# Vertex Pharmaceuticals Inc / Ma: Form 10-Q for the period ended Sep 30, 2015

- Company: [Vertex Pharmaceuticals Inc / Ma](/companies/vrtx.md) (CIK 875320)
- Form: 10-Q
- Filed: 2015-10-30
- Accepted by EDGAR: Oct 30, 2015, 20:23 ET
- Period: 2015-09-30
- Accession: 0000875320-15-000056
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/875320/000087532015000056/a2015q310-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/875320/000087532015000056/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2015-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2015-07-01 to 2015-09-30 | $309.8m | us-gaap:Revenues |
| Revenue | 9 months, 2015-01-01 to 2015-09-30 | $614.4m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2015-07-01 to 2015-09-30 | $30.3m | us-gaap:CostOfGoodsSold |
| Cost of revenue | 9 months, 2015-01-01 to 2015-09-30 | $55.1m | us-gaap:CostOfGoodsSold |
| Research and development | 3 months, 2015-07-01 to 2015-09-30 | $246.3m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2015-01-01 to 2015-09-30 | $685.7m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2015-07-01 to 2015-09-30 | $99.8m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2015-01-01 to 2015-09-30 | $280.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2015-07-01 to 2015-09-30 | −$70.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2015-01-01 to 2015-09-30 | −$413.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2015-07-01 to 2015-09-30 | $1.3m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2015-01-01 to 2015-09-30 | $31.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2015-07-01 to 2015-09-30 | −$95.1m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2015-01-01 to 2015-09-30 | −$482.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2015-07-01 to 2015-09-30 | −$0.39 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2015-01-01 to 2015-09-30 | −$2.00 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2015-07-01 to 2015-09-30 | −$0.39 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2015-01-01 to 2015-09-30 | −$2.00 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2015-07-01 to 2015-09-30 | 241,969,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2015-01-01 to 2015-09-30 | 240,749,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2015-01-01 to 2015-09-30 | −$349.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2015-01-01 to 2015-09-30 | $32.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2015-09-30 | $756.3m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2015-09-30 | $1.36bn | us-gaap:AssetsCurrent |
| Total assets | at 2015-09-30 | $2.43bn | us-gaap:Assets |
| Current liabilities | at 2015-09-30 | $375.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2015-09-30 | $1.36bn | us-gaap:Liabilities |
| Shareholders' equity | at 2015-09-30 | $922.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 48,962 characters.

### OVERVIEW

We are in the business of discovering, developing, manufacturing and commercializing medicines for serious diseases. We use precision medicine approaches with the goal of creating transformative medicines for patients in specialty markets. Our business is focused on developing and commercializing therapies for the treatment of cystic fibrosis, or CF, and advancing our research and early-stage development programs in other indications, while maintaining our financial strength.

We market KALYDECO (ivacaftor) for the treatment of certain patients with CF who have specific genetic mutations in their cystic fibrosis transmembrane conductance regulator, or *CFTR*, gene. In July 2015, we began marketing ORKAMBI (lumacaftor in combination with ivacaftor) in the United States for the treatment of patients with CF twelve years of age and older who have two copies (homozygous) of the F508del mutation in their *CFTR* gene, which is the most prevalent form of CF. We also are seeking approval to market lumacaftor in combination with ivacaftor for this patient population in Europe, Canada and Australia.

### Cystic Fibrosis

#### Ivacaftor

KALYDECO was approved in 2012 in the United States and European Union as a treatment for patients with CF six years of age and older who have the G551D mutation in their *CFTR* gene. Our KALYDECO net product revenues have been increasing over the last several years due to the increased number of patients who are being treated with KALYDECO in the United States and ex-U.S. markets as we have expanded the label for KALYDECO and obtained reimbursement for additional patients eligible for treatment with KALYDECO in ex-U.S markets.

In September 2015, the European Union Committee for Medicinal Products for Human Use, or CHMP, issued positive opinions recommending approval of KALYDECO for patients with CF two to five years of age who have one of nine gating mutations in their *CFTR* gene and in patients with CF 18 years of age and older who have the R117H mutation in their *CFTR* gene. The CHMP's opinions will be reviewed by the European Commission, which has the authority to approve medicines for the European Union. In Europe, we believe there are approximately 125 patients with CF two to five years of age with one of the nine gating mutations included in the opinion and approximately 250 patients with CF 18 years of age and old with the R117H mutation in their *CFTR* gene.

We have submitted a supplemental New Drug Application, or sNDA, for KALYDECO for patients with CF two years of age and older who have one of 23 residual function mutations to the United States Food and Drug Administration, or FDA. A target review date for the sNDA of February 6, 2016 was set under the Prescription Drug User Fee Act for the FDA's decision on the sNDA. The sNDA was based on preclinical data for ivacaftor in the 23 residual function mutations, the established clinical profile of KALYDECO and on previously reported data from an exploratory Phase 2a clinical trial in 24 patients with residual function mutations. Nineteen of the patients in this clinical trial had one of the 23 residual function mutations included in the sNDA. We believe more than 1,500 patients with CF two years of age and older in the United States have the mutations represented in the sNDA.

In the first quarter of 2016, we plan to commence a clinical trial for ivacaftor in patients with CF less than two years of age to evaluate the effect of ivacaftor on markers of CF disease in young children. The clinical trial will utilize a weight-based dose of ivacaftor granules that can be mixed in soft foods or liquids.

