,462,793

Nov. 1, 2025 to Nov. 30, 2025

—

$ —

—

$ 3,381,462,793

Dec. 1, 2025 to Dec. 31, 2025

—

$ —

—

$ 3,381,462,793

Total

256,788

$ 409.11

256,788

$ 3,381,462,793

(1) Under our 2025 Share Repurchase Program, we are authorized to purchase shares from time to time through open market or privately
negotiated transactions. 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]

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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 2025 as compared to 2024 are
discussed below. For a discussion of our financial condition and results of operations for 2024 as compared to 2023 , please
refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024
Annual Report on Form 10-K, except as set forth below.
OVERVIEW
We are a global biotechnology company that invests in scientific innovation to create transformative medicines for
people with serious diseases, with a focus on specialty markets. We have approved medicines for cystic fibrosis (“CF”),
sickle cell disease (“SCD”), transfusion dependent beta thalassemia (“TDT”), and acute pain, and we continue to serially
innovate and advance next-generation clinical and research programs in these areas. Our mid- and late-stage clinical pipeline
includes programs across a range of modalities in additional serious diseases, including IgA nephropathy, APOL1-mediated
kidney disease, neuropathic pain, type 1 diabetes, primary membranous nephropathy, autosomal dominant polycystic kidney
disease, and myotonic dystrophy type 1.
Collectively, our five CF medicines, led by TRIKAFTA/KAFTRIO, are being used to treat nearly three quarters of the
people with CF in the U.S., Europe, Australia, and Canada. ALYFTREK, our newest CF medicine, is approved in the United
States (the “U.S.”), the United Kingdom (the “U.K.”), the European Union (the “E.U.”), Canada, New Zealand, Switzerland,
Australia and Israel.
CASGEVY, our ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, is approved in the U.S., the E.U., the U.K.,
the Kingdom of Saudi Arabia (“Saudi Arabia”), the Kingdom of Bahrain (“Bahrain”), Qatar, the United Arab Emirates (the
“UAE”), Kuwait, Switzerland and Canada for the treatment of people 12 years of age and older with SCD or TDT.
JOURNAVX, our selective non-opioid NaV1.8 pain signal inhibitor, is approved in the U.S. for the treatment of people
with moderate-to-severe acute pain. We are continuing our commercial launch of JOURNAVX for eligible adults.
Financial Highlights

Total Revenues

In 2025 , our total revenues increased to $12.0 billion as compared to $11.0 billion in 2024 ,
primarily due to continued strong demand for TRIKAFTA/KAFTRIO as well as contributions
from our launches of ALYFTREK, JOURNAVX and CASGEVY.

Cost of Sales

Our cost of sales as a percentage of our net product revenues decreased from 13.9% in 2024 to
13.8% in 2025 as a result of a lower overall royalty rate for our CF medicines, partially offset by
changes in our product mix, and investments in network expansion and manufacturing process
improvements.

Total R&D and SG&A
Expenses

Our total research and development (“R&D”) and selling, general and administrative (“SG&A”)
expenses increased to $5.7 billion in 2025 as compared to $5.1 billion in 2024, primarily due to
increased investment to commercialize our new products and to advance our R&D pipeline.

AIPR&D Expenses

In 2025, our acquired in-process research and development expenses (“AIPR&D”) of $133.0
million included various upfront and milestone payments related to our collaboration and in-
licensing arrangements. In 2024, AIPR&D included $4.4 billion resulting from our acquisition of
Alpine Immune Sciences, Inc. (“Alpine”), which was accounted for as an asset acquisition.

Cash

Our total cash, cash equivalents and marketable securities increased to $12.3 billion as of
December 31, 2025 as compared to $11.2 billion as of December 31, 2024 primarily due to cash
flows provided by our operating activities partially offset by repurchases of our common stock.

$0.1

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$0.1

2024

2025

December 31, 2025

December 31, 2024

Note: Charts above may not add due to rounding.
Business Updates
Marketed Products
Cystic Fibrosis
We expect that the number of people with CF taking our medicines will continue to grow through new approvals and
reimbursement agreements, treatment of younger patients, increased survival and expansion into additional geographies.
• ALYFTREK is reimbursed for eligible people with CF in the U .S., England, Ireland, Germany, Denmark, Northern
Ireland, Norway, Wales, Italy, Australia, New Zealand and Luxembourg. We are working to secure access for
eligible patients in additional countries.
Sickle Cell Disease and Beta Thalassemia
• In 2025 , we recorded $115.8 million of CASGEVY product revenues. This reflects 64 patients receiving infusions
of CASGEVY in 2025, including 30 people infused in the fourth quarter. Globally, in 2025, 147 people with SCD or
TDT had their first cell collection for CASGEVY.
• As of the end of 2025, approximately 90 percent of people with SCD or TDT in the U.S. have reimbursed access to
CASGEVY, which is also reimbursed in the U.K., Italy, Austria, Denmark, Luxembourg, Saudi Arabia, the UAE,
Bahrain, and Kuwait. In January 2026, we secured reimbursed access to CASGEVY for eligible people with SCD in
Scotland, consistent with the reimbursement agreement reached in 2025 for people with TDT.
• We expect to begin global regulatory submissions for approvals for CASGEVY in children 5 to 11 years of age, in
the first half of 2026. The FDA awarded Vertex with a Commissioner’s National Priority Voucher for this pediatric
submission, indicating an accelerated timeline for review once the submission is complete.
Acute Pain
• Since pharmacy availability in March 2025 through year-end 2025, more than 550,000 prescriptions for
JOURNAVX were written and filled across the hospital and retail settings in different acute pain conditions,
consistent with JOURNAVX’s broad label.
• We have secured access for JOURNAVX with all three national pharmacy benefit managers, and, a s of January
2026, over 200 million individuals across commercial and government payers have coverage, representing two-
thirds of U.S. covered lives . In addition, 21 states provide coverage via Medicaid.
• More than 100 of the targeted 150 healthcare systems and more than 950 individual hospitals of the 2,000 targeted
institutions have added JOURNAVX to formularies, protocols or order sets.

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Select R&D Pipeline Programs
We continue to advance a diversified pipeline of potentially transformative medicines for serious diseases utilizing a
range of modalities. Recent and anticipated progress in activities supporting these efforts is included below:
Cystic Fibrosis
• We completed the global trial evaluating ALYFTREK in children 2 to 5 years of age. Following positive results
from this clinical trial, w e expect to submit for approval with global regulators in this age group in the first half of
2026. We also initiated a pivotal trial of ALYFTREK in children 1 year to less than 2 years of age.
• Following positive results from the clinical trial evaluating TRIKAFTA in children 1 year to less than 2 years of age,
we expect to begin submissions for global regulatory approvals in this age group in the first half of 2026.
IgA Nephropathy
• We are developing povetacicept, a dual inhibitor of B cell activating factor (“BAFF”) and a proliferation-inducing
ligand (“APRIL”) cytokines, for multiple diseases. Povetacicept represents a potentially best-in-class approach to
control B cell activity in immunoglobulin A nephropathy (“IgAN”).
• We completed enrollment in the Phase 3 clinical trial evaluating povetacicept for IgAN and, in the fourth quarter of
2025, we initiated the rolling Biologics Licensing Application (“BLA”) filing for U.S. accelerated approval with
submission of the first module. We expect to release interim analysis data in the first half of 2026 and we expect to
complete the submission in the first half of 2026, if data from the interim analysis are supportive . We are using a
priority review voucher to expedite the review of the povetacicept BLA from ten months to six months.
APOL1-Mediated Kidney Disease
• Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”). We completed
enrollment in the interim analysis cohort of the global Phase 2/3 pivotal clinical trial evaluating inaxaplin in people
with primary AMKD (“AMPLITUDE”). We expect to conduct the pre-planned interim analysis once this cohort has
been treated for 48 weeks and we expect to share data from the interim analysis in l ate 2026 or early 2027. We
expect to complete full enrollment in AMPLITUDE in the second half of 2026.
Peripheral Neuropathic Pain
• We previously initiated the first Phase 3 clinical trial evaluating suzetrigine for the treatment of people with diabetic
peripheral neuropathy (“DPN”), a common form of peripheral neuropathic pain, and have initiated a second Phase 3
clinical trial evaluating suzetrigine in DPN in the fourth quarter of 2025. We expect to complete enrollment in both
Phase 3 clinical trials by the end of 2026.
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. We have completed enrollment in the Phase 1/2/3
clinical trial of zimislecel in people with type 1 diabetes (“T1D”). We have temporarily postponed completion of
dosing in this clinical trial, pending an internal manufacturing analysis.
Primary Membranous Nephropathy
• Povetacicept represents a potentially best-in-class approach to control B cell activity in primary membranous
nephropathy (“pMN”), another B cell-mediated disease. We are enrolling and dosing patients in the adaptive Phase
2/3 pivotal clinical trial of povetacicept for the treatment of people with pMN. We expect to complete the Phase 2
portion of the clinical trial and to initiate the Phase 3 portion in mid-2026.

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External Innovation
Recent investments in external innovation include:
• An exclusive global license agreement with WuXi Biologics to develop and commercialize a trispecific T cell
engager for B cell-mediated autoimmune diseases, which is currently in preclinical development.
Our Business Environment
In 2025 , our net product revenues were primarily from the sale of our medicines for the treatment of CF. 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. Outside of CF, we
continue to advance the commercialization of CASGEVY for the treatment of SCD and TDT, and JOURNAVX for the
treatment of acute pain. In addition, we are advancing our pipeline of product candidates for the treatment of serious diseases
outside of CF, SCD, TDT and acute pain.
Our strategy is to combine transformative advances in the understanding of causal human biology and the science of
therapeutics to discover and develop innovative medicines. This approach includes advancing multiple compounds or
therapies from each program, spanning multiple modalities, into early clinical trials to obtain patient data that can inform
selection of the most promising therapies for later-stage development, as well as to inform discovery and development
efforts. We aim to serially innovate in our disease areas of interest and follow our first-in-class therapies with potential best-
in-class candidates to provide durable clinical and commercial success.
In pursuit of new product candidates and therapies in specialty markets, we invest in research and development. We
believe that pursuing research in diverse areas allows us to balance the risks inherent in product development and may
provide product candidates that will form our pipeline in future years. To supplement our internal research programs, we
acquire technologies and programs and collaborate with biopharmaceutical and technology companies, leading academic
research institutions, government laboratories, foundations and other organizations, as needed, to advance research in our
areas of therapeutic interest and to access technologies needed to execute on our strategy.
Discovery and development of a new pharmaceutical or biological product is a difficult and lengthy process that requires
significant financial resources along with extensive technical and regulatory expertise. Across the industry, most potential
drug or biological products never progress into development, and most products that advance into development never receive
marketing approval. 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. 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. In addition, our product candidates must satisfy rigorous
standards of safety and efficacy before they can be approved for sale by regulatory authorities. Our analysis of data obtained
from nonclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could
delay, limit or prevent regulatory approval.
Our business also requires ensuring appropriate manufacturing and supply of our products. As we advance our product
candidates through clinical development toward commercialization and market and sell our approved products, we build and
maintain our supply chain and quality assurance resources. 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. In addition to establishing supply chains for
each newly approved product, we adapt our supply chain for existing products to include additional formulations or to
increase scale of production for existing products as needed. 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.
Sales of our products depend, to a large degree, on the extent to which our products are reimbursed by third-party payors,
such as government health programs, commercial insurance and managed health care organizations. Reimbursement for our
products, including our potential pipeline therapies, cannot be assured and may take significant periods of time to obtain. We
dedicate substantial management and other resources to obtain and maintain appropriate levels of reimbursement for our

