Vertex Pharmaceuticals Inc / Ma: Form 10-K for the period ended Dec 31, 2025

OVERVIEW

We are a global biotechnology company that invests in scientific innovation to create transformative medicines for

people with serious diseases, with a focus on specialty markets. We have approved medicines for cystic fibrosis (“CF”),

sickle cell disease (“SCD”), transfusion dependent beta thalassemia (“TDT”), and acute pain, and we continue to serially

innovate and advance next-generation clinical and research programs in these areas. Our mid- and late-stage clinical pipeline

includes programs across a range of modalities in additional serious diseases, including IgA nephropathy, APOL1-mediated

kidney disease, neuropathic pain, type 1 diabetes, primary membranous nephropathy, autosomal dominant polycystic kidney

disease, and myotonic dystrophy type 1.

The following chart sets forth our approved products, clinical-stage programs, and select pre-clinical programs:

We are advancing five pivotal programs across multiple disease areas:

• IgA Nephropathy. We are developing povetacicept, a dual inhibitor of the B cell activating factor (“BAFF”) and a

proliferation-inducing ligand (“APRIL”) pathways, as a potentially best-in-class approach to treat IgA nephropathy

(“IgAN”), a serious, progressive, life-threatening kidney disease that often progresses to end-stage renal disease. We

completed enrollment in the IgAN Phase 3 clinical trial and submitted the first module of the rolling Biologics

Licensing Application (“BLA”) for povetacicept in IgAN in the fourth quarter of 2025. We expect to complete the

submission for potential accelerated approval in the U.S. in the first half of 2026.

• APOL1-Mediated Kidney Disease. We are developing inaxaplin, a small molecule inhibitor of APOL1 as a potential

first-in-class treatment for APOL1-mediated kidney disease (“AMKD”). We have completed the enrollment of the

interim analysis cohort of the Phase 2/3 clinical trial and will conduct the pre-planned interim analysis once this

cohort reaches 48 weeks of treatment. We expect to share data from the interim analysis in late 2026 or early 2027.

• Peripheral Neuropathic Pain. We are developing suzetrigine, a selective non-opioid NaV1.8 pain signal inhibitor,

for diabetic peripheral neuropathy (“DPN”), a common form of peripheral neuropathic pain. We are evaluating

suzetrigine for the treatment of DPN in two Phase 3 clinical trials. We expect to complete enrollment in both Phase

3 clinical trials by the end of 2026.

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• Type 1 Diabetes. Zimislecel is an allogeneic stem-cell derived, fully differentiated islet cell therapy in pivotal

development for the treatment of type 1 diabetes (“T1D”). We have completed enrollment in the Phase 1/2/3 clinical

trial of zimislecel in people with T1D. We have temporarily postponed completion of the dosing in this clinical trial,

pending an ongoing internal manufacturing analysis.

• Primary Membranous Nephropathy. We are also developing povetacicept to treat primary membranous nephropathy

(“pMN”), a rare and serious autoimmune glomerular disease that can lead to kidney damage and renal failure, and

which has no treatments specifically approved for this condition. We continue to enroll and dose patients in the

adaptive Phase 2/3 pivotal trial in people with pMN. We expect to complete the Phase 2 portion of the clinical trial

and to initiate the Phase 3 portion in mid-2026.

Our core strategy is to discover, develop, and commercialize innovative medicines by combining transformative

advances in the understanding of human disease and the science of therapeutics, to dramatically advance human health. We

focus on validated targets that address causal human biology, predictive lab assays and clinical biomarkers, rapid paths to

registration and approval, and product candidates that hold the potential for transformative patient benefit. Our approach

includes advancing multiple compounds or therapies from each program into early clinical trials to obtain patient data that

can inform selection of the most promising therapies for later stage development as well as inform our ongoing 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. We plan to continue investing to advance our strategy, fostering scientific innovation by

identifying additional product candidates through internal research efforts, and investing in business development

transactions to access emerging technologies, products and product candidates.

Our serial innovation approach is intended to increase the likelihood of successfully bringing transformative medicines to

patients and to provide durable clinical and commercial success. We are working to ensure broad access for eligible patients

with these conditions in all countries with regulatory approval. Within our clinical pipeline, we are rapidly progressing

multiple programs into pivotal development. We maintain a strong financial profile as we continue to invest in our serial

innovation strategy, launch new products, advance our diverse pipeline, and expand geographically.

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MARKETED PRODUCTS

Information regarding our marketed products, including information regarding the disease area, initial approval and age

group for which the therapy is approved, are set forth in the table below.

(1) Specifies the youngest eligible age group in any major market.

CF

CF is a life-shortening genetic disease caused by a defective or missing cystic fibrosis transmembrane conductance

receptor (“CFTR”) protein resulting from mutations in the CFTR gene. The absence of working CFTR protein results in poor

flow of salt and water into and out of cells in a number of organs, including the lungs, where mucus builds up, causing

chronic lung infections and progressive lung damage. Our CFTR modulators, including ivacaftor, deutivacaftor, lumacaftor,

tezacaftor, elexacaftor, and vanzacaftor, target the underlying cause of disease by improving CFTR protein function, and as

such have been shown to provide transformative benefit for people living with CF.

Our marketed CF medicines, ALYFTREK (vanzacaftor/tezacaftor/deutivacaftor), TRIKAFTA/KAFTRIO (elexacaftor/

tezacaftor/ivacaftor and ivacaftor), SYMDEKO/SYMKEVI (tezacaftor/ivacaftor and ivacaftor), ORKAMBI (lumacaftor/

ivacaftor) and KALYDECO (ivacaftor), are being used by nearly three quarters of the approximately 97,000 people with CF

in the U.S., Europe, Australia, and Canada. We estimate that there are approximately 112,000 people with CF in all target

markets.

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Our CF medicines are reimbursed or accessible in more than 60 countries across six continents. ALYFTREK, our most-

recently approved triple combination CF medicine, has the benefit of a once-daily dosing regimen and demonstrated non-

inferiority to TRIKAFTA in ppFEV1, a measure of lung function, and an improvement in sweat chloride levels as compared

to TRIKAFTA. We expect that the majority of people with CF will transition to ALYFTREK over time.

Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia

SCD and TDT are hemoglobinopathies, a group of inherited blood disorders that result from gene mutations that alter

hemoglobin, a protein in red blood cells that delivers oxygen throughout the body.

SCD is caused by the change of a single amino acid in the β-hemoglobin gene that causes red cells to change shape in

settings of low oxygen. These sickled cells block blood flow and can lead to severe pain (known as vaso-occlusive crises),

organ damage, and shortened life span. Treatment is typically focused on relieving pain and minimizing organ damage,

requiring medication and, for some patients, monthly blood transfusions and frequent hospital visits.

Beta thalassemia is caused by loss-of-function mutations in the same β-hemoglobin gene that lead to severe anemia in

patients, which causes fatigue and shortness of breath. In infants, beta thalassemia causes failure to thrive, jaundice, and

feeding problems. Complications of beta thalassemia can lead to an enlarged spleen, liver and/or heart, misshapen bones and

delayed puberty. Treatment for beta thalassemia varies depending on the disease severity for each patient. People with TDT,

the most severe form of the disease, require regular blood transfusions, as frequently as every two to four weeks. Repeated

blood transfusions eventually cause an unhealthy buildup of iron in the patient, leading to organ damage.

CASGEVY (exagamglogene autotemcel), our ex-vivo, non-viral CRISPR/Cas9-based gene-editing therapy for severe

SCD and TDT, is approved in the U.S. and across multiple geographies including Europe, Canada, and the Middle East. We

estimate approximately 60,000 people with severe SCD or TDT are or could become eligible for CASGEVY in these

geographies. To receive CASGEVY, patients first undergo a treatment at an authorized treatment center (“ATC”) that

mobilizes a population of hematopoietic stem and progenitor cells (“HSPC”) from the bone marrow into the bloodstream.

These cells are collected from the patient’s bloodstream and transferred to a manufacturing facility where the HSPCs are

isolated and CRISPR/Cas9 gene-editing is performed on the cells. The gene-editing procedure results in a precise and specific

gene-edit in a non-coding intron of the BCL11A gene. Following manufacturing, the edited cells, now called CASGEVY, are

transferred back to the ATC. Patients are preconditioned with a myeloablative conditioning treatment that ablates their bone

marrow to create space for the edited cells. After CASGEVY is infused into the patient and the edited cells engraft, the levels

of fetal hemoglobin erythrocytes increase, thereby reducing or eliminating symptoms associated with disease. Efficacy data

support the profile of CASGEVY as a potential one-time functional cure for people with severe SCD and TDT.

CASGEVY is broadly reimbursed by third-party payors in the U.S., including the federal government and commercial

payors. In addition, we have agreements with national and regional payors covering more than 275 million lives, to provide

access to CASGEVY. Outside of the U.S., patients have access to CASGEVY in Austria, Denmark, the U.K., Italy,

Luxembourg, Bahrain, Saudi Arabia, the UAE, and Kuwait. We continue to expand access and pursue additional long-term

reimbursement arrangements and to engage with payors in the E.U. and the Middle East.

Globally in 2025, approximately 300 people with SCD or TDT initiated treatment with CASGEVY, 147 people had their

first cell collection for CASGEVY, and 64 people received infusions of CASGEVY. In 2026, we expect to reach more

eligible patients and drive patient infusions through our global ATC network.

Acute Pain

Acute pain is a disabling condition that may occur suddenly but typically lasts less than 90 days and resolves in days or

weeks (for example, following surgery or an injury). It is estimated that over 80 million people are prescribed a medicine for

acute pain every year in the U.S. Currently available treatments have limitations around efficacy or side effects, including a

risk of addiction with opioids. Because of these challenges, over- and under-utilization, as well as misutilization, of current

pain medicines may occur.

JOURNAVX (suzetrigine) is a first-in-class, oral pain signal inhibitor that is highly selective for voltage-gated sodium

channel NaV1.8. Through this mechanism, JOURNAVX provides effective relief of pain without evidence of the several

limitations of other currently available therapies, including the addictive potential of opioids. JOURNAVX was approved by

the U.S. Food and Drug Administration (“FDA”) in January 2025 for the treatment of moderate-to-severe acute pain in

adults.

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Since JOURNAVX became available at U.S. pharmacies in March 2025 and through the end of 2025, more than 550,000

prescriptions were written and filled across the hospital and retail settings in different acute pain conditions, consistent with

the product’s broad label. We have secured access for JOURNAVX with all three national pharmacy benefit managers, and

as of January 2026, more than 200 million individuals across commercial and government payors have coverage to

JOURNAVX, representing two-thirds of U.S. covered lives. In addition, 21 states provide coverage via Medicaid.

COMMERCIALIZATION OF OUR MEDICINES

We sell our medicines primarily to a limited number of specialty pharmacy and specialty distributors globally, as well as

to certain major wholesalers in the U.S. Our customers in the U.S. subsequently resell our medicines to patients, health care

providers, retail pharmacies, hospitals, or ATCs. Outside of the U.S., we generate sales primarily through distributor

arrangements and to retail pharmacies, as well as to hospitals and clinics, many of which are government-owned or supported

customers. In certain markets, we may not utilize a specialty distributor or specialty pharmacy to distribute CASGEVY and

instead may sell CASGEVY directly to ATCs. We contract with government agencies so that our medicines will be eligible

for purchase by, or partial or full reimbursement from, such third-party payors.

We promote the use of our medicines directly to healthcare professionals and organizations such as doctors, nurse

practitioners, physician assistants, pharmacists, hospitals, and pharmacy benefit managers. Through our field sales and

medical organizations, we explain the risks and benefits of our medicines to these healthcare professionals and organizations.

Our marketing is limited to the approved uses of the particular medicine. We also continue to develop scientific data and

other information about potential additional uses of our medicines and provide such information through clinical or medical

affairs teams as scientific exchange at scientific congresses or in other ways, including the development of publications, or in

response to unsolicited inquiries from healthcare professionals and organizations. In the U.S., we also market directly to

consumers by communicating the approved uses, benefits and risks.

We are dedicated to helping patients obtain access to our therapies. We work to gain access for our medicines on

formularies and reimbursement plans (lists of formulary-recommended or approved medicines and other products) by

providing information about the clinical profiles of our medicines. Our patient support representatives help patients

understand their insurance coverage and, in the U.S., we have established programs that provide co-pay assistance or free

medicine for qualified uninsured or underinsured patients, based on specific eligibility criteria.

RESEARCH AND DEVELOPMENT PROGRAMS

We invest in research and development to discover and develop transformative medicines for people with serious

diseases, with a focus on specialty markets. Our research strategy is to combine transformative advances in the understanding

of human disease and in the science of therapeutics to dramatically advance human health. We focus on:

• disease areas with known causal human biology;
• targets validated by causal human biology;
• predictive lab assays and clinical biomarkers;
• potential for transformative benefit regardless of modality; and
• efficient path to registration and approval.

Our development-stage product candidates are focused on the treatment of serious diseases. In pursuit of serial

innovation, our research and development approach includes advancing multiple candidates into clinical trials and pursuing

multiple modalities with the goal of bringing first-in-class and/or best-in-class therapies to patients.

Our research and development strategy has been validated through our success in moving novel product candidates into

clinical trials and obtaining marketing approvals for our five CF medicines, CASGEVY, and JOURNAVX. Our approach to

drug discovery has been further validated by ongoing pivotal development in five additional disease areas: in IgAN and pMN

with povetacicept, in AMKD with inaxaplin, in T1D with zimislecel, and in diabetic peripheral neuropathy with suzetrigine.

To augment our internal programs, we acquire businesses and technologies and collaborate with biopharmaceutical and

technology companies, leading academic research institutions, government laboratories, foundations and other organizations

to advance research in our disease areas of interest, as well as to access technologies needed to execute on our strategy. Our

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internal and external innovation approaches are based on the same strategy, which enables us to effectively integrate and

execute on new internal capabilities as we invest in external innovation. Our investments in external innovation include our

collaboration with CRISPR, which resulted in the successful development and approval of CASGEVY; our acquisition of

Semma Therapeutics, Inc. (“Semma”), which established and advanced our T1D program; our expansion of our renal

programs through our acquisition of Alpine Immune Sciences, Inc. (“Alpine”); our mRNA therapeutic, VX-522, for

treatment of CF through our collaboration with Moderna; and our intracellular therapeutic for myotonic dystrophy type 1

(“DM1”), VX-670, through our collaboration with Entrada.

CF

Our goal in CF is to continue to extend our leadership by developing treatment regimens that will provide benefits to all

people with CF. We have completed the Phase 3 clinical trial evaluating TRIKAFTA/KAFTRIO in children one year to less

than two years of age. The data showed that TRIKAFTA was generally safe and well-tolerated, consistent with the

established safety profile. Treatment with TRIKAFTA in this age group resulted in rapid, robust, and clinically meaningful

improvement in the secondary endpoint of sweat chloride reduction. We expect to begin submissions for global regulatory

approvals in this age group in the first half of 2026. We completed the global trial evaluating ALYFTREK in children 2 to 5

years of age. The data showed that ALYFTREK was generally safe and well-tolerated, consistent with the established safety

profile. Treatment with ALYFTREK in this age group resulted in a clinically meaningful improvement in the CFTR function

as measured by sweat chloride. We expect to submit for approval with global regulators in this age group in the first half of

2026. In addition, we initiated a pivotal trial evaluating ALYFTREK in children one to less than two years of age.

We estimate that nearly 95% of people with CF could benefit from our five approved medicines, and, in connection with

our serial innovation approach, we continue to identify and develop additional CFTR modulators with the goal of developing

best-in-class medicines that can treat more people with CF. We have advanced several next-generation, 3.0 CFTR modulators

into the clinic. VX-828 is the first of these and is being evaluated in a proof-of-concept clinical trial of people with CF. We

expect to complete enrollment and dosing in the first half of 2026. We are also enrolling and dosing in a Phase 1 clinical trial

of VX-581, another corrector in the next-generation 3.0 class, in healthy volunteers.

To treat people with CF who do not make full-length CFTR protein, and as a result, cannot benefit from our CFTR

modulators, we are researching and developing genetic therapies, such as mRNA, and gene-editing approaches to CF. In

collaboration with Moderna, we are developing VX-522, a nebulized CF mRNA therapeutic designed to treat the underlying

cause of CF lung disease for these people by enabling cells in the lungs to produce functional CFTR protein. We are targeting

completion of dosing in the multiple ascending dose portion of the Phase 1/2 clinical trial evaluating VX-522 and disclosure

of the data in the second half of 2026.

Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia

In December 2025, we presented positive data from the pivotal trials evaluating CASGEVY in children 5 to 11 years of

age with severe SCD (the CLIMB SCD-151 clinical trial) and TDT (the CLIMB THAL-141 clinical trial). We expect to

initiate global regulatory submissions for this age group, including in the U.S., in the first half of 2026. In the U.S.,

CASGEVY has received a Commissioner’s National Priority Voucher for use in this age group, which is meant to accelerate

the FDA’s review of the application once submitted.

In connection with our serial innovation approach, we are advancing preclinical assets for myeloablative conditioning

agents with improved tolerability profiles, which we refer to as “improved conditioning agents,” which could be used in

connection with treatment with CASGEVY, significantly broadening the eligible SCD and TDT patient population. We are

also investigating in vivo gene-editing approaches and small molecules for the potential treatment of SCD and TDT.

Pain

Pain can be debilitating and develop from a variety of conditions. Most commonly, people with pain can be categorized

as suffering from one of three types of pain: acute pain, chronic neuropathic pain (caused primarily by damage or dysfunction

of peripheral nerves), or chronic musculoskeletal pain (caused primarily by damage to muscle, joints or bone). Acute pain

usually resolves in days or weeks (for example, following surgery or an injury), while chronic pain generally lasts greater

than three months due to unresolved or ongoing damage to tissues or nerves. Currently available treatments have limitations

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around efficacy or side effects, including a risk of addiction. Because of these challenges, over, under, and mis-utilization of

current pain medicines may occur.

The sodium channels NaV1.8 and NaV1.7 play important roles in the physiology of pain. We have discovered multiple

selective small molecule inhibitors of NaV1.8 as potential treatments for pain. We obtained pharmacological validation of

NaV1.8 inhibition with a first generation NaV1.8 inhibitor in acute pain, chronic neuropathic pain, and chronic

musculoskeletal pain.

Acute Pain

In August 2025, we announced results from the Phase 2 placebo-controlled dose-ranging clinical trial evaluating the

safety and efficacy of VX-993, an investigational selective NaV1.8 pain signal inhibitor, for the treatment of acute pain

following bunionectomy surgery. The clinical trial was powered to determine whether VX-993 would result in higher clinical

efficacy than previously demonstrated with the NaV1.8 pathway. Based on the efficacy results of the clinical trial, we did not

expect VX-993 to be superior to suzetrigine and therefore chose not to further advance VX-993 as monotherapy in acute pain.

VX-993 was generally safe and well-tolerated.

Peripheral Neuropathic Pain

There are no approved medicines in the U.S. that are labeled for the treatment of peripheral neuropathic pain. We are

evaluating suzetrigine, our selective non-opioid NaV1.8 pain signal inhibitor, for the treatment of DPN, a type of peripheral

neuropathic pain, in two Phase 3 clinical trials. We expect to complete enrollment in both Phase 3 clinical trials by the end of

2026. The FDA granted Breakthrough Therapy Designation to suzetrigine in DPN. We are also enrolling and dosing people

with DPN in a Phase 2 clinical trial evaluating VX-993.

In connection with our serial innovation approach, we are advancing multiple NaV1.8 inhibitors and NaV1.7 inhibitors,

which could be used alone or in combination, for the treatment of acute pain and peripheral neuropathic pain.

IgA Nephropathy

IgAN is a serious, progressive, life-threatening chronic kidney disease driven by uncontrolled autoreactive B cell activity

that causes inflammation and damage to the kidneys. It is the most common cause of primary glomerulonephritis worldwide.

We estimate that IgAN affects approximately 330,000 people in the U.S. and Europe, and, globally, more than 1.5 million

people are diagnosed with IgAN. A high percentage of people with IgAN progress to end-stage kidney disease.

IgAN is thought to occur when the body produces an abnormal form of IgA, a type of antibody that normally helps the

body fight infections. The body generates an abnormal immune response, including antibodies (autoantibodies), against this

abnormal IgA, and these antibodies can combine to create larger molecules called immune complexes. These immune

complexes can deposit in the kidneys, triggering damage and inflammation, especially within the glomeruli, impairing the

kidneys’ ability to properly filter waste and fluid.

We are developing povetacicept for multiple diseases and believe that it has pipeline-in-a-product potential. Povetacicept

is a potent dual inhibitor of the BAFF and APRIL cytokines, which promote B cell proliferation, differentiation and survival,

and provides B cell control by inhibiting the ability of BAFF and APRIL to drive the pathogenesis of multiple autoimmune

diseases, such as IgAN, pMN and generalized myasthenia gravis (“gMG”) (as described below). Povetacicept was

specifically engineered to achieve improvements in binding affinity, potency, pharmacokinetics, and tissue distribution.

Povetacicept has demonstrated potential best-in-class efficacy in a global Phase 1/2 clinical trial in people with IgAN. A

small volume dose of povetacicept is expected to be self-administered at home once every four weeks via a subcutaneous

auto-injector.

We completed enrollment in RAINIER, the global Phase 3 pivotal trial of povetacicept versus placebo in people with

IgAN. The clinical trial design contemplates a pre-planned interim analysis evaluating the change from baseline in urine

protein-to-creatine ratio (“UPCR”) after a certain number of patients reach 36 weeks of treatment. We expect to share data

from the interim analysis in the first half of 2026. If positive, the interim analysis may serve as the basis to seek accelerated

approval in the U.S. The final analysis will occur when patients reach two years of treatment and will evaluate total eGFR

(estimated glomerular filtration rate) slope. The FDA has granted Breakthrough Therapy Designation for povetacicept in

IgAN. We submitted the first module of the IgAN BLA to the FDA at the end of 2025 under the rolling submission pathway,

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and we expect to complete the submission in the first half of 2026, pending positive results from the interim analysis. We are

using a priority review voucher to expedite the FDA review of the povetacicept BLA from ten months to six months.

Our serial innovation approach continues with respect to IgAN and other B cell-mediated diseases.

APOL1-Mediated Kidney Disease

AMKD is a rapidly progressive, proteinuric kidney disease caused by variants in the APOL1 gene. In AMKD, the

kidney’s filtering units, known as the glomeruli, and within them the cells known as podocytes, are damaged, leading to

leakage of protein into the urine, deterioration in kidney function, scarring, and, ultimately, end stage renal disease. People

with AMKD progress to end stage kidney disease at a faster rate than those with other forms of chronic kidney disease and

reach kidney failure at a median age of 45 years old. AMKD occurs in people with African ancestry, with an estimated

patient population of approximately 150,000 people in the U.S. and Europe. In addition, we estimate that there are

approximately 100,000 people with AMKD with comorbidities, such as type 2 diabetes, in the U.S. and Europe.

In a Phase 2 proof-of-concept clinical trial, people with APOL1-mediated focal segmental glomerulosclerosis (“FSGS”)

treated with inaxaplin on top of standard of care achieved a statistically significant, substantial, and clinically meaningful

reduction of proteinuria. Inaxaplin was generally safe and well tolerated by patients. Based on the positive Phase 2 data, the

FDA granted Breakthrough Therapy Designation to inaxaplin for FSGS and the European Medicines Agency (“EMA”)

granted Priority Medicines (“PRIME”) designation to inaxaplin for AMKD. We initiated pivotal development of inaxaplin in

a single Phase 2/3 adaptive clinical trial (“AMPLITUDE”) in people with AMKD in 2022. We completed enrollment of the

interim analysis cohort of AMPLITUDE in 2025 and we expect to conduct the pre-planned interim analysis once this cohort

has been treated for 48 weeks. We expect to share data from the interim analysis in late 2026 or early 2027, and we expect to

complete full enrollment in the AMPLITUDE clinical trial in the second half of 2026.

Our serial innovation strategy in AMKD focuses on indication expansion: evaluating inaxaplin in new populations of

people with AMKD not included in the AMPLITUDE clinical trial. The Phase 2 clinical trial (“AMPLIFIED”) evaluates

inaxaplin as a treatment for people with AMKD with moderate proteinuria, or with AMKD and type 2 diabetes, two

populations that are not being studied in the AMPLITUDE trial. We expect to complete the AMPLIFIED clinical trial and

share results in mid-2026.

Type 1 Diabetes

T1D is a chronic metabolic disorder caused by insufficient insulin secretion by the beta cells in the pancreas. In people

with T1D, the insulin-producing islet cells of the pancreas are destroyed by the person’s own immune system, resulting in a

lack of insulin and impairment of blood glucose control. While insulin therapy allows patients to live for decades with the

disease, challenges of insulin therapy include inadequate control of blood sugar (both hyper- and hypo-glycemia), a

substantial burden of care on patients and families, and long-term vascular complications. Current standards of care do not

address the underlying causes of the disease, and there are limited treatment options beyond insulin for the management of

T1D.

We are developing non-autologous (allogeneic) fully differentiated, stem-cell derived islet cell therapies designed to

replace insulin-producing islet cells that are destroyed in people with T1D, with the goal of delivering a functional cure.

Zimislecel, our first program, is a stem cell-derived, allogeneic, fully differentiated, insulin-producing islet cell replacement

therapy, using standard immunosuppression to protect the implanted cells. We believe that zimislecel has the potential to

transform the lives of eligible people with T1D. In the U.S. and Europe, we estimate that there are approximately four million

people diagnosed with T1D. At initial launch, we expect there will be approximately 65,000 people with high unmet need

who experience severe hypoglycemic events who will be eligible for zimislecel.

We have completed enrollment in the Phase 1/2/3 clinical trial evaluating the safety and efficacy of zimislecel. We have

temporarily postponed completion of the dosing pending an ongoing internal manufacturing analysis. The most recent data

from this trial, published online in the New England Journal of Medicine in June 2025, continue to demonstrate the

transformative potential of zimislecel with consistent and durable patient benefit. The safety profile is generally consistent

with the immunosuppressive regimen used in the trial, the infusion procedure, and complications from long-standing

diabetes. Zimislecel has been granted Regenerative Medicine Advanced Therapy and Fast Track designations from the FDA,

PRIME designation from the EMA, Breakthrough Medicine designation from the Kingdom of Saudi Arabia (“Saudi

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Arabia”), and has secured an Innovation Passport under the Innovative Licensing and Access Pathway from the U.K.

Medicines and Healthcare products Regulatory Agency (the “MHRA”).

In March 2025, we announced results from the Phase 1/2 clinical trial evaluating VX-264, which encapsulated zimislecel

in an immunoprotective device. VX-264 was generally safe and well-tolerated but did not meet its efficacy endpoint, and we

have discontinued development of this program.

In connection with our serial innovation approach, we are pursuing research-stage programs to evaluate additional

approaches that could provide transformative benefits to people with T1D and reduce or eliminate the need for standard

immunosuppressive regimens, including targeting improved immunosuppression for zimislecel.

Primary Membranous Nephropathy

pMN is a serious, progressive, life-threatening chronic kidney disease driven by uncontrolled autoreactive B cell activity

that causes inflammation and damage to the kidneys. It is a rare autoimmune glomerular disease that occurs when the body

generates an abnormal immune response, including antibodies (autoantibodies), against proteins that are part of the kidney.

We estimate that pMN affects approximately 150,000 people in the U.S. and Europe, and more than 600,000 people globally.

Autoantibodies trigger damage and inflammation, especially within the glomeruli, impairing the kidneys’ ability to properly

filter waste and fluid.

People with pMN can experience a variety of serious complications, including blood clots, infection, and heart disease.

At time of diagnosis, most people with pMN are at risk of progression to end-stage renal disease. There are no therapies

specifically approved for the treatment of pMN.

We believe povetacicept represents a potentially best-in-class approach to control B cell activity in people with pMN.

We have received Fast Track Designation from the FDA and PRIME designation from the EMA for povetacicept in pMN.

Based on the strength of the Phase 2 results in the RUBY-3 clinical trial, we completed the End of Phase 2 meeting with the

FDA and reached agreement on an adaptive Phase 2/3 pivotal development program for pMN; we are enrolling and dosing

people with pMN in that clinical trial. We expect to complete the Phase 2 portion of the clinical trial and to initiate the Phase

3 portion of the trial in mid-2026.

Autosomal Dominant Polycystic Kidney Disease

ADPKD is a life-shortening genetic kidney disease characterized by the growth of numerous kidney-enlarging cysts that

impair kidney function and can ultimately lead to end stage renal disease. In most cases, ADPKD is caused by variants in the

PKD1 and PKD2 genes; the majority of ADPKD patients have a variant in the PKD1 gene. Around half of people with

ADPKD experience kidney failure by the age of 60. We estimate that there are approximately 300,000 people diagnosed with

ADPKD in the U.S. and Europe.

VX-407 is a first-in-class small molecule corrector that is designed to target the underlying cause of ADPKD in people

with a subset of PKD1 variants, which represents up to approximately 10% of the overall patient population living with

ADPKD. We are enrolling and dosing patients in a Phase 2 proof-of-concept clinical trial evaluating VX-407 (“AGLOW”)

for the treatment of ADPKD. We expect to complete enrollment in the AGLOW clinical trial by the end of 2026.

In connection with our serial innovation approach, we are progressing multiple research-stage assets in ADPKD.

Myotonic Dystrophy Type 1

DM1 is an inherited disease that results in the weakening and destruction of skeletal muscles over time. Muscle

weakness, muscle wasting and myotonia (sustained muscle contraction and difficulty relaxing muscles) are the hallmark

features of DM1. It is a serious life-shortening disease with no approved treatments, and we estimate that it affects

approximately 110,000 people in the U.S. and Europe.

VX-670, our lead approach for DM1, holds the potential to address the underlying cause of DM1. VX-670 is an

oligonucleotide connected to a cyclic peptide to promote effective delivery into cells. We continue to enroll and dose in the

multiple ascending dose portion of the global Phase 1/2 clinical trial of VX-670 in people with DM1 (“GALILEO”), which

evaluates both safety and efficacy of VX-670. We expect to complete enrollment and dosing in this trial in mid-2026.

Our serial innovation approach in DM1 includes a small molecule program in preclinical development.

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Generalized Myasthenia Gravis

gMG is a serious, chronic, and debilitating B cell-mediated immune disorder. This rare condition is caused by the

formation of pathogenic autoantibodies to key proteins that function in neuromuscular transmission. These pathogenic

antibodies block, alter, or damage the neuromuscular junction, which is the connection point between nerve cells and the

muscles they control. As a result, people with gMG experience muscle weakness and fatigue, which can lead to inability to

perform the activities of daily living and, in severe cases, compromise of respiratory muscles that can lead to life-threatening

respiratory failure. Current therapies address only subsets of the gMG population, and many advanced treatments require

cyclic treatment and drug holidays due to safety challenges and immunosuppression. As a consequence, there is significant

unmet medical need for improved therapies. We estimate that gMG affects approximately 175,000 people in the U.S. and

Europe and more than 300,000 people globally.

Povetacicept is a potent dual inhibitor of BAFF and APRIL, two cytokines that are elevated in gMG, where they play

distinct roles in the proliferation, differentiation, and survival of B cells. In gMG, elevated expression of both BAFF and

APRIL drives uncontrolled B cell growth and activation, triggering overproduction of the pathogenic autoantibodies driving

disease activity. By inhibiting both BAFF and APRIL, we believe povetacicept represents a potential best-in-class approach

to reducing production of these pathogenic autoantibodies in gMG.

We expect to initiate a placebo-controlled, Phase 2 dose-ranging proof-of-concept clinical trial evaluating povetacicept

for the treatment of people with gMG in the first half of 2026.

STRATEGIC TRANSACTIONS

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 that complement and advance our ongoing

research and development efforts. In addition, we establish business relationships with collaborators to support our research

activities and to lead or support development and/or commercialization of certain product candidates. We expect to continue

to identify and evaluate potential acquisitions, licenses and collaborations that may be similar to or different from the

transactions that we have engaged in previously.

Acquisitions

In 2024, we acquired Alpine for approximately $5.0 billion. Alpine’s lead molecule, povetacicept, is a highly potent and

effective dual inhibitor of BAFF and APRIL. We are currently evaluating povetacicept in a pivotal trial as a potentially best-

in-class approach to treat IgAN. We also believe povetacicept holds pipeline-in-a-product potential for other indications, such

as pMN and gMG.

We previously made other acquisitions which have expanded and advanced our pipeline, including:

• In 2019, we established our T1D program through our acquisition of Semma, a privately held company focused on

the use of stem cell-derived human islets as a potentially curative treatment for T1D. We are evaluating zimislecel

for the potential treatment of T1D in a Phase 1/2/3 clinical trial.