#### Lumacaftor in Combination with Ivacaftor

In July 2015, the FDA approved ORKAMBI for the treatment of patients with CF twelve years of age and older who are homozygous for the F508del mutation in their *CFTR* gene. In the third quarter of 2015, we began marketing ORKAMBI in the United States and recognized our first net product revenues from ORKAMBI. Our future ORKAMBI net product revenues in the United States will reflect the number of patients for whom ORKAMBI is prescribed, the level of rebates, chargebacks, discounts and other adjustments to our ORKAMBI gross product revenues and patient adherence to the recommended treatment regimen. We believe that there currently are approximately 8,500 patients in the United States who are eligible for treatment with ORKAMBI and that as of September 30, 2015 more than 3,000 patients in the United States have started treatment with ORKAMBI.

We submitted a Marketing Authorization Application, or MAA, for ORKAMBI for the treatment of patients with CF twelve years of age and older who are homozygous for the F508del mutation in their *CFTR* gene to the European Medicines Agency, or EMA, in November 2014. In September 2015, the CHMP issued a positive opinion recommending approval of the MAA. The CHMP's opinion will be reviewed by the European Commission, which has the authority to approve medicines for the European Union. We believe that there are approximately 12,000 patients with CF twelve years of age and older who are homozygous for the F508del mutation in Europe.

We are conducting two Phase 3 clinical trials to evaluate lumacaftor in combination with ivacaftor for the treatment of patients with CF six to eleven years of age who are homozygous for the F508del mutation in their *CFTR* gene. The first clinical trial is fully enrolled and if successful, will be used to support an sNDA to the FDA in the first half of 2016. Enrollment is ongoing in the second clinical trial, which is required to support approval of lumacaftor in combination with ivacaftor in this patient population in the European Union.

#### VX-661 in Combination with Ivacaftor

In the first quarter of 2015, we initiated a Phase 3 development program for VX-661 in combination with ivacaftor in multiple CF patient populations who have at least one copy of the F508del mutation. These clinical trials are enrolling patients with CF with the following mutations:

- Two copies of the F508del in their *CFTR* gene;
- One copy of the F508del mutation in their *CFTR* gene and a second mutation in their *CFTR* gene that results in a gating defect in the CFTR protein;
- One copy of the F508del mutation in their *CFTR* gene and a second mutation in their *CFTR* gene that results in residual CFTR function; and
- One copy of the F508del mutation in their *CFTR* gene and a second mutation that results in minimal CFTR function.

We expect to enroll more than 1,000 patients with CF in this Phase 3 development program. In mid-2016, we expect to complete enrollment in the first three of these clinical trials and the first part of the fourth clinical trial.

#### ENaC Inhibition

In June 2015, we entered into a collaboration with Parion Sciences, Inc., or Parion, to develop investigational epithelial sodium channel, or ENaC, inhibitors, including VX-371 (formerly P-1037), for the potential treatment of CF and other pulmonary diseases. VX-371 is currently being evaluated in an exploratory Phase 2a clinical trial in approximately 120 patients with CF with any mutation in their *CFTR* gene, including those who have mutations not expected to respond to ivacaftor alone. We expect data from this clinical trial in mid-2016. We expect to initiate a Phase 2a clinical trial of VX-371 in early 2016, that evaluates the addition of VX-371 to treatment with ORKAMBI for patients with CF who are homozygous for the F508del mutation in their *CFTR* gene.

#### Next-generation CFTR Corrector Compounds

We are developing two next-generation CFTR corrector compounds, VX-152 and VX-440, that we plan to evaluate as part of combination treatment regimens. We initiated the first Phase 1 clinical trial in healthy volunteers of a next-generation corrector compound in October 2015 and plan to initiate the first Phase 1 clinical trial in healthy volunteers of the second next-generation corrector compound in November 2015. If these clinical trials are successful, we plan to initiate Phase 2 clinical trials of VX-152 or VX-440 in combination with VX-661 and/or ivacaftor in the second half of 2016. In human bronchial epithelial, or HBE, cells with two copies of the F508del mutation in the *CFTR* gene, as well as in HBE cells with one copy of the F508del mutation in the *CFTR* gene and a second mutation that results in minimal CFTR function, the triple combinations (VX-152/VX-661/ivacaftor and VX-440/VX-661/ivacaftor) resulted in chloride transport (measured as a percent of normal) that was approximately three-fold greater than the use of a lumacaftor/ivacaftor combination in these cells.

### Research and Early-Stage Development

We are engaged in a number of other research and early-stage development programs, including in the areas of oncology and pain.

#### Oncology

We are conducting two Phase 1 clinical trials of VX-970, a protein kinase inhibitor of ATR, dosed intravenously in combination with commonly used DNA-damaging chemotherapies across a range of solid tumor types, including triple negative breast cancer and non-small cell lung cancer. Data from a Phase 1 safety and pharmacokinetics clinical trial demonstrated that treatment with VX-970 was generally well-tolerated, both alone and in combination with the chemotherapy drug carboplatin, and there was preliminary evidence of anti-tumor activity. We also have entered into a cooperative research and development agreement with the National Cancer Institute to evaluate VX-970 across other types of cancers. The first clinical trial conducted under the agreement is ongoing, and six additional clinical trials are planned. We are also in Phase 1 development of VX-803, a second ATR inhibitor, alone and in combination with chemotherapy. We expect to initiate Phase 1 clinical development of VX-984, a third oncology drug candidate, alone and in combination with chemotherapy, in early 2016.

#### Pain

We are developing VX-150 and VX-241, two drug candidates for the treatment of pain. By the end of 2015, we expect to initiate a Phase 2 clinical trial to evaluate VX-150 in approximately 100 patients with symptomatic osteoarthritis of the knee. We expect to begin clinical development of VX-241 in the first half of 2016.