48

products from third-party payors, including governmental organizations in the U.S. and ex-U.S. markets. In the U.S., we
work with government and commercial payors to obtain and maintain appropriate levels of reimbursement for our medicines.
In ex-U.S. markets, we seek government reimbursement for our medicines on a country-by-country or region-by-region, as
required. This is necessary for each new medicine, as well as for label expansions for our current medicines. 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.
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 acquired multiple biotechnology companies over the last several years and expect to
continue to identify and evaluate such opportunities. The accounting for these acquisitions can vary significantly based on
whether we conclude the transactions represent business combinations or asset acquisitions. In 2024, we acquired Alpine and
its lead molecule, povetacicept, for approximately $5.0 billion. Povetacicept has shown potential to treat multiple diseases or
conditions and become a pipeline-in-a-product. We accounted for the Alpine transaction as an asset acquisition because
povetacicept represented substantially all of the fair value of the gross assets that we acquired. As a result, $4.4 billion of the
fair value attributed to povetacicept was expensed as AIPR&D in 2024. In 2019 and 2022, we acquired Semma Therapeutics,
Inc. (“Semma”) and ViaCyte, Inc. (“ViaCyte”), respectively, pursuant to which we established and accelerated the
development of our T1D program. We accounted for each of these acquisitions as a business combination.
Please refer to our critical accounting policies, “ Acquisitions ,” for further information regarding the significant
judgments and estimates related to our acquisitions.
Collaboration and In-Licensing Arrangements
We enter into arrangements with third parties, including collaboration and licensing arrangements, for the development,
manufacture and commercialization of products, product candidates, and other technologies that have the potential to
complement our ongoing research and development efforts.
Over the last several years, we entered into collaboration agreements with a number of companies, including CRISPR
Therapeutics AG (“CRISPR”), Entrada Therapeutics, Inc. (“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. 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. These payments were expensed to AIPR&D because they were primarily
attributable to acquired in-process research and development for which there was no alternative future use. However,
depending on many factors, including the structure of the collaboration, the stage of development of the acquired technology,
the significance of the in-licensed product candidate to the collaborator’s operations and the other activities in which our
collaborators are engaged, the accounting for these transactions can vary significantly. 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.
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.
Pursuant to the CRISPR JDCA, we lead global development, manufacturing and commercialization of CASGEVY, with
support from CRISPR. We also conduct all research, development, manufacturing and commercialization activities relating
to other product candidates and products under the CRISPR JDCA throughout the world subject to CRISPR’s reserved right
to conduct certain activities.

49

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. 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. 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.
Prior to receiving marketing approval from the FDA for CASGEVY in December 2023, we accounted for the CRISPR
JDCA as a cost-sharing arrangement, with costs incurred related to CASGEVY allocated 60% to us and 40% to CRISPR,
subject to certain adjustments. In 2023, we recognized net reimbursements from CRISPR as credits to “Research and
development expenses” and to “Selling, general and administrative expenses,” related to CRISPR’s share of the CRISPR
JDCA’s operating expenses.
Acquired In-Process Research and Development Expenses
In 2025 and 2024 , our AIPR&D included $133.0 million and $4.6 billion , 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. Please refer to Note B, “Collaboration, License and
Other Arrangements,” for further information regarding our asset acquisitions, collaborations, and in-license agreements.
Out-licensing Arrangements
We also have out-licensed certain development programs to collaborators who are leading the development or
commercialization of these programs, either globally or within certain geographic regions.
I n 2025, we entered into agreements with Zai Lab Limited (“Zai”) and Ono Pharmaceuticals, Co Ltd (“Ono”)
respectively, for the development and commercialization of povetacicept in various Asian markets. Zai licensed povetacicept
for mainland China, Hong Kong SAR, Macau SAR, Taiwan region, and Singapore, while Ono licensed povetacicept for
Japan and South Korea. Zai and Ono will help advance povetacicept c linical trials, and will be responsible for obtaining
marketing authorizations and commercialization activities, if povetacicept becomes an approved product, in their licensed
territories. We are eligible to receive certain future milestone payments and tiered royalties on future net sales of povetacicept
in these regions.

RESULTS OF OPERATIONS
Total Revenues

2025

% Change

2024

% Change

2023

(in millions, except percentages)

TRIKAFTA/KAFTRIO

$ 10,312.7

1%

$ 10,238.6

14%

$ 8,944.7

ALYFTREK

837.8

**

—

**

—

Other product revenues

820.1

5%

781.5

(15)%

924.5

Product revenues, net

11,970.6

9%

11,020.1

12%

9,869.2

Other revenues

30.7

**

—

**

—

Total revenues

$ 12,001.3

9%

$ 11,020.1

12%

$ 9,869.2

** Not meaningful

Product Revenues, Net
In 2025 , our net product revenues increased $950.5 million , or 9% , as compared to 2024 , primarily due to continued
strong demand for TRIKAFTA/KAFTRIO as well as contributions from our launches of ALYFTREK, JOURNAVX and

50

CASGEVY. In 2025 , “ Other product revenues ” included $115.8 million from CASGEVY and $59.6 million from
JOURNAVX. In 2024 , “ Other product revenues ” included CASGEVY product revenues of $10.0 million . Our remaining
“Other product revenues” are related to KALYDECO, ORKAMBI, and SYMDEKO/SYMKEVI, our other CF products.
Other Revenues
In 2025 , other revenues were $30.7 million, which included $20.6 million and $10.0 million related to upfront payments
received from our agreements with Ono and Zai, respectively.
Revenues by Geographic Location
Our total revenues from the U.S. and from ex-U.S. markets were as follows:

2025

% Change

2024

% Change

2023

(in millions, except percentages)

United States

$ 7,548.6

13%

$ 6,684.9

11%

$ 6,040.4

ex-U.S.

4,452.7

3%

4,335.2

13%

3,828.8

Total revenues

$ 12,001.3

9%

$ 11,020.1

12%

$ 9,869.2

Our U.S. total revenues increased 13% in 2025 , as compared to 2024 , due to continued strong patient demand, new
patient initiations and higher realized net prices. Our ex-U.S. total revenues increased 3% in 2025 , as compared to 2024 ,
primarily due to solid CF performance across multiple geographies and increased CASGEVY product revenues, partially
offset by a decline in product revenues in Russia, where we are continuing to experience a violation of our intellectual
property rights.
In 2026 , we expect our total revenues to increase due to continued growth of our CF product revenues, including from
ALYFTREK globally, and increased contributions from CASGEVY and JOURNAVX.
Operating Costs and Expenses

2025

% Change

2024

% Change

2023

(in millions, except percentages)

Cost of sales

$ 1,651.3

8%

$ 1,530.5

21%

$ 1,262.2

Research and development expenses

3,909.5

8%

3,630.3

15%

3,162.9

Acquired in-process research and development
expenses

133.0

**

4,628.4

**

527.1

Selling, general and administrative expenses

1,753.1

20%

1,464.3

29%

1,136.6

Intangible asset impairment charge

379.0

**

—

**

—

Change in fair value of contingent consideration

2.1

**

(0.5)

**

(51.6)

Total costs and expenses

$ 7,828.0

(30)%

$ 11,253.0

86%

$ 6,037.2

** 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. Pursuant to our agreement (the “CFF Agreement”) with the Cystic Fibrosis Foundation (the “CFF”),
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. The royalty burden associated with TRIKAFTA/
KAFTRIO is 9.33% and our position is that the royalty burden associated with ALYFTREK is 4%. On October 10, 2025,
Royalty Pharma plc (“RP”), the third party to whom the CFF assigned its rights (and the CFF, which remains a party to the
CFF Agreement), initiated a confidential arbitration alleging the royalty burden on ALYFTREK is approximately 8%. RP is
seeking a declaratory judgment regarding the royalty burden on ALYFTREK as well as alleged unpaid royalties and other
alleged damages available under the CFF Agreement or applicable law, costs, expenses, attorneys’ fees, and interest. We

51

believe RP’s position is contrary to the plain terms of the CFF Agreement and intend to vigorously defend our position under
the CFF Agreement.
Our cost of sales as a percentage of our net product revenues was 13.8% and 13.9% in 2025 and 2024 , respectively,
primarily due to ALYFTREK sales in 2025, which has the royalty burden lower than TRIKAFTA/KAFTRIO, partially offset
by changes in product mix, and investments in network expansion and manufacturing process improvements.
In 2026 , we expect our cost of sales as a percentage of our net product revenues to increase due to a higher proportion of
products outside of CF, which currently have greater manufacturing costs relative to their net product revenue contributions,
and continued investments in efficient manufacturing and delivery processes .
Research and Development Expenses

2025

% Change

2024

% Change

2023

(in millions, except percentages)

Research expenses

$ 827.9

3%

$ 804.5

14%

$ 705.6

Development expenses

3,081.6

9%

2,825.8

15%

2,457.3

Total research and development expenses

$ 3,909.5

8%

$ 3,630.3

15%

$ 3,162.9

Over the past three years, we have incurred approximately $10.7 billion in research and development expenses
associated with product discovery and development. Our research and development expenses include internal and external
costs incurred for research and development of our products and product candidates. We assign external costs of services
provided to us by clinical research organizations and other outsourced research by individual program. Our internal costs
include salary and benefits, stock-based compensation expense, laboratory supplies and other direct expenses and
infrastructure costs, the majority of which are not assigned to individual products or product candidates.
Research Expenses

2025

Change %

2024

Change %

2023

(in millions, except percentages)

Research Expenses:

Salary and benefits

$ 203.9

(3)%

$ 210.7

14%

$ 184.1

Stock-based compensation expense

94.8

(15)%

112.1

21%

92.4

Outsourced services and other direct expenses

286.2

5%

271.4

15%

237.0

Infrastructure costs

243.0

16%

210.3

9%

192.1

Total research expenses

$ 827.9

3%

$ 804.5

14%

$ 705.6

Our research expenses reflect investment in our pipeline and expansion of our cell and genetic therapy capabilities,
which has increased our outsourced services and other direct expenses and infrastructure costs in 2025 as compared to 2024 .
Salary and benefits in 2024 included $13.1 million associated with cash-settled unvested Alpine equity awards. Compared to
2024 , our total res earch expenses in 2025 increased $23.4 million , or 3% . We expect to continue to invest in our research
programs with a focus on creating transformative medicines for serious diseases.

