vrtx-20260331

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________________

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number 000-19319

____________________________________________

Vertex Pharmaceuticals Incorporated

(Exact name of registrant as specified in its charter)

Massachusetts

(State or other jurisdiction of incorporation or organization)

50 Northern Avenue, Boston, Massachusetts

(Address of principal executive offices)

04-3039129

(I.R.S. Employer Identification No.)

02210

(Zip Code)

Registrant’s telephone number, including area code (617) 341-6100

____________________________________________


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 Par Value Per Share	VRTX	The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities

Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and

(2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to

Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was

required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting

company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying

with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Common Stock, par value $0.01 per share	253,805,417	Outstanding at April 30, 2026

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VERTEX PHARMACEUTICALS INCORPORATED

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2026

TABLE OF CONTENTS


		Page
Part I. Financial Information
Item 1.	Financial Statements (unaudited)	2
	Condensed Consolidated Statements of Income	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Shareholders' Equity	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
Part II. Other Information
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 5.	Other Information	33
Item 6.	Exhibits	34
Signatures		35

“Vertex,” “we,” “us,” and “our” as used in this Quarterly Report on Form 10-Q refer to Vertex Pharmaceuticals

Incorporated, a Massachusetts corporation, and its subsidiaries.

“Vertex®,” “KALYDECO®,” “ORKAMBI®,” “SYMDEKO®,” “SYMKEVI®,” “TRIKAFTA®,” “KAFTRIO®,”

CASGEVY®, ” “ALYFTREK®,” and “JOURNAVX®” are registered trademarks of Vertex. Other brands, names and

trademarks contained in this Quarterly Report on Form 10-Q are the property of their respective owners.

We use the brand name for our products when we refer to the product that has been approved and with respect to the

indications on the approved label. Otherwise, including in discussions of our cystic fibrosis, sickle cell disease, beta

thalassemia, and pain development programs, we refer to our product candidates by their scientific (or generic) name or VX

developmental designation.

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Part I. Financial Information

Item 1. Financial Statements

VERTEX PHARMACEUTICALS INCORPORATED

Condensed Consolidated Statements of Income

(unaudited; in millions, except per share amounts)


	Three Months Ended March 31,
	2026	2025
Revenues:
Product revenues, net	$2,986.9	$2,760.2
Other revenues	—	10.0
Total revenues	2,986.9	2,770.2
Costs and expenses:
Cost of sales	392.8	363.0
Research and development expenses	961.6	979.7
Acquired in-process research and development expenses	0.5	19.8
Selling, general and administrative expenses	493.7	396.4
Intangible asset impairment charge	—	379.0
Change in fair value of contingent consideration	0.2	2.2
Total costs and expenses	1,848.8	2,140.1
Income from operations	1,138.1	630.1
Interest income, net	114.8	117.9
Other expense, net	—	(17.6)
Income before provision for income taxes	1,252.9	730.4
Provision for income taxes	221.5	84.1
Net income	$1,031.4	$646.3

Net income per common share:
Basic	$4.06	$2.52
Diluted	$4.02	$2.49
Shares used in per share calculations:
Basic	254.1	256.9
Diluted	256.3	259.5

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

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VERTEX PHARMACEUTICALS INCORPORATED

Condensed Consolidated Balance Sheets

(unaudited; in millions, except share and per share data)


	March 31, 2026	December 31, 2025
Assets
Current assets:
Cash and cash equivalents	$5,492.9	$5,084.8
Marketable securities	1,753.8	1,523.3
Accounts receivable, net	1,996.1	2,052.8
Inventories	1,766.7	1,686.8
Prepaid expenses and other current assets	720.8	853.3
Total current assets	11,730.3	11,201.0
Property and equipment, net	1,608.4	1,520.3
Goodwill	1,088.0	1,088.0
Other intangible assets, net	418.5	424.2
Deferred tax assets	2,947.8	2,897.9
Operating lease assets	1,685.1	1,562.7
Long-term marketable securities	5,749.9	5,712.3
Other assets	1,256.4	1,236.6
Total assets	$26,484.4	$25,643.0
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$489.3	$461.7
Accrued expenses	2,984.2	2,971.2
Other current liabilities	407.1	428.3
Total current liabilities	3,880.6	3,861.2
Long-term operating lease liabilities	1,986.5	1,846.5
Other long-term liabilities	1,255.4	1,269.5
Total liabilities	7,122.5	6,977.2
Commitments and contingencies (Note L)
Shareholders’ equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued	—	—
Common stock, $0.01 par value; 500,000,000 shares authorized, 254,163,953 and 253,991,224 shares issued and outstanding, respectively	2.5	2.5
Additional paid-in capital	4,743.2	5,119.2
Accumulated other comprehensive income (loss)	24.8	(15.9)
Retained earnings	14,591.4	13,560.0
Total shareholders’ equity	19,361.9	18,665.8
Total liabilities and shareholders’ equity	$26,484.4	$25,643.0

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

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VERTEX PHARMACEUTICALS INCORPORATED

Condensed Consolidated Statements of Shareholders’ Equity

(unaudited; in millions)


	Three Months Ended
	Common Stock		Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total Shareholders’ Equity
	Shares	Amount	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total Shareholders’ Equity
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	—	—	—	(59.7)	—	(59.7)
Net income	—	—	—	—	646.3	646.3
Repurchases of common stock	(0.9)	—	(416.9)	—	—	(416.9)
Common stock withheld for employee tax obligations	(0.6)	—	(270.5)	—	—	(270.5)
Issuance of common stock under benefit plans	1.6	—	18.5	—	—	18.5
Stock-based compensation expense	—	—	169.0	—	—	169.0
Balance at March 31, 2025	257.0	$2.6	$6,172.5	$68.1	$10,253.1	$16,496.3

Balance at December 31, 2025	254.0	$2.5	$5,119.2	$(15.9)	$13,560.0	$18,665.8
Other comprehensive income, net of tax	—	—	—	40.7	—	40.7
Net income	—	—	—	—	1,031.4	1,031.4
Repurchases of common stock	(0.7)	—	(344.5)	—	—	(344.5)
Common stock withheld for employee tax obligations	(0.5)	—	(228.5)	—	—	(228.5)
Issuance of common stock under benefit plans	1.4	—	27.1	—	—	27.1
Stock-based compensation expense	—	—	169.9	—	—	169.9
Balance at March 31, 2026	254.2	$2.5	$4,743.2	$24.8	$14,591.4	$19,361.9

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

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VERTEX PHARMACEUTICALS INCORPORATED

Condensed Consolidated Statements of Cash Flows

(unaudited; in millions)


	Three Months Ended March 31,
	2026	2025
Cash flows from operating activities:
Net income	$1,031.4	$646.3
Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation expense	166.4	166.1
Depreciation and amortization expense	55.9	48.4
Intangible asset impairment charge	—	379.0
Deferred income taxes	(65.3)	(191.6)
Other non-cash items, net	(5.0)	39.2
Changes in operating assets and liabilities:
Accounts receivable	39.8	(169.6)
Inventories	(97.7)	(167.1)
Prepaid expenses and other assets	173.4	(28.1)
Accounts payable	35.6	26.2
Accrued expenses	70.5	48.1
Other liabilities	23.1	22.0
Net cash provided by operating activities	1,428.1	818.9
Cash flows from investing activities:
Purchases of available-for-sale debt securities	(2,507.6)	(1,647.4)
Sales and maturities of available-for-sale debt securities	2,209.1	1,637.6
Purchases of property and equipment	(133.4)	(40.7)
Other investing activities	—	(5.3)
Net cash used in investing activities	(431.9)	(55.8)
Cash flows from financing activities:
Issuances of common stock under benefit plans	27.0	16.7
Repurchases of common stock	(336.9)	(426.1)
Payments in connection with common stock withheld for employee tax obligations	(228.5)	(270.5)
Other financing activities	(0.4)	(0.5)
Net cash used in financing activities	(538.8)	(680.4)
Effect of changes in exchange rates on cash	(40.3)	30.5
Net increase in cash, cash equivalents and restricted cash	417.1	113.2
Cash, cash equivalents and restricted cash—beginning of period	5,087.8	4,572.2
Cash, cash equivalents and restricted cash—end of period	$5,504.9	$4,685.4

Supplemental disclosure of cash flow information:
Cash paid for income taxes	$82.3	$184.4
Cash paid for interest	$3.2	$2.7

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

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

A.Basis of Presentation and Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared by Vertex

Pharmaceuticals Incorporated (“Vertex,” “we,” “us” or “our”) in accordance with accounting principles generally accepted in

the United States of America (“U.S. GAAP”).