• In 2017, we enhanced our CF portfolio through our acquisition of certain CF assets, including deutivacaftor, from

Concert Pharmaceuticals Inc. In 2024, the FDA approved ALYFTREK for people with CF 6 years of age and older.

We expect to continue to identify and make acquisitions to expand and advance our pipeline and business.

Collaboration and Licensing Arrangements

Joint Development and Commercialization Agreement with CRISPR

In 2017, we entered into a joint development and commercialization agreement (“Original JDCA”) with CRISPR

Therapeutics AG (“CRISPR”), pursuant to which we are co-developing and co-commercializing CASGEVY for SCD and

TDT. In 2021, we and CRISPR amended and restated the Original JDCA (the “A&R JDCA”).

Pursuant to the A&R JDCA, we lead global development, manufacturing and commercialization of CASGEVY, with

support from CRISPR. Subject to the terms and conditions of the A&R JDCA, we have the right to conduct all research,

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development, manufacturing, and commercialization activities relating to the product candidates and products under the A&R

JDCA (including CASGEVY) throughout the world, subject to CRISPR’s reserved right to conduct certain activities.

The net profits and net losses incurred pursuant to the A&R JDCA with respect to CASGEVY are allocated 60% to us

and 40% to CRISPR, subject to certain adjustments, while all other product candidates and products under the A&R JDCA

have net profits and net losses shared equally between the parties.

Either party may terminate the A&R JDCA upon the other party’s material breach, subject to specified notice and cure

provisions, or, in our case, in the event that CRISPR becomes subject to specified bankruptcy, winding up, or similar

circumstances. Either party may terminate the A&R JDCA in the event the other party commences or participates in any

action or proceeding challenging the validity or enforceability of any patent that is licensed to such challenging party

pursuant to the A&R JDCA. We also have the right to terminate the A&R JDCA for convenience at any time after giving

prior written notice. If circumstances arise pursuant to which a party would have the right to terminate the A&R JDCA on

account of an uncured material breach, such party may elect to keep the A&R JDCA in effect and cause such breaching party

to be treated as if it had exercised its opt-out rights with respect to the products associated with such uncured material breach

and the royalties payable to the breaching party would be reduced by a specified percentage.

Either party may opt out of the development of a product candidate under the A&R JDCA after predetermined points in

the development of the product candidate, on a candidate-by-candidate basis. In the event of such opt-out, the party opting-

out will no longer share in the net profits and net losses associated with such product candidate and, instead, the opting out

party will be entitled to high single to mid-teen percentage royalties on the net sales of such product, if commercialized.

In-License Agreements

We have entered into various agreements pursuant to which we have obtained access to technologies from third parties

and are conducting research and development activities with collaborators. Pursuant to these arrangements, we have obtained

development and commercialization rights to resulting product candidates. Depending on the terms of the arrangements, we

may be responsible for the costs of research activities, required to make upfront payments and/or milestone payments upon

the achievement of certain research, development, and commercial objectives, and/or pay royalties on future sales, if any, of

commercial products resulting from the collaboration. Our current in-license agreements include:

• CRISPR Therapeutics AG. In addition to our arrangement with CRISPR described above, we have exercised options

to exclusively license treatments for specific targets, including CF, that were subject to the research program under

the collaboration agreement we entered into with CRISPR in 2015. In 2019, we obtained exclusive worldwide rights

to CRISPR’s intellectual property for Duchenne muscular dystrophy (“DMD”) and DM1 gene-editing products

through a new agreement with CRISPR. In 2023, we obtained non-exclusive rights to CRISPR’s intellectual

property for the development of hypoimmune gene-edited cell therapies for T1D through a new agreement with

CRISPR.

• Moderna, Inc. In 2016, we entered into a collaboration with Moderna for the identification and development of

mRNA therapeutics encoding CFTR for the treatment of CF. We are evaluating VX-522, an mRNA therapeutic,

pursuant to this collaboration.

• Entrada Therapeutics, Inc. In 2022, we established a collaboration with Entrada focused on enabling efficient

intracellular delivery of an oligonucleotide for DM1. This collaboration includes VX-670, an investigational

candidate for the treatment of DM1 that is in clinical development. We are evaluating VX-670 in people with DM1

pursuant to this collaboration.

Out-license Agreements

We have entered into various agreements pursuant to which we have out-licensed rights to certain product candidates to

third-party collaborators. Pursuant to these out-license arrangements, our collaborators are responsible for certain costs

related to the continued development of such product candidates and obtain development and commercialization rights to

these product candidates. Depending on the terms of the arrangements, our collaborators may be required to make upfront

payments, milestone payments upon the achievement of certain research and development objectives and/or pay royalties on

future sales, if any, of commercial products licensed under the agreement.

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In 2025, we entered into agreements with Zai Lab Limited (“Zai”) and Ono Pharmaceuticals Co., Ltd (“Ono”) related to

the development and commercialization of povetacicept in certain 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 in the licensed territories, if povetacicept becomes an approved product.

Cystic Fibrosis Foundation

In 2004, we entered into an agreement (the “CFF 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 CFF 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. For TRIKAFTA/KAFTRIO, the CFF Agreement does not identify

a specific date on which royalty obligations terminate. To qualify as a royalty bearing “Drug Product” as defined under the

CFF Agreement, a compound must be covered by intellectual property protection (including patents) that Vertex has the legal

right to license to another party.

INTELLECTUAL PROPERTY

Patents and other intellectual property rights such as trademarks, trade secrets, and copyrights are critical to our business.

We actively seek protection for our products and proprietary information by means of U.S. and foreign patents, trademarks,

and copyrights, as appropriate. In addition, we rely upon trade secret protection and contractual arrangements to protect

certain of our proprietary information.

Patents provide a period of exclusivity that can make it more difficult for competitors to market and use our technology.

We own and control patents and pending patent applications that relate to compounds, formulations, synthetic routes,

intermediates, devices, treatment of diseases, and other inventions.

To protect our intellectual property, we typically apply for patents several years before a product receives marketing

approval. Under current law, a patent expires 20 years from its first effective filing date. Since the drug development process

may last for many years, there may be a period of time in which we have an issued patent but not marketing approval to sell

the drug. To compensate for patent term lost while a product is in clinical trials and undergoing review for marketing

approval, we may be able to apply for patent term extensions or supplementary protection certificates (“SPCs”) in some

countries. In addition to patent protection, we receive regulatory exclusivity from U.S. and European regulatory agencies for

the active pharmaceutical and biological agents and, where applicable, their approved orphan indications for a certain time

period. Regulatory exclusivity runs concurrently with patent exclusivity and provides complementary protection for our

products.

For our approved commercial products, and those in development, we own or hold exclusive and non-exclusive licenses

to several hundred patents around the world. In the U.S., once a New Drug Application (“NDA”), or a supplement thereto, is

approved we are required to list with the FDA each U.S. patent with claims that cover our product or a method of using the

product. The FDA publishes the patents we list in a book referred to as the Orange Book. We have fourteen issued U.S.

patents listed in the Orange Book that cover the active pharmaceutical ingredients in KALYDECO, its marketed

formulations, and/or its approved indication. We have 22 issued U.S. patents listed in the Orange Book that cover the active

pharmaceutical ingredients in ORKAMBI, its marketed formulations, and/or its approved indication. We have 25 issued U.S.

patents listed in the Orange Book that cover the active pharmaceutical ingredients in SYMDEKO, its marketed formulations,

and/or its approved indication. We have 34 issued U.S. patents listed in the Orange Book that cover the active pharmaceutical

ingredients in TRIKAFTA, its marketed formulations, and/or its approved indication. We have 35 issued U.S. patents listed

in the Orange Book that cover the active pharmaceutical ingredients in ALYFTREK, its marketed formulations, and/or its

approved indication. We have an issued patent listed in the Orange Book that covers the active pharmaceutical ingredient in

JOURNAVX, its marketed formulation, and/or its approved indication.

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Products approved by the FDA under a BLA, including CASGEVY, receive 12 years of regulatory exclusivity in the

U.S. from a product’s approval date. Additionally, we have licenses to dozens of issued U.S. patents that cover CASGEVY,

its approved indication, and/or its manufacture. Products approved by the FDA under a BLA are not subject to the Orange

Book patent listing requirement.

The table below sets forth the year of projected expiration for the basic product patent covering each of our approved

products. For products that are combinations of two or more active ingredients, the table lists the projected expiration of the

latest expiring patent covering any of the active pharmaceutical ingredients (lumacaftor for ORKAMBI, tezacaftor for

SYMDEKO/SYMKEVI, elexacaftor for TRIKAFTA/KAFTRIO and vanzacaftor for ALYFTREK). Unless otherwise noted,

patent term extensions, and pediatric exclusivity periods are not reflected in the expiration dates listed in the table below and

may extend protection. In some instances, we also own later-expiring patents and applications relating to solid forms,

formulations, methods of manufacture, or the use of these drugs in the treatment of particular diseases or conditions. In some

cases, however, such patents may not protect our drug from generic competition after the expiration of the basic patent.

1 Includes pediatric exclusivity.

2 Expiration date reflects SPCs granted in the five major European markets (France, Germany, Italy, Spain and the U.K.).

3 SPC expires in 2028 in Germany; application for pediatric extension pending in France, Italy, Spain, and the U.K.

4 Expiration year reflects the expiration of regulatory exclusivity, which expires later than the basic product patent for this product in this market.

5 Expiration year reflects the expiration of regulatory exclusivity in the E.U., which expires later than the basic product patent for this product in

this market.

6 Product is approved in Great Britain with regulatory exclusivity until November 2033, which is later than the expiration of the basic product

patent.

In addition to protecting our marketed products, we actively file patent applications in the U.S. and in foreign countries

on inventions relating to our pipeline. For example, we also own and/or control U.S. and foreign patents and/or patent

applications relating to the following:

• Other CF potentiators and correctors and many other related compounds, and the use of those compounds for the

treatment of CF.

• VX-522 and other mRNA-based approaches for treating CF.
• VX-993, VX-973, and other compounds being studied for the potential treatment of pain.
• Povetacicept for the treatment of IgAN, pMN and gMG.
• Inaxaplin for the potential treatment of AMKD.
• Zimislecel and other cell-based approaches for treating T1D.
• VX-407 and other compounds being studied for the potential treatment of ADPKD.
• VX-670 for the treatment of DM1.
• Other pre-clinical and clinical candidates and the use of such candidates to treat specified diseases.

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• The manufacture, pharmaceutical compositions, related solid forms, formulations, dosing regimens, and methods of

use of many of the above compounds.

We and CRISPR intend to rely upon a combination of rights, including patent rights, trade secret protection, and

regulatory exclusivities to protect CASGEVY. CRISPR has licensed certain rights to a worldwide patent portfolio that covers

various aspects of the CRISPR/Cas9 editing platform technology including, for example, compositions of matter and methods

of use, including their use in targeting or cutting DNA, from Dr. Emmanuelle Charpentier. In addition to Dr. Charpentier, this

patent portfolio has named inventors who assigned their rights to the Regents of the University of California or the University

of Vienna, to whom we refer, together with Dr. Charpentier, as the CVC Group. CRISPR has non-exclusive or co-exclusive

rights to the patent rights that protect the core CRISPR/Cas9 gene-editing technology. For example, certain third parties,

including competitors, have reported obtaining a license to rights in this patent portfolio in certain fields. In addition, patents

and patent applications in this patent portfolio are the subject of adversarial proceedings in the U.S., Europe, and other

jurisdictions, including proceedings in the U.S. Patent and Trademark Office (the “USPTO”), between the CVC Group and,

separately, Sigma-Aldrich, Co. LLC (“Sigma-Aldrich”), ToolGen, Inc. (“ToolGen”), and the Broad Institute, Harvard

University, and Massachusetts Institute of Technology (collectively, “Broad”). To date, both the CVC Group and Broad have

obtained granted patents that purport to cover aspects of CRISPR/Cas9 editing platform technology. The patents and patent

applications within the patent portfolios of the CVC Group, Broad, Sigma-Aldrich and/or ToolGen are, or may in the future

be, involved in proceedings similar to interferences or priority disputes in Europe or other foreign jurisdictions. In December

2023, we entered into an agreement with Editas Medicine, Inc. (“Editas”), providing us a non-exclusive sublicense to certain

patents relating to CRISPR/Cas9 technology, owned by Broad and Harvard, which are licensed to Editas. In addition to the

patent portfolios licensed from Dr. Charpentier, Broad, and Harvard, we own patents and/or patent applications relating to the

composition, manufacture, and use of CASGEVY.

We and our CASGEVY manufacturing partners are engaged in patent litigation against ToolGen in the U.S., the U.K.,

and the Netherlands. In these cases, ToolGen alleges that the CASGEVY manufacturing process infringes its patents relating

to CRISPR/Cas9. We have argued in the U.K. and the Netherlands that ToolGen’s patents are invalid, and we filed

oppositions at the European Patent Office seeking the revocation of the patents asserted in the U.K. and the Netherlands

cases. We intend to respond to the U.S. case in the first half of 2026.

From time to time, we enter into exclusive and non-exclusive license agreements for proprietary third-party technology

used in connection with our research activities. These license agreements typically provide for the payment by us of a license

fee but may also include terms providing for milestone payments or royalties for the development and/or commercialization

of our drug products arising from the related research.

We cannot be certain that issued patents we own or license will be enforceable or provide adequate protection or that

pending patent applications will result in issued patents. The existence of patents does not guarantee our right to practice the

patented technology or commercialize the patented product. Litigation, interferences, oppositions, inter partes reviews,

administrative challenges or other similar types of proceedings may be necessary in some instances to determine the validity

and scope of certain patents, regulatory exclusivities or other proprietary rights, and in other instances to determine the

validity, scope or non-infringement of intellectual property rights that may be claimed by third parties to be pertinent to the

manufacture, use or sale of our products.

MANUFACTURING

As we market and sell our approved products and advance our product candidates through clinical development toward

commercialization, we continue to build and maintain our supply chain and quality assurance resources. We rely on internal

capabilities and a global network of third parties to manufacture and distribute our product candidates for clinical trials, as

well as our products for commercial sale and post-approval clinical trials. In addition to establishing supply chains for newly

approved products, we must adapt our supply chains for existing products to increase scale of production or to include

additional formulations. We are focused on ensuring the stability of the supply chains for our current products, including our

CF medicines, CASGEVY, and JOURNAVX, and for our pipeline programs. We are also focused on identifying and

ensuring efficient manufacturing and delivery processes for the biologics and cell and genetic therapies we are developing,

including our stem cell therapy program for T1D, and biologics manufacturing for povetacicept.

We have established our own small molecule manufacturing capabilities in Boston, which we use for clinical trial and

commercial supplies, including certain manufacturing steps related to our commercial supply of TRIKAFTA/KAFTRIO. We

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expect to continue to rely on third parties to meet our commercial supply needs and a significant portion of our clinical

supply needs for the foreseeable future.

Our supply chain for sourcing raw materials and manufacturing our products and product candidates, including obtaining

all necessary supplies, is a multi-step, global endeavor. In general, these raw materials and other necessary supplies are

available from multiple sources. Third-party contract manufacturers, including some based in China, perform different parts

of our manufacturing process. Contract manufacturers supply us with raw materials, convert these raw materials into drug

substance and/or convert the drug substance or product into final dosage form. In addition, third parties assist us with

packaging, warehousing, and global distribution of our products. Establishing and managing this global supply chain for each

of our products and product candidates requires a significant financial commitment and the creation and maintenance of

numerous third-party contractual relationships. We have established and we maintain second sources for the vast majority of

our commercial products, including active ingredients, drug product, and finished dosage form packaging. Similarly,

commercial manufacturing for the vast majority of our small molecule drug products is in the U.S.

The manufacturing processes for biologics and cell and genetic therapies are more complex than those required for small

molecule drugs and require different systems, equipment, facilities, and expertise. Additionally, we are unable to utilize a

single process for all of our biologics and cell and genetic therapies; they must be customized for each program and therapy.

We are investing and plan to continue to invest significant resources in expanding and strengthening our manufacturing

infrastructure and capabilities, such as current Good Manufacturing Practices (“cGMP”) clinical manufacturing, both

independently and through third-party networks, in an effort to develop and commercialize our biologics and cell and genetic

therapies. We have secured agreements to meet our current demands for these products and product candidates. We continue

to evaluate additional suppliers for all of our late-stage clinical programs for additional capacity and redundancy to support

commercial supply.