We plan to continue investing in our research programs and fostering scientific innovation in order to identify and develop transformative medicines. We believe that pursuing research in diverse areas allows us to balance the risks inherent in drug development and may provide drug candidates that will form our pipeline in future years.

### CRISPR Collaboration

In October 2015, we entered into an agreement with CRISPR Therapeutics AG, or CRISPR, to collaborate on the discovery and development of potential new treatments aimed at the underlying genetic causes of human diseases using CRISPR-Cas9 gene editing technology. We and CRISPR will focus the initial discovery efforts on genes known to cause and contribute to cystic fibrosis and sickle cell disease. We have the exclusive rights to license up to six CRISPR-Cas9-based targets. In connection with this collaboration agreement, we made an upfront payment to CRISPR of $75.0 million and will provide a $30.0 million investment in CRISPR, which is a private company.

We will fund all of the discovery activities, which will be conducted primarily by CRISPR. For potential hemoglobinapathy treatments, including treatments for sickle cell disease, we will share equally all research and development costs and worldwide revenues with CRISPR, and CRISPR would lead the commercialization efforts in the United States. For other targets that we elect to license, we would lead all development and global commercialization activities, and CRISPR would be entitled to development, regulatory and sales milestones and royalties on net sales.

### HCV Infection

Prior to 2014, we recognized significant net product revenues based on sales of INCIVEK (telaprevir), a product for the treatment of genotype 1 HCV infection that we marketed in North America. In October 2013, in response to declining sales of INCIVEK and increased competition, we reduced our focus on marketing INCIVEK and eliminated the U.S. field-based sales force that had been promoting INCIVEK. We have withdrawn INCIVEK from the market in the United States, and we expect to wind-down any remaining activities relating to the field of HCV infection in 2015.

In the fourth quarter of 2014, we terminated our collaboration with Alios BioPharma, Inc., or Alios, related to the development of HCV nucleotide analogues. Our financial statements reflect the activities related to Alios as discontinued operations.

### Drug Discovery and Development

Discovery and development of a new pharmaceutical product is a difficult and lengthy process that requires significant financial resources along with extensive technical and regulatory expertise and can take 10 to 15 years or more. Potential drug candidates are subjected to rigorous evaluations, driven in part by stringent regulatory considerations, designed to generate information concerning efficacy, side-effects, proper dosage levels and a variety of other physical and chemical characteristics that are important in determining whether a drug candidate should be approved for marketing as a pharmaceutical product. Most chemical compounds that are investigated as potential drug candidates never progress into development, and most drug candidates that do advance into development never receive marketing approval. Because our investments in drug candidates are subject to considerable risks, we closely monitor the results of our discovery, research, clinical trials and nonclinical studies and frequently evaluate our drug development 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 abrupt 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.

If we believe that data from a completed registration program support approval of a drug candidate, we submit an NDA to the FDA requesting approval to market the drug candidate in the United States and seek analogous approvals from comparable regulatory authorities in foreign jurisdictions. To obtain approval, we must, among other things, demonstrate with evidence gathered in nonclinical studies and well-controlled clinical trials that the drug candidate is safe and effective for the disease it is intended to treat and that the manufacturing facilities, processes and controls for the manufacture of the drug candidate are adequate. The FDA and foreign regulatory authorities have substantial discretion in deciding whether or not a drug candidate should be granted approval based on the benefits and risks of the drug candidate in the treatment of a particular disease, and could delay, limit or deny regulatory approval. If regulatory delays are significant or regulatory approval is limited or denied altogether, our financial results and the commercial prospects for the drug candidate involved will be harmed.

### Regulatory Compliance

Our marketing of pharmaceutical products is subject to extensive and complex laws and regulations. We have a corporate compliance program designed to actively identify, prevent and mitigate risk through the implementation of compliance policies and systems, and through the promotion of a culture of compliance. Among other laws, regulations and standards, we are subject to various U.S. federal and state laws, and comparable foreign laws pertaining to health care fraud and abuse, including anti-kickback and false claims statutes, and laws prohibiting the promotion of drugs for unapproved or off-label uses. Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive or pay any remuneration to induce the referral of business, including the purchase or prescription of a particular drug. False claims laws prohibit anyone from presenting for payment to third-party payors, including Medicare and Medicaid, claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. We expect to continue to devote substantial resources to maintain, administer and expand these compliance programs globally.

### Reimbursement

Sales of our products depend, to a large degree, on the extent to which our products are covered by third-party payors, such as government health programs, commercial insurance and managed health care organizations. We dedicate substantial management and other resources in order to obtain and maintain appropriate levels of reimbursement for our products from third-party payors, including governmental organizations in the United States and ex-U.S. markets. Following the FDA's July 2015 approval of ORKAMBI in the United States, we are engaging in discussions with numerous commercial insurers and managed health care organizations, along with government health programs that are typically managed by authorities in the individual states. If ORKAMBI is approved in Europe and other foreign countries, we will need to focus on obtaining and maintaining government reimbursement for ORKAMBI on a country-by-country basis, because in many foreign countries patients are unable to access prescription pharmaceutical products that are not reimbursed by their governments. Consistent with our experience with KALYDECO when it was first approved, we expect reimbursement discussions in ex-U.S. markets may take a significant period of time following obtaining any marketing approvals for ORKAMBI in ex-U.S. markets.