The condensed consolidated financial statements 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.

Certain information and footnote disclosures normally included in our Annual Report on Form 10-K for the fiscal year

ended December 31, 2025 (the “2025 Annual Report on Form 10-K”) have been condensed or omitted. These interim

financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation

of the financial position and results of income for the interim periods ended March 31, 2026 and 2025.

The results of operations for the interim period are not necessarily indicative of the results of operations to be expected

for the full fiscal year. These interim financial statements should be read in conjunction with the audited financial statements

for the year ended December 31, 2025, which are contained in our 2025 Annual Report on Form 10-K.

Use of Estimates

The preparation of condensed 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 condensed 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.

Recently Issued Accounting Standards

Disaggregation of Income Statement Expenses

In 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03,

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities, among other items, to

disclose in a tabular format, on an annual and interim basis, purchases of inventory, employee compensation, depreciation,

intangible asset amortization and depletion for each income statement line item that contains those expenses. ASU 2024-03

becomes effective for the annual period starting on January 1, 2027 and interim periods starting on January 1, 2028. We are

in the process of analyzing the impact that the adoption of ASU 2024-03 will have on our disclosures.

Internal-Use Software

In 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which eliminates consideration of the

software project development stages and replaces them with modernized recognition and measurement guidance designed to

reflect current internal-use software development practices. ASU 2025-06 becomes effective for the annual and interim

periods starting on January 1, 2028. We are in the process of analyzing the impact that the adoption of ASU 2025-06 will

have on our consolidated financial statements and related disclosures.

Summary of Significant Accounting Policies

Our significant accounting policies are described in Note A, “Nature of Business and Accounting Policies,” in our 2025

Annual Report on Form 10-K.

B.Collaboration, License and Other Arrangements

Acquired In-Process Research and Development

We have entered into numerous business development agreements with third parties to collaborate on research,

development and commercialization programs, license technologies, or acquire assets. Our “Acquired in-process research and

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

development expenses” (“AIPR&D”) included $0.5 million and $19.8 million in the three months ended March 31, 2026 and

2025, respectively, related to upfront, contingent milestone, or other payments pursuant to our business development

transactions.

Our collaboration, licensing and asset acquisition agreements that had a significant impact on our financial statements for

the three months ended March 31, 2026 and 2025 or were new or materially revised during the three months ended March 31,

2026, are described below. Additional agreements are described in Note B, “Collaboration, License and Other

Arrangements,” of our 2025 Annual Report on Form 10-K.

In-license Agreements

CRISPR Therapeutics AG

We have a joint development and commercialization agreement (the “CRISPR JDCA”) with CRISPR Therapeutics AG

and its affiliates (“CRISPR”). Pursuant to the CRISPR JDCA, we lead global development, manufacturing and

commercialization of CASGEVY for the treatment of hemoglobinopathies, including treatments for severe sickle cell disease

(“SCD”) and transfusion-dependent beta thalassemia, with support from CRISPR.

We 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 recognized during the applicable period

related to the CRISPR JDCA. We also are reimbursed by CRISPR for its 40% share of the research and development

activities conducted under the CRISPR JDCA, subject to certain adjustments, and we record this reimbursement from

CRISPR as a credit within “Research and development expenses.”

In the first quarter of 2025, we recorded a $12.5 million credit to AIPR&D from CRISPR, reflecting its share of our

upfront payment paid to Orna Therapeutics in December 2024.

During the three months ended March 31, 2026 and 2025, the credits recognized in our condensed consolidated

statements of income for CRISPR’s share of CRISPR JDCA activities were as follows:


	Three Months Ended March 31,
	2026	2025

(in millions)
Cost of sales	$23.1	$36.2
Research and development expenses	$16.1	$16.0
Acquired in-process research and development expenses	$—	$12.5

Cystic Fibrosis Foundation

In 2004, we entered into an agreement with the Cystic Fibrosis Foundation (the “CFF”), as successor in interest to the

Cystic Fibrosis Foundation Therapeutics, Inc., to support research and development activities. Pursuant to the agreement, as

amended, we have agreed to pay tiered royalties ranging from single digits to sub-teens on covered compounds first

synthesized and/or tested during a research term on or before February 28, 2014, including ivacaftor, lumacaftor and

tezacaftor, and royalties ranging from low-single digits to mid-single digits on net sales of certain compounds first

synthesized and/or tested between March 1, 2014 and August 31, 2016, including elexacaftor. We do not have any royalty

obligations on compounds first synthesized and tested on or after September 1, 2016. For combination products, such as

ORKAMBI, SYMDEKO/SYMKEVI, TRIKAFTA/KAFTRIO, and ALYFTREK, sales are allocated equally to each of the

active pharmaceutical ingredients in the combination product, and royalties are then paid for any royalty-bearing components

included in the combination. We record expenses related to these royalty obligations to “Cost of sales.”

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

D.Fair Value Measurements

The following table sets forth our financial assets and liabilities subject to fair value measurements by level within the

fair value hierarchy, as described in Note A, “Nature of Business and Accounting Policies,” of our 2025 Annual Report on

Form 10-K:


	As of March 31, 2026				As of December 31, 2025
		Fair Value Hierarchy				Fair Value Hierarchy
	Total	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3

	(in millions)
Financial instruments carried at fair value (asset positions):
Cash equivalents	$2,569.8	$1,312.8	$1,257.0	$—	$2,779.1	$1,770.7	$1,008.4	$—
Marketable securities:
Corporate equity securities	20.4	20.4	—	—	16.6	16.6	—	—
U.S. Treasury securities	1,744.8	1,744.8	—	—	1,864.9	1,864.9	—	—
U.S. government agency securities	208.2	—	208.2	—	262.4	—	262.4	—
Asset-backed securities	1,293.6	—	1,293.6	—	1,357.0	—	1,357.0	—
Certificates of deposit	36.6	—	36.6	—	26.2	—	26.2	—
Corporate debt securities	4,170.5	—	4,170.5	—	3,693.9	—	3,693.9	—
Commercial paper	29.6	—	29.6	—	14.6	—	14.6	—
Prepaid expenses and other current assets:
Foreign currency forward contracts	36.1	—	36.1	—	6.2	—	6.2	—
Other assets:
Foreign currency forward contracts	39.4	—	39.4	—	12.7	—	12.7	—
Total financial assets	$10,149.0	$3,078.0	$7,071.0	$—	$10,033.6	$3,652.2	$6,381.4	$—

Financial instruments carried at fair value (liability positions):
Other current liabilities:
Foreign currency forward contracts	$(50.1)	$—	$(50.1)	$—	$(79.4)	$—	$(79.4)	$—
Other long-term liabilities:
Foreign currency forward contracts	(28.1)	—	(28.1)	—	(51.0)	—	(51.0)	—
Contingent consideration	(79.2)	—	—	(79.2)	(79.0)	—	—	(79.0)
Total financial liabilities	$(157.4)	$—	$(78.2)	$(79.2)	$(209.4)	$—	$(130.4)	$(79.0)

Please refer to Note E, “Marketable Securities and Equity Investments,” for the carrying amount and related unrealized

gains (losses) by type of investment. Our cash equivalents primarily include money market funds, commercial paper, and

time deposits.