We rely on third-party manufacturers to produce or process cell culture reagents and gene-editing components, such as

Cas9 protein and guide RNA molecules, for clinical trials and commercial supply of CASGEVY, and to generate gene-edited

cells to supply CASGEVY. The manufacturing process for CASGEVY involves a number of steps prior to the final infusion

of drug product into patients. Following mobilization and collection of blood cells from the patient, cells are transferred to a

manufacturing site where HSPCs are purified and CRISPR/Cas9 gene-editing is performed. The edited cellular product,

called CASGEVY, is frozen and transported back to the authorized treatment center where it is stored prior to infusion into

the patient. Each step must be completed successfully, and in a timely manner, requiring coordination between us, authorized

treatment centers, third-party manufacturers and shipping vendors. We are making investments to enhance the CASGEVY

manufacturing process, to secure additional capacity, and to coordinate manufacturing, testing, and logistics activities at a

larger scale across multiple facilities to serve the geographies in which we are treating and expect to treat additional people

with CASGEVY.

In addition, we have established cell therapy manufacturing capabilities at our facilities in the Boston area to supply

clinical and potentially commercial quantities of our cell therapies as our needs evolve, including our plans to utilize our own

manufacturing capabilities in Boston for additional commercial supply of CASGEVY. To further expand our ability to supply

clinical and potentially commercial quantities of our cell therapies, we have a strategic agreement with Lonza to support the

manufacture of T1D cell therapy product candidates. We also rely on third-party manufacturers to produce drug substance

and finished drug product for clinical trials for povetacicept. In addition, we have obligations to supply product to global third

parties that support the development and commercialization of povetacicept.

We have developed systems and processes to track, monitor, and oversee our and our third-party manufacturers’

activities, including a quality assurance program intended to ensure that our third-party manufacturers comply with cGMP

and the foreign jurisdictional equivalents when applicable. We devote substantial time, resources, and effort in the areas of

production, quality control, and quality assurance to maintain cGMP compliance. We regularly evaluate the performance of

our third-party manufacturers with the objective of confirming their continuing capabilities to meet our needs compliantly,

efficiently, and economically. Manufacturing facilities, both foreign and domestic, are subject to inspections by or under the

authority of the FDA and other U.S. and foreign government authorities. Although we actively engage with regulatory

authorities, the timing of inspections and regulatory approvals for each of these facilities is the remit of the third-party

manufacturer and not within our control and may be delayed for a number of reasons.

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COMPETITION

The pharmaceutical industry is characterized by extensive research efforts, rapid technological progress, and intense

competition. There are many public and private companies, including pharmaceutical companies and biotechnology

companies, engaged in developing products for the indications our medicines are approved to treat and the therapeutic areas

we are targeting with our research and development activities. Potential competitors also include academic institutions,

government agencies, other public and private research organizations and charitable venture philanthropy organizations that

conduct research, seek patent protection and/or establish collaborative arrangements for research, development,

manufacturing and commercialization. Mergers and acquisitions in the pharmaceutical, biotechnology and gene therapy

industries may result in a larger concentration of resources among a smaller number of our competitors. Some of our

competitors may have substantially greater financial, technical, sales and marketing, and human resources than we do.

Competition may be based, among other things, on efficacy, safety, availability, patient convenience, frequency of

dosing, ease of use, delivery devices and overall patient experience; formulary placement, price, payer coverage and

reimbursement rates; regulatory approvals and exclusivity; patent and other intellectual property positions; marketing

effectiveness; and research and development of new products, processes, modalities, indications, and uses. Early market entry

and rapid patient access can also be important to achieve product acceptance and success. Accordingly, the relative speed

with which we can develop therapies, complete the testing and approval process, and supply commercial quantities of such

therapies will have a significant impact on our competitive position.

Our therapies must compete with other branded or generic products already on the market or those that are developed in

the future. The introduction of new products or technologies, including the development of new processes or technologies by

competitors or new information about existing products or technologies, results in increased competition for our marketed

products and pricing pressure on our marketed products. For example, the number of compounds available to treat a

particular disease typically increases over time and can result in slowed sales growth or reduced sales of our products in that

therapeutic area. The development of new or improved treatment options could eliminate the use of our medicines or may

limit the utility and application of ongoing clinical trials for our product candidates. Similarly, developments of new

standards of care practices, treatment options or cures for the diseases our medicines treat could have similar impacts.

We believe our long-term competitive success depends on discovering and developing or acquiring transformative

medicines for people with serious diseases and continuously improving the productivity of our operations in a highly

competitive environment. There can be no assurance that our efforts will result in commercially successful medicines, and it

is possible that our medicines will be, or will become, uncompetitive from time to time. See also Item 1A., Risk Factors –

“Competing products and technological advances from our competitors may negatively affect our business and market

position.” of this Annual Report on Form 10-K.

GOVERNMENT REGULATION

Our operations and activities are subject to extensive regulation by numerous government authorities in the U.S., Europe

and other countries, including with respect to the testing, manufacture, labeling, storage, record keeping, approval, pricing

and price reporting, and advertising and promotion of our products.

Regulations Concerning Product Development and Approval

United States. The process for obtaining regulatory approvals to market a new pharmaceutical product, or an additional

indication of an existing product, requires substantial effort and financial resources and takes several years to complete. The

applicant must complete preclinical tests and submit protocols to the FDA before commencing clinical trials. Clinical trials

are intended to establish the safety and efficacy of the pharmaceutical product and typically are conducted in sequential

phases, although the phases may overlap or be combined. If the required clinical testing is successful, the results are

submitted to the FDA in the form of an NDA or BLA requesting approval to market the product for one or more indications.

The FDA reviews an NDA or BLA to determine whether a product is safe and effective for its intended use and whether its

manufacturing is compliant with cGMP.

The FDA can employ several tools to facilitate the development of certain drugs or expedite certain applications,

including fast track designation, Breakthrough Therapy designation, regenerative medicine advanced therapy designation,

priority review, accelerated approval, incentives for orphan drugs developed for rare diseases and others.

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Compliance with regulatory requirements is assured through periodic, announced or unannounced inspections by the

FDA and other regulatory authorities, and these inspections associated with clinical development may include the sponsor,

investigator sites, laboratories, hospitals and manufacturing facilities of our subcontractors or other third-party manufacturers.

Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, including rejection

of an NDA or BLA.

Even if an NDA or a BLA receives approval, the applicant must comply with post-approval requirements. For example,

holders of an approval must report adverse reactions, provide updated safety and efficacy information and comply with

requirements concerning advertising and promotional materials and activities. Also, quality control and manufacturing

procedures must continue to conform to cGMP after approval, and certain changes to the manufacturing procedures and

finished product must be submitted and approved by the FDA prior to implementation. The FDA periodically inspects

manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural and record keeping

requirements. In addition, as a condition of approval, the FDA may require post-marketing testing and surveillance to further

assess and monitor the product's safety or efficacy after commercialization, which may require additional clinical trials,

patient registries, observational data or additional work on chemistry, manufacturing and controls. Any post-approval

regulatory obligations, and the cost of complying with such obligations, could expand in the future. Further, the FDA

continues to regulate product labeling and prohibits the promotion of products for unapproved or “off-label” uses along with

other labeling restrictions.

Outside the United States. We are subject to similar regulatory requirements outside the United States for approval and

marketing of pharmaceutical products. We must obtain approval of a clinical trial application or product from applicable

supervising regulatory authorities before it can commence clinical trials or marketing of the product in target markets. The

approval requirements and process for each country can vary, and the time required to obtain approval may be longer or

shorter than that required for FDA approval in the United States. For example, we may submit marketing authorizations in

the E.U. under either a centralized or decentralized procedure. The centralized procedure is mandatory for the approval of

biotechnology products and many pharmaceutical products and provides for a single marketing authorization that is valid for

all E.U. member states. Under the centralized procedure, a single marketing authorization application is submitted to the

European Medicines Agency. After the agency evaluates the application, it makes a recommendation to the European

Commission, which then makes the final determination on whether to approve the application. The decentralized procedure

provides for mutual recognition of individual national approval decisions and is available for products that are not subject to

the centralized procedure.

In April 2023, the European Commission adopted a proposal to revise the E.U. pharmaceutical legislation. In April 2024,

the European Parliament introduced amendments to the European Commission’s proposal. The legislative process remains

ongoing, with several stages still required before the reform can receive final approval. Once completed, the reform is likely

to be the most comprehensive overhaul of E.U.’s medicines regulation in over 20 years, with a wide range of impacts

including on approval procedures, regulatory data protection, and environmental protection measures. Once approved, certain

provisions of the reform could potentially have an adverse impact on our business.

The requirements governing the conduct of clinical trials and product licensing also vary. In addition, post-approval

regulatory obligations such as adverse event reporting and cGMP compliance generally apply and may vary by country. For

example, after a marketing authorization has been granted in the E.U., periodic safety reports must be submitted and other

pharmacovigilance measures may be required.

Regulations Concerning Pricing and Reimbursement

Sales of our products depend, to a large degree, on the extent to which our products will be reimbursed by third-party

payors, such as government health programs, commercial insurance companies, and managed health care organizations.

Increasingly, these third-party payors are becoming stricter in the ways they evaluate and reimburse medical products and

services. Additionally, the containment of health care costs has become a priority of many governments, and the prices of

drugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have shown

significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and

requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of

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more restrictive policies in jurisdictions with existing controls and measures, could limit our revenues. Decisions by third-

party payors to not cover a product could reduce physician usage of the product.

United States. In the U.S., we participate in the Medicaid Drug Rebate Program, Medicare, and other governmental

pricing programs. Medicaid is a joint federal and state program that is administered by the states for low-income and disabled

beneficiaries. Under the Medicaid Drug Rebate program, we are required to pay a rebate to each state Medicaid program for

our covered outpatient drugs, which includes select inpatient drugs for which there is “direct reimbursement.” Medicaid

rebates are based on pricing data reported by us on a monthly and quarterly basis to CMS, the federal agency that administers

the Medicaid and Medicare programs.

Any company that participates in the Medicaid Drug Rebate Program also must participate in the 340B drug pricing

program (the “340B program”), and the Federal Supply Schedule (“FSS”) pricing program. The 340B program, which is

administered by the Health Resources and Services Administration, requires participating companies to agree to charge

statutorily defined “covered entities” no more than the 340B “ceiling price” for covered outpatient drugs. The 340B ceiling

price is calculated using a statutory formula, which is based on pricing data calculated under the Medicaid Drug Rebate

Program. The FSS pricing program, which is administered by the Department of Veterans Affairs (“VA”), also requires

participating companies to extend discounted prices to the VA, Department of Defense, Coast Guard, and Public Health

Service. Similar to the 340B program, FSS prices are calculated utilizing pricing data reported by us to the VA on a quarterly

and annual basis.

Medicare is a federal program that is administered by the federal government. The program covers individuals age 65

and over as well as those with certain disabilities. Medicare Part A generally covers certain inpatient hospital services for

eligible beneficiaries. Prescription drugs that are used as part of an inpatient hospital stay will be covered by Medicare Part A,

and these products typically are paid as part of a bundled or composite rate (e.g., diagnosis related group).

Medicare Part D provides coverage to enrolled Medicare patients for self-administered drugs (i.e., drugs that are not

administered by a physician). Medicare Part D is administered by private prescription drug plans approved by the U.S.

government. Subject to certain statutory parameters, each drug plan establishes its own Medicare Part D formulary for

prescription drug coverage and pricing, which the drug plan may modify from time-to-time. The prescription drug plans

negotiate pricing with manufacturers and pharmacies, and may condition formulary placement on the availability of

manufacturer discounts.

The U.S. government has shown significant interest in implementing cost-containment programs for medicines and has

enacted reforms at the federal level designed to, among other things, modify prescription drug reimbursement amounts and

methodologies, and otherwise control health care costs. For example, the Patient Protection and Affordable Care Act

(“ACA”) was enacted in March 2010 and was designed to expand coverage for the uninsured while at the same time

containing overall health care costs. With regard to pharmaceutical products, among other things, the ACA was designed to

expand and increase manufacturer rebates for drugs covered under Medicaid programs, impose an annual fee on branded

pharmaceutical manufacturers, subject biological products to potential competition by lower-cost biosimilars, and make

changes to the coverage requirements under the Medicare Part D program. Additionally, in August 2022, the Inflation

Reduction Act (“IRA”) was enacted, establishing a Medicare Drug Price Negotiation Program, a Medicare inflationary

rebate, and a redesign of the Part D benefit structure. Certain drugs, including our CF medicines and CASGEVY, currently

are excluded from the IRA negotiation program. Nevertheless, other elements of the IRA may have a material impact on our

business, including the redesign of the Part D benefit and the Manufacturer Discount Program, which requires manufacturers

to take on more of the beneficiary cost previously subsidized by the federal government through the application of increased

drug discounts.

We anticipate that the U.S. government will continue to engage in activities seeking to address drug pricing and

reimbursement. Furthermore, certain states have enacted laws establishing Prescription Drug Affordability Boards

(“PDABs”). Some state PDABs, including those in Colorado, Maryland, Washington, and Minnesota, either have the

authority or have defined a pathway pursuant to which they may be granted the authority to establish upper payment limits

for prescription drugs. In certain states, there is pending litigation that would establish a PDAB or expand the authority of an

existing PDAB. Additionally, the U.S. government continues to focus on obtaining most-favored-nation pricing on U.S.

prescription drug prices in government programs. For example, CMS recently issued a proposed rule called the Guarding

U.S. Medicare Against Rising Drug Costs Model (“GUARD”). GUARD is a proposed mandatory model that would assess

rebates for certain drugs payable under Medicare Part D if the prices exceed those paid in economically comparable

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countries. While there is significant uncertainty around the potential implementation of GUARD and related executive orders

and rulemaking, implementation of mandatory initiatives could result in reduced pricing and reimbursement for our products.

Outside the United States. In Europe and other foreign jurisdictions, the success of our products depends largely on

obtaining and maintaining government reimbursement, because patients are generally unable to access prescription

pharmaceutical products that are not reimbursed by their governments. In some countries, such as Germany, commercial

sales of a new product may begin while pricing and reimbursement terms are under discussion. In other countries, a company

must complete reimbursement negotiations prior to the commencement of commercial supply of the pharmaceutical product.

The requirements governing drug pricing vary widely country-by-country and region-by-region. For example, the

member states of the E.U. can restrict the range of drugs for which their national health insurance systems provide

reimbursement and can control the prices of prescription drugs. Many countries in the E.U. also attempt to contain drug costs

by engaging in some form of reference pricing in which authorities examine pre-determined internal or external markets for

published prices of a product or national class of drugs. In addition, many ex-U.S. government payors require companies to

provide health economic assessments of products, which are evaluated by government agencies set up for this purpose. A

member state may approve a specific price for the drug, or it may instead adopt a system of direct or indirect controls on the

total amount of money that a company may receive for supply of a drug. Countries also may consider increasing mandatory

discounts over time in an attempt to manage increased demands on healthcare budgets. Reimbursement discussions in foreign

countries often result in a reimbursement price that is lower than the net price that companies can obtain for the product in the

U.S.

In addition, reimbursement discussions may take a significant period of time resulting in commercialization delays. In

some countries where reimbursement has not yet been obtained, or where there are a limited number of eligible people and

our medicines or therapies are unregistered, the governments of such countries may agree to purchase our medicines and

therapies on an unlicensed and/or named patient basis. Reimbursement for our products cannot be assured because a country

or region may only provide for reimbursement on terms that we do not deem adequate.

Further, many governments outside of the U.S. have introduced or are in the process of introducing legislation focusing

on cost containment measures in the pharmaceutical industry. The impact of these laws where finalized, the final form of

laws under consideration, and their relevant practical application, are unknown at this time, but may lead to lower prices,

paybacks, or other forms of discounts or special taxes. Reforms in our product markets, including those that may stem from

periods of uneven economic growth or downturns or uncertainty, or as a result of high inflation, emergence, or escalation of,

and responses to, international tension and conflicts, or government budgeting priorities, may continue to result in added

pressure on pricing, access, and reimbursement for our products.