### RESULTS OF OPERATIONS

*(in thousands)*

*(in thousands)*

|  | Three Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  | Nine Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenues | $309,816 | $178,987 | $130,829 | 73% | $614,401 | $435,859 | $178,542 | 41% |
| Operating costs and expenses | 379,842 | 321,190 | 58,652 | 18% | 1,027,576 | 974,646 | 52,930 | 5% |
| Other items, net | (25,123) | (27,857) | 2,734 | 10% | (69,428) | (23,112) | $(46,316) | (200)% |
| Net loss attributable to Vertex | $(95,149) | $(170,060) | $(74,911) | (44)% | $(482,603) | $(561,899) | $(79,296) | (14)% |

### Net Loss Attributable to Vertex

Net loss attributable to Vertex was $95.1 million in the third quarter of 2015 compared to a net loss attributable to Vertex of $170.1 million in the third quarter of 2014. Our revenues increased in the third quarter of 2015 as compared to the third quarter of 2014 due to net product revenues from ORKAMBI, which was approved by the FDA in July 2015, and increased KALYDECO net product revenues, partially offset by decreased collaborative revenues. Our operating costs and expenses increased in the third quarter of 2015 as compared to the third quarter of 2014 primarily due to increases in research and development expenses, sales, general and administrative expenses and cost of product revenues, partially offset by decreased restructuring expenses. In the near term, we expect net loss (income) attributable to Vertex will be dependent on expected increases in ORKAMBI net product revenues.

Net loss attributable to Vertex was $482.6 million in the nine months ended September 30, 2015 compared to a net loss attributable to Vertex of $561.9 million in the nine months ended September 30, 2014. Our revenues increased in the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014 due to net product revenues from ORKAMBI and increased KALYDECO net product revenues, partially offset by decreased royalty revenues and collaborative revenues. Our operating costs and expenses increased in the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014, primarily due to increases in research and development expenses, sales, general and administrative expenses and cost of product revenues, partially offset by decreased restructuring expenses and royalty expenses. The change in other items, net in the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014 was principally due to a $36.7 million credit to other income (expense) recorded in the nine months ended September 30, 2014 related to a one-time payment received in connection with our headquarters lease for which there was no corresponding credit in the nine months ended September 30, 2015.

### Diluted Net Loss Per Share Attributable to Vertex Common Shareholders

Diluted net loss per share attributable to Vertex common shareholders was $0.39 in the third quarter of 2015 as compared to a diluted net loss per share attributable to Vertex common shareholders of $0.72 in the third quarter of 2014. Diluted net loss per share attributable to Vertex common shareholders was $2.00 in the nine months ended September 30, 2015 as compared to a diluted net loss per share attributable to Vertex common shareholders of $2.40 in the nine months ended September 30, 2014.

### Revenues

*(in thousands)*

*(in thousands)*

|  | Three Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  | Nine Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Product revenues, net | $302,511 | $137,099 | $165,412 | 121% | $593,774 | $362,879 | $230,895 | 64% |
| Royalty revenues | 5,759 | 8,386 | (2,627) | (31)% | 17,628 | 32,134 | (14,506) | (45)% |
| Collaborative revenues | 1,546 | 33,502 | (31,956) | (95)% | 2,999 | 40,846 | (37,847) | (93)% |
| Total revenues | $309,816 | $178,987 | $130,829 | 73% | $614,401 | $435,859 | $178,542 | 41% |

### Product Revenues, Net

*(in thousands)*

*(in thousands)*

|  | Three Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  | Nine Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| KALYDECO | $165,929 | $126,801 | $39,128 | 31% | $450,991 | $339,371 | $111,620 | 33% |
| ORKAMBI | 130,767 | — | N/A | N/A | 130,767 | — | N/A | N/A |
| INCIVEK | 5,815 | 10,298 | (4,483) | (44)% | 12,016 | 23,508 | (11,492) | (49)% |
| Total product revenues, net | $302,511 | $137,099 | $165,412 | 121% | $593,774 | $362,879 | $230,895 | 64% |

Our total net product revenues increased in the third quarter and the nine months ended September 30, 2015 as compared to the third quarter and the nine months ended September 30, 2014 due to net product revenues from ORKAMBI, which was approved by the FDA in July 2015, and increased KALYDECO net product revenues.

KALYDECO net product revenues were $165.9 million in the third quarter of 2015, including $70.9 million of net product revenues from international markets. The increase in KALYDECO net product revenues in the third quarter and the nine months ended September 30, 2015, as compared to the third quarter and the nine months ended September 30, 2014, was primarily due to additional patients being treated with KALYDECO as we completed reimbursement discussions in various jurisdictions and increased the number of patients eligible to receive KALYDECO through multiple label expansions that were approved by regulatory authorities in the United States and Europe during 2014 and 2015.

Our ORKAMBI net product revenues in the United Sates increased on a monthly basis during the third quarter of 2015 as patients initiated treatment following approval in early July 2015. We expect ORKAMBI revenues to increase in the fourth quarter of 2015 as compared to the third quarter of 2015 as additional patients initiate treatment with ORKAMBI. If approved in the fourth quarter of 2015, we expect to recognize our first ex-U.S. ORKAMBI net product revenues in the first half of 2016. Initially, we expect these revenues will be primarily from Germany due to the time it will take to complete the reimbursement discussions in other European countries.

We have withdrawn INCIVEK from the market in the United States. We may continue to recognize small incremental INCIVEK revenues over the next several quarters as we adjust our INCIVEK reserves for rebates, chargebacks and discounts.