Fair Value of Corporate Equity Securities

We classify our investments in publicly traded corporate equity securities as “Marketable securities” on our condensed

consolidated balance sheets. Generally, our investments in the common stock of publicly traded companies are valued based

on Level 1 inputs because they have readily determinable fair values.

Please refer to Note E, “Marketable Securities and Equity Investments,” for further information on these investments.

Fair Value of Contingent Consideration

Our Level 3 contingent consideration liabilities of $79.2 million are related to $678.3 million of development and

regulatory milestones potentially payable to former equity holders of a privately-held company we acquired in 2019. We base

our estimates of the probability of achieving the milestones relevant to the fair value of contingent payments on industry data

attributable to gene therapies and our knowledge of the progress and viability of the associated Duchenne muscular dystrophy

programs. The discount rates used in the valuation model for contingent payments, which were between 4.4% and 4.6% as of

March 31, 2026, represent a measure of credit risk and market risk associated with settling the liabilities. Significant

judgment is used in determining the appropriateness of these assumptions at each reporting period.

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

The following table represents a rollforward of the fair value of our contingent consideration liabilities:


	Three Months Ended March 31, 2026
	(in millions)
Balance at December 31, 2025	$79.0
Increase in fair value of contingent payments	0.2
Balance at March 31, 2026	$79.2

E.Marketable Securities and Equity Investments

A summary of our cash equivalents and marketable debt and equity securities, which are recorded at fair value, is shown

below:


	As of March 31, 2026				As of December 31, 2025
	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Fair Value

	(in millions)
Cash equivalents	$2,569.8	$—	$—	$2,569.8	$2,779.1	$—	$—	$2,779.1
Marketable securities:
U.S. Treasury securities	1,744.9	2.8	(2.9)	1,744.8	1,852.9	12.1	(0.1)	1,864.9
U.S. government agency securities	207.8	0.6	(0.2)	208.2	261.2	1.2	—	262.4
Asset-backed securities	1,293.2	2.6	(2.2)	1,293.6	1,351.1	6.0	(0.1)	1,357.0
Certificates of deposit	36.6	—	—	36.6	26.2	—	—	26.2
Corporate debt securities	4,167.5	10.9	(7.9)	4,170.5	3,669.3	25.0	(0.4)	3,693.9
Commercial paper	29.6	—	—	29.6	14.6	—	—	14.6
Total marketable available-for- sale debt securities	7,479.6	16.9	(13.2)	7,483.3	7,175.3	44.3	(0.6)	7,219.0
Corporate equity securities	25.0	—	(4.6)	20.4	25.0	—	(8.4)	16.6
Total marketable securities	7,504.6	16.9	(17.8)	7,503.7	7,200.3	44.3	(9.0)	7,235.6
Total cash equivalents and marketable securities	$10,074.4	$16.9	$(17.8)	$10,073.5	$9,979.4	$44.3	$(9.0)	$10,014.7

Amounts in the table above at fair value were classified on our condensed consolidated balance sheets as follows:


	As of March 31, 2026	As of December 31, 2025

	(in millions)
Cash and cash equivalents	$2,569.8	$2,779.1
Marketable securities	1,753.8	1,523.3
Long-term marketable securities	5,749.9	5,712.3
Total	$10,073.5	$10,014.7

Marketable available-for-sale debt securities by contractual maturity were as follows:


	As of March 31, 2026	As of December 31, 2025

	(in millions)
Matures within one year	$1,733.4	$1,506.7
Matures after one year through five years	5,669.5	5,595.8
Matures after five years	80.4	116.5
Total	$7,483.3	$7,219.0

We did not record any allowances for credit losses to adjust the fair value of our marketable available-for-sale debt

securities during the three months ended March 31, 2026 and 2025. Additionally, we did not record any realized gains or

losses that were material to our condensed consolidated statements of income during the three months ended March 31, 2026

and 2025. As of March 31, 2026, we held marketable available-for-sale debt securities with a total fair value of $3.4 billion

that were in unrealized loss positions totaling $13.2 million. Included in this amount were marketable available-for sale debt

securities with a total fair value of $8.4 million and total unrealized loss of $0.1 million that had been in unrealized loss

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

positions for greater than twelve months. We intend to hold these investments until maturity and do not expect to incur

realized losses on these investments when they mature.

We record changes in the fair value of our investments in corporate equity securities to “Other expense, net” in our

condensed consolidated statements of income. During the three months ended March 31, 2026 and 2025, our net unrealized

gains (losses) on corporate equity securities with readily determinable fair values held at the conclusion of each period were

as follows:


	Three Months Ended March 31,
	2026	2025

(in millions)
Net unrealized gains (losses)	$3.8	$(15.0)

As of March 31, 2026 and December 31, 2025, the carrying value of our equity investments without readily determinable

fair values, which are recorded in “Other assets” on our condensed consolidated balance sheets was $81.5 million.

F.Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in accumulated other comprehensive income (loss) (“AOCI”) by

component:


		Unrealized Holding Gains (Losses), Net of Tax
	Foreign Currency Translation Adjustment	On Available- For-Sale Debt Securities	On Foreign Currency Forward Contracts	Total

	(in millions)
Balance at December 31, 2025	$37.2	$34.0	$(87.1)	$(15.9)
Other comprehensive (loss) income before reclassifications	(13.0)	(29.3)	65.0	22.7
Amounts reclassified from accumulated other comprehensive income (loss)	—	(1.9)	19.9	18.0
Net current period other comprehensive (loss) income	(13.0)	(31.2)	84.9	40.7
Balance at March 31, 2026	$24.2	$2.8	$(2.2)	$24.8

Balance at December 31, 2024	$9.7	$7.1	$111.0	$127.8
Other comprehensive income before reclassifications	14.1	18.3	(71.5)	(39.1)
Amounts reclassified from accumulated other comprehensive income (loss)	—	(1.8)	(18.8)	(20.6)
Net current period other comprehensive income (loss)	14.1	16.5	(90.3)	(59.7)
Balance at March 31, 2025	$23.8	$23.6	$20.7	$68.1

G.Hedging

Foreign currency forward contracts - Designated as hedging instruments

We maintain a hedging program intended to mitigate the effect of changes in foreign exchange rates for a portion of our

forecasted product revenues denominated in certain foreign currencies. The program includes foreign currency forward

contracts that are designated as cash flow hedges under U.S. GAAP having contractual durations from one to 36 months. We

recognize realized gains and losses for the effective portion of such contracts in “Product revenues, net” in our condensed

consolidated statements of income in the same period that we recognize the product revenues that were impacted by the

hedged foreign exchange rate changes.

We formally document the relationship between foreign currency forward contracts (hedging instruments) and forecasted

product revenues (hedged items), as well as our risk management objective and strategy for undertaking various hedging

activities, which includes matching all foreign currency forward contracts that are designated as cash flow hedges to

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

forecasted transactions. Using regression analysis, we assess, both at the hedge’s inception and on an ongoing basis, whether

the foreign currency forward contracts are highly effective in offsetting changes in cash flows of hedged items on a

prospective and retrospective basis. As of March 31, 2026, all hedges were determined to be highly effective.

We consider the impact of our counterparties’ credit risk on the fair value of the foreign currency forward contracts. As

of March 31, 2026 and December 31, 2025, credit risk did not change the fair value of our foreign currency forward

contracts.