Other Regulations

The manufacturing process for pharmaceutical products is highly regulated and regulators may shut down manufacturing

facilities that they observe are not complying with regulations. We, our commercial manufacturing organizations (“CMOs”)

and our corporate partners are subject to cGMP, which are extensive regulations governing manufacturing processes, stability

testing, record keeping and quality standards as defined by FDA and EMA. Similar regulations are in effect in other

jurisdictions. Suppliers of key components and materials must be named in the NDA or marketing authorization application

filed with the regulatory authority for any product candidate for which we are seeking marketing approval, and significant

delays can occur if the qualification of a new supplier is required. Even after our facilities or a third-party supplier is qualified

by the regulatory authority, investment and effort must continue to be expended in the areas of production and quality control

to maintain full compliance with applicable regulatory requirements, including cGMP. Our manufacturing operations and

third-party suppliers are subject to regular periodic inspections by regulatory authorities following initial approval.

Pharmaceutical companies must also monitor information on side effects and adverse events reported during clinical

studies and after marketing approval and report such information and events to regulatory agencies. Non-compliance with the

applicable safety reporting requirements may result in civil or criminal penalties. Side effects or adverse events that are

reported during clinical trials can delay, impede or prevent marketing approval. Based on new safety information that

emerges after approval, the FDA can mandate product labeling changes, impose risk evaluation and mitigation strategies,

require new post-marketing studies (including additional clinical trials) or suspend or withdraw approval of the product.

These requirements may affect our ability to maintain marketing approval of our products or require us to make significant

expenditures to obtain or maintain such approvals.

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Pharmaceutical companies are also subject to various laws pertaining to healthcare “fraud and abuse,” including the

federal Anti-Kickback Statute (“AKS”), the False Claims Act (“FCA”), and other state and federal laws and regulations in

and outside of the U.S. In the U.S., the Anti-Kickback Statute generally makes it illegal to knowingly and willfully solicit,

offer, receive or pay any remuneration in return for or to induce the referral of business, including the purchase or

prescription of a particular drug that is reimbursed by a state or federal health care program. The FCA prohibits knowingly

and willingly presenting or causing to be presented for payment to third-party payors (including Medicare and Medicaid), any

claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed or

claims for medically unnecessary items or services. Violations of fraud and abuse laws may be punishable by criminal and/or

civil sanctions, including fines and civil monetary penalties, as well as by the possibility of exclusion from federal healthcare

programs (including Medicare and Medicaid). Liability under the FCA may also arise when a violation of certain laws or

regulations related to the underlying products (e.g., violations regarding improper promotional activity, manufacturing

regulations, or unlawful payments) contributes to the submission of a false claim. If we were subject to allegations

concerning, or convicted of violating, these laws, our business could be harmed.

Laws and regulations also have been enacted by the federal government and various states to regulate the sales and

marketing practices of pharmaceutical manufacturers. The laws and regulations generally limit financial interactions between

manufacturers and health care providers, require manufacturers to adopt certain compliance standards or require disclosure to

the government and public of such interactions. The laws include U.S. federal and state “sunshine” provisions. The federal

sunshine provisions apply to pharmaceutical manufacturers with products reimbursed under certain government programs

and require those manufacturers to disclose annually to the federal government (for re-disclosure to the public) certain

payments and other transfers of value made to physicians, physicians assistants, advanced practice registered nurses, and

teaching hospitals. State laws may also require disclosure of pharmaceutical pricing information and marketing expenditures.

Many of these laws and regulations contain requirements that are subject to interpretation. Outside the U.S., other countries

have implemented laws and regulations limiting financial interactions between manufacturers and health care providers and

providing requirements for disclosure of financial interactions with healthcare providers and additional countries may

consider or implement such laws.

We are subject to various federal and foreign laws that govern our international business practices with respect to

payments to government officials. Those laws include the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits

U.S. companies and their representatives from paying, offering to pay, promising, or authorizing the payment of anything of

value to any foreign government official, government staff member, political party, or political candidate for the purpose of

obtaining or retaining business or to otherwise obtain favorable treatment or influence a person working in an official

capacity. In many countries, the health care professionals we regularly interact with may meet the FCPA’s definition of a

foreign government official. We are also subject to U.K. Bribery Act 2010 (“the Bribery Act”), which proscribes giving and

receiving bribes in the public and private sectors, bribing a foreign public official, and failing to have adequate procedures to

prevent employees and other agents from giving bribes. U.S. companies that conduct business in the U.K. generally will be

subject to the Bribery Act.

We are subject to extensive privacy and data protection laws and regulations concerning the collection, use and sharing

of personal data. We routinely collect and use sensitive personal information relating to health. The legislative, regulatory and

litigation landscape for privacy and data protection requirements is rapidly evolving and changing, and may limit our ability

to use data globally or across borders. For example, the E.U. General Data Protection Regulation (“GDPR”) imposes

obligations on us with respect to our processing of personal data and the cross-border transfer of such data, including higher

standards of obtaining consent, more robust transparency requirements, data breach notification requirements, requirements

for contractual language with our data processors, and stronger individual data rights. In addition, several U.S. jurisdictions

have similar data privacy laws, such as the California Consumer Privacy Act and California Privacy Rights Act. Data

protection requirements are not universal and can conflict between jurisdictions. There has also been an increase in

enforcement actions from the Federal Trade Commission, with a specific focus on companies operating health-related

websites. Compliance with these laws and regulations is made more complex by the lack of consistent standards, common

definitions, or clear regulatory expectations. At the same time, enforcement of these laws and regulations is increasing and

litigation, fines, and penalties are also becoming more common.

In addition, as we expand our pipeline and contemplate different approaches that may incorporate the use of medical

devices, such approaches may necessitate compliance with regulatory laws applicable to medical devices, including those

governing the testing, manufacture, approval, distribution, and marketing of medical devices. Furthermore, the extent of

government regulation, which might result from future legislation or administrative action, cannot accurately be predicted.

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EMPLOYEES AND HUMAN CAPITAL MANAGEMENT

As of December 31, 2025, we had approximately 6,400 employees. Of these employees, approximately 5,200 were based

in the U.S. and approximately 1,200 were based outside the U.S. None of our U.S. employees are covered by a collective

bargaining agreement. A small number of employees outside the U.S. are covered by such agreements due to local law or

industry requirements. We consider our relations with our employees to be good.

We rely on skilled, experienced, and innovative employees to conduct the operations of our company. The biotechnology

industry is very competitive, and recruiting and retaining such employees is important to the continued success of our

business. We are committed to building an outstanding, committed, and passionate team, and we focus on a culture that

values all employees. We focus on recruiting, retaining, and developing qualified and talented employees from a range of

backgrounds to conduct our research, development, commercial, and other business activities because we believe that each

employee brings unique perspectives and strengths, and by embracing these strengths, we can do our best work for patients.

We support our employees through a variety of initiatives including learning resources and forums that promote

belonging in our workplaces; five global employee resource networks open to all employees that promote connectivity and

collaboration across levels and functions; and investments that advance access to opportunity in our surrounding

communities.

To promote our employees’ continued well-being, we offer comprehensive benefits and resources, including those

focused on health and income protection, such as life insurance and retirement savings programs. We continue to promote

and enhance wellness tools supporting our employees’ mental, social, physical and financial health. We continually review

and augment our programs to include benefits that support the evolving needs of our workforce.

In addition, we provide our employees with career development and advancement opportunities, including job rotations,

mentoring, and training. We are committed to identifying and developing our next generation of leaders, which is reflected in

our manager excellence and talent readiness programs designed for critical roles in our organization.

OTHER MATTERS

Financial Information and Significant Customers

We operate in one segment, pharmaceuticals. Financial information about our revenue by product and significant

customers is set forth in Note Q, “Segment Information,” to our consolidated financial statements included in this Annual

Report on Form 10-K.

Information Available on the Internet

Our internet address is www.vrtx.com (http://www.vrtx.com). Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current

reports on Form 8-K, and all amendments to those reports, are available to you free of charge through the “Investors/

Financial Information/SEC Filings” section of our website as soon as reasonably practicable after those materials have been

electronically filed with, or furnished to, the Securities and Exchange Commission.

Corporate Information

Vertex was incorporated in Massachusetts in 1989, and our principal executive offices are located at 50 Northern Avenue

Boston, Massachusetts 02210.

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INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The names, ages and positions held by our executive officers are as follows:

Dr. Kewalramani has been our Chief Executive Officer (CEO”) and President since April 2020 and a member of our

Board of Directors since February 2020. Dr. Kewalramani was our Executive Vice President and Chief Medical Officer from

April 2018 through April 2020. She was our Senior Vice President, Late Development from February 2017 until April 2018.

Dr. Kewalramani also served on the board of Ginkgo Bioworks from September 2021 to June 2024. From August 2004 to

January 2017, she served in roles of increasing responsibility at Amgen Inc., most recently as Vice President and Head of

U.S. Medical Organization. From 2014 through 2019, Dr. Kewalramani was the industry representative to the FDA’s

Endocrine and Metabolic Drug Advisory Committee. She completed her internship and residency in Internal Medicine at the

Massachusetts General Hospital and her fellowship in Nephrology at the Massachusetts General Hospital and Brigham and

Women’s Hospital combined program. Dr. Kewalramani holds a B.A. from Boston University and an M.D. from Boston

University School of Medicine. She is an alumna of the Harvard Business School, having completed the General

Management Program.

Dr. Leiden is our Executive Chairman, a position he has held since in April 2020. He was our Chief Executive Officer

and President from 2012 through March 2020. He has been a member of our Board of Directors since July 2009, the

Chairman of our Board of Directors since May 2012, and served as our lead independent director from October 2010 through

December 2011. Dr. Leiden was a Managing Director at Clarus Ventures, a life sciences venture capital firm, from 2006

through January 2012. Dr. Leiden was President and Chief Operating Officer of Abbott Laboratories, Pharmaceuticals

Products Group, and a member of the Board of Directors of Abbott Laboratories from 2001 to 2006. From 1987 to 2000, Dr.

Leiden held several academic appointments, including the Rawson Professor of Medicine and Pathology and Chief of

Cardiology and Director of the Cardiovascular Research Institute at the University of Chicago, the Elkan R. Blout Professor

of Biological Sciences at the Harvard School of Public Health, and Professor of Medicine at Harvard Medical School. He is

an elected member of both the American Academy of Arts and Sciences and the Institute of Medicine of the National

Academy of Sciences. Dr. Leiden was a director and the non-executive Vice Chairman of the board of Shire plc, from 2006

to January 2012, a director of Quest Diagnostics, from December 2014 to May 2019, and the Chairman of Revolution

Healthcare Acquisition Corp., from April 2021 to December 2022. Dr. Leiden received his M.D., Ph.D. and B.A. degrees

from the University of Chicago.

Dr. Atkinson has been our Executive Vice President, Chief Technical Operations Officer, Head of Biopharmaceutical

Sciences and Manufacturing Operations since August 2023. He previously served as our Senior Vice President, Head of

Commercial Manufacturing and Supply Chain since July 2020. Prior to joining us, Dr. Atkinson served in various roles at

Bristol-Myers Squibb Co., including as Senior Vice President, Global Manufacturing Operations from September 2019 to

June 2020; Vice President and Integration Leader, Corporate Cell Therapy and Global Development and Manufacturing from

January 2019 to September 2019; Vice President, Internal Manufacturing, Biologics from June 2017 to January 2019; and

Vice President, Biologics Development and Clinical Manufacturing from 2012 to June 2017. Before Bristol-Myers Squibb,

he held various roles at Cook Pharmica, LLC (now owned by Novo Holdings) and Eli Lilly. Dr. Atkinson served as a

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member of the Board of Directors of 89bio, Inc. from February 2022 until October 2025, when it was acquired by Roche. Dr.

Atkinson holds a B.S. in Biology from Indiana University and a Ph.D. in Biological Sciences from Stanford University.

Mr. Biller has been our Executive Vice President, Chief Legal Officer since September 2022. From November 2019 until

he joined us, Mr. Biller served in several executive roles at Agios Pharmaceuticals, Inc., including Chief Legal Officer and,

most recently, Chief Financial Officer and Head of Corporate Affairs. Prior to Agios, he served as Executive Vice President,

General Counsel at Celgene from July 2018 to November 2019, where he was responsible for their global legal function, and

served as Senior Vice President, Tax and Treasury from 2011 to June 2018. Prior to Celgene, Mr. Biller was General

Counsel, Chief Tax Officer and Secretary at Bunge Limited, a global publicly traded agriculture and food company. Earlier in

his career he held various leadership roles at Alcon, Inc. and was a partner at Hopkins & Sutter and Foley & Lardner. Mr.

Biller holds a B.A. from Brown University and a J.D. from Yale Law School.

Dr. Bozic is our Executive Vice President, Global Medicines Development and Medical Affairs, a position she has held

since October 2019, and she has been our Chief Medical Officer since April 2020. She was our Senior Vice President and

Head of Global Clinical Development from May 2019 to October 2019. Prior to joining us, Dr. Bozic spent more than 20

years at Biogen Inc., a biotechnology company focused on neurological diseases, most recently as Senior Vice President of

Global Development and Portfolio Transformation from 2015 to May 2019 and as Senior Vice President of Clinical and

Safety Sciences from 2013 to 2015. Dr. Bozic has served as the industry representative to the FDA’s Risk Communication

Advisory Committee, and was a member of PhRMA’s Clinical and Preclinical Development Committee and the Board of

Managers at BioMotiv. She received her M.D., C.M., completed her residency, and was Chief Resident in Internal Medicine

at McGill University. She completed her fellowship in Pulmonary and Critical Care Medicine at Brigham and Women’s

Hospital and was an Associate Physician at Beth Israel Deaconess Medical Center and Harvard Medical School before

joining the biopharmaceutical industry.

Dr. Bunnage is our Executive Vice President and Chief Scientific Officer, a position he has held since February 2026. He

was our Senior Vice President & Head of Global Research from March 2024 through January 2026, our Senior Vice

President & Head of Research from July 2021 to March 2024, and our Senior Vice President & Site Head, Boston Research,

from August 2016 to July 2021. Prior to joining Vertex, Dr. Bunnage had a 20-year career at Pfizer Inc. where he held

positions of increasing responsibility, including Vice President, Worldwide Medicinal Chemistry and Head of Medicinal

Chemistry, Sandwich Laboratories. Dr. Bunnage is a Fellow of the Royal Society of Chemistry and a Fellow of the Royal

Society of Biology. He also serves as a visiting professor in chemistry at the University of Oxford, United Kingdom, and is a

member of the Strategic Advisory Board for the Department of Chemistry at the University of Durham, United Kingdom. Dr.

Bunnage received his B.Sc in Chemistry from the University of Durham and his D.Phil in Chemistry from the University of

Oxford. He completed his postdoctoral research as a NATO Fellow at The Scripps Research Institute in La Jolla, California.

Mr. McKechnie is our Executive Vice President, Chief Commercial Officer, a position he has held since July 1, 2025.

Mr. McKechnie previously served as our Senior Vice President, Head of North America Commercial from October 2018 to

July 2025, and as our Vice President of Global Marketing from June 2013 to September 2018. Prior to joining Vertex, Mr.

McKechnie held positions of increasing responsibility at Novartis AG, including Vice President, Respiratory Franchise from

January 2013 to June 2013; Vice President and Head Brand Maximization and Established Medicines from April 2012 to

April 2013; and Vice President, Cardiovascular Marketing from November 2008 to March 2012. Before Novartis, Mr.

McKechnie held various roles at GlaxoSmithKline plc. Mr. McKechnie holds a Business & Marketing degree from the

University of Plymouth in England.

Mr. Sachdev is our Executive Vice President, Chief Patient and External Affairs Officer, a role he has held since July

2023. From October 2019 to July 2023, he was our Executive Vice President, Chief Patient Officer. In addition, Mr. Sachdev

served in the role of Chief of Staff to the CEO from April 2020 to March 2023. He served as our Executive Vice President

and Chief Regulatory Officer from January 2017 until September 2019, and as our Executive Vice President, Policy, Access

and Value from October 2014 through December 2016. In 2010, he established our first international commercial operations

in Canada. In 2007, he joined us as a Senior Vice President, to establish our government affairs and public policy activities,

as well as our patient advocacy programs. Prior to joining us, Mr. Sachdev served as Executive Vice President, Health, of the

Biotechnology Industry Organization (BIO) and was the Deputy Commissioner for Policy at the FDA, where he also served

in several other senior positions. Prior to the FDA, Mr. Sachdev served as Majority Counsel to the Committee on Energy and

Commerce in the U.S. House of Representatives and practiced law at the American Chemistry Council, and subsequently at

the law firm of Ropes & Gray LLP. He served as a member of the Board of Directors of Eiger BioPharmaceuticals from

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April 2019 to September 2024. Mr. Sachdev holds a B.S from Carnegie Mellon University and a J.D. from Emory University

School of Law.