52

Development Expenses

2025

Change %

2024

Change %

2023

(in millions, except percentages)

Development Expenses:

Salary and benefits

$ 744.8

8%

$ 686.7

16%

$ 590.9

Stock-based compensation expense

320.6

2%

313.7

20%

262.5

Compensation expense for cash-settled
unvested Alpine equity awards

—

**

151.9

**

—

Outsourced services and other direct expenses

1,493.5

21%

1,239.1

0%

1,238.7

Infrastructure costs

522.7

20%

434.4

19%

365.2

Total development expenses

$ 3,081.6

9%

$ 2,825.8

15%

$ 2,457.3

** Not meaningful

As we have advanced our pipeline of transformative medicines, we have invested in internal headcount and infrastructure
to support multiple mid- and late-stage clinical development program s. These include our povetacicept programs acquired
from Alpine, pain and T1D programs, which together have increased our outsourced services and other direct expenses. In
conjunction with our acquisition of Alpine, we incurred $151.9 million associated with cash-settled unvested Alpine equity
awards within development expenses in 2024. Compared to 2024 , our total de velopment expenses in 2025 increased by
$255.8 million , or 9% . In 2026 , we expect our development expenses to continue to increase due to our advancing pipeline
programs, including our T1D pro grams.
Our stock-based compensation expenses, including those recorded as research and development expenses, have
historically fluctuated and are expected to continue to fluctuate from one period to another primarily due to changes in the
probability of achieving milestones associated with our performance-based awards.
Acquired In-P rocess Research and Development Expenses

2025

% Change

2024

% Change

2023

(in millions, except percentages)

Acquired in-process research and development
expenses

$ 133.0

**

$ 4,628.4

**

$ 527.1

** Not meaningful

In 2025, AIPR&D included various upfront and mileston e payment s related to our collaboration and in-licensing
arrangements. I n 2024, AIPR&D included $4.4 billion resulting from our acquisition of Alpine, which was accounted for as
an asset acquisition, and various other upfront and milestone payments. Our AIPR&D has historically fluctuated, and is
expected to continue to fluctuate, from one period to another due to upfront, contingent milestone, and other payments
pursuant to our existing and future business development transactions, including collaborations, licenses of third-party
technologies, and asset acquisitions.
Selling, General and Administrative Expenses

2025

% Change

2024

% Change

2023

(in millions, except percentages)

Selling, general and administrative expenses

$ 1,753.1

20%

$ 1,464.3

29%

$ 1,136.6

Selling, general and administrative expenses increased by 20% in 2025 as compared to 2024 , primarily due to increased
commercial investment to support the launch of JOURNAVX. We expect our selling, general and administrative expenses to
continue to increase in 2026 to as we expand the commercialization of JOURNAVX, prepare for our anticipated launch of
povetacicept for the treatment of IgAN, and further investments in infrastructure to scale our organization.

53

Intangible Asset Impairment Charge
In the first quarter of 2025, based on results from a Phase 1/2 clinical trial evaluating our VX-264 clinical program in
patients with T1D, we concluded that VX-264 will not be advancing further in clinical development. Based on this event, we
performed an interim impairment test on the fair value of our VX-264 indefinite-lived in-process research and development
asset that we acquired from Semma Therapeutics, Inc. As a result, we recorded a full intangible asset impairment charge of
$379.0 million associated with VX-264 in the first quarter of 2025.
Non-Operating Income (Expense), Net
Interest Income
Interest income decreased from $598.1 million in 2024 to $490.9 million in 2025 , primarily due to decreased market
interest rat es. Our future interest income is dependent on the amount of, and prevailing market interest rates on, our
outstanding cash, cash e quivalents and available-for-sale debt securities.
Other Income (Expense), Net
Other income (expense), net were expenses of $7.7 million and $86.1 million in 2025 and 2024 , respectively. These
amounts primarily related to net unrealized and realized losses resulting from changes in the fair value of certain of our
strategic equity investments a nd net foreign currency exchange losses.
Income Taxes
Our effective tax rate fluctuates from year to year due to the global nature of our operations. The factors that most
significantly impact our effective tax rate include changes in tax laws, variability in the amount and 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.
In July 2025, the U.S. enacted H.R.1, which includes significant provisions modifying the U.S. tax framework, including
the ability for companies to immediately deduct research and development expenditures for 2025 and provisions for
deducting previously capitalized amounts. H.R.1 does not have a material impact on our 2025 U.S. taxes, but we expect
further guidance to be issued. We will review guidance when issued for impacts on future years and disclose any impacts if
needed at that time. These legislative changes could have an impact on our future effective tax rates, tax liabilities, and cash
taxes.
Our provision for income taxes was $690.0 million in 2025 and $784.1 million in 2024 . In 2025, our 14.9% effective tax
rate was lower than the U.S. statutory rate primarily due to research and development tax credits, increased utilization of
foreign tax credits, and excess tax benefits related to stock-based compensation .
In 2024, our 315.5% effective tax rate was materially different than the U.S. statutory rate primarily due to the
$4.4 billion of non-deductible AIPR&D resulting from our acquisition of Alpine, which significantly lowered our pre-tax
income. The non-deductible AIPR&D was partially offset by a benefit from a research and development tax credit study that
was completed in 2024 and excess tax benefits related to stock-based compensation .

54

LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes the components of our financial condition as of December 31, 2025 and 2024 :

2025

2024

% Change

(in millions, except percentages)

Cash, cash equivalents and marketable securities:

Cash and cash equivalents

$ 5,084.8

$ 4,569.6

Marketable securities

1,523.3

1,546.3

Long-term marketable securities

5,712.3

5,107.9

Total cash, cash equivalents and marketable securities

$ 12,320.4

$ 11,223.8

10%

Working Capital:

Total current assets

$ 11,201.0

$ 9,596.4

17%

Total current liabilities

(3,861.2)

(3,564.6)

8%

Total working capital

$ 7,339.8

$ 6,031.8

22%

Working Capital
As of December 31, 2025 , total working capital was $7.3 billion , which represented an increase of $1.3 billion , or 22% ,
from $6.0 billion as of December 31, 2024 , primarily due to increased cash and marketable securities due to product revenue
growth, as well as increased inventories to support our recent commercial launches.
Cash Flows

2025

2024

2023

(in millions)

Net cash provided by (used in):

Operating activities

$ 3,631.4

$ (492.6)

$ 3,537.3

Investing activities

$ (945.4)

$ (3,770.0)

$ (3,141.7)

Financing activities

$ (2,261.3)

$ (1,494.9)

$ (562.2)

Operating Activities
Cash provided by operating activities was $3.6 billion in 2025 , primarily due to income from operations of $4.2 billion
driven by our net product revenues partially offset by purchases of inventory and other changes in operating assets and
liabilities. Cash used in operating activities was $492.6 million in 2024 , primarily due to our acquisition of Alpine partially
offset by cash flows provided by other operating activities.
Investing Activities
Cash used in investing activities was $945.4 million in 2025 , primarily related to net purchases of available-for-sale debt
securities and purchases of property and equipment. Cash used in investing activities was $3.8 billion in 2024 , which
included net purchases of available-for-sale debt securities of $3.0 billion .
Financing Activities
Cash used in financing activities were $2.3 billion and $1.5 billion in 2025 and 2024 , respectively. Our financing
activities in each year were primarily related to repurchases of our common stock pursuant to our share repurchase programs
and payments in connection with common stock withheld for employee tax obligations.

55

Sources and Uses of Liquidity
We intend to rely on our existing cash, cash equivalents and current marketable securities together with our operating
profitability 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. The
adequacy of our available funds to meet our future operating and capital requirements will depend on many factors, including
our future sales of currently marketed products, and the potential introduction of one or more new product candidates to the
market, our business development activities, and the number, breadth and cost of our research and development programs.
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. 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, 2025 , the facility was undrawn, and we were in compliance with these covenants.
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. There can be no assurance that any such financing opportunities will be available on
acceptable terms, if at all.
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.
In addition, other potential significant future capital requirements may include:
• We have entered into certain agreements with third parties that include the funding of certain research, development,
manufacturing and commercialization efforts. 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. 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. We may enter into additional 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, 2025 , we had $3.4 billion remaining authorization available under the share repurchase program
that our Board of Directors approved in May 2025. The program does not have an expiration date and can be
discontinued at any time. We expect to fund the program through a combination of cash on hand and cash generated
by operations.
Additional information on several of our future capital requirements is provided below.

56

Research and Development Costs
We have ongoing clinical trials of product candidates at various stages of clinical development. Our clinical trial costs
are dependent on, among other things, the size, number, and length of our clinical trials. These costs can increase as product
candidates move from earlier-stage clinical trials into later-stage clinical development.
Leases
We account for the majority of our real estate leases and each of our embedded leases with contract manufacturing
organizations as operating leases. These include leases for our corporate headquarters at Fan Pier in Boston, Massachusetts,
which continues through June 2044, and office and laboratory space at the Jeffrey Leiden Center for Biologics, Cell and
Genetic Therapies Campus (the “Leiden Campus”) near our corporate headquarters. As of December 31, 2025 , the longest
lease at the Leiden Campus continues through the first quarter of 2042. W e also have several embedded leases with contract
manufacturing organizations related to the manufacturing and commercialization of our products with remaining lease terms
up to 7 years as of December 31, 2025 .
Our total future minimum lease payments for our 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 $3.2 billion and $178.1 million related to our
operating and finance leases, respectively, as of December 31, 2025 .
In addition to the items described above, w e have a strategic agreement with Lonza to support the manufacture of T1D
cell therapy product candidates, pursuant to which we have partnered with Lonza to build a 130,000 square foot dedicated
new facility operated by Lonza in New Hampshire. Lease payments will begin in the first quarter of 2026 and continue
through the tenth anniversary of the facility’s regulatory approval for commercial production . We may enter into additional
lease agreements to support future product development and commercialization efforts, which would require additional
capital.