The following table summarizes the notional amount in U.S. dollars of our outstanding foreign currency forward

contracts designated as cash flow hedges under U.S. GAAP:


	As of March 31, 2026	As of December 31, 2025

Foreign Currency	(in millions)
Euro	$4,112.0	$4,677.9
Canadian dollar	445.2	516.1
British pound sterling	423.7	492.6
Australian dollar	231.5	267.5
Swiss franc	109.2	126.0
Total foreign currency forward contracts	$5,321.6	$6,080.1

Foreign currency forward contracts - Not designated as hedging instruments

We enter into foreign currency forward contracts, typically with contractual maturities of approximately one month,

which are designed to mitigate the effect of changes in foreign exchange rates on monetary assets and liabilities, including

intercompany balances. These contracts are not designated as hedging instruments under U.S. GAAP. We recognize realized

gains and losses for such contracts in “Other expense, net” in our condensed consolidated statements of income each period.

As of March 31, 2026 and December 31, 2025, the notional amount of our outstanding foreign currency forward contracts

where hedge accounting under U.S. GAAP was not applied was $868.0 million and $612.6 million, respectively.

During the three months ended March 31, 2026 and 2025, we recognized the following related to foreign currency

forward contracts in our condensed consolidated statements of income:


	Three Months Ended March 31,
	2026	2025

(in millions)
Designated as hedging instruments - Reclassified from AOCI
Product revenues, net	$(25.5)	$24.1
Not designated as hedging instruments
Other expense, net	$2.9	$(1.2)

Total reported in the Condensed Consolidated Statements of Income
Product revenues, net	$2,986.9	$2,760.2
Other expense, net	$—	$(17.6)

The following table summarizes the fair value of our outstanding foreign currency forward contracts designated as cash

flow hedges under U.S. GAAP included on our condensed consolidated balance sheets:


As of March 31, 2026
Assets		Liabilities
Classification	Fair Value	Classification	Fair Value

(in millions)
Prepaid expenses and other current assets	$36.1	Other current liabilities	$(50.1)
Other assets	39.4	Other long-term liabilities	(28.1)
Total assets	$75.5	Total liabilities	$(78.2)

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)


As of December 31, 2025
Assets		Liabilities
Classification	Fair Value	Classification	Fair Value

(in millions)
Prepaid expenses and other current assets	$6.2	Other current liabilities	$(79.4)
Other assets	12.7	Other long-term liabilities	(51.0)
Total assets	$18.9	Total liabilities	$(130.4)

As of March 31, 2026, we expect the amounts that are related to foreign currency forward contracts designated as cash

flow hedges under U.S. GAAP recorded in “Prepaid expenses and other current assets” and “Other current liabilities” to be

reclassified to earnings within twelve months.

We present the fair value of our foreign currency forward contracts on a gross basis within our condensed consolidated

balance sheets. The following table summarizes the potential effect of offsetting derivatives by type of financial instrument

designated as cash flow hedges under U.S. GAAP on our condensed consolidated balance sheets:


	As of March 31, 2026
	Gross Amounts Recognized	Gross Amounts Offset	Gross Amounts Presented	Gross Amounts Not Offset	Legal Offset

Foreign currency forward contracts	(in millions)
Total assets	$75.5	$—	$75.5	$(75.5)	$—
Total liabilities	(78.2)	—	(78.2)	75.5	(2.7)


	As of December 31, 2025
	Gross Amounts Recognized	Gross Amounts Offset	Gross Amounts Presented	Gross Amounts Not Offset	Legal Offset

Foreign currency forward contracts	(in millions)
Total assets	$18.9	$—	$18.9	$(18.9)	$—
Total liabilities	(130.4)	—	(130.4)	18.9	(111.5)

H.Inventories

“Inventories” consisted of the following:


	As of March 31, 2026	As of December 31, 2025

	(in millions)
Raw materials	$267.4	$259.8
Work-in-process	1,243.4	1,196.9
Finished goods	255.9	230.1
Total	$1,766.7	$1,686.8

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

I.Intangible Assets

“Other intangible assets, net” consisted of the following:


		As of March 31, 2026			As of December 31, 2025
	Estimated Useful Lives	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount	Gross Carrying Amount	Accumulated Amortization	Net Carrying Amount
		(in millions, except useful lives)
In-process research and development	Indefinite	$224.6	$—	$224.6	$224.6	$—	$224.6
Finite-lived intangible assets - marketed products	10 to 12 years	238.0	(47.1)	190.9	238.0	(42.1)	195.9
Finite-lived intangible assets - assembled workforce	3 years	7.7	(4.7)	3.0	7.7	(4.0)	3.7
Total other intangible assets, net		$470.3	$(51.8)	$418.5	$470.3	$(46.1)	$424.2

In March 2025, based on results from a Phase 1/2 clinical trial evaluating our VX-264 clinical program in patients with

type 1 diabetes (“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. As a result, using the multi period earnings

method of the income approach, we recorded a full intangible asset impairment charge of $379.0 million in the first quarter of

2025. As of March 31, 2026, our remaining indefinite-lived in-process research and development assets were associated with

our T1D program.

J.Stock-based Compensation Expense and Share Repurchase Programs

Stock-based compensation expense

During the three months ended March 31, 2026 and 2025, we recognized the following stock-based compensation

expense:


	Three Months Ended March 31,
	2026	2025

(in millions)
Stock-based compensation expense by type of award:
Restricted stock units (including PSUs)	$166.5	$163.4
ESPP share issuances	3.4	5.6
Stock-based compensation expense related to inventories	(3.5)	(2.9)
Total stock-based compensation expense included in “Total costs and expenses”	$166.4	$166.1

Stock-based compensation expense by line item:
Cost of sales	$3.2	$2.6
Research and development expenses	101.7	100.1
Selling, general and administrative expenses	61.5	63.4
Total stock-based compensation expense included in “Total costs and expenses”	166.4	166.1
Income tax effect	(35.3)	(75.2)
Total stock-based compensation expense, net of tax	$131.1	$90.9

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

Share repurchase program

In February 2023, our Board of Directors authorized a share repurchase program (the “2023 Share Repurchase

Program”), pursuant to which we were authorized to repurchase up to $3.0 billion of our common stock. As of September 30,

2025, we had repurchased the full amount authorized under the 2023 Share Repurchase Program.

In May 2025, our Board of Directors authorized an additional share repurchase program (the “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.

During the three months ended March 31, 2026 and 2025, we repurchased 0.7 million and 0.9 million shares of our

common stock under our share repurchase programs, respectively, for aggregate repurchases of $344.5 million and $416.9

million, respectively. As of March 31, 2026, we had $3.0 billion remaining available under the 2025 Share Repurchase

Program.

K.Income Taxes

We are subject to U.S. federal, state, and foreign income taxes. During the three months ended March 31, 2026 and 2025,

we recorded the following provisions for income taxes and effective tax rates as compared to our income before provision for

income taxes.


	Three Months Ended March 31,
	2026	2025

(in millions, except percentages)
Income before provision for income taxes	$1,252.9	$730.4
Provision for income taxes	$221.5	$84.1


Effective tax rate	17.7%		11.5%

Our effective tax rates for the three months ended March 31, 2026 and 2025 were lower than the U.S. statutory rate

primarily due to excess tax benefits related to stock-based compensation.

We have reviewed the tax positions taken, or to be taken, in our tax returns for all tax years currently open to

examination by a taxing authority. As of March 31, 2026 and December 31, 2025, we had $420.3 million and $436.6 million,

respectively, of net unrecognized tax benefits, which would affect our tax rate if recognized.

We file U.S. federal income tax returns and income tax returns in various state, local and foreign jurisdictions. We have

various income tax audits ongoing at any time throughout the world. Except for jurisdictions where we have net operating

losses or tax credit carryforwards, we are no longer subject to any tax assessment from tax authorities for years prior to 2014

in jurisdictions that have a material impact on our consolidated financial statements. Due to the nature of the adjustments

from a settlement with the United Kingdom’s HM Revenue & Customs in 2023, we have asserted our rights under the U.S./

U.K. Income Tax Convention pursuant to the mutual agreement procedures for the relief of double taxation for these matters.