Dr. Tatsis is our Executive Vice President, Chief Regulatory and Quality Officer, a position she has held since August

2020. Previously, she was our Senior Vice President and Chief Regulatory Officer from October 2019 to August 2020, and

our Senior Vice President, Global Regulatory Affairs from September 2017 to October 2019. Prior to joining us, Dr. Tatsis

held positions of increasing responsibility at several pharmaceutical companies, including Sanofi, Stemnion, Pfizer, and

Wyeth. Most recently, from 2014 to 2017, she was Vice President, Head of Global Regulatory Affairs, at the Sanofi

Genzyme Business Unit focused on Inflammation/Immunology, Rare Disease, Multiple Sclerosis, Ophthalmology,

Neurology, and Oncology/Immuno-Oncology. Dr. Tatsis also worked as an associate staff scientist and research fellow in

Immunology and Vaccine Development at the Wistar Institute and completed a post-doctoral research fellowship in

Immunology at Thomas Jefferson University. Dr. Tatsis has served as a member of the board of directors at Odyssey

Therapeutics since October 2025, and previously served on the board of directors of Verve Therapeutics from June 2024 until

July 2025, when it was acquired by Eli Lilly. She received her Ph.D. in Cell and Molecular Biology from the University of

Vermont and holds a B.S. in Biology from Temple University.

Mr. Wagner is our Executive Vice President, Chief Operating & Financial Officer, a position he has held since July

2025. Mr. Wagner was our Executive Vice President, Chief Financial Officer from April 2019 through June 2025. Prior to his

role at Vertex, Mr. Wagner was Chief Financial Officer and Executive Vice President, Finance, of Ortho Clinical

Diagnostics, a Carlyle Group portfolio company, from June 2015 to March 2019. In that role, he led the finance, accounting,

tax, treasury, global financial systems, lender relations, and acquisitions and divestiture groups. From July 2012 to June 2015,

Mr. Wagner served as Executive Vice President, Chief Financial Officer of Bruker Corporation, a scientific instruments

manufacturer. Prior to that, Mr. Wagner served as Chief Financial Officer for Progress Software Corporation, a provider of

enterprise software, and Millipore Corporation, a global provider of products and services in the life science tools market. Mr.

Wagner served as a director of Good Start Genetics, Inc., from April 2014 to August 2017 and served as a director and

member of the Audit Committee of Bruker Corporation from August 2010 to June 2012. He has served as a member of the

Board of Directors of The TJX Companies, Inc., since September 2023. Mr. Wagner holds a B.S. in Accounting from Boston

College and a M.B.A from Harvard Business School.

Ms. Ambrose is our Senior Vice President, Chief Accounting Officer, a position she has held since May 2021. Ms.

Ambrose previously served as our Senior Vice President, Accounting, Tax, Treasury, Strategic Sourcing and Corporate

Services since March 2021. From February 2003 until she joined us, Ms. Ambrose held roles of increasing responsibility at

Boston Scientific Corporation, a medical device company, most recently as Vice President of Finance and Controller of the

Global Endoscopy Division from July 2019 to March 2021 and as Vice President of Global Internal Audit from February

2017 to June 2019. Prior to Boston Scientific Corporation, Ms. Ambrose served as an accountant at Ernst & Young LLP. She

received her B.S. in Commerce from the University of Virginia and is a Certified Public Accountant.

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Investing in our common stock involves a high degree of risk, and you should carefully consider the risks and

uncertainties described below in addition to the other information included or incorporated by reference in this Annual

Report on Form 10-K. If any of the following risks or uncertainties occur, our business, financial condition or results of

operations would likely suffer, possibly materially. In that case, the trading price of our common stock could decline.

Risks Related to Our Business and Products

Our success depends on our ability to develop and commercialize additional medicines.

We invest significant resources in research and development to discover and develop transformative medicines for

people with serious diseases. Product development is highly uncertain and expensive. Product candidates may appear

promising in research and development but may fail to reach commercial success for many reasons, including:

• the failure to establish safety and efficacy through clinical trials;
• the failure to obtain marketing approval;
• the inability to manufacture on economically feasible terms;
• the failure to gain and maintain market acceptance among physicians and patients or other members of the medical

community;

• the failure to obtain adequate pricing or reimbursement levels from third-party payors or foreign governments; and
• competition based on, among other factors, safety, efficacy, patient convenience, pricing and reimbursement.

If we are not able to successfully develop and commercialize additional medicines, our business would be materially

harmed.

Our business is substantially dependent on the success of our CF medicines.

Substantially all our net product revenues have been derived from the sale of our CF medicines. We may be unable to

sustain or increase revenues from sales of our CF medicines in the future for any number of reasons, including the potential

introduction of competitive products or the inability to successfully develop and commercialize next-generation medications

or medicines to treat people with CF who cannot benefit from our current CF medicines. Our concentrated source of revenue

increases the risks associated with potential manufacturing or supply disruptions, safety issues that may be identified with

respect to our CF medicines, and failure to gain and/or maintain market acceptance or adequate pricing or reimbursement for

our CF medicines. If we are unable to sustain or increase revenues from sales of our CF medicines, or if we do not meet the

expectations of investors, our business would be materially harmed and our ability to fund our operations could be adversely

affected.

If we are unable to successfully develop and commercialize medicines for acute and neuropathic pain, our business could

be materially harmed.

A portion of the value attributed to our company by investors is based on the expected commercial success of

JOURNAVX for acute pain and on our development programs for both acute and peripheral neuropathic pain. JOURNAVX

may not gain or maintain market acceptance among physicians, patients, or payors due to various factors, including the

availability of lower-cost alternatives, and sales, marketing, pricing, and/or distribution challenges associated with

introducing a product into a highly competitive market. Furthermore, we may not succeed in developing JOURNAVX for

additional indications or in advancing other product candidates, including NaV1.8 or NaV1.7 inhibitors, for the treatment of

acute or peripheral neuropathic pain. Even if we obtain marketing approvals for these product candidates, they will face

significant competition and there can be no assurance of commercial success.

We may not be able to increase or maintain CASGEVY product revenues.

The future commercial success of CASGEVY depends on physicians, patients, or payors accepting it as medically

useful, cost-effective, ethical, safe, and preferred with respect to current and potential future competitive therapies, and on

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payors providing adequate reimbursement. In addition to risks generally associated with the commercialization of medicines,

the cell collection processes, manufacturing and other procedures required to manufacture and administer CASGEVY are

more complex, resource-intensive, and operationally demanding than for small molecules. For example, the cost of

manufacturing CASGEVY as a percentage of revenue is significantly higher than for our CF medicines. Moreover, market

acceptance continues to be dependent in part on the prevalence and severity of side effects associated with the procedure by

which CASGEVY is administered, including those resulting from the myeloablative preconditioning regime. There can be no

assurance that we will be able to increase or maintain our revenues from CASGEVY in future periods.

Risks Related to Commercialization

We are subject to pricing and reimbursement pressures that could have a material adverse effect on our business,

revenues, and results of operations.

Revenues from our products depend, to a large degree, on the extent to which the products are purchased by customers,

such as wholesalers, pharmacies, and hospitals, and reimbursed by third-party payors, such as government health programs,

commercial insurers, and managed health care organizations. Increasingly, these third-party payors are becoming more

critical in evaluating and reimbursing medicines. The containment of health care costs continues to be a priority for many

governments, and drug pricing has been a focus in this effort. The U.S. federal government and state legislatures and foreign

governments have shown significant and evolving interest in implementing cost-containment programs, including price

controls, restrictions on reimbursement, value-based and reference pricing, compulsory licensing, including the pursuit of so-

called “march in” rights, and mandatory substitution with generic products, all of which could limit the prices of, or access to,

our products. Decisions by third-party payors to not cover a product or restrict access to a product may shift over time and

could reduce market acceptance of the product and limit product revenues. We must also compete to be placed on formularies

of managed care providers, as exclusion of our products from a formulary would limit usage by managed care providers and

patients.

In the U.S., pricing and access is primarily governed by practices of private managed care providers and institutional and

governmental purchasers, federal laws and regulations related to Medicare and Medicaid, including the ACA and the IRA,

and state activities, including the establishment of PDABs and price transparency rules. For example, in August 2023, the

Colorado PDAB selected five drugs for an affordability review, including TRIKAFTA. Although the Colorado PDAB later

found TRIKAFTA to be ineligible for an upper payment limit we cannot predict whether future reviews by the Colorado

PDAB, or any other PDAB, will come to the same conclusion about TRIKAFTA or any of our other therapies, or the amount

of any potential upper payment limit. Furthermore, changes to the health care system enacted as part of health care reform in

the U.S., as well as increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid, and private

payors, could result in further pricing pressures. For example, initiatives by the U.S. government to impose most-favored-

nation pricing on U.S. prescription drug prices in government programs, including the recently proposed GUARD Model by

the CMS. While there is significant uncertainty around the related executive orders and rulemaking, mandatory initiatives

could result in reduced pricing and reimbursement for our products.

In most markets outside of the U.S., the pricing and reimbursement medicines is subject to governmental control and

governments are making greater efforts to reduce drug prices and limit drug spending. The reimbursement process in ex-U.S.

markets vary widely and can take a significant time to complete, and reimbursement decisions are made on a country-by-

country and region-by-region basis. Reimbursement for our products by governments, including the timing of any

reimbursements, may also be affected by budgetary or political constraints, particularly in challenging economic

environments. We have experienced challenges in obtaining timely reimbursement for our products in various countries

outside the U.S., and our future revenues depend on maintaining such reimbursement. There is no assurance that coverage

and reimbursement will continue for our current products or be available for our future products. Even if reimbursement is

available, there is no assurance that the timing or level of reimbursement will be sufficient. Furthermore, many ex-U.S.

governments are introducing new legislation focused on cost containment measures applicable to the pharmaceutical

industry; such legislation, if finalized, could lead to lower prices, rebates or other forms of discounts or special taxes.

Our failure to obtain or maintain adequate prices, coverage, or reimbursement for our products would have an adverse

effect on our business, revenue and results of operations, could curtail or eliminate our ability to adequately fund our research

and development programs and/or could cause a decline or volatility in our stock price.

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Competing products and technological advances from our competitors may negatively affect our business and market

position.

Our products and product candidates face or may face competition from existing and potential competing products. See

also Item 1., Business – Competition of this Annual Report on Form 10-K. Competing products may be more effective, safer,

more effectively marketed, have lower prices or better coverage or reimbursement levels, eliminate or minimize the need for

treatment with our products or product candidates, or have other differentiating factors that negatively affect the demand for

our products or product candidates. If a competitor obtains approval and reimbursement before we do, approval and/or

reimbursement of our products or product candidates could be delayed, denied, or otherwise adversely affected. We compete

with an array of companies and other organizations, including those that have substantially greater resources, more mature

development, manufacturing and commercial organizations, and/or other competitive advantages. Smaller companies with

innovative programs or technologies are frequently acquired by and enter into collaborations with larger competitors, which

may result in the acceleration or enhancement of competitive programs. We cannot predict the timing or impact of the

introduction of competitive products. If a competing product is successfully developed and commercialized for a patient

population we are currently treating or are seeking to treat, our revenues, business or market position could be materially

adversely affected. In addition, the release of new information, including clinical data and regulatory approval timelines, by

our competitors regarding competitive products or potentially competitive product candidates can affect investors’

perceptions regarding the prospects of our products and product candidates, and has caused and may in the future cause our

stock price to decline or experience periods of significant volatility.

If we discover safety or efficacy issues with any of our products, commercialization efforts for the product could be

negatively affected, the approved product could lose its approval, and our business could be materially harmed.

After regulatory approval and launch, our products are used over longer periods of time and by larger populations of

patients than during pre-approval clinical trials. Additional clinical and non-clinical studies, such as for label expansions, new

combinations or otherwise, may also be conducted after regulatory approval. For example, as part of FDA approval for

CASGEVY, we are required to conduct post-marketing safety studies to assess certain long-term risks associated with the

treatment. Additionally, when post-marketing studies involve our marketed products, or an active pharmaceutical ingredient

thereof, they can raise new safety issues for our existing products. The subsequent discovery or appearance of previously

unknown or underestimated safety or efficacy concerns with a product could negatively affect commercial sales of the

product, result in reduced coverage or reimbursement by payors, cause reputational harm, government investigations, and/or

lawsuits against us. Subsequent adverse safety events, as well as safety or efficacy issues affecting suppliers or competing

products, may also lead to recalls, denial or withdrawal of regulatory approvals, non-renewal of conditional regulatory

approvals, label changes, obligations to conduct additional or more extensive clinical trials or to implement a risk

management plan, and reductions in market acceptance. Each of our CF products shares at least one active pharmaceutical

ingredient with another of our products. If any of our CF products were to experience safety issues or labeling modifications,

our other CF products may be adversely affected. For example, in December 2024, the FDA required us to modify the

TRIKAFTA label by revising information regarding liver injury and liver failure and moving that information from the

“warnings and precautions” section to a “boxed warning” section; the FDA required similar language in the ALYFTREK

label. In addition, safety or efficacy issues affecting suppliers’ or competitors’ products also may reduce the market

acceptance of our products.

The discovery of safety events involving our products or public speculation about such events could limit or reduce

product revenues and cause our stock price to decline or experience periods of volatility.

Risks Related to Product Development

The data from our product development activities may not support advancement or regulatory approval of our product

candidates, or label expansions for our marketed products, or provide sufficient data to support the successful

commercialization of our approved products.

Extensive testing is required for our product candidates and for new indications of our marketed products. The outcomes

of such clinical and non-clinical testing are highly uncertain, may not generate sufficient safety, efficacy, or other data, and

may not support regulatory approval of our product candidates. Clinical and non-clinical testing, and in particular our later-

stage clinical trials, are expensive and resource intensive. The data from our preclinical studies and other research activities

have in the past and may in the future fail to predict results in clinical trials. For example, despite considerable non-clinical

testing, the clinical study of VX-264 in T1D did not meet its efficacy endpoint. Similarly, results from earlier-stage clinical

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trials may not be predictive of the results from later-stage clinical trials, or of the likelihood of approval of a product

candidate for commercial sale. In addition, interim or preliminary data from a clinical trial may not be predictive of final

results from the clinical trial and are subject to the risk that one or more of the clinical outcomes may materially change as

patient enrollment and treatment continues, more patient data become available, or as patients continue other treatments for

their disease.

The data from our clinical programs may not support approval or successful commercialization of our product

candidates, and we may be unable to recoup the significant research and development, clinical trial, acquisition-related, and

other expenses incurred, which could have an adverse effect on our business, financial condition and results of operations,

and/or cause our stock price to decline or experience periods of volatility.

In addition, results of our clinical trials and findings from nonclinical studies could lead to abrupt changes in our

development activities, including the possible cessation of development activities associated with a particular product

candidate or program. For example, after VX-264 did not meet its efficacy endpoint, we announced that the program would

not advance into further clinical studies. Failure to advance product candidates through clinical development would impair

our ability to commercialize products, which could materially harm our business, financial condition and long-term prospects.

Our research and development activities are highly regulated, and it is possible that the FDA and other regulatory

authorities:

• pause or halt our clinical trials based on their assessment of the potential or actual risks of continuing;
• disagree with our conclusions about the results from our clinical trials;
• require additional clinical trials, including confirmatory trials, or disagree with our clinical trial design or endpoint;
• fail to approve the facilities or processes used to manufacture a product candidate, or our dosing or delivery

methods;

• grant marketing approval that is more restricted than anticipated, including limiting indications to narrow patient

populations and imposing safety monitoring requirements, or risk evaluation and mitigation strategies;

• withdraw approval of a product or indication, including when the product or indication was approved under an

accelerated approval pathway and confirmatory studies were unsuccessful.

Furthermore, we periodically release new information, including clinical data, regarding our products and product

candidates, which may affect investors’ perceptions regarding our products and product candidates, and cause our stock price

to decline or experience periods of significant volatility. For example, our stock price decreased in August 2025 after we

released Phase 2 data for VX-993 and informed investors that the FDA did not see a path toward a broad peripheral

neuropathic pain label for suzetrigine at that time. The timing of the release of information by us regarding our product

development programs is often beyond our control and is influenced by the timing of receipt of communications from

regulators and data from our clinical trials, among other things.