### Royalty Revenues

Our royalty revenues were $5.8 million and $17.6 million in the third quarter and the nine months ended September 30, 2015, respectively, as compared to $8.4 million and $32.1 million in the third quarter and the nine months ended September 30, 2014, respectively. Since the beginning of 2014, our royalty revenues have consisted of (i) revenues related to a cash payment we received in 2008 when we sold our rights to certain HIV royalties and (ii) revenues related to certain third-party royalties payable by our collaborators on sales of HIV and HCV drugs that also result in corresponding royalty expenses. The decreased royalty revenues in the third quarter and the nine months ended September 30, 2015 as compared to the third quarter and the nine months ended September 30, 2014 were primarily due to the continued decline in net sales of INCIVO (telaprevir) by our collaborator Janssen NV.

### Collaborative Revenues

Our collaborative revenues were $1.5 million and $3.0 million in the third quarter and the nine months ended September 30, 2015, respectively, as compared to $33.5 million and $40.8 million in the third quarter and the nine months ended September 30, 2014, respectively. The decrease during the third quarter and the nine months ended September 30, 2015 as compared to the third quarter and the nine months ended September 30, 2014 was primarily attributable to a one-time $30.0 million payment we received in July 2014 from Janssen Pharmaceuticals, Inc.

### Operating Costs and Expenses

*(in thousands)*

*(in thousands)*

|  | Three Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  | Nine Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Cost of product revenues | $30,269 | $10,208 | $20,061 | 197% | $55,059 | $28,435 | $26,624 | 94% |
| Royalty expenses | 1,691 | 3,976 | (2,285) | (57)% | 6,068 | 18,525 | (12,457) | (67)% |
| Research and development expenses | 246,284 | 190,939 | 55,345 | 29% | 685,741 | 654,043 | 31,698 | 5% |
| Sales, general and administrative expenses | 99,772 | 75,224 | 24,548 | 33% | 280,026 | 226,882 | 53,144 | 23% |
| Restructuring expenses, net | 1,826 | 40,843 | (39,017) | (96)% | 682 | 46,761 | (46,079) | (99)% |
| Total costs and expenses | $379,842 | $321,190 | $58,652 | 18% | $1,027,576 | $974,646 | $52,930 | 5% |

### Cost of Product Revenues

Our cost of product revenues includes the cost of producing inventories that corresponded to product revenues for the reporting period, plus the third-party royalties payable on our net sales of our products. Pursuant to our agreement with Cystic Fibrosis Foundation Therapeutics Incorporated, or CFFT, our tiered third-party royalties on sales of KALYDECO and ORKAMBI, calculated as a percentage of net sales, range from the single digits to the sub-teens. Our cost of product revenues increased in the third quarter and the nine months ended September 30, 2015 as compared to the third quarter and the nine months ended September 30, 2014 due to increased net product revenues. We expect our cost of product revenues to continue to increase due to increased net product revenues, together with an expected increase in the third-party royalty rate payable to CFFT as we pay royalties at the top end of the royalty range, and the expected payment of an aggregate of $27.8 million of commercial milestones to CFFT by early 2016 based on sales of ORKAMBI.

### Royalty Expenses

Royalty expenses include third-party royalties payable upon net sales of telaprevir by our collaborators in their territories and expenses related to a subroyalty payable to a third party on net sales of an HIV protease inhibitor sold by GlaxoSmithKline. Royalty expenses do not include royalties we pay to CFFT on sales of KALYDECO and ORKAMBI, which instead are included in cost of product revenues. Royalty expenses in the third quarter of 2015 decreased by $2.3 million, or 57%, as compared to the third quarter of 2014 and decreased by $12.5 million, or 67%, in the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014, primarily as a result of decreased INCIVO (telaprevir) sales by our collaborator Janssen NV.

### Research and Development Expenses

*(in thousands)*

*(in thousands)*

|  | Three Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  | Nine Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Research expenses | $69,342 | $63,460 | $5,882 | 9% | $200,099 | $195,825 | $4,274 | 2% |
| Development expenses | 176,942 | 127,479 | 49,463 | 39% | 485,642 | 458,218 | 27,424 | 6% |
| Total research and development expenses | $246,284 | $190,939 | $55,345 | 29% | $685,741 | $654,043 | $31,698 | 5% |

Our research and development expenses include internal and external costs incurred for research and development of our drugs and drug candidates. We do not assign our internal costs, such as salary and benefits, stock-based compensation expense, laboratory supplies and other direct expenses and infrastructure costs, to individual drugs or drug candidates, because the employees within our research and development groups typically are deployed across multiple research and development programs. These internal costs are significantly greater than our external costs, such as the costs of services provided to us by clinical research organizations and other outsourced research, which we allocate by individual program. All research and development costs for our drugs and drug candidates are expensed as incurred.

Since January 1, 2012, we have incurred $3.2 billion in research and development expenses associated with drug discovery and development. The successful development of our drug candidates is highly uncertain and subject to a number of risks. In addition, the duration of clinical trials may vary substantially according to the type, complexity and novelty of the drug candidate and the disease indication being targeted. The FDA and comparable agencies in foreign countries impose substantial requirements on the introduction of therapeutic pharmaceutical products, typically requiring lengthy and detailed laboratory and clinical testing procedures, sampling activities and other costly and time-consuming procedures. Data obtained from nonclinical and clinical activities at any step in the testing process may be adverse and lead to discontinuation or redirection of development activities. Data obtained from these activities also are susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The duration and cost of discovery, nonclinical studies and clinical trials may vary significantly over the life of a project and are difficult to predict. Therefore, accurate and meaningful estimates of the ultimate costs to bring our drug candidates to market are not available.