In December 2022, European Union member states reached an agreement to implement the minimum tax component

(“Pillar Two”) of the Organization for Economic Co-operation and Development’s (the “OECD’s”), global international tax

reform initiative with effective dates of January 1, 2024 and 2025. On January 5, 2026, the OECD announced that a ‘side-by-

side’ agreement was reached with member countries creating safe harbors to exempt U.S. multi-nationals from certain taxes

under the Pillar Two regime by recognizing the U.S. tax system as a compatible domestic minimum tax regime. Our exposure

to other countries’ minimum tax regimes was limited before these changes, but the side-by-side agreement allows for

certainty as our structure may change in the future.

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 U.S. taxes for the first quarter of

2026, 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.

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

L.Commitments and Contingencies

2022 Credit Facility

In July 2022, Vertex and certain of its subsidiaries entered into a $500.0 million unsecured revolving facility (the “Credit

Agreement”) with Bank of America, N.A., as administrative agent and the lenders referred to therein (the “Lenders”), which

matures on July 1, 2027. The Credit Agreement was not drawn upon at closing and we have not drawn upon it to date.

Amounts drawn pursuant to the Credit Agreement, if any, will be used for general corporate purposes. Subject to satisfaction

of certain conditions, we may request that the borrowing capacity for the Credit Agreement be increased by an additional

$500.0 million. Additionally, the Credit Agreement provides a sublimit of $100.0 million for letters of credit.

Any amounts borrowed under the Credit Agreement will bear interest, at our option, at either a base rate or a Secured

Overnight Financing Rate (“SOFR”), in each case plus an applicable margin. Under the Credit Agreement, the applicable

margins on base rate loans range from 0.000% to 0.500% and the applicable margins on SOFR loans range from 1.000% to

1.500%, in each case 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).

Any amounts borrowed pursuant to the Credit Agreement are guaranteed by certain of our existing and future domestic

subsidiaries, subject to certain exceptions.

The Credit Agreement contains customary representations and warranties and affirmative and negative covenants,

including a financial covenant to maintain subject to certain limited exceptions, a consolidated leverage ratio of 3.50 to 1.00,

subject to an increase to 4.00 to 1.00 following a material acquisition. As of March 31, 2026, we were in compliance with the

covenants described above. The Credit Agreement also contains customary events of default. In the case of a continuing

event of default, the administrative agent would be entitled to exercise various remedies, including the acceleration of

amounts due under outstanding loans.

Direct costs related to the Credit Agreement are recorded over its term and are not material to our financial statements.

Guaranties and Indemnifications

As permitted under Massachusetts law, our Articles of Organization and By-laws provide that we will indemnify certain

of our officers and directors for certain claims asserted against them in connection with their service as an officer or director.

The maximum potential amount of future payments that we could be required to make under these indemnification provisions

is unlimited. However, we have purchased directors’ and officers’ liability insurance policies that could reduce our monetary

exposure and enable us to recover a portion of any future amounts paid. No indemnification claims currently are outstanding,

and we believe the estimated fair value of these indemnification arrangements is minimal.

We customarily agree in the ordinary course of our business to indemnification provisions in agreements with clinical

trial investigators and sites in our product development programs, sponsored research agreements with academic and not-for-

profit institutions, various comparable agreements involving parties performing services for us, and our real estate leases. We

also customarily agree to certain indemnification provisions in our drug discovery, development and commercialization

collaboration agreements. With respect to our clinical trials and sponsored research agreements, these indemnification

provisions typically apply to any claim asserted against the investigator or the investigator’s institution relating to personal

injury or property damage, violations of law or certain breaches of our contractual obligations arising out of the research or

clinical testing of our compounds or product candidates. With respect to lease agreements, the indemnification provisions

typically apply to claims asserted against the landlord relating to personal injury or property damage caused by us, to

violations of law by us or to certain breaches of our contractual obligations. The indemnification provisions appearing in our

collaboration agreements are similar to those for the other agreements discussed above, but in addition provide some limited

indemnification for our collaborator in the event of third-party claims alleging infringement of intellectual property rights. In

each of the cases above, the indemnification obligation generally survives the termination of the agreement for some

extended period, although we believe the obligation typically has the most relevance during the contract term and for a short

period of time thereafter. The maximum potential amount of future payments that we could be required to make under these

provisions is generally unlimited. We have purchased insurance policies covering personal injury, property damage and

general liability that reduce our exposure for indemnification and would enable us in many cases to recover all or a portion of

any future amounts paid. We have never paid any material amounts to defend lawsuits or settle claims related to these

indemnification provisions. Accordingly, we believe the estimated fair value of these indemnification arrangements is

minimal.

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

Legal Matters and Other Contingencies

As described in Note B, “Collaboration, License and Other Arrangements,” we have an agreement with the CFF (the

“CFF Agreement”) pursuant to which we owe third-party royalties payable on net sales of certain CF products, including

ALYFTREK. Since inception, our ALYFTREK net product revenues total $1.3 billion. Based on the CFF Agreement, 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 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.

On a quarterly basis, we evaluate developments with claims, whether asserted or unasserted, and legal proceedings that

could result in a loss contingency accrual, or an increase or decrease to a previously accrued loss contingency. There were no

material loss contingencies accrued as of March 31, 2026 or December 31, 2025.

We also have certain contingent liabilities that arise in the ordinary course of our business activities. We accrue for such

contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably

estimated. Other than our contingent consideration liabilities discussed in Note D, “Fair Value Measurements,” there were no

significant contingent liabilities accrued as of March 31, 2026 or December 31, 2025.

M.Segment Information

Revenues by Product

“Product revenues, net” consisted of the following:


	Three Months Ended March 31,
	2026	2025

(in millions)
TRIKAFTA/KAFTRIO	$2,354.7	$2,535.5
ALYFTREK	424.4	53.9
Other CF product revenues (1)	135.9	155.3
Total CF product revenues, net	2,915.0	2,744.7
CASGEVY	42.9	14.2
JOURNAVX	29.0	1.3
Total product revenues, net	$2,986.9	$2,760.2

(1) Include KALYDECO, ORKAMBI, and SYMDEKO/SYMKEVI.

Revenues by Geographic Location

“Product revenues, net” are allocated based on the location of the customer. “Other revenues” are allocated based on the

location of the Vertex entity associated with such revenues. Our “Total revenues” consisted of the following:


	Three Months Ended March 31,
	2026	2025

(in millions)
United States	$1,775.9	$1,663.5
Outside of the United States
Europe	950.0	826.6
Other	261.0	280.1
Total revenues outside of the United States	1,211.0	1,106.7
Total revenues	$2,986.9	$2,770.2

We did not have any “Other revenues” in the three months ended March 31, 2026. In the three months ended March 31,

2025, our “Other revenues” of $10.0 million were attributed to the U.S.

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

Significant Segment Expenses

Significant segment expenses are set forth in the following table:


	Three Months Ended March 31,
	2026	2025

(in millions)
Total revenues	$2,986.9	$2,770.2
Costs and expenses:
Cost of sales - products	160.2	130.6
Cost of sales - royalty	232.6	232.4
Research expenses	205.0	206.1
Development expenses	756.6	773.6
Acquired in-process research and development expenses	0.5	19.8
Selling and other commercial expenses	313.6	241.1
General and administrative expenses	180.1	155.3
Intangible asset impairment charge	—	379.0
Interest income, net	(114.8)	(117.9)
Other segment items (1)	0.2	19.8
Provision for income taxes	221.5	84.1
Net income	$1,031.4	$646.3

(1)Other segment items included in “Net income” primarily include changes in the fair value of contingent

consideration and changes in the fair value of equity investments.