If we fail to successfully conduct our clinical activities, our clinical trials or future regulatory approvals may be delayed or

denied.

Conducting clinical trials is a complex, lengthy and expensive process. Our ability to complete clinical trials on our

anticipated timelines depends on numerous factors, including proper and efficient protocol design, regulatory and institutional

review board approval, adequate patient enrollment and retention rates, and compliance with current good clinical practices.

Delays or complications in clinical trials may arise from difficulties in enrolling or retaining patients, competition from other

clinical trials, the occurrence of significant and/or unexpected adverse safety events, changes in regulatory requirements,

supply chain issues or disruptions at clinical trial sites. Further, we may face additional challenges identifying and enrolling

sufficient patients for clinical trials for rare diseases and cell and gene therapies due to small patient populations. With respect

to cell and genetic therapies there may be additional concerns regarding the safety of these more novel therapeutic approaches

to the treatment of these diseases. If we or our third-party clinical trial providers, including contract research organizations

(“CROs”), do not successfully conduct and manage our clinical activities or adequately comply with regulatory requirements,

our clinical trials may experience delays or increased costs, and the potential regulatory approval of a product candidate or

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expansion of a label for a marketed product may be delayed or denied. Any delay in obtaining required regulatory approvals

could adversely affect our ability to successfully commercialize a product candidate.

Regulatory, Intellectual Property and Other Legal Risks

The extensive regulatory framework governing the health care industry could adversely affect our ability to obtain

approval and market our medicines and failure to comply with these regulations could result in fines, penalties or other

non-monetary remedies.

The health care industry is highly regulated and subject to complex and increasing regulations. U.S. federal and state

regulators, including the FDA and comparable ex-U.S. regulators directly regulate our most critical business activities,

including those related to research, development, manufacturing, and commercialization, as described in Item 1, “Business –

Government Regulation.”

The process for obtaining regulatory approvals to market a product is costly and time consuming, and approvals may not

be granted for future products, or additional indications of existing products, on a timely basis or at all. In addition, we cannot

guarantee that we will remain compliant with applicable regulatory requirements once approval has been obtained. These

requirements govern, among other things, our manufacturing practices, communications regarding our products, and

reporting of safety events. Maintaining compliance with these extensive regulations is complex, expensive, and time

consuming, and failure to comply may result in additional regulatory actions, including recalls, withdrawal or suspension of

product approvals, civil and criminal charges, reputational harm, and fines, penalties, or other monetary or non-monetary

remedies, including exclusion from receipt of payment from U.S. federal and state healthcare programs like Medicare and

Medicaid. Compliance with the regulatory requirements for biologics and cell and gene therapies can be more burdensome,

expensive and time-consuming than for other, better known or more extensively studied types of medicines, such as small

molecules. Regulatory requirements governing cell and genetic therapy products have changed frequently and may continue

to change in the future. Furthermore, risks relating to compliance with laws and regulations may be heightened as we

continue to expand our global operations and enter new therapeutic areas with different patient populations, which may

require different commercialization activities from those we currently utilize.

We expect that regulation of the healthcare industry will continue to evolve through political and legal action, as future

proposals to reform healthcare systems are considered by U.S. and foreign governments and regulatory authorities. We

cannot predict when additional changes in the healthcare industry in general, or the pharmaceutical industry in particular, will

occur, or what the impact of such changes may be. For example, new proposals or requirements regarding local

manufacturing of pharmaceutical products, enhanced data security and privacy measures, sustainability, importation

restrictions, embargoes, or trade sanctions may negatively impact our business. In addition, our development and

commercialization activities could be harmed or delayed by a shutdown of the U.S. government or events that affect the

manner in which the FDA operates.

Commercialization of our products requires that we operate in compliance with applicable health care laws, including

laws regulating promotional activities, prohibiting fraud and abuse and requiring reporting of government pricing

information.

We market our products to health care providers and provide promotional materials and informational programs

regarding the use of each product in these patient populations. In jurisdictions where permitted, we also market our products

to patients for whom the applicable product has been approved, as well as to their caregivers. If a regulatory authority

interprets any of our conduct, including our marketing practices or patient support programs, as promotion of unapproved

uses or otherwise false and misleading, it could request that we modify or withdraw our promotional materials or issue

corrective advertising. It could also take enforcement action, such as issuing warning or untitled letters, prohibiting certain of

our activities, seizing products, and imposing civil fines and criminal penalties. It is also possible that other federal, state, or

foreign enforcement authorities might take action if they believe that the alleged conduct led to the submission and payment

of claims for unapproved uses of our product, which could result in significant fines or penalties. Even if it is later determined

we were not in violation of these laws, we may be faced with negative publicity, incur significant expenses defending our

actions, and have to divert significant management resources from other matters.

Our interactions with health care providers that prescribe or purchase our products are also subject to laws and

regulations designed to prevent fraud and abuse in the sale and use of medicines and that place significant restrictions on the

marketing practices of biopharmaceutical companies. The relationships between companies and health care providers are

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scrutinized and have been the target of lawsuits and investigations alleging various problematic conduct, including

submission of incorrect pricing information, improper promotion of pharmaceutical products, payments intended to influence

the referral of health care business, submission of false claims for government reimbursement, and anticompetitive behavior.

We are required to track and disclose financial interactions with health care providers and health care organizations, which

may increase government and public scrutiny of these financial interactions. Failure to comply with these reporting

requirements could result in significant civil monetary penalties. As we commercialize products for new patient populations

and in new geographies, we will have more interactions with a broader set of healthcare providers and we must continue to

expend significant efforts to establish, maintain and enhance systems and processes to comply with laws and regulations

governing those interactions.

Government price reporting and payment regulations are also complex, requiring us to continually assess the methods by

which we calculate and report pricing in accordance with these obligations. Our methodologies for calculations are inherently

subject to assumptions and may be subject to review and challenge by various government agencies, which may disagree

with our interpretation. If the government disagrees with our reported calculations, we may need to restate previously

reported data and could be subject to additional financial and legal liability.

If we are unable to obtain, maintain and enforce our intellectual property rights, our business could be harmed.

Our success depends, in significant part, on our ability to obtain, maintain, and enforce patents and intellectual property

rights such as trademarks and copyrights that protect our products, product candidates, and technologies. In addition, we rely

upon trade secret protection and contractual arrangements to protect certain of our proprietary information. Due to the

complexity of the legal standards and factual questions relating to the patentability, validity, and enforceability of patents

covering pharmaceutical and biotechnological inventions and the scope of claims made under these patents, our ability to

obtain, maintain and enforce our patents is uncertain. The initial grant of patents or regulatory exclusivity in the U.S. and ex-

U.S. markets depends upon decisions of the patent offices, courts, and governments in those countries. We may fail to obtain,

defend or otherwise preserve patent and other intellectual property rights, including certain forms of regulatory exclusivity,

and our current intellectual property rights or protections and those we obtain in the future may not be broad enough or

sufficient to protect our commercial interests in all countries where we conduct business.

In the U.S. and ex-U.S. markets, third parties have challenged and may continue to challenge, invalidate, or circumvent

our patents and patent applications relating to our products, product candidates, and technologies. We have had and may

continue to have disputes with respect to the rights to products, product candidates, and technologies developed in

collaboration with other parties. If we cannot resolve disputes and obtain adequate intellectual property right protections, we

may not be able to develop or market our products. Settlements of such proceedings could also result in reducing the period

of exclusivity and other protections, resulting in a reduction in revenue from affected products. Any litigation, including

litigation related to Abbreviated New Drug Applications (“ANDA”), litigation related to 505(b)(2) applications, interference

proceedings to determine priority of inventions, derivations proceedings, inter partes review, oppositions to patents in foreign

countries, litigation against our collaborators, or similar actions, could harm our business.

Difficulties in, or preclusion from, protecting our intellectual property rights in foreign jurisdictions could substantially

harm our business. Third-party manufacturers may be able to sell generic versions of our products in countries that do not

provide effective mechanisms for enforcement of our patents or other intellectual property rights. For example, we have

experienced a violation of our intellectual property rights in Russia, where a copy product that infringes our patents has been

made available. In addition, many foreign countries have compulsory licensing laws under which a patent owner must grant

licenses to third parties in certain circumstances. Compulsory licenses have been used in certain countries for market access

purposes and, in some cases, as a cost-containment measure. Compulsory licenses issued for our patents may diminish or

reduce revenue from those jurisdictions and negatively affect our results of operations. Third parties may also illegally

distribute and sell counterfeit versions of our products. Copy or counterfeit products may not meet our rigorous

manufacturing and testing standards and a patient who receives such product may be at risk for a number of dangerous health

consequences. Our business and reputation could suffer harm as a result of illegally produced and distributed generic versions

of our products, as well as counterfeit products sold under our brand name. The diversion of products from their authorized

market into other channels may result in reduced revenues and negatively affect our profitability.

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If we are not able to operate without infringing upon intellectual property rights of third parties, our business could be

harmed.

Our competitors seek to protect their products, product candidates and proprietary information through patents,

trademarks, trade secrets, and copyrights. Third parties have claimed and may claim in the future that our products or other

activities infringe their intellectual property rights or that our employees have misappropriated their intellectual property

rights. See also Item 1., Business – Intellectual Property of this Annual Report on Form 10-K. Resolving an intellectual

property infringement or other claim can be costly and time consuming and may require us to enter into license agreements,

which may not be available on commercially reasonable terms. A successful claim of patent infringement or other violation

or misappropriation of intellectual property rights by a third party could subject us to significant damages and/or an

injunction preventing the manufacture, sale, or use of the affected product or products, and/or require us to pay royalties or

redesign our infringing products, which may be impossible or require substantial time and monetary expenditure.

Our business has a substantial risk of product liability claims and other litigation liability.

The testing, manufacturing, marketing and use of our products and product candidates involve substantial risk of product

liability claims. These claims may be made directly by consumers, patients, healthcare providers, or others. Product liability

claims and lawsuits and safety alerts or product recalls, regardless of their ultimate outcome, may decrease demand for our

products or any product candidate for which we obtain marketing approval, and may have a material adverse effect on our

business, results of operations, reputation, and our ability to market our products. Our product liability and clinical trial

insurance may not provide adequate coverage against all potential liabilities.

There continues to be a significant volume of government and regulatory investigations and litigation against companies

operating in our industry, as well as robust regulatory enforcement and whistleblower claims. Investigations into aspects of

our business include inquiries, subpoenas, and other types of information demands from government and regulatory

authorities. We are also involved in and are subject to other various legal proceedings, including litigation, and other dispute-

related proceedings. These activities require significant financial and internal resources. This includes the arbitration initiated

by the third party to whom the CFF has assigned its ALYFTREK royalty rights. Please see Item 7. Management’s Discussion

and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K for more information.

The outcome of such legal proceedings, investigations or any other dispute-related proceedings are inherently uncertain and

adverse developments or outcomes can result in significant expenses, monetary damages, penalties, injunctions, or other

relief against us, and in the ALYFTREK arbitration, could result in higher future costs of goods if royalty fees are higher than

anticipated. For a description of our litigation, investigation and other dispute-related matters, see Note P., Commitments and

Contingencies — Legal Matters and Other Contingencies, included in this Annual Report on Form 10-K.

We are subject to various and evolving laws and regulations governing the privacy and security of personal data.

We are subject to a variety of evolving and developing data privacy and security laws and regulations in various

jurisdictions related to the collection, storage, use, sharing, and security of personal data, including health information.

Regulators globally are imposing data privacy and security requirements, such as the E.U.’s GDPR and other domestic data

privacy and security laws, such as the California Consumer Privacy Act and the California Privacy Rights Act. These and

other similar types of laws and regulations that have been or may be passed often include requirements with respect to

personal information. Compliance with privacy laws and regulations is a rigorous and time-intensive process that may

increase our cost of doing business or require us to change our business practices. Failure to comply may result in liability

through government enforcement, private actions, civil and criminal fines and penalties, litigation, and reputational harm.

Although we are not directly subject to HIPAA, we could face penalties, including criminal liability, for knowingly obtaining

or disclosing protected health information from non-compliant HIPAA-covered entities. The commercialization of cell and

genetic therapies involves processing more personal data than traditional therapies, increasing our risk exposure.

Furthermore, the number of government investigations, enforcement actions, and class action lawsuits related to data security

incidents and privacy violations, particularly focused on online data sharing, continue to increase. Government investigations

typically require significant resources and generate negative publicity, which could harm our business and reputation.

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Risks Related to Our Operations

We may face manufacturing, supply, and distribution delays, difficulties, and disruptions, among other challenges,

including at our third-party providers.

We could be subject to significant supply interruptions for our commercial products or product candidates as a result of

disruptions to our internal manufacturing capabilities or those of our suppliers or partners. Supply disruptions may result from

a variety of factors, including shortages in product raw materials or labor, technical difficulties, regulatory inspections or

restrictions, delays in construction, regulatory approval, and inspection of new facilities or the expansion of existing facilities,

shipping or customs delays, inability to maintain compliance with quality or other regulations, including cGMP requirements,

general global supply chain disruptions, and performance failures by us or any third-party manufacturer on which we rely.

Disruption in our supply chain or manufacturing capabilities can result in shipment delays, inventory shortages, lot failures,

product withdrawals, recalls and other interruptions in the commercial and clinical supply of our products and product

candidates. Any such disruption with respect to our commercial products could result in a failure to meet market demand,

could negatively affect our patients, could reduce our net product revenues and/or increase our costs. Any such disruption in

the supply of product candidates to our clinical trials could negatively affect the subjects enrolled in our clinical trials and/or

cause delays in our clinical trials and applications for regulatory approval.

Additionally, unfavorable geopolitical events could affect our ability to interact with or conduct business with specific

vendors within our global supply network or could prevent or delay the transportation of supplies or products to their planned

destination. For example, we depend on China-based suppliers for portions of our supply chain. Finding alternative suppliers

due to geopolitical developments or otherwise may not be feasible or could take a significant amount of time and involve

significant expense due to the nature of our products and the need to obtain regulatory approvals.

If we are unable to maintain and expand our supply chain and manufacturing capabilities, our ability to develop our

product candidates and manufacture our products would be harmed.

We continue to invest in and expand our manufacturing capabilities and supplier relationships to ensure the stability of

our supply chains and to support the anticipated demand for our products. Establishing, managing and expanding our global

manufacturing capabilities and supply chain, particularly as we enter new therapeutic modalities, requires significant

financial commitment. This includes the creation and maintenance of numerous third-party contractual relationships upon

which we rely. There can be no assurance that we will be able to identify, establish and maintain additional manufacturers or

capacity for our product candidates and products on a timely basis, on commercially reasonable terms, or at all. The

foregoing risks may be heightened where our products and the materials that we utilize in our operations are manufactured by

only one supplier or at only one facility. In addition, in the course of providing its services, a contract manufacturer may

develop process technology related to the manufacture of our products or product candidates that the manufacturer owns,

either independently or jointly with us. This would increase our reliance on that manufacturer or require us to obtain a license

from that manufacturer to have our products or product candidates manufactured by other suppliers utilizing the same

process.

In addition, we and our CMOs and corporate partners are subject to cGMP, as well as comparable regulations in other

jurisdictions. Manufacturing operations are also subject to routine inspections by regulatory agencies. Even after a supplier is

qualified by the regulatory authority, the supplier must continue to expend time, money and effort in the area of production

and quality control to maintain full compliance with applicable regulatory requirements, including cGMP. If, as a result of

these inspections, a regulatory authority determines that the equipment, facilities, laboratories or processes do not comply

with applicable regulations and conditions of product approval, the regulatory authority may suspend the manufacturing

operations. There can be no assurance that we or our CMOs and corporate partners will be able to remedy any deficiencies

cited by FDA or other regulatory agencies in their inspections.

Furthermore, the manufacturing and logistics for drug products are highly complex and can require significant

investment, including to scale-up manufacturing processes and to secure capacity at third parties with expertise to meet our

requirements. This capacity may be limited by the number of other clinical trials and commercial manufacturing ongoing for

other companies seeking similar support. There are many risks that could result in delays and additional costs, including the

need to hire and train qualified employees and obtain access to necessary equipment and third-party technology. Additionally,

even with relevant experience and expertise, drug manufacturers often encounter difficulties in scale-up and production,

including difficulties with production costs and yields, quality control, and compliance with federal, state and foreign

33

regulations, which can prevent manufacturers from completing clinical trials or commercializing products on a timely or

profitable basis, if at all.