In 2014 and the nine months ended September 30, 2015, costs related to our CF programs represented the largest portion of our development costs. Any estimates regarding development and regulatory timelines for our drug candidates are highly subjective and subject to change. Obtaining regulatory approval can be a lengthy, time-consuming and uncertain process. We have submitted an MAA to the EMA for lumacaftor in combination with ivacaftor. If we are successful in obtaining marketing approval from the European Commission in the fourth quarter of 2015, we currently do not expect to recognize revenues from ORKAMBI in Europe until the first half of 2016. We cannot make a meaningful estimate when, if ever, our other clinical development programs will generate revenues and cash flows.

#### Research Expenses

*(in thousands)*

*(in thousands)*

| Research Expenses: | Three Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  | Nine Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Salary and benefits | $21,542 | $21,575 | $(33) | —% | $61,796 | $63,017 | $(1,221) | (2)% |
| Stock-based compensation expense | 16,342 | 11,523 | 4,819 | 42% | 43,199 | 32,414 | 10,785 | 33% |
| Laboratory supplies and other direct expenses | 8,755 | 7,988 | 767 | 10% | 28,339 | 27,963 | 376 | 1% |
| Outsourced services | 4,788 | 2,895 | 1,893 | 65% | 14,293 | 12,229 | 2,064 | 17% |
| Infrastructure costs | 17,915 | 19,479 | (1,564) | (8)% | 52,472 | 60,202 | (7,730) | (13)% |
| Total research expenses | $69,342 | $63,460 | $5,882 | 9% | $200,099 | $195,825 | $4,274 | 2% |

We maintain a substantial investment in research activities. Our research expenses increased by 9% in the third quarter of 2015 as compared to the third quarter of 2014 and were consistent in the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014. We expect to continue to invest in our research programs with a focus on identifying drug candidates for specialty markets.

#### Development Expenses

*(in thousands)*

*(in thousands)*

| Development Expenses: | Three Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  | Nine Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Salary and benefits | $42,101 | $40,571 | $1,530 | 4% | $123,723 | $121,411 | $2,312 | 2% |
| Stock-based compensation expense | 28,359 | 19,608 | 8,751 | 45% | 81,351 | 58,870 | 22,481 | 38% |
| Laboratory supplies and other direct expenses | 6,696 | 5,392 | 1,304 | 24% | 22,113 | 25,040 | (2,927) | (12)% |
| Outsourced services | 70,927 | 32,483 | 38,444 | 118% | 177,324 | 156,018 | 21,306 | 14% |
| Drug supply costs | 2,977 | 2,253 | 724 | 32% | 7,262 | 6,777 | 485 | 7% |
| Infrastructure costs | 25,882 | 27,172 | (1,290) | (5)% | 73,869 | 90,102 | (16,233) | (18)% |
| Total development expenses | $176,942 | $127,479 | $49,463 | 39% | $485,642 | $458,218 | $27,424 | 6% |

Our development expenses increased by $49.5 million or 39% in the third quarter of 2015 as compared to the third quarter of 2014, primarily due to an increase in outsourced services related to ongoing clinical trials, including our Phase 3 development program for VX-661 in combination with ivacaftor and an increase in stock-based compensation expense. Our development expenses increased by $27.4 million, or 6%, in the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014, primarily due to an increase in outsourced services and an increase in stock-based compensation expense, partially offset by a reduction in infrastructure costs. The increase in outsourced services expenses in the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014 was primarily due to the increase in clinical trial expenses. The decrease in infrastructure costs in the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014 was primarily attributable to the relocation of our corporate headquarters in Massachusetts from Cambridge to Boston in the nine months ended September 30, 2014.

### Sales, General and Administrative Expenses

*(in thousands)*

*(in thousands)*

|  | Three Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  | Nine Months Ended September 30, 2015 | 2014 | Increase/(Decrease) $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Sales, general and administrative expenses | $99,772 | $75,224 | $24,548 | 33% | $280,026 | $226,882 | $53,144 | 23% |

Sales, general and administrative expenses increased by 33% in the third quarter of 2015 as compared to the third quarter of 2014 and increased by 23% in the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014, primarily due to increased investment in commercial support for KALYDECO and ORKAMBI and costs incurred to prepare for the potential launch of ORKAMBI in ex-U.S. markets.

### Restructuring Expense, Net

We recorded restructuring expenses of $1.8 million in the third quarter of 2015 as compared to restructuring expenses of $40.8 million in the third quarter of 2014 and recorded restructuring expenses of $0.7 million in the nine months ended September 30, 2015 as compared to restructuring expenses of $46.8 million in the nine months ended September 30, 2014. Our restructuring expenses in the third quarter and the nine months ended September 30, 2015 and 2014 primarily relate to adjustments to our restructuring liability resulting from the relocation of our corporate headquarters to Boston, Massachusetts and the early termination of our leases in Cambridge, Massachusetts.

### Other Items

### Interest Expense, Net

Interest expense, net was $21.1 million and $63.6 million in the third quarter and the nine months ended September 30, 2015, respectively, compared to $20.4 million and $51.7 million in the third quarter and the nine months ended September 30, 2014, respectively. During the fourth quarter of 2015, we expect to incur approximately $15 million of interest expense associated with the leases for our corporate headquarters and approximately $5 million of interest expense related to the credit agreement that we entered into in July 2014.

### Other (Expense) Income, Net

Other (expense) income, net was an expense of $1.3 million in the third quarter and an expense of $5.0 million in the nine months ended September 30, 2015, compared to expense of $4.0 million and income of $34.2 million in the third quarter and the nine months ended September 30, 2014, respectively. Other income (expense), net in the nine months ended September 30, 2014 was primarily due to a credit of $36.7 million related to a one-time cash payment in the second quarter of 2014 from our landlord pursuant to leases for our corporate headquarters.