Additional Segment Information

During the three months ended March 31, 2026 and 2025, we recorded total depreciation and amortization expense of

$55.9 million and $48.4 million, respectively.

N.Additional Balance Sheet & Cash Flow Information

Contract Liabilities

We had contract liabilities of $218.7 million and $171.8 million as of March 31, 2026 and December 31, 2025,

respectively, primarily related to annual contracts with government-owned and supported customers in international markets

that limit the amount of annual reimbursement we can receive for our CF products. Upon exceeding the annual

reimbursement amount provided by the customer’s contract with us, our CF products are provided free of charge, which is a

material right. These contracts include upfront payments and fees. If we estimate that we will exceed the annual

reimbursement amount under a contract, we defer a portion of the consideration received for shipments made up to the annual

reimbursement limit as a portion of “Other current liabilities.” Once the reimbursement limit has been reached, we recognize

the deferred amount as revenue when we ship the free products. Our CF product revenue contracts include performance

obligations that are one year or less.

Our contract liabilities at the end of each fiscal year relate to contracts with CF annual reimbursement limits in

international markets in which the annual period associated with the contract is not the same as our fiscal year. In these

markets, we recognize revenues related to performance obligations satisfied in previous years; however, these revenues do

not relate to any performance obligations that were satisfied more than 12 months prior to the beginning of the current year.

Operating Lease Assets and Liabilities

In 2023, we entered into a strategic agreement with Lonza to support the manufacture of T1D cell therapy product

candidates. As part of this agreement, we have partnered with Lonza to build a 130,000 square foot dedicated new facility in

New Hampshire, which will be operated by Lonza (the “Lonza Facility”) and is an embedded lease for accounting purposes.

The lease commencement for the Lonza Facility occurred during the first quarter of 2026, upon which we recorded a right-of-

use asset and corresponding lease liability of $95.8 million within each of “Operating lease assets” and “Long-term operating

lease liabilities” on our condensed consolidated balance sheet. In accordance with our policy for embedded leases with

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VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements (unaudited)

contract manufacturing organizations, we account for the lease component separately from the variable non-lease

components, which we expense as incurred. Payments will continue through the tenth anniversary of the Lonza Facility’s

regulatory approval for commercial production. The lease will automatically renew for additional one-year periods, unless

either we or Lonza provides written notice of intent to not renew. We utilize the initial period as our lease term.

We obtained $148.2 million and $5.2 million of right-of-use operating lease assets in exchange for a similar amount of

lease obligations, including the Lonza Facility amounts described above, during the three months ended March 31, 2026 and

2025, respectively. These represent non-cash operating activities associated with our condensed consolidated statement of

cash flows.

Cash, Cash Equivalents and Restricted Cash Presented in Condensed Consolidated Statements of Cash Flows

The cash, cash equivalents and restricted cash at the beginning and ending of each period presented in our condensed

consolidated statements of cash flows consisted of the following:


	Three Months Ended March 31,
	2026		2025
	Beginning of period	End of period	Beginning of period	End of period

	(in millions)
Cash and cash equivalents	$5,084.8	$5,492.9	$4,569.6	$4,674.7
Prepaid expenses and other current assets	3.0	12.0	2.6	10.7
Cash, cash equivalents and restricted cash per condensed consolidated statement of cash flows	$5,087.8	$5,504.9	$4,572.2	$4,685.4

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 seven approved medicines: five that treat the

underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, one that treats severe sickle cell disease

(“SCD”) and transfusion dependent beta thalassemia (“TDT”), life shortening inherited blood disorders, and one that treats

moderate-to-severe acute pain. We are also preparing for the anticipated launch of povetacicept, a potential treatment for IgA

nephropathy (“IgAN”). Our clinical-stage pipeline spans a range of programs targeting CF, SCD, beta thalassemia,

neuropathic pain, type 1 diabetes, IgA nephropathy, primary membranous nephropathy and other autoimmune diseases and

cytopenias, APOL1-mediated kidney disease, autosomal dominant polycystic kidney disease and myotonic dystrophy type 1,

reflecting our commitment to addressing significant unmet medical needs globally.

Financial Highlights


Total Revenues	In the first quarter of 2026, our total revenues increased to $3.0 billion as compared to $2.8 billion in the first quarter of 2025, primarily due to continued performance of our CF therapies and growth from diversification into additional disease areas.
Cost of Sales	Our cost of sales as a percentage of our net product revenues was 13.2% in each of the first quarters of 2026 and 2025, as a result of a lower overall royalty rate for our CF medicines, offset by changes in product mix.
Total R&D, AIPR&D and SG&A Expenses	Our total research and development (“R&D”), acquired in-process research and development expenses (“AIPR&D”) and selling, general and administrative (“SG&A”) expenses increased to $1.5 billion in the first quarter of 2026 as compared to $1.4 billion in the first quarter of 2025, primarily due to increased investment to commercialize our new products.
Cash	Our total cash, cash equivalents and marketable securities increased to $13.0 billion as of March 31, 2026 as compared to $12.3 billion as of December 31, 2025, primarily due to cash flows provided by our operating activities partially offset by repurchases of our common stock.

Q1 2025

Q1 2026

December 31, 2025

March 31, 2026

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.

Recent and anticipated progress in activities expanding our CF business is included below:

•The U.S. Food and Drug Administration (the “FDA”) approved label extensions for ALYFTREK and TRIKAFTA,

expanding availability of these medicines to approximately 95% of all people with CF in the United States (the

“U.S.”). With these label extensions, approximately 800 people with CF in the U.S. are newly eligible for a

medicine that treats the underlying cause of CF.

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•We secured reimbursement agreements for ALYFTREK in Scotland, Spain, Sweden, Switzerland, New Zealand,

Israel, and Finland, and we are working to secure access for eligible patients in additional countries.

Sickle Cell Disease and Beta Thalassemia

•In the first quarter of 2026, we recorded $43 million of CASGEVY product revenues.

•We secured a pricing agreement for CASGEVY for eligible patients with SCD or TDT in Germany, and we are

working through final implementation to provide long-term reimbursed access to patients at a sustainable price.

•We completed the regulatory submission in the U.S. for approval of CASGEVY in children with SCD or TDT five

to less than twelve years of age. The FDA awarded a Commissioner’s National Priority Voucher for this pediatric

submission, indicating an accelerated timeline for review once the submission is accepted.

Acute Pain

•Since the launch of JOURNAVX in March 2025, more than 1 million prescriptions have been filled for

JOURNAVX across the hospital and retail settings for a broad range of acute pain conditions. In the first quarter of

2026, more than 350,000 prescriptions were filled, and we recorded $29 million of JOURNAVX product revenues.

•We have reached an agreement with a major pharmacy benefit manager for Medicare Part D coverage for

JOURNAVX effective on May 1. This agreement adds approximately 10 million lives covered under Part D.

Twenty-two states provide coverage for JOURNAVX via Medicaid. In total, approximately 240 million individuals

have reimbursed access to JOURNAVX across a wide range of commercial and government payers.

Pipeline

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

•Following positive results from the ALYFTREK clinical trial in children with CF two to five years of age, we expect

to submit for global regulatory approvals in this age group in the first half of 2026. We continue to enroll and dose

patients in the pivotal clinical trial evaluating ALYFTREK in children with CF one to less than two years of age.

•Following positive results from the TRIKAFTA clinical trial in children one to less than two years of age, we have

begun submissions for global regulatory approvals in this age group.

Peripheral Neuropathic Pain

•We expect to complete enrollment in both Phase 3 clinical trials evaluating suzetrigine in diabetic peripheral

neuropathy, a form of peripheral neuropathic pain, by the end of 2026.

IgA Nephropathy and Other B Cell-Mediated Diseases

•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 IgAN.