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. 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. 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. We base our estimates on
historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results
may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.
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;
• pre-launch inventories; and
• income taxes.
Our accounting policies, including the ones discussed below, are more fully described in Note A, “Nature of Business
and Accounting Policies.”

57

Revenue Recognition
Product Revenues, Net
We generate product revenues from sales in the U.S. and in international markets. We sell our products principally to a
limited number of specialty pharmacy and specialty distributors as well as certain major wholesalers 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,
health care providers, retail pharmacies, hospitals, or authorized treatment centers (“ATCs”) for CASGEVY. 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. In certain markets, we may not
utilize a specialty distributor or specialty pharmacy to distribute CASGEVY. In these markets, we sell CASGEVY directly to
ATCs. We recognize net product revenues from sales of our products when our customers obtain control of our products,
which typically occurs upon delivery to customers for our small molecule products, including our CF products and
JOURNAVX, and upon infusion of our gene-therapy products, including CASGEVY. Revenues from our 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.
We are required to make estimates for o ur product reve nues related to government, commercial, 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. Our most significant estimate relates to determining amounts due pursuant to the Medicaid Drug Rebate
Program, including estimating the level of expected utilization of the rebates based on the amount of product sold to eligible
patients. 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. 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.
The following table summarizes activity related to our product revenue accr uals for rebates for 2025 , 2024 and 2023 :

(in millions)

Balance at 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 at December 31, 2023

$ 1,701.6

Provision related to 2024 sales

3,673.0

Adjustments related to prior year(s) sales

(42.1)

Credits/payments made

(3,725.4)

Balance at December 31, 2024

$ 1,607.1

Provision related to 2025 sales

3,780.4

Adjustments related to prior year(s) sales

(90.4)

Credits/payments made

(3,519.5)

Balance at December 31, 2025

$ 1,777.6

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 products. 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. 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

58

as revenue when we deliver the free products. 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. Our forecasts are based on, among other things, our
historical experience.
The preceding estimates and judgments materially affect our recognition of net product revenues. Changes in our
estimates of net product revenues could have a material effect on net product revenues recorded in the period in which we
determine that change occurs.
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.
We are required to make several significant judgments and estimates to determine the accounting treatment for each
acquisition transaction. If we determine that substantially all the fair value associated with an acquisition is concentrated in a
single asset, or the acquisition does not constitute a business, we account for it as an asset acquisition. For example, we
accounted for our $5.0 billion acquisition of Alpine in 2024 as an asset acquisition because povetacicept, Alpine’s lead
molecule, represented substantially all of the fair value of the gross assets that we acquired. As a result, $4.4 billion of the fair
value attributed to povetacicept was expensed to AIPR&D in 2024. 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.
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 expense our upfront payment to AIPR&D,
because there is no alternative future use for the asset that was acquired.
For business combinations, we are required to make several significant judgments and estimates to calculate and allocate
the purchase price, including the fair value of contingent consideration liabilities, to the assets that we have acquired and the
liabilities that we have assumed on our consolidated balance sheet. The most significant judgment and estimate we have
made for our business combinations relates to the fair value of the in-process research and development assets.
In-process Research and Development Intangible Assets
As of December 31, 2025 and 2024 , we had $224.6 million and $603.6 million , respectively, of in-process research and
development assets on our consolidated balance sheet within “ Other intangible assets, net .” During 2025, we recorded a
$379.0 million impairment of one of these assets, which was classified as an “ Intangible asset impairment charge .” As of
December 31, 2025 , our remaining indefinite-lived in-process research and development assets were associated with our T1D
program.
We characterize in-process research and development assets on our consolidated balance sheets as indefinite-lived
intangible assets until the completion or abandonment of the associated research and development efforts. 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. 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.
For example, i n 2025 , based on results from a Phase 1/2 clinical trial evaluating our VX-264 clinical program in patients
with T1D, we concluded that VX-264 will not be advancing further in clinical development. Based on this event, we
performed an interim impairment test on the fair value of our VX-264 indefinite-lived in-process research and development
asset that we acquired from Semma Therapeutics, Inc. in 2019. We recorded the $379.0 million impairment charge based on
the results of this impairment test.
We use significant judgment to determine the fair value of our in-process research and development assets and have
utilized either the multi-period excess earnings or the relief from royalty methods of the income approach. Each method
requires us to estimate the probability of technical and regulatory success, revenue projections and growth rates, and

59

appropriate discount and tax rates. The multi-period excess earnings method also requires us to estimate development and
commercial costs. The relief from royalty method also requires us to estimate the after-tax royalty savings expected from
ownership of the asset that we acquired. In 2025, we used the multi-period earnings method to record the impairment
described above.
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.
Finite-lived Intangible Assets
As of December 31, 2025 and 2024 , we had $199.6 million and $222.3 million , respectively, of finite-lived intangible
assets on our consolidated balance sheet within “ Other intangible assets, net .” These finite-lived intangible assets primarily
relate to $208.0 million of CASGEVY regulatory approval milestones recorded in 2023.
We amortize our finite-lived intangible assets related to our marketed products, which represent the majority of our
finite-lived intangible assets, using the straight-line method within “ Cost of sales ” over the remaining estimated life of the
assets beginning in the period in which regulatory approval is achieved or the assets are acquired and continuing through the
period that we no longer have either exclusive rights to market the products associated with the assets or in-license rights to
the intellectual property underlying the assets. We test finite-lived intangible assets for impairment if indicators are present or
changes in circumstances suggest that the carrying value of an asset may not be recoverable. If we determine that the carrying
value of a finite-lived intangible asset may not be recoverable, we compare the carrying value of the asset to the undiscounted
cash flows that we expect the asset to generate. When we determine that a finite-lived intangible asset has become impaired,
we write down the carrying value of the asset to its fair value and record an impairment charge in the period in which the
impairment occurs.
Pre-Launch Inventories
We capitalize inventories prior to regulatory approval when we consider the related product candidate to have a high
likelihood of regulatory approval and expect to recover the related costs. In making this determination, we evaluate, among
other factors, the status of regulatory submissions and communications with regulatory authorities, information regarding the
product candidate’s safety and efficacy, and the outlook for commercial sales, including the existence of any competition. As
an example, during the first quarter of 2024, following positive results related to our Phase 3 trials for JOURNAVX, we
began capitalizing inventories produced in preparation for our planned product launch. In January 2025, we received approval
from the FDA to market JOURNAVX in the U.S. Prior to making this determination, we expensed inventoriable and related
costs associated with JOURNAVX as “ Research and development expenses .”
Income Taxes
We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and
liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. If our estimate
of the tax effect of reversing temporary differences is (i) not reflective of actual outcomes, (ii) modified to reflect new
developments or interpretations of the tax law, or (iii) revised to incorporate new accounting principles, or changes in the
expected timing or manner of the reversal, our results of operations could be materially impacted.
We provide a valuation allowance when it is more likely than not that deferred tax assets will not be realized. On a
periodic basis, we reassess our valuation allowances on our deferred tax assets, weighing positive and negative evidence to
assess the recoverability of the deferred tax assets. Judgment is required in making these assessments to maintain or adjust
our valuation allowances and, to the extent our future expectations change we would have to assess the recoverability of these
deferred tax assets at that time. As of December 31, 2025 , we maintained a valuation allowance of $326.2 million related
primarily to U.S. state tax attributes.
We record liabilities related to uncertain tax positions by prescribing a minimum recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax
return. We adjust our liability to reflect any subsequent changes in the relevant facts and circumstances surrounding the
uncertain positions. We are subject to tax laws and audits in multiple jurisdictions and judgment is required in making this
assessment. Consequently, we regularly re-evaluate uncertain tax positions and consider various factors, including changes in

60

tax law, the measurement of tax positions taken or expected to be taken in tax returns, and changes in facts or circumstances
related to a tax position. As of December 31, 2025 , our liability for uncertain tax positions was $852.1 million .

RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note A, “Nature of Business and Accounting Policies,” in the accompanying notes to the consolidated financial
statements for a discussion of recent accounting pronouncements and new accounting pronouncements adopted during 2025 .

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. 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, asset-backed securities and money market funds. These
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.
Substantially all of our investment portfolio consists of marketable securities with active secondary or resale markets to help
ensure portfolio liquidity, and we have implemented guidelines limiting the term-to-maturity of our investment instruments.
Since we account for these securities as available-for-sale, no gains or losses are realized due to changes in the fair value of
our investments unless we sell our investments prior to maturity or incur a credit loss. Due to the conservative nature of these
instruments, we do not believe that the fair value of our investments has a material exposure to interest rate risk.
While we are exposed to global interest rate fluctuations, our investment portfolio is most affected by fluctuations in U.S.
interest rates, which affect the interest earned on our cash, cash equivalents and marketable securities.
Credit Agreement
In 2022, we entered into a $500.0 million unsecured revolving credit facility (“credit agreement”). Loans under this
credit agreement bear interest, at our option, at a base rate or a Secured Overnight Financing Rate (“SOFR”), plus an
applicable margin based on our consolidated leverage ratio (the ratio of our total consolidated funded indebtedness to our
consolidated EBITDA for the most recently completed four fiscal quarter period). Pursuant to our credit agreement, the
applicable margin on base rate loans ranges from 0.000% to 0.500% and the applicable margin on SOFR loans ranges from
1.000% to 1.500%. We do not believe that changes in interest rates related to our credit agreement would have a material
effect on our consolidated financial statements. As of December 31, 2025 , we had no principal or interest outstanding under
our credit facility. A portion of our “ Interest expense ” in 2026 will be dependent on whether, and to what extent, we borrow
amounts under this facility.
Foreign Exchange Market Risk
As a result of our foreign operations, we face significant exposure to movements in foreign currency exchange rates
between the U.S. dollar and various foreign currencies, the most significant of which is the Euro. Fluctuations in the amounts
of our foreign revenues and fluctuations in foreign currency exchange rates, may have a positive or negative effect on our
foreign exchange rate exposure. The current exposures arise primarily from cash, accounts receivable, intercompany
receivables and payables, payables, and accruals, and inventories.
We have a foreign currency management program, which is separate from our investment policy and portfolio, with the
objective of reducing the effect of exchange rate fluctuations on our operating results and forecasted revenues denominated in
foreign currencies. W e have cash flow hedges related to a portion of our forecasted product revenues that qualify for hedge
accounting treatment under U.S. GAAP. We do not seek hedge accounting treatment for our foreign currency forward
contracts related to monetary assets and liabilities that impact our operating results. As of December 31, 2025 , we held
foreign exchange forward contracts that were designated as cash flow hedges with notional amounts totaling $6.1 billion
representing a net liability of  $111.5 million on our consolidated balance sheet.