### Income Taxes

We recorded a provision for income taxes of $1.3 million and $31.8 million in the third quarter and the nine months ended September 30, 2015, respectively, compared to $3.4 million and $4.9 million in the third quarter and the nine months ended September 30, 2014, respectively. The provision for income taxes in the nine months ended September 30, 2015 was principally due to the consolidation of Parion as a VIE into our condensed consolidated financial statements in the second quarter of 2015. The provision for income taxes in the third quarter and nine months ended September 30, 2014 related to state income taxes and income earned in various foreign jurisdictions.

### Discontinued Operations, Net of Tax

Our loss from discontinued operations was $0.1 million and $0.7 million in the third quarter and the nine months ended September 30, 2014, respectively, related to Alios, a variable interest entity that we consolidated from June 2011 through

December 2013. As of September 30, 2014, we concluded that we no longer had significant continuing involvement with Alios. As a result, the effect of the Alios collaboration is presented as discontinued operations in our condensed consolidated statements of operations.

### LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2015, we had cash, cash equivalents and marketable securities of $1.01 billion, which represented a decrease of $11 million from $1.02 billion as of June 30, 2015 and a decrease of $381 million from $1.39 billion as of December 31, 2014.

In the third quarter of 2015, we maintained our cash, cash equivalents and marketable securities balance due to increased cash receipts in the third quarter of 2015 from product sales together with $51.8 million in cash we received from issuances of common stock pursuant to our employee benefit plans balancing cash expenditures in the third quarter of 2015 related to, among other things, research and development expenses and sales, general and administrative expenses.

The decrease in our cash, cash equivalents and marketable securities during the nine months ended September 30, 2015 was primarily due to cash expenditures we made during the nine months ended September 30, 2015 related to, among other things, research and development expenses and sales, general and administrative expenses and an $80 million payment made in connection with entering into a collaboration agreement with Parion, partially offset by cash receipts from product sales and $139.7 million in cash we received from issuances of common stock pursuant to our employee benefit plans. We also incurred $35.9 million in costs for capital expenditures including net cash flows from capital leases during the nine months ended September 30, 2015.

Our future cash flows will be substantially dependent on continued revenue from KALYDECO, increasing ORKAMBI sales in the United States and on obtaining approval and government reimbursement for ORKAMBI in ex-U.S. markets.

### Sources of Liquidity

We intend to rely on our existing cash, cash equivalents and marketable securities together with cash flows from product sales as our primary source of liquidity. In the near-term, we expect cash flows from product revenues to increase due to sales of ORKAMBI in the United States. If we are successful in obtaining marketing approval for ORKAMBI from the European Commission in the fourth quarter of 2015, we currently do not expect to recognize revenues from ORKAMBI in Europe until the first half of 2016. Initially, we expect these revenues will be primarily from Germany due to the time it will take to complete the reimbursement discussions in other European countries.

We have borrowed $300.0 million under a credit agreement that we entered into in July 2014 and, subject to certain conditions, we may request up to an additional $200.0 million pursuant to that credit agreement. In recent periods, we also have received significant proceeds from the issuance of common stock under our employee benefit plans, but the amount and timing of future proceeds from employee benefits plans is uncertain. Other possible sources of liquidity include strategic collaborative agreements that include research and/or development funding, commercial debt, public and private offerings of our equity and debt securities, development milestones and royalties on sales of products, software and equipment leases, strategic sales of assets or businesses and financial transactions. Negative covenants in our credit agreement may prohibit or limit our ability to access these sources of liquidity.

### Future Capital Requirements

We incur substantial operating expenses to conduct research and development activities and operate our organization. In October 2015, we entered into an amendment to our credit agreement to, among other things, modify the repayment schedule of the loan. Under the terms of the credit agreement, we were previously required to repay the principal amount on the $300.0 million we borrowed in July 2014 in installments of $15 million on each of November 1, 2015, January 1, 2016, April 1, 2016 and July 1, 2016 and in installments of $60 million on each of October 1, 2016, January 1, 2017, April 1, 2017 and July 9, 2017. As amended, our first principal payment will be in the fourth quarter of 2016 with us repaying $75 million on each of October 1, 2016, January 1, 2017, April 1, 2017 and July 9, 2017. We also have substantial facility and capital lease obligations, including leases for two buildings in Boston, Massachusetts that continue through 2028. In addition, we have entered into certain collaboration agreements with third parties that include the funding of certain research, development and commercialization efforts with the potential for future milestone and royalty payments by us upon the achievement of pre-established developmental and regulatory targets.

We expect that cash flows from KALYDECO and ORKAMBI, together with our current cash, cash equivalents and 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 the amounts of future revenues generated by KALYDECO and ORKAMBI and the potential introduction of one or more of our other drug candidates to the market, the level of our business development activities and the number, breadth, cost and prospects of our research and development programs.

### Financing Strategy

In July 2014, we borrowed $300.0 million pursuant to a credit agreement. In addition, subject to certain conditions, we may request that the lenders loan us up to an additional $200.0 million under the credit agreement. We may raise additional capital 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.