•Following positive results from the RAINIER Phase 3 clinical trial evaluating povetacicept in adults with IgAN, we

completed in March the submission of the rolling biologics license application (“BLA”) to the FDA for potential

accelerated approval in the U.S. We are using a Priority Review Voucher and therefore expect the FDA review of

this BLA to be expedited to six months from the date of the FDA’s acceptance of the BLA.

•Povetacicept represents a potentially best-in-class approach to control B cell activity in primary membranous

nephropathy (“pMN”), another B cell-mediated disease. We completed enrollment in the Phase 2 portion of the

Phase 2/3 OLYMPUS pivotal trial evaluating povetacicept in people with pMN, and we initiated the Phase 3 portion

of this clinical trial. Enrollment and dosing in this clinical trial are ongoing.

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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 AMPLITUDE Phase 2/3 pivotal clinical trial evaluating

inaxaplin. We expect to conduct the pre-planned interim analysis for potential accelerated approval once this cohort

has been treated for 48 weeks. We expect to share data from the interim analysis in early 2027. We expect to

complete full enrollment in the AMPLITUDE clinical trial in the second half 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 the internal manufacturing

analysis for the Phase 1/2/3 clinical trial of zimislecel in people with type 1 diabetes (“T1D”), and we have resumed

dosing in this clinical trial. Multiple people with T1D have been treated since the resumption of dosing. In 2026, we

expect to provide updated timelines for trial completion.

Our Business Environment

In the first quarter of 2026, our total product revenues came 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, and we are preparing for a potential launch of povetacicept for the treatment

of IgAN. 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,

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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

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 license or acquire technologies, products, product candidates and 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

Immune Sciences, Inc. (“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.

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”) and Entrada Therapeutics, Inc. (“Entrada”).

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 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.

Acquired In-Process Research and Development Expenses

In the first quarter of 2026 and 2025, our AIPR&D included $0.5 million and $19.8 million, respectively, related to

upfront, contingent milestone, or other payments pursuant to our business development transactions, including the asset

acquisitions, collaborations, and licenses of third-party technologies described above. 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.

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In January 2025 and June 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 clinical 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


	Three Months Ended March 31,
	2026	2025	Change

(in millions, except percentages)
TRIKAFTA/KAFTRIO	$2,354.7	$2,535.5	(7)%
ALYFTREK	424.4	53.9	687%
Other CF product revenues (1)	135.9	155.3	(12)%
Total CF product revenues, net	2,915.0	2,744.7	6%
CASGEVY	42.9	14.2	202%
JOURNAVX	29.0	1.3	**
Product revenues, net	2,986.9	2,760.2	8%
Other revenues	—	10.0	**
Total revenues	$2,986.9	$2,770.2	8%

(1) Include KALYDECO, ORKAMBI and SYMDEKO/SYMKEVI.	** Not meaningful

Product Revenues, Net

In the first quarter of 2026, our net product revenues increased by $226.7 million, or 8%, as compared to the first quarter

of 2025, primarily due to continued performance of our CF therapies and growth from diversification into additional disease

areas.

Other Revenues

Other revenues were $10.0 million in the first quarter of 2025, related to an upfront payment received from our

collaboration agreement with Zai.

Revenues by Geographic Location

Our total revenues from the U.S. and from ex-U.S. markets were as follows:


	Three Months Ended March 31,
	2026	2025	Change

(in millions, except percentages)
United States	$1,775.9	$1,663.5	7%
ex-U.S.	1,211.0	1,106.7	9%
Total revenues	$2,986.9	$2,770.2	8%

In the first quarter of 2026, our U.S. total revenues increased 7%, as compared to the first quarter of 2025, due to

continued strong patient demand, including from new initiations of ALYFTREK, and higher realized net prices in CF, and

contributions from CASGEVY and JOURNAVX. In the first quarter of 2026, our ex-U.S. total revenues increased 9%, as

compared to the first quarter of 2025, primarily due to strong CF performance across multiple geographies, including

ALYFTREK uptake, increased CASGEVY product revenues, and a favorable impact from foreign exchange.

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Operating Costs and Expenses


	Three Months Ended March 31,
	2026	2025	Change

(in millions, except percentages)
Cost of sales	$392.8	$363.0	8%
Research and development expenses	961.6	979.7	(2)%
Acquired in-process research and development expenses	0.5	19.8	**
Selling, general and administrative expenses	493.7	396.4	25%
Intangible asset impairment charge	—	379.0	**
Change in fair value of contingent consideration	0.2	2.2	**
Total costs and expenses	$1,848.8	$2,140.1	(14)%

	** 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. Our cost of sales as a percentage of our net product revenues was 13.2% in each of the first quarters of

2026 and 2025, as a result of a lower overall royalty rate for our CF medicines, offset by changes in product mix.

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

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.

Research and Development Expenses


	Three Months Ended March 31,
	2026	2025	Change

(in millions, except percentages)
Research expenses	$205.0	$206.1	(1)%
Development expenses	756.6	773.6	(2)%
Total research and development expenses	$961.6	$979.7	(2)%

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Research Expenses


	Three Months Ended March 31,
	2026	2025	Change

(in millions, except percentages)
Research Expenses:
Salary and benefits	$55.2	$53.1	4%
Stock-based compensation expense	21.2	22.3	(5)%
Outsourced services and other direct expenses	66.6	73.1	(9)%
Infrastructure costs	62.0	57.6	8%
Total research expenses	$205.0	$206.1	(1)%

Our research expenses include investment in our pipeline, including our cell and genetic therapy capabilities, which has

increased our salary and benefits and infrastructure costs in the first quarter of 2026 as compared to the first quarter of 2025.

We expect to continue to invest in our research programs with a focus on creating transformative medicines for serious

diseases.

Development Expenses


	Three Months Ended March 31,
	2026	2025	Change

(in millions, except percentages)
Development Expenses:
Salary and benefits	$212.6	$195.9	9%
Stock-based compensation expense	80.5	77.8	3%
Outsourced services and other direct expenses	326.2	379.7	(14)%
Infrastructure costs	137.3	120.2	14%
Total development expenses	$756.6	$773.6	(2)%

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 programs, including our povetacicept, T1D, peripheral

neuropathic pain and AMKD programs. We expect to continue to invest in these programs, launch new products and advance

our pipeline going forward. Our outsourced services and other direct expenses were lower as compared to the first quarter of

2025 due to the discontinuation of certain clinical programs during 2025.

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. 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-Process Research and Development Expenses


	Three Months Ended March 31,
	2026	2025	Change

(in millions, except percentages)
Acquired in-process research and development expenses	$0.5	$19.8	**
	** Not meaningful

AIPR&D in the first quarters of 2026 and 2025 included various upfront and milestone payments related to our

collaboration and in-licensing arrangements. 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

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future business development transactions, including collaborations, licenses of third-party technologies, and asset

acquisitions.

Selling, General and Administrative Expenses


	Three Months Ended March 31,
	2026	2025	Change

(in millions, except percentages)
Selling, general and administrative expenses	$493.7	$396.4	25%

Selling, general and administrative expenses increased by 25% in the first quarter of 2026, as compared to the first

quarter of 2025, primarily due to increased internal headcount and commercial investment to support JOURNAVX and

povetacicept in IgAN.

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. 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, Net

Our net interest income of $114.8 million in the first quarter of 2026 was similar to $117.9 million of net interest income

in the first quarter of 2025. Our future net interest income is primarily dependent on the amount of, and prevailing market

interest rates on our outstanding cash, cash equivalents and available-for-sale debt securities.

Other Income (Expense), Net

Other income (expense), net was $0.0 million in the first quarter of 2026 and net expenses of $17.6 million in the first

quarter of 2025. Our other income (expense), net primarily relates to net unrealized and realized losses resulting from

changes in the fair value of certain of our strategic equity investments and net foreign currency exchange losses.