61

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, 2025 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, 2025 would change by approximately  $608.0 million . 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
reclassified to earnings in the same periods during which the underlying product revenues affect earnings. Therefore, any
change in the fair value of these contracts that would result from a hypothetical 10% change in exchange rates would be
entirely offset by the change in value associated with the underlying hedged product revenues resulting in no impact on our
future anticipated earnings and cash flows with respect to the hedged portion of our forecasted product revenues.

ITEM 8. 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.

ITEM 9A. CONTROLS AND PROCEDURES
(1)  Evaluation of Disclosure Controls and Procedures. Our chief executive officer and chief financial officer, after
evaluating the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e)
promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period
covered by this Annual Report on Form 10-K, have concluded that, based on such evaluation, our disclosure controls and
procedures were effective. In designing and evaluating the disclosure controls and procedures, management recognized that
any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving
the desired control objectives, and management necessarily was required to apply our judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
(2)  Management’s Annual Report on Internal Control Over Financial Reporting. Management is responsible for
establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) and Rule 15d-15(f) promulgated under the Exchange Act, as a process designed by, or under the
supervision of, our principal executive and principal financial officers and effected by our board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control
over financial reporting include those policies and procedures that:
• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are
being made only in accordance with authorizations of management and our directors; and
• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 . In
making this assessment, we used the criteria set forth in the Internal Control—Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our assessment, management has
concluded that, as of December 31, 2025 , our internal control over financial reporting is effective based on those criteria.

62

Our independent registered public accounting firm, Ernst & Young LLP, issued an attestation report on our internal
control over financial reporting. See Section 4 below.
(3)  Changes in Internal Controls. During the quarter ended December 31, 2025 , there were no changes in our internal
control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.

63

(4)  Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Vertex Pharmaceuticals Incorporated
Opinion on Internal Control Over Financial Reporting
We have audited Vertex Pharmaceuticals Incorporated’s internal control over financial reporting as of December 31, 2025 ,
based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Vertex Pharmaceuticals
Incorporated (the Company) maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2025 , based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the 2025 consolidated financial statements of the Company and our report dated February 13, 2026 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and
are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 13, 2026

64

ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Plans
Our policy governing transactions in our securities by our directors, officers, and employees permits our officers,
directors and employees to enter into trading plans complying with Rule 10b5-1 under the Exchange Act. The following table
describes the written plans for the sale of our securities adopted by our directors and officers (as defined in Rule 16a-1(f)
under the Exchange Act) during the fourth quarter of 2025 , each of which is intended to satisfy the affirmative defense
conditions of Rule 10b5-1 (each, a “Trading Plan”). Other than as described in the table below, none of our directors or
officers adopted , modified or terminated a Trading Plan in the fourth quarter of 2025 .

Name and Title

Date of Adoption
of Trading Plan

Scheduled Expiration
Date of Trading Plan (1)

Maximum Shares
Subject to Trading
Plan

Reshma Kewalramani
Chief Executive Officer and President

11/17/2025

11/16/2026

40,000

Amit Sachdev
EVP, Chief Patient and External Affairs Officer

11/18/2025

10/30/2026

70,498 (2)

Carmen Bozic
EVP, Global Medicines Development and
Medical Affairs, Chief Medical Officer

11/20/2025

11/02/2026

34,733 (2)

Duncan McKechnie
EVP, Chief Commercial Officer

11/25/2025

11/13/2026

17,367 (2)

(1) A Trading Plan may expire on an earlier date if all contemplated transactions are completed before such Trading Plan’s expiration
date, upon termination by broker or the holder of the Trading Plan, or as otherwise provided in the Trading Plan.

(2) The maximum shares listed has not been reduced by the number of shares of common stock that will be withheld to satisfy tax
withholding obligations at future vesting dates because such number of shares is not yet determinable.

2026 Restated Articles of Organizatio n
On February 12, 2026, the Company filed Restated Articles of Organization with the Secretary of the Commonwealth of
Massachusetts to consolidate its Articles of Organization and all prior amendments and to remove references to the Series A
Junior Participating Preferred Stock, which is no longer outstanding. The restatement was effected for clarity only and did not
result in any changes to the rights of holders of the Company’s common stock.
A copy of the Restated Articles of Organization is filed as Exhibit 3.1 to this Annual Report on Form 10-K and is
incorporated herein by reference.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
None.

65

PART III
Portions of our definitive Proxy Statement for the 2026 Annual Meeting of Shareholders (“ 2026 Proxy Statement”) are
incorporated by reference into this Part III of our Annual Report on Form 10-K.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information regarding directors required by this Item 10 will be included in our 2026 Proxy Statement and is
incorporated herein by reference. We expect this information to be provided under “Election of Directors,” “Corporate
Governance and Risk Management,” “Shareholder Proposals for the 2027 Annual Meeting and Nominations for Director,”
“Delinquent Section 16(a) Reports” and “Code of Conduct.” The information regarding executive officers required by this
Item 10 is included in Part I of this Annual Report on Form 10-K.
We have adopted insider trading policies and procedures governing the purchase, sale and/or other dispositions of our
securities by directors, officers and employees, or Vertex itself, that are reasonably designed to promote compliance with
insider trading laws, rules and regulations and any listing standards applicable to us. A copy of our Insider Trading Policy is
filed as Exhibit 19.1 to this Annual Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 will be included in the 2026 Proxy Statement and is incorporated herein by
reference. We expect this information to be provided under “Compensation Committee Interlocks and Insider Participation,”
“Compensation Discussion and Analysis,” “Compensation and Equity Tables,” “Director Compensation,” “Management
Development and Compensation Committee Report” and/or “Corporate Governance and Risk Management.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by this Item 12 will be included in the 2026 Proxy Statement and is incorporated herein by
reference. We expect this information to be provided under “Security Ownership of Certain Beneficial Owners and
Management” and “Equity Compensation Plan Information.”

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item 13 will be included in the 2026 Proxy Statement and is incorporated herein by
reference. We expect this information to be provided under “Election of Directors,” “Corporate Governance and Risk
Management,” and “Audit and Finance Committee.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required by this Item 14 will be included in the 2026 Proxy Statement and is incorporated herein by
reference. We expect this information to be provided under “Ratification of the Appointment of Independent Registered
Public Accounting Firm.”

66

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) The Financial Statements required to be filed by Items 8 and 15(c) of Form 10-K, and filed herewith, are as
follows:

Page Number in
this Form 10-K

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) .......................................................

F- 1

Consolidated Statements of Income (Loss) .........................................................................................................................

F- 3

Consolidated Statements of Comprehensive Income (Loss) ...............................................................................................

F- 4

Consolidated Balance Sheets ...............................................................................................................................................

F- 5

Consolidated Statements of Shareholders’ Equity ...............................................................................................................

F- 6

Consolidated Statements of Cash Flows ..............................................................................................................................

F- 7

Notes to Consolidated Financial Statements ........................................................................................................................

F- 8

(a)(2) Financial Statement Schedules have been omitted because they are either not applicable or the required
information is included in the consolidated financial statements or notes thereto listed in (a)(1) above.
(a)(3) Exhibits.
The following is a list of exhibits filed as part of this Annual Report on Form 10-K.

Exhibit
Number

Exhibit Description

Filed
with
this
report

Incorporated by
Reference herein
from—Form or
Schedule

Filing Date/
Period Covered

SEC File/
Reg.
Number

Governance Documents

3.1

Restated Articles of Organization of Vertex Pharmaceuticals Incorporated, as
amended.

X

3.2

Amended and Restated By-Laws of Vertex Pharmaceuticals Incorporated.

10-K
(Exhibit 3.2)

February 13, 2025

000-19319

Stock Certificate

4.1

Specimen Stock Certificate.

10-K
(Exhibit 4.1)

February 15, 2018

000-19319

4.2

Description of Securities.

10-K
(Exhibit 4.2)

February 13, 2025

000-19319

Collaboration Agreement

10.1

Research, Development and Commercialization Agreement, dated as of May 24,
2004, between Vertex Pharmaceuticals Incorporated and Cystic Fibrosis
Foundation Therapeutics Incorporated.†

10-Q
(Exhibit 10.1)

November 3, 2021

000-19319

10.2

Amendment No. 1 to Research, Development and Commercialization Agreement,
dated as of January 6, 2006, between Vertex Pharmaceuticals Incorporated and
Cystic Fibrosis Foundation Therapeutics Incorporated.†

10-Q
(Exhibit 10.2)

November 3, 2021

000-19319

10.3

Amendment No. 2 to Research, Development and Commercialization Agreement,
dated as of March 17, 2006, between Vertex Pharmaceuticals Incorporated and
Cystic Fibrosis Foundation Therapeutics Incorporated.

10-Q/A
(Exhibit 10.6)

August 19, 2011

000-19319

10.4

Amendment No. 5 to Research, Development and Commercialization Agreement,
effective as of April 1, 2011, between Vertex Pharmaceuticals Incorporated and
Cystic Fibrosis Foundation Therapeutics Incorporated.†

10-Q
(Exhibit 10.3)

November 3, 2021

000-19319

10.5

Amendment No. 7 to Research, Development and Commercialization Agreement,
dated October 13, 2016, between Vertex Pharmaceuticals Incorporated and Cystic
Fibrosis Foundation Therapeutics Incorporated.†

10-Q
(Exhibit 10.4)

November 3, 2021

000-19319

67

Exhibit
Number

Exhibit Description

Filed
with
this
report

Incorporated by
Reference herein
from—Form or
Schedule

Filing Date/
Period Covered

SEC File/
Reg.
Number

10.6

Amended and Restated Joint Development and Commercialization Agreement,
dated April 16, 2021, between Vertex Pharmaceuticals Incorporated, Vertex
Pharmaceuticals (Europe) Limited and CRISPR Therapeutics AG, CRISPR
Therapeutics Limited, CRISPR Therapeutics, Inc., TRACR Hematology Ltd.†

10-Q
(Exhibit 10.1)

July 30, 2021

000-19319

10.7

Amendment No. 1 to Amended and Restated Joint Development and
Commercialization Agreement, dated December 12, 2023, between Vertex
Pharmaceuticals Incorporated, Vertex Pharmaceuticals (Europe) Limited and
CRISPR Therapeutics AG, CRISPR Therapeutics Limited, CRISPR
Therapeutics, Inc., TRACR Hematology Ltd.†

10-K
(Exhibit 10.7)

February 15, 2024

000-19319

Leases

10.8

Lease, dated May 5, 2011, between Fifty Northern Avenue LLC and Vertex
Pharmaceuticals Incorporated.†

10-Q
(Exhibit 10.2)

July 30, 2021

000-19319

10.9

2024 Amendment to the Lease (50 Northern Avenue), dated August 15, 2024,
between Vertex Pharmaceuticals Incorporated and SNH Seaport LLC. †

10-Q
(Exhibit 10.1)

November 5, 2024

000-19319

10.10

Lease, dated May 5, 2011, between Eleven Fan Pier Boulevard LLC and Vertex
Pharmaceuticals Incorporated.†

10-Q
(Exhibit 10.3)

July 30, 2021

000-19319

10.11

2024 Amendment to Lease (11 Fan Pier Boulevard), dated August 15, 2024,
between Vertex Pharmaceuticals Incorporated and SNH Seaport LLC.†

10-Q
(Exhibit 10.2)

November 5, 2024

000-19319

Financing Agreements

10.12

Credit Agreement, dated as of July 1, 2022, by and among Vertex
Pharmaceuticals Incorporated, Bank of America, N.A. and the other lenders party
thereto.