### CONTRACTUAL COMMITMENTS AND OBLIGATIONS

Our commitments and obligations were reported in our Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the Securities and Exchange Commission, or SEC, on February 13, 2015. There have been no material changes from the contractual commitments and obligations previously disclosed in that Annual Report on Form 10-K, except that:

- in the second quarter of 2015, we entered into a collaboration agreement with Parion pursuant to which Parion is eligible to receive milestone and royalty payments, including up to $490 million in development and regulatory milestone payments for the development of VX-371 (formerly P-1037) and/or P-1055 in CF;
- in the fourth quarter of 2015, we entered into a collaboration agreement with CRISPR pursuant to which CRISPR is eligible to receive milestone and royalty payments, including up to $420 million in development, regulatory and commercial milestone payments for each of up to six targets pursuant to the collaboration; and
- in the fourth quarter of 2015, we entered into an amendment to our credit agreement to, among other things, modify the repayment schedule of the loan. As amended, our first principal payment will be in the fourth quarter of 2016 with us repaying $75 million on each of October 1, 2016, January 1, 2017, April 1, 2017 and July 9, 2017.

### CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States. 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 nine months ended September 30, 2015, 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, 2014, which was filed with the SEC on February 13, 2015.

### RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements please refer to Note A, “Nature of Business and Accounting Policies—Recent Accounting Pronouncements,” in the 2014 Annual Report on Form 10-K. There were no new accounting pronouncements adopted during the nine months ended September 30, 2015 that had a material effect on our financial statements.

## Market risk

As filed, 1,960 characters.

As part of our investment portfolio, we own financial instruments that are sensitive to market risks. The investment portfolio is used to preserve our capital until it is required to fund operations, including our research and development activities. None of these market risk-sensitive instruments are held for trading purposes.

### Interest Rate Risk

As of September 30, 2015, we invest our cash in a variety of financial instruments, principally money market funds, investment-grade corporate bonds and commercial paper. These investments are denominated in U.S. dollars. All of our interest-bearing securities are subject to interest rate risk and could decline in value if interest rates fluctuate. Substantially all of our investment portfolio consists of marketable securities with active secondary or resale markets to help ensure portfolio liquidity, and we have implemented guidelines limiting the term-to-maturity of our investment instruments. Due to the conservative nature of these instruments, we do not believe that we have a material exposure to interest rate risk.

### Foreign Exchange Market Risk

As a result of our foreign operations, we face exposure to movements in foreign currency exchange rates, primarily the Euro, Swiss Franc, British Pound, Australian Dollar and Canadian Dollar against the U.S. dollar. The current exposures arise primarily from cash, accounts receivable, intercompany receivables, payables and inventories. Both positive and negative affects to our net revenues from international product sales from movements in foreign currency exchange rates are partially mitigated by the natural, opposite affect that foreign currency exchange rates have on our international operating costs and expenses.

We maintain a foreign currency management program with the objective of reducing the impact of exchange rate fluctuations on our operating results and forecasted revenues and expenses denominated in foreign currencies.

## Controls and procedures

As filed, 1,487 characters.

### Evaluation of Disclosure Controls and Procedures

Our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in 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, have concluded that, based on such evaluation, as of September 30, 2015 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 September 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 4,742 characters.

Information regarding risk factors appears in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 13, 2015. There have been no material changes from the risk factors previously disclosed in that 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 or incorporate a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding:

- our expectations regarding the amount of, timing of and trends with respect to our revenues, costs and expenses and other gains and losses, including those related to net product revenues from KALYDECO and ORKAMBI;
- our expectations regarding clinical trials, development timelines and regulatory authority filings and submissions for ivacaftor, lumacaftor, VX-661, VX-371 (formerly P-1037), VX-152, VX-440, VX-970, VX-803, VX-984, VX-150 and VX-241, as well as the sNDA for KALYDECO for patients with CF two years of age and older who have one of 23 residual function mutations;
- our expectations regarding planned clinical trials for next-generation correctors based upon pre-clinical data;
- expectations regarding potential marketing approvals for drug candidates in ex-U.S. markets, including drug candidates that have received a positive opinion from the CHMP;
- our ability to successfully market KALYDECO and ORKAMBI or any of our other drug candidates for which we obtain regulatory approval;
- our expectations regarding the timing and structure of clinical trials of our drugs and drug candidates, including ivacaftor, lumacaftor, VX-661, VX-371 (formerly P-1037), VX-152, VX-440, VX-970, VX-803, VX-984, VX-150 and VX-241, and the expected timing of our receipt of data from our ongoing and planned clinical trials;
- the data that will be generated by ongoing and planned clinical trials and the ability to use that data to advance compounds, continue development or support regulatory filings;
- our beliefs regarding the support provided by clinical trials and preclinical and nonclinical studies of our drug candidates for further investigation, clinical trials or potential use as a treatment;
- our plan to continue investing in our research and development programs and our strategy to develop our drug candidates, alone or with third party-collaborators;
- the establishment, development and maintenance of collaborative relationships;
- potential business development activities;
- our ability to use our research programs to identify and develop new drug candidates to address serious diseases and significant unmet medical needs; and
- our liquidity and our expectations regarding the possibility of raising additional capital.

Any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many factors mentioned in this Quarterly Report on Form 10-Q will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from expected results. We also provide a cautionary discussion of risks and uncertainties under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 13, 2015. These are factors and uncertainties that we think could cause our actual results to differ materially from expected results. Other factors and uncertainties besides those listed there could also adversely affect us.

Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “intends,” “expects” and similar expressions are intended to identify forward-looking statements. There are a number of factors and uncertainties that could cause actual events or results to differ materially from those indicated by such forward-looking statements, many of which are beyond our control. In addition, the forward-looking statements contained herein represent our estimate only as of the date of this filing and should not be relied upon as representing our estimate as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

Filed Oct 30, 2015.
Source: SEC EDGAR, the filing index for accession 0000875320-15-000056. Last ingested by Listed: Nov 6, 2026, 12:56 ET. No prices; not investment advice.