Income Taxes

Our effective tax rate fluctuates from period to period due to the global nature of our operations. The factors that most

significantly impact our effective tax rate include changes in tax laws, excess tax benefits related to stock-based

compensation, 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 U.S. taxes for the first quarter of

2026, 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 effective tax rates of 17.7% and 11.5% in the first quarter of 2026 and 2025, respectively, were lower than the U.S.

statutory rate primarily due to excess tax benefits related to stock-based compensation.

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LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes the components of our financial condition as of March 31, 2026 and December 31,

2025:


	As of March 31, 2026	As of December 31, 2025	Change

	(in millions, except percentages)
Cash, cash equivalents and marketable securities:
Cash and cash equivalents	$5,492.9	$5,084.8
Marketable securities	1,753.8	1,523.3
Long-term marketable securities	5,749.9	5,712.3
Total cash, cash equivalents and marketable securities	$12,996.6	$12,320.4	5%

Working Capital:
Total current assets	$11,730.3	$11,201.0	5%
Total current liabilities	(3,880.6)	(3,861.2)	1%
Total working capital	$7,849.7	$7,339.8	7%

Working Capital

As of March 31, 2026, total working capital was $7.8 billion, which represented an increase of $509.9 million, or 7%,

compared to December 31, 2025, primarily due to increased cash, cash equivalents and marketable securities resulting from

our growing portfolio of products, partially offset by tax accruals and payments.

Cash Flows


	Three Months Ended March 31,
	2026	2025

	(in millions)
Net cash provided by (used in):
Operating activities	$1,428.1	$818.9
Investing activities	$(431.9)	$(55.8)
Financing activities	$(538.8)	$(680.4)

Operating Activities

Cash provided by operating activities increased to $1.4 billion in the first quarter of 2026, as compared to $818.9 million

in the first quarter of 2025, primarily due to the timing of tax payments and increased accounts receivable during the first

quarter of 2025 resulting from our product launches.

Investing Activities

Cash used in investing activities was $431.9 million in the first quarter of 2026, primarily related to net purchases of

available-for-sale debt securities. Cash used in investing activities was $55.8 million in the first quarter of 2025, primarily

related to purchases of property and equipment.

Financing Activities

Cash used in financing activities were $538.8 million and $680.4 million in the first quarter of 2026 and 2025,

respectively. Our financing activities in each of these periods 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.

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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 March

31, 2026, 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.

•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 July 2027.

•As of March 31, 2026, we had $3.0 billion remaining available under the share repurchase program that our Board

of Directors authorized 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.

There have not been any material changes to our future capital requirements disclosed in our Annual Report on Form 10-

K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission, or SEC, on

February 13, 2026.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our condensed

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 condensed 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. During the three months ended March 31, 2026, there were no material changes to our critical

accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed

with the SEC on February 13, 2026.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, please refer to Note A, “Basis of Presentation and Accounting

Policies.”

Item 3.Quantitative and Qualitative Disclosures About Market Risk

Information required by this item is incorporated by reference from the discussion in Part II, Item 7A, “Quantitative and

Qualitative Disclosures About Market Risk,” of our Annual Report on Form 10-K for the year ended December 31, 2025,

which was filed with the SEC on February 13, 2026.

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management (under the supervision and with the participation of our chief executive officer and chief financial

officer), after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and

15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly

Report on Form 10-Q, has concluded that, based on such evaluation, as of March 31, 2026 our disclosure controls and

procedures were effective and designed to provide reasonable assurance that the information required to be disclosed is

recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. In designing

and evaluating our disclosure controls and procedures, our 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 our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible

controls and procedures.

Changes in Internal Controls Over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the

Securities Exchange Act of 1934, as amended) occurred during the three months ended March 31, 2026 that has materially

affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. Other Information

Item 1. Legal Proceedings

Other than as described in Part I—Note L, “Commitments and Contingencies,” to our condensed consolidated financial

statements, we are not currently subject to any material legal proceedings.

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Item 1A. Risk Factors

The information presented below supplements the risk factors set forth in Part I, Item 1A. “Risk Factors” of our Annual

Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on February 13, 2026. There

have been no material changes from the risk factors previously disclosed in the Annual Report on Form 10-K.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and, in particular, our Management’s Discussion and Analysis of Financial

Condition and Results of Operations set forth in Part I, Item 2, contain a number of 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 financial performance, including revenues, costs and expenses, taxes, and other gains and losses;

•product development, including our development timelines, timing of data from our ongoing and planned clinical

trials, regulatory authority filings and other submissions for our therapies, including the potential to file for

accelerated approvals, and communications with regulatory authorities;

•our ability to continue to grow our CF business by increasing the number of people with CF eligible and able to

receive our medicines through new approvals, label extensions and reimbursement agreements, treatment of younger

patients, increased survival, and expansion into additional geographies;

•our ability to continue to launch, commercialize and market our products and our ability to obtain label expansions

for existing therapies, including the anticipated launch of povetacicept for the treatment of IgAN;

•our ability to obtain and maintain adequate coverage, pricing, and reimbursement from third-party payors for our

products;

•the data that will be generated by ongoing and planned clinical trials, preclinical and nonclinical studies, and the

ability to use that data to advance compounds, continue development or support regulatory filings, or accelerate

regulatory approval, including our expectations regarding the FDA’s review of the BLA for povetacicept on an

expedited basis of six months from the date of FDA acceptance of the BLA;

•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 ability to use our research programs to identify and develop new product candidates to address serious diseases

and significant unmet medical needs;

•our beliefs regarding the approximate patient populations for the disease areas on which we focus;

•plans for and prospects of our business development activities, including the potential benefits and therapeutic scope

of our collaborations, our ability to integrate and continue operations of acquired businesses, and our ability to

successfully capitalize on these opportunities;

•the establishment, development and maintenance of collaborative relationships, including potential milestone

payments or other obligations, and other potential business development activities, including the identification of

potential collaborative partners or acquisition targets;

•our plans to build and maintain our global supply chains and manufacturing infrastructure and capabilities, including

for biologics, cell and gene therapies;

•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;

•potential fluctuations in foreign currency exchange rates and the effectiveness of our foreign currency management

program;

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•our expectations regarding cash generated by operations, our cash balance and expected generation and net interest

income;

•our expectations regarding our provision for or benefit from income taxes and the utilization of our deferred tax

assets; 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” in Item 1A of our Annual

Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on February 13, 2026, 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 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Repurchases of Equity Securities

In May 2025, our Board of Directors authorized a share repurchase program (our “Share Repurchase Program”),

pursuant to which we were authorized to repurchase up to $4.0 billion of our common stock. The 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 March 31, 2026 under our

Share Repurchase Program.


Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (1)
January 1, 2026 to January 31, 2026	257,009	$460.37	257,009	$3,263,144,316
February 1, 2026 to February 28, 2026	210,126	$474.46	210,126	$3,163,447,298
March 1, 2026 to March 31, 2026	274,000	$461.53	274,000	$3,036,987,553
Total	741,135	$464.79	741,135	$3,036,987,553

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

negotiated transactions. Such purchases may be 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 5. 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 Securities Exchange Act of 1934,

as amended (each a “Trading Plan”). In the first quarter of 2026, none of our directors or officers adopted or terminated a

Trading Plan.


Exhibit Number	Exhibit Description
31.1	Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer and the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.LAB	XBRL Taxonomy Extension Labels
101.PRE	XBRL Taxonomy Extension Presentation
101.DEF	XBRL Taxonomy Extension Definition
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.


	Vertex Pharmaceuticals Incorporated

May 5, 2026	By:	/s/ Charles F. Wagner, Jr.
		Charles F. Wagner, Jr.
		Executive Vice President, Chief Operating & Financial Officer (principal financial officer and duly authorized officer)