10-Q
(Exhibit 10.1)

August 5, 2022

000-19319

10.13

First Amendment to Credit Agreement, dated June 20, 2024 by and between
Vertex Pharmaceuticals Incorporated and Bank of America N.A.

10-Q
(Exhibit 10.1)

August 2, 2024

000-19319

Equity Plans

10.14

Amended and Restated 2006 Stock and Option Plan.*

10-Q
(Exhibit 10.1)

October 25, 2018

000-19319

10.15

Form of Stock Option Agreement under Amended and Restated 2006 Stock and
Option Plan (granted on or after July 30, 2013).*

10-K
(Exhibit 10.20)

February 13, 2015

000-19319

10.16

Amended and Restated 2013 Stock and Option Plan.*

DEF 14A
(Appendix A)

April 7, 2022

000-19319

10.17

Form of Non-Qualified Stock Option Agreement under 2013 Stock and Option
Plan.*

10-K
(Exhibit 10.17)

February 13, 2015

000-19319

10.18

Form of Restricted Stock Unit Agreement under 2013 Stock and Option Plan
(U.S.).*

10-K
(Exhibit 10.25)

February 16, 2016

000-19319

10.19

Form of Restricted Stock Unit Agreement under 2013 Stock and Option Plan
(International).*

10-K
(Exhibit 10.19)

February 13, 2015

000-19319

10.20

Form of Restricted Stock Unit Agreement Under 2013 Stock and Option Plan.*

10-K
(Exhibit 10.17)

February 13, 2020

000-19319

10.21

Form of Restricted Stock Unit Agreement under 2013 Stock and Option Plan
(granted on or after January 1, 2025).*

10-K
(Exhibit 10.21)

February 13, 2025

000-19319

10.22

Form of Restricted Stock Unit Agreement (with performance conditions) under
2013 Stock and Option Plan.*

10-K
(Exhibit 10.22)

February 13, 2025

000-19319

10.23

Non-Employee Director Deferred Compensation Plan.*

10-K
(Exhibit 10.27)

February 16, 2016

000-19319

10.24

Vertex Pharmaceuticals Incorporated Employee Stock Purchase Plan.*

DEF 14A
(Appendix B)

April 26, 2019

000-19319

Agreements with Executive Officers and Directors

10.25

Employment Agreement, dated as of April 1, 2020, by and between Vertex
Pharmaceuticals Incorporated and Jeffrey M. Leiden, M.D., Ph.D.*

8-K
(Exhibit 10.1)

April 1, 2020

000-19319

10.26

Amendment No. 1 to Employment Agreement, between Jeffrey M. Leiden and
Vertex Pharmaceuticals Incorporated, dated as of February 7, 2022.*

10-K
(Exhibit 10.24)

February 9, 2022

000-19319

10.27

Amendment No. 2 to Employment Agreement, between Jeffrey M. Leiden and
Vertex Pharmaceuticals Incorporated, dated as of February 8, 2023*

10-K
(Exhibit 10.23)

February 10, 2023

000-19319

68

Exhibit
Number

Exhibit Description

Filed
with
this
report

Incorporated by
Reference herein
from—Form or
Schedule

Filing Date/
Period Covered

SEC File/
Reg.
Number

10.28

Amendment No.3 to Employment Agreement, between Jeffrey M. Leiden and
Vertex Pharmaceuticals Incorporated, dated as of November 1, 2024.*

10-Q
(Exhibit 10.3)

November 5, 2024

000-19319

10.29

Employee Non-disclosure, Non-competition and Inventions Agreement between
Jeffrey M. Leiden and Vertex Pharmaceuticals Incorporated, dated December 14,
2011.*

10-K
(Exhibit 10.35)

February 22, 2012

000-19319

10.30

Employment Agreement, dated as of July 24, 2019, between Vertex
Pharmaceuticals Incorporated and Reshma Kewalramani.*

8-K
(Exhibit 10.1)

July 25, 2019

000-19319

10.31

Change of Control Agreement, dated as of July 24, 2019, between Vertex
Pharmaceuticals Incorporated and Reshma Kewalramani.*

8-K
(Exhibit 10.2)

July 25, 2019

000-19319

10.32

Employment Agreement, dated as of August 27, 2012, between Vertex
Pharmaceuticals Incorporated and Stuart Arbuckle.*

10-Q
(Exhibit 10.1)

November 6, 2012

000-19319

10.33

Change of Control Agreement, dated as of August 27, 2012, between Vertex
Pharmaceuticals Incorporated and Stuart Arbuckle.*

10-Q
(Exhibit 10.2)

November 6, 2012

000-19319

10.34

Employment Agreement, dated as of December 12, 2014, between Vertex
Pharmaceuticals Incorporated and David Altshuler.*

10-K
(Exhibit 10.34)

February 16, 2016

000-19319

10.35

Change of Control Agreement, dated as of December 10, 2014, between Vertex
Pharmaceuticals Incorporated and David Altshuler.*

10-K
(Exhibit 10.35)

February 16, 2016

000-19319

10.36

Third Amended and Restated Employment Agreement, dated as of February 26,
2013, between Vertex Pharmaceuticals Incorporated and Amit Sachdev.*

10-K
(Exhibit 10.42)

February 23, 2017

000-19319

10.37

Third Amended and Restated Change of Control Agreement, dated as of February
26, 2013, between Vertex Pharmaceuticals Incorporated and Amit Sachdev.*

10-K
(Exhibit 10.43)

February 23, 2017

000-19319

10.38

Employment Agreement, dated February 7, 2025, by and between Vertex
Pharmaceuticals Incorporated and Charles F. Wagner, Jr.*

10-Q
(Exhibit 10.1)

May 6, 2025

000-19319

10.39

Change of Control Agreement, dated as of February 7, 2025, by and between
Vertex Pharmaceuticals Incorporated and Charles F. Wagner, Jr.*

10-K
(Exhibit 10.39)

February 13, 2025

000-19319

10.40

Employment Agreement, dated August 1, 2020, by and between Vertex
Pharmaceuticals Incorporated and Nia Tatsis.*

10-K
(Exhibit 10.36)

February 9, 2022

000-19319

10.41

Change of Control Agreement, dated August 1, 2020, by and between Vertex
Pharmaceuticals Incorporated and Nia Tatsis.*

10-K
(Exhibit 10.37)

February 9, 2022

000-19319

10.42

Employment Agreement, dated October 3, 2022, by and between Vertex
Pharmaceuticals Incorporated and Carmen Bozic.*

X

10.43

Change of Control Agreement, dated October 3, 2022, by and between Vertex
Pharmaceuticals Incorporated and Carmen Bozic.*

X

10.44

Vertex Pharmaceuticals Employee Compensation Plan.*

X

10.45

Vertex Pharmaceuticals Non-Employee Board Compensation.*

10-K
(Exhibit 10.43)

February 13, 2025

000-19319

Insider Trading Policy

19.1

Vertex Pharmaceuticals Incorporated Insider Trading Policy. *

10-K
(Exhibit 19.1)

February 13, 2025

000-19319

Subsidiaries

21.1

Subsidiaries of Vertex Pharmaceuticals Incorporated.

X

Consent

23.1

Consent of Independent Registered Public Accounting Firm, Ernst & Young LLP.

X

Certifications

31.1

Certification of the Chief Executive Officer under Section 302 of the Sarbanes-
Oxley Act of 2002.

X

31.2

Certification of the Chief Financial Officer under Section 302 of the Sarbanes-
Oxley Act of 2002.

X

32.1

Certification of the Chief Executive Officer and the Chief Financial Officer under
Section 906 of the Sarbanes-Oxley Act of 2002.

X

Clawback Policy

97.1

Policy Relating to Recovery of Erroneously Awarded Compensation

10-K
(Exhibit 97.1)

February 15, 2024

000-19319

69

Exhibit
Number

Exhibit Description

Filed
with
this
report

Incorporated by
Reference herein
from—Form or
Schedule

Filing Date/
Period Covered

SEC File/
Reg.
Number

101.INS

XBRL Instance

X

101.SCH

XBRL Taxonomy Extension Schema

X

101.CAL

XBRL Taxonomy Extension Calculation

X

101.LAB

XBRL Taxonomy Extension Labels

X

101.PRE

XBRL Taxonomy Extension Presentation

X

101.DEF

XBRL Taxonomy Extension Definition

X

104

Cover Page Interactive Data File––the cover page interactive data file does not
appear in the Interactive Data File because its XBRL tags are embedded within
the Inline XBRL document.

X

*

Management contract, compensatory plan or agreement.

†

Confidential portions of this document have been redacted according to the applicable rules.

ITEM 16. FORM 10-K SUMMARY
Not applicable.

70

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Vertex Pharmaceuticals Incorporated

February 13, 2026

By:

/s/ Reshma Kewalramani

Reshma Kewalramani
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.

Name

Title

Date

/s/ Reshma Kewalramani

Reshma Kewalramani

President, Chief Executive Officer and Director (Principal Executive Officer)

February 13, 2026

/s/ Charles F. Wagner, Jr.

Charles F. Wagner, Jr.

Executive Vice President and Chief Operating & Financial Officer (Principal
Financial Officer)

February 13, 2026

/s/ Kristen C. Ambrose

Kristen C. Ambrose

Senior Vice President and Chief Accounting Officer (Principal Accounting
Officer)

February 13, 2026

/s/Jeffrey M. Leiden

Jeffrey M. Leiden

Executive Chairman

February 13, 2026

/s/ Sangeeta N. Bhatia

Sangeeta N. Bhatia

Director

February 13, 2026

/s/ Lloyd Carney

Lloyd Carney

Director

February 13, 2026

/s/ Alan Garber

Alan Garber

Director

February 13, 2026

/s/ Michel Lagarde

Michel Lagarde

Director

February 13, 2026

/s/ Diana McKenzie

Diana McKenzie

Director

February 13, 2026

/s/ Nancy A. Thornberry

Nancy A. Thornberry

Director

February 13, 2026

/s/ Bruce I. Sachs

Bruce I. Sachs

Director

February 13, 2026

/s/ Jennifer Schneider

Jennifer Schneider

Director

February 13, 2026

/s/ Suketu Upadhyay

Suketu Upadhyay

Director

February 13, 2026

F-1

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Vertex Pharmaceuticals Incorporated
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Vertex Pharmaceuticals Incorporated (the Company) as of
December 31, 2025 and 2024 , the related consolidated statements of income (loss) , comprehensive income (loss) ,
shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2025 , and the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements
present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024 , and the results
of its operations and its cash flows for each of the three years in the period ended December 31, 2025 , in conformity with
U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2025 , based on criteria established in
Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 13, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and
are required to be indepen d ent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our a udits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain re asonable assurance about whether the financial statements are free of material misstatement, whether due
to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the
overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements,
taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.

F-2

Medicaid Drug Rebate Program in the U.S.

Description of
the Matter

As discussed in Note A to the Company’s consolidated financial statements, the Company recognizes
revenue from product sales based on amounts due from customers net of allowances for variable
consideration, which include, among others, rebates mandated by law under Medicaid and other
government pricing programs. The most significant estimates relate to government and private payor
rebates, chargebacks, discounts and fees, collectively rebates. The Company includes an estimate of
variable consideration in its transaction price at the time of sale, when control of the product transfers to
the customer. The Company estimates its Medicaid and other government pricing accruals based on
monthly sales, historical experience of claims submitted by the various states and jurisdictions, historical
rebate rates and estimated lag time of the rebate invoices. Rebate accruals inclusive of estimated amounts
due for claims not yet received or processed as part of the Company’s Medicaid program are recorded
within accrued expenses on the Company’s consolidated balance sheet.
Auditing the allowances for rebates owed pursuant to the Medicaid Drug Rebate Program in the U.S. was
complex and judgmental due to the significant estimation required in determining certain assumptions
including the levels of expected utilization of these rebates based on the amount of product sold to
eligible patients, as well as the complexity of the government mandated rebate calculations. The
allowances for rebates owed pursuant to the Medicaid Drug Rebate Program in the U.S. are sensitive to
these significant assumptions and calculations.

How We
Addressed the
Matter in Our
Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls
over the Company’s revenue recognition process, including controls over management’s computation
and review of the allowances for Medicaid rebates. We tested the Company’s controls to assess the
completeness and accuracy of the current and historical data that supports the Medicaid estimate,
significant assumptions related to the inputs utilized as well as management’s review of the application
of the government pricing regulations.
Our audit procedures to test the allowances for rebates owed pursuant to the Medicaid Drug Rebate
Program in the U.S., included the following: we assessed the methodology used to determine the estimate
and tested the significant assumptions as well as the underlying data used by the Company in its analysis.
We also assessed the historical accuracy of the Company’s estimates of Medicaid rebates by comparing
assumptions to historical trends and evaluating the change from prior periods. We further tested the
completeness and accuracy of the underlying data used in the Company’s calculations through
reconciliation to third-party invoices, claims data and actual cash payments. In addition, we involved our
government pricing specialists to assist in evaluating management’s methodology and calculations used
in the measurement of certain estimated rebates.

/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2005.
Boston, Massachusetts
February 13, 2026

F-3

VERTEX PHARMACEUTICALS INCORPORATED
Consolidated Statements of Income (Loss)
(in millions, except per share amounts)

Year Ended December 31,

2025

2024

2023

Revenues:

Product revenues, net

$ 11,970.6

$ 11,020.1

$ 9,869.2

Other revenues

30.7

—

—

Total revenues

12,001.3

11,020.1

9,869.2

Costs and expenses:

Cost of sales

1,651.3

1,530.5

1,262.2

Research and development expenses

3,909.5

3,630.3

3,162.9

Acquired in-process research and development expenses

133.0

4,628.4

527.1

Selling, general and administrative expenses

1,753.1

1,464.3

1,136.6

Intangible asset impairment charge

379.0

—

—

Change in fair value of contingent consideration

2.1

( 0.5 )

( 51.6 )

Total costs and expenses

7,828.0

11,253.0

6,037.2

Income (loss) from operations

4,173.3

( 232.9 )

3,832.0

Interest income

490.9

598.1

614.7

Interest expense

( 13.3 )

( 30.6 )

( 44.1 )

Other expense , net

( 7.7 )

( 86.1 )

( 22.8 )

Income before provision for income taxes

4,643.2

248.5

4,379.8

Provision for income taxes

690.0

784.1

760.2

Net income (loss)

$ 3,953.2

$ ( 535.6 )

$ 3,619.6

Net income (loss) per common share:

Basic

$ 15.46

$ ( 2.08 )

$ 14.05

Diluted

$ 15.32

$ ( 2.08 )

$ 13.89

Shares used in per share calculations:

Basic

255.7

257.9

257.7

Diluted

258.0

257.9

260.5

The accompanying notes are an integral part of these consolidated financial statements.

F-4

VERTEX PHARMACEUTICALS INCORPORATED
Consolidated Statements of Comprehensive Income (Loss)
(in millions)

Year ended December 31,

2025

2024

2023

Net income (loss)

$ 3,953.2

$ ( 535.6 )

$ 3,619.6

Other comprehensive (loss) income :

Unrealized holding gains (losses) on available-for-sale debt securities,
net of tax of $( 7.6 ) , $ 0.6 and $( 2.7 ) , respectively

26.9

( 2.5 )

9.7

Unrealized (losses) gains on foreign currency forward contracts, net of
tax of $ 56.0 , $( 38.2 ) and $ 14.0 , respectively

( 198.1 )

136.0

( 50.9 )

Foreign currency translation adjustment

27.5

8.6

26.1

Total other comprehensive (loss) income

( 143.7 )

142.1

( 15.1 )

Comprehensive income (loss)

$ 3,809.5

$ ( 393.5 )

$ 3,604.5

The accompanying notes are an integral part of these consolidated financial statements.

F-5

VERTEX PHARMACEUTICALS INCORPORATED
Consolidated Balance Sheets
(in millions, exce pt share and per share data)

December 31,

2025

2024

Assets

Current assets:

Cash and cash equivalents

$ 5,084.8

$ 4,569.6

Marketable securities

1,523.3

1,546.3

Accounts receivable, net

2,052.8

1,609.4

Inventories

1,686.8

1,205.4

Prepaid expenses and other current assets

853.3

665.7

Total current assets

11,201.0

9,596.4

Property and equipment, net

1,520.3

1,227.8

Goodwill

1,088.0

1,088.0

Other intangible assets, net

424.2

825.9

Deferred tax assets

2,897.9

2,331.1

Operating lease assets

1,562.7

1,356.8

Long-term marketable securities

5,712.3

5,107.9

Other assets

1,236.6

999.3

Total assets

$ 25,643.0

$ 22,533.2

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$ 461.7

$ 413.0

Accrued expenses

2,971.2

2,788.6

Other current liabilities

428.3

363.0

Total current liabilities

3,861.2

3,564.6

Long-term operating lease liabilities

1,846.5

1,544.4

Other long-term liabilities

1,269.5

1,014.6

Total liabilities

6,977.2

6,123.6

Commitments and contingencies ( Note P )

Shareholders’ equity:

Preferred stock, $ 0.01 par value; 1,000,000 shares authorized; none issued and outstanding

—

—

Common stock, $ 0.01 par value; 500,000,000 shares authorized, 253,991,224 and 256,940,382
shares issued and outstanding, respectively

2.5

2.6

Additional paid-in capital

5,119.2

6,672.4

Accumulated other comprehensive (loss) income

( 15.9 )

127.8

Retained earnings

13,560.0

9,606.8

Total shareholders’ equity

18,665.8

16,409.6

Total liabilities and shareholders’ equity

$ 25,643.0

$ 22,533.2

The accompanying notes are an integral part of these consolidated financial statements.

F-6

VERTEX PHARMACEUTICALS INCORPORATED
Consolidated Statements of Shareholders’ Equity
(in millions)

Common Stock

Additional
Paid-in
Capital

Accumulated
Other
Comprehensive
Income (Loss)

Retained
Earnings

Total
Shareholders’
Equity

Shares

Amount

Balance at December 31, 2022

257.0

$ 2.6

$ 7,386.5

$ 0.8

$ 6,522.8

$ 13,912.7

Other comprehensive loss , net of tax

—

—

—

( 15.1 )

—

( 15.1 )

Net income

—

—

—

—

3,619.6

3,619.6

Repurchases of common stock

( 1.3 )

—

( 427.6 )

—

—

( 427.6 )

Common stock withheld for employee tax obligations

( 0.7 )

—

( 226.1 )

—

—

( 226.1 )

Issuance of common stock under benefit plans

2.7

—

133.4

—

—

133.4

Stock-based compensation expense

—

—

583.5

—

—

583.5

Balance at December 31, 2023

257.7

$ 2.6

$ 7,449.7

$ ( 14.3 )

$ 10,142.4

$ 17,580.4

Other comprehensive income , net of tax

—

—

—

142.1

—

142.1

Net loss

—

—

—

—

( 535.6 )

( 535.6 )

Repurchases of common stock

( 2.7 )

—

( 1,194.9 )

—

—

( 1,194.9 )

Common stock withheld for employee tax obligations

( 0.9 )

—

( 405.0 )

—

—

( 405.0 )

Issuance of common stock under benefit plans

2.8

—

113.5

—

—

113.5

Stock-based compensation expense

—

—

709.1

—

—

709.1

Balance at December 31, 2024

256.9

$ 2.6

$ 6,672.4

$ 127.8

$ 9,606.8

$ 16,409.6

Other comprehensive loss , net of tax

—

—

—

( 143.7 )

—

( 143.7 )

Net income

—

—

—

—

3,953.2

3,953.2

Repurchases of common stock

( 4.8 )

( 0.1 )

( 2,011.5 )

—

—

( 2,011.6 )

Common stock withheld for employee tax obligations

( 0.7 )

—

( 369.9 )

—

—

( 369.9 )

Issuance of common stock under benefit plans

2.6

—

127.9

—

—

127.9

Stock-based compensation expense

—

—

700.3

—

—

700.3

Balance at December 31, 2025

254.0

$ 2.5

$ 5,119.2

$ ( 15.9 )

$ 13,560.0

$ 18,665.8

The accompanying notes are an integral part of these consolidated financial statements.

F-7

VERTEX PHARMACEUTICALS INCORPORATED
Consolidated Statements of Cash Flows
(in millions)

Year Ended December 31,

2025

2024

2023

Cash flows from operating activities:

Net income (loss)

$ 3,953.2

$ ( 535.6 )

$ 3,619.6

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating
activities:

Stock-based compensation expense

685.9

698.5

581.2

Depreciation and amortization expense

209.8

207.2

181.3

Intangible asset impairment charges

379.0

—

—

Deferred income taxes

( 510.8 )

( 348.8 )

( 536.5 )

Other non-cash items, net

113.4

0.9

( 42.6 )

Changes in operating assets and liabilities:

Accounts receivable, net

( 347.3 )

( 99.3 )

( 84.1 )

Inventories

( 524.2 )

( 517.3 )

( 322.9 )

Prepaid expenses and other assets

( 396.0 )

( 200.3 )

( 545.7 )

Accounts payable

36.8

49.5

48.7

Accrued expenses

( 116.9 )

212.9

429.4

Other liabilities

148.5

39.7

208.9

Net cash provided by (used in) operating activities

3,631.4

( 492.6 )

3,537.3

Cash flows from investing activities:

Purchases of available-for-sale debt securities

( 6,396.5 )

( 7,438.2 )

( 3,786.5 )

Sales and maturities of available-for-sale debt securities

5,897.4

4,465.6

839.1

Purchases of property and equipment

( 437.6 )

( 297.7 )

( 200.4 )

Proceeds related to equity securities

16.0

—

95.1

Net payments related to finite-lived intangible assets

—

( 187.7 )

( 58.0 )

Acquisition of available-for-sale debt securities from Alpine Immune Sciences, Inc.

—

( 258.0 )

—

Other investing activities

( 24.7 )

( 54.0 )

( 31.0 )

Net cash used in investing activities

( 945.4 )

( 3,770.0 )

( 3,141.7 )

Cash flows from financing activities:

Issuances of common stock under benefit plans

127.7

114.6

134.6

Repurchases of common stock

( 2,017.4 )

( 1,177.1 )

( 427.6 )

Payments in connection with common stock withheld for employee tax obligations

( 369.9 )

( 405.0 )

( 226.1 )

Payments on finance leases

( 5.4 )

( 33.6 )

( 44.9 )

Other financing activities

3.7

6.2

1.8

Net cash used in financing activities

( 2,261.3 )

( 1,494.9 )

( 562.2 )

Effect of changes in exchange rates on cash

90.9

( 42.6 )

26.9

Net increase (decrease) in cash, cash equivalents and restricted cash

515.6

( 5,800.1 )

( 139.7 )

Cash, cash equivalents and restricted cash—beginning of period

4,572.2

10,372.3

10,512.0

Cash, cash equivalents and restricted cash—end of period

$ 5,087.8

$ 4,572.2

$ 10,372.3

Supplemental disclosure of cash flow information:

Cash paid for income taxes

$ 1,566.7

$ 1,082.1

$ 1,677.3

Cash paid for interest

$ 12.4

$ 30.5

$ 43.1

Net payments due to CRISPR Therapeutics AG related to finite-lived intangible assets

$ —

$ —

$ 180.0

The accompanying notes are an integral part of these consolidated financial statements.

F-8

VERTEX PHARMACEUTICALS INCORPORATED
Notes to Consolidated Financial Statements

A. Nature of Business and Accounting Policies
Business
Vertex Pharmaceuticals Incorporated (“Vertex,” “we,” “us” or “our”) is a global biotechnology company that invests in
scientific innovation to create transformative medicines for people with serious diseases, with a focus on specialty markets.
We have approved medicines for cystic fibrosis (“CF”), sickle cell disease (“SCD”), transfusion dependent beta thalassemia
(“TDT”), and acute pain, and we continue to serially innovate and advance next-generation clinical and research programs in
these areas. Our mid- and late-stage clinical pipeline includes programs across a range of modalities in additional serious
diseases, including IgA nephropathy (“IgAN”), APOL1-mediated kidney disease, neuropathic pain, type 1 diabetes (“T1D”),
primary membranous nephropathy (“pMN”), autosomal dominant polycystic kidney disease, and myotonic dystrophy type 1
(“DM1”).
Our marketed CF medicines are ALYFTREK (vanzacaftor/tezacaftor/deutivacaftor) , which was approved by the U.S.
Food and Drug Administration (“FDA”) in December 2024, TRIKAFTA/KAFTRIO (elexacaftor/tezacaftor/ivacaftor and
ivacaftor), SYMDEKO/SYMKEVI (tezacaftor/ivacaftor and ivacaftor), ORKAMBI (lumacaftor/ivacaftor) and KALYDECO
(ivacaftor) .
CASGEVY (exagamglogene autotemcel), our ex-vivo, non-viral CRISPR/Cas9-based gene-editing therapy for severe
SCD and TDT, is approved in the United States (“U.S.”) and across multiple geographies including Europe, Canada, and the
Middle East . CASGEVY was initially approved by the FDA in December 2023.
In January 2025, the FDA approved JOURNAVX (suzetrigine), our first-in-class, oral pain signal inhibitor that is highly
selective for voltage-gated sodium channel NaV1.8 , for the treatment of moderate-to-severe acute pain in adults .
Basis of Presentation
The accompanying consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the U.S. (“U.S. GAAP”), reflect the operations of Vertex and our wholly owned subsidiaries.
All material intercompany balances and transactions have been eliminated. We operate in one segment, pharmaceuticals.
Please refer to Note Q, “Segment Information,” for enterprise-wide disclosures regarding our revenues, major customers,
significant segment expenses, and long-lived assets by geographic area.
Use of Estimates
The preparation of consolidated financial statements in accordance with U.S. GAAP requires us to make certain
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of our consolidated financial statements, and the amounts of revenues and expenses during the reported
periods. We base our estimates on historical experience and various other assumptions, including in certain circumstances
future projections that we believe to be reasonable under the circumstances. Actual results could differ from those estimates.
Changes in estimates are reflected in reported results in the period in which they become known.
Revenue Recognition
We recognize revenue when a customer obtains control of promised goods or services. We record the amount of revenue
that reflects the consideration that we expect to receive in exchange for those goods or services. We apply the following five-
step model to determine this amount: (i) identification of the promised goods or services in the contract; (ii) determination of
whether the promised goods or services are performance obligations, including whether they are distinct in the context of the
contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the
transaction price to the performance obligations; and (v) recognition of revenue when (or as) we satisfy each performance
obligation. 
We only apply the five-step model to contracts when it is probable that we will collect the consideration to which we are
entitled in exchange for the goods or services that we transfer to the customer. Once a contract is determined to be within the

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VERTEX PHARMACEUTICALS INCORPORATED
Notes to Consolidated Financial Statements (Continued)

scope of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers at contract inception, we
review the contract to determine which performance obligations we must deliver and which of these performance obligations
are distinct. We recognize as revenue the amount of the transaction price that is allocated to each performance obligation
when that performance obligation is satisfied or as it is satisfied. Generally, our performance obligations are transferred to
customers at a point in time, typically upon delivery.
Product Revenues, Net
We sell our products primarily to a limited number of specialty pharmacy and specialty distributors globally, as well as
to certain major wholesalers in the U.S. and to retail pharmacies, hospitals and clinics internationally. Many of the
international hospitals and clinics are government-owned or supported. Our customers in the U.S. subsequently resell our
products to patients, health care providers, retail pharmacies, hospitals, or authorized treatment centers (“ATCs”). In certain
markets, we may sell CASGEVY directly to ATCs. Revenue recognition typically occurs upon delivery of our small
molecule products, including our CF medicines and JOURNAVX, and upon infusion of our gene-therapy products, including
CASGEVY.
Revenues from product sales are recorded at the net sales price, or “transaction price,” which includes estimates of
variable consideration that result from (a) invoice discounts for prompt payment and distribution fees, (b) government and
private payor rebates, chargebacks, discounts and fees, (c) product returns, and (d) other adjustments for certain indirect
customers, including costs of co-pay assistance programs for patients. Reserves are established for the estimates of variable
consideration based on the amounts earned or to be claimed on the related sales. The reserves are classified as reductions to
“ Accounts receivable, net ” if payable to a customer or “ Accrued expenses ” if payable to a third-party. Where appropriate, we
utilize the expected value method to determine the appropriate amount for estimates of variable consideration based on
factors such as our historical experience, current contractual and statutory requirements, specific known market events and
trends, industry data and forecasted customer buying and payment patterns. The amount of variable consideration that is
included in the transaction price may be constrained and is included in our net product revenues only to the extent that it is
probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future
period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results vary from our
estimates, we adjust these estimates, which would affect net product revenue and earnings in the period such variances
become known.
Invoice Discounts and Distribution Fees: In the U.S., we may provide invoice discounts on product sales to our
customers for prompt payment and pay distribution and administrative fees, such as fees for certain data that customers
provide to us. These fees are based on a fixed percentage of sales. We estimate that, based on our experience, our customers
will earn these discounts and fees, and deduct the full amount of these discounts and fees from our gross product revenues
and accounts receivable at the time such revenues are recognized.
Rebates, Chargebacks, Discounts and Fees: We contract with government agencies and commercial payors (our “Third-
party Payors”) so that products will be eligible for purchase by, or partial or full reimbursement from, such Third-party
Payors. We estimate the rebates, chargebacks, discounts and fees we will provide to Third-party Payors and deduct these
estimated amounts from our gross product revenues at the time the revenues are recognized. For each product, we estimate
the aggregate rebates, chargebacks and discounts that we will provide to Third-party Payors based upon (i) our contracts with
these Third-party Payors, (ii) the government-mandated discounts and fees applicable to government-funded programs,
(iii) information obtained from our customers and other third-party data regarding the payor mix for such product and (iv)
historical experience.
Product Returns: Return policies vary by product and market. We typically permit returns if our product is damaged,
defective, or otherwise cannot be used by our customer. In specific cases, we will allow returns for expired product as defined
within specific customer agreements. We record deductions from our gross product revenues for estimated sales returns in the
period the related revenue is recognized and base our estimate for returns on historical experience and known or expected
changes in the marketplace specific to each product.
Other Adjustments : We offer patient support programs to eligible patients, such as co-pay assistance programs, which
require us to establish accruals based on an estimated cost per claim that we expect to receive.

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VERTEX PHARMACEUTICALS INCORPORATED
Notes to Consolidated Financial Statements (Continued)