Reliance on third-party relationships could adversely affect our business.

Our business depends on relationships with third parties, including activities critical to research, development,

manufacturing, commercialization, and technology. For example, we rely on third parties such as CROs for the day-to-day

management and oversight of our clinical trials, on CMOs for active ingredient manufacturing and finishing operations, and

on logistics providers for the distribution of our products. We are expanding our relationships with CROs, CMOs, and other

third parties as we enter markets in which we have no or limited experience. Failure by any of our third parties to meet their

contractual, regulatory, or other obligations, any disruption in the relationship between Vertex and a third party upon whom

we rely, or the failure of a third party to conduct activities in accordance with our expectations, could adversely affect the

relevant research, development, manufacturing, commercial, or administrative activity and our business. The foregoing risks

may be heightened as a result of the limited number or specialized nature of certain third parties, as we may not be able to

replace such third party in a timely manner, on commercially reasonable terms, or at all.

The third parties upon which we rely are subject to their own operational and financial risks, as well as other difficulties,

which, if realized, could negatively affect our business. If any of our third parties violate, or are alleged to have violated, any

laws or regulations, including anti-corruption or anti-bribery regulations, the GDPR, or other laws and regulations, during the

performance of their obligations to us, we could suffer financial and reputational harm or other negative outcomes, including

possible legal consequences.

If we fail to scale our operations to accommodate growth, our business may suffer.

As we continue to expand our global operations and capabilities, we face increasing demands on our management and

infrastructure. To effectively manage our growing business, we need to:

• implement and clearly communicate corporate-wide strategies and effectively prioritize resources;
• enhance our operational and financial infrastructure, including data and information controls;
• effectively leverage technology and automation where appropriate to enable efficient growth and remain

competitive;

• improve our administrative, financial and management processes, including decision-making processes and budget

prioritization;

• effectively grow, train and manage our global employee base; and
• expand our compliance and legal resources.

A variety of risks associated with operating in foreign countries could materially adversely affect our business.

Our global operations subject us to risks that could adversely affect our business and revenue. In addition to the ex-U.S.

risks we face with respect to compliance with local laws and regulatory requirements, pricing and reimbursement, intellectual

property, manufacturing capabilities and supply chain, foreign exchange risks, and reliance on third parties, risks associated

with operating a global biotechnology company include the potential for:

• economic weakness, including recession and inflation, or political instability globally or with respect to particular

foreign economies and markets;

• business interruptions resulting from geo-political actions, including war and terrorism;
• import and export licensing requirements, tariffs, trade barriers, and other trade and travel restrictions, the risks of

which appear to have increased in the current political environment;

• credit risks related to our customers, which may be higher in less developed markets; and
• global or regional public health emergencies.

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If any of the above risks were to occur, our revenues, results of operations, financial condition or business could be

materially harmed.

Current or future U.S. legislation, including executive orders, or other new changes in laws, regulations or policies in the

U.S. or other countries could negatively impact our business by increasing costs, decreasing demand for our products, and

increasing government cost controls, among other risks. For example, U.S. legislation has been introduced to limit certain

U.S. biotechnology companies from using equipment or services from select Chinese biotechnology companies, and others in

Congress have advocated for limitations on those Chinese service providers’ ability to engage in business in the U.S. We

cannot predict what actions may ultimately be taken with respect to trade relations between the United States and China or

other countries, what products and services may be subject to such actions, the effective date or duration of such actions, or

what actions may be taken by the other countries in response to actions by the United States. If we are unable to obtain or use

services from existing service providers or become unable to export or sell our products to any of our customers or service

providers, our business could be materially and adversely affected.

A breakdown or breach of our information technology systems, or unauthorized access to confidential information could

adversely affect our business.

We maintain and rely extensively on information technology systems and network infrastructures, internally and with

third parties for the effective operation of our business. We collect, store, and transmit confidential information, including

personal information, financial information and intellectual property. Disruption, infiltration, or failure of our information

technology systems because of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or

misuse, power disruptions, natural disasters or accidents could cause breaches of data security and/or loss of critical data,

which in turn could materially adversely affect our business.

Cyber-attacks and incidents are increasing in their frequency, sophistication, and intensity, and are difficult to detect.

Cyber-attacks are carried out by well-resourced groups and individuals with a wide range of motives and expertise. Due to

the nature of some cyber-attacks and incidents, there is a risk that they may remain undetected for a period of time. Recent

developments in the threat landscape include the use of adversarial artificial intelligence techniques and machine learning, as

well as an increased number of cyber extortion attacks with higher financial ransom demand amounts and increasing

sophistication and variety of ransomware techniques. Cyber-attacks and incidents also include manufacturing, hardware or

software supply chain attacks, which could cause disruption to or a delay in the manufacturing of our products or product

candidates, or lead to data privacy or security breach. We use cloud technologies and any failure by cloud or other technology

service providers to adequately safeguard their systems and prevent cyber-attacks or data privacy incidents could disrupt our

operations and result in misappropriation, corruption, or loss of confidential or proprietary information. The third parties

upon which we rely face similar risks and when they experience a security breach of their systems, our security can be

adversely affected.

Like many companies, we have experienced immaterial cybersecurity incidents, including temporary service

interruptions of third-party suppliers. There can be no assurance that our efforts to protect our data and information systems

will prevent breakdowns or breaches in our systems that could adversely affect our business. While we maintain cyber

liability insurance, this insurance may not be sufficient to cover the financial, legal, business or reputational losses that may

result from an interruption or breach of our systems and those of critical third parties. Cybersecurity incidents can cause the

loss of critical or sensitive information, including personal information, and could give rise to legal liability and regulatory

action under data protection and privacy laws.

In addition, we face certain risks as we seek to leverage artificial intelligence to optimize productivity and efficiency in

various aspects of the organization. Flaws, biases, or malfunctions in these systems could lead to operational disruptions, data

loss, or erroneous decision-making, impacting our operations, financial condition, and reputation. Ethical and legal

challenges may arise, including biases or discrimination in generated outcomes, non-compliance with data protection

regulations and laws specifically governing the use of artificial intelligence systems and tools, and lack of transparency.

Furthermore, the deployment of artificial intelligence systems could expose us to increased cybersecurity threats, such as data

breaches and unauthorized access. We also face competitive risks if we do not implement artificial intelligence or other

machine learning technologies in a timely fashion.

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Our operations may be disrupted by the occurrence of a natural disaster, catastrophic event, or by other serious accidents

occurring at our facilities.

Most of our operations, including our research and development activities, are conducted in a limited number of

facilities. If any of our major facilities were to experience a catastrophic loss due to an earthquake, flood, severe storms, fire

or similar event, our operations would be seriously harmed. For example, our corporate headquarters, as well as additional

leased space that we use for certain logistical and laboratory operations and manufacturing, are located in a flood zone along

the Massachusetts coast. If we are unable to effectively implement our business continuity plans, we may experience delays

in recovery of data and/or an inability to perform vital corporate functions, which could result in a significant disruption in

our operations, large expenses to repair or replace the facility and/or the loss of critical data. Additionally, we use hazardous

materials in some of our facilities, and any accident, injury or other loss related thereto could result in substantial liability.

Our property or other relevant insurance may not be sufficient to cover all potential losses that may result from an

interruption to our operations or damage resulting from these risks.

Strategic and Financial Risks

Our business development strategy, including strategic transactions and collaborations, may not be successful, and there

may be delays or failures in realizing the anticipated benefits of these activities.

As part of our business strategy, we seek to enter into strategic transactions to acquire, license, or collaborate with other

entities, in each case that have potential to complement and advance our ongoing research, development, manufacturing, and

commercialization efforts. Over the last several years we have engaged in a number of strategic transactions and

collaborations, including our acquisition of Alpine and its lead asset, povetacicept, as well as several smaller transactions and

collaboration arrangements. See also Item 1., Business – Strategic Transactions of this Annual Report on Form 10-K. Our

future transactions and collaborations may be similar to prior transactions, may be structured differently from prior

transactions, or may involve larger transactions or later-stage assets. We face significant competition for potential strategic

transactions and collaborations from a variety of other companies, some of which have significantly more financial resources

and experience in business development activities. We may not complete future transactions in a timely manner, or at all,

including due to the possibility that a governmental entity or regulatory body may delay or refuse to grant approval for the

consummation of the transaction.

We may not realize the anticipated benefits of our completed or future strategic transactions. The product candidates or

products contemplated by those transactions may be delayed or terminated at any point during research or clinical

development. Even if a product is approved, we may not be able to successfully commercialize it. As a result, we may fail to

generate expected revenue growth or income contribution within the anticipated timeframe or at all. We also face risks that

we:

• may not effectively integrate acquired assets or businesses into our ongoing business;
• may incur additional expenses or fail to achieve anticipated cost savings related to the strategic transactions;
• may incur impairment charges related to assets acquired in any such transactions; or
• may acquire unanticipated liabilities.

In addition, future strategic transactions could result in potentially dilutive issuances of equity securities or the incurrence

of debt.

We continue to collaborate with outside partners on research, development, manufacturing, and/or commercialization

activities with respect to product candidates and products. We face the same research, development, manufacturing, and

commercialization risks with respect to product candidates and products that are subject to collaborations as with product

candidates and products that we have developed ourselves. We face additional risks in connection with our current and future

collaborative arrangements, including with respect to the performance of the collaborator and their compliance with

contractual obligations.

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Our effective tax rate fluctuates, and changes in tax laws, regulations and treaties, unfavorable resolution to the tax

positions we have taken, and exposure to additional income tax liabilities could have a material impact on our future

taxable income.

Our effective tax rate is derived from a combination of applicable tax rates in the various places that we operate globally.

Our effective tax rate may be different than experienced in the past due to numerous factors, including:

• changes in the mix of our profitability from country to country;
• tax authority examinations/audits of our tax filings;
• adjustments to the value of our uncertain tax positions;
• changes in accounting for income taxes; and
• changes in tax laws or modifications of treaties in various jurisdictions.

Any of these factors could cause us to experience an effective tax rate that is significantly different from previous periods

or our current expectations. For example, actions taken with respect to tax-related matters by associations such as the

Organisation for Economic Co-operation and Development and the European Commission could influence tax laws in

jurisdictions in which we operate, such as the enactments by both E.U. and non-E.U. member countries of a global minimum

tax. We are subject to ongoing tax audits in various jurisdictions, and local tax authorities may disagree with certain positions

we have taken and assess additional taxes. We regularly assess the probable outcomes of these audits to determine the

appropriateness of our tax provision, and we have established contingency reserves for material tax exposures. However,

there can be no assurance that we will accurately predict the outcomes of these disputes or other tax audits or that issues

raised by tax authorities will be resolved at a financial cost that does not exceed our related reserves and the actual outcomes

of these disputes and other tax audits could have a material impact on our results of operations or financial condition.

Changes in foreign currency rates, interest rate risks, the value of our investment portfolio, and inflation affect our results

of operations and financial condition.

Fluctuations in currency exchange rates and interest rates, changes in the value of our investment portfolio, and inflation

have affected and will continue to affect our cash flows, results of operations, and financial condition. The exchange rates

among our reporting currency, the U.S. dollar, and the currencies in which we do business are volatile and our efforts to

mitigate against these risks may not be successful. We invest our available cash in a range of investments, including

investments in cash equivalents and debt securities, and fluctuations in interest rates, among other factors, could materially

negatively affect the value of this investment portfolio. In addition, systemic economic downturns, as well as inflationary

pressures, such as those observed in recent periods, may adversely impact our business and financial results. See also Item

7A., Quantitative and Qualitative Disclosures About Market Risk of this Annual Report on Form 10-K.

Future indebtedness could materially and adversely affect our financial condition, and the terms of our credit agreements

impose restrictions on our business.

If we borrow under our current credit agreement or any future credit agreements, or otherwise issue or incur additional

debt, such indebtedness could have important consequences to our business. The credit agreement requires that we comply

with certain financial covenants, including a consolidated leverage ratio covenant and negative covenants, restricting or

limiting our ability and the ability of our subsidiaries to, among other things, incur additional indebtedness, grant liens,

engage in certain investment, acquisition and disposition transactions, and enter into transactions with affiliates. As a result,

we may be restricted from engaging in business activities that may otherwise improve our business. Failure to comply with

the covenants could result in an event of default that could trigger acceleration of our indebtedness. If we incur additional

indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.

There can be no assurance that we will repurchase shares of common stock or that we will repurchase shares at favorable

prices.

In May 2025, our Board of Directors approved a share repurchase program pursuant to which we are authorized to

repurchase up to $4.0 billion of our common stock from time to time through open market or privately negotiated

transactions, of which $618.5 million has been repurchased as of December 31, 2025. Our stock repurchases will depend

37

upon, among other factors, market conditions, our cash balances and potential future capital requirements, results of

operations, financial condition, and other factors that we may deem relevant. We can provide no assurance that we will

repurchase stock at favorable prices, if at all.

General Risk Factors

Our stock price is volatile.

Our stock price is subject to significant fluctuations. From January 1, 2025 to December 31, 2025, our common stock

traded between $362.50 and $519.68 per share. Our future stock price could be significantly and adversely affected by:

• announcements or investor analyst commentary regarding the clinical development of our product candidates as new

information, including efficacy and safety information becomes available;

• our financial guidance and/or financial results, including quarterly and annual fluctuations resulting from factors

such as the timing and amount of our revenues and expenses; and

• other factors including the risks described in these “Risk Factors.”

Fluctuations in our stock price can result in substantial losses for shareholders. Following periods of volatility in the

market price of a company’s securities, shareholder derivative lawsuits and securities class action litigation are common.

Such litigation, if instituted against us or our officers and directors, could result in substantial costs and other harm to our

business.

If we fail to attract and retain skilled employees, our business could be materially harmed.

We must attract and retain highly qualified and trained scientists, as well as employees with experience in the

development, manufacture, and commercialization of medicines, including biologic and cell and genetic therapies. We face

intense competition for such talent from our competitors, other companies, academic institutions, and other organizations

throughout our industry, especially with respect to employees with expertise in cell or genetic therapies. Our compensation

program, including equity awards, may not be sufficient to retain employees, especially if our stock price declines or other

employers offer more attractive opportunities. Our ability to commercialize our products and achieve our research and

development objectives depends on our ability to respond effectively to these demands. If we are unable to hire and retain

qualified personnel, our ability to advance our pipeline, commercialize our products, and achieve our business objectives

could be materially adversely affected.

The use of social media platforms presents risks and challenges.

Social media is increasingly used by patients, advocacy groups, and other third parties to discuss our products and

product candidates. Social media posts may include statements about efficacy or adverse events that could create reporting

obligations or regulatory scrutiny. Our employees’ use of social media also presents risks, including potential noncompliance

with legal or regulatory requirements, inappropriate disclosure of confidential information or personal information, and loss

of intellectual property. In addition, misinformation, negative sentiment, or impersonation of our business on social media

could cause reputational damage or otherwise harm our business. Failure to appropriately manage these risks could result in

regulatory actions, liability, or other adverse consequences.

We have adopted provisions in our articles of organization and by-laws and are subject to Massachusetts corporate laws

that may frustrate any attempt to remove or replace members of our board or to effectuate certain types of business

combinations involving us.

Provisions of our articles of organization, by-laws and Massachusetts state laws may frustrate any attempt to remove or

replace members of our current Board of Directors and may discourage certain types of business combinations involving us.

Our by-laws allow the Board of Directors to adjourn any meetings of shareholders prior to the time the meeting has been

convened. We may issue shares of any class or series of preferred stock in the future without shareholder approval and upon

such terms as our Board of Directors may determine. The rights of the holders of common stock will be subject to, and may

be adversely affected by, the rights of the holders of any class or series of preferred stock that may be issued in the future.

Massachusetts state law also prohibits us from engaging in specified business combinations with an interested stockholder,

subject to certain exceptions, unless the combination is approved or consummated in a prescribed manner, and places

38

restrictions on voting by any shareholder who acquires 20% or more of the aggregate shareholder voting power without

approval by non-interested shareholders. As a result, shareholders or other parties may find it difficult to remove or replace

our directors or to effectuate certain types of business combinations involving us.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, including the descriptions of our Business set forth in Part I, Item 1, our Risk Factors

set forth in Part I, Item 1A, and our Management’s Discussion and Analysis of Financial Condition and Results of Operations

set forth in Part II, Item 7, contains forward-looking statements. Forward-looking statements are not purely historical and

may be accompanied by words such as “anticipates,” “may,” “forecasts,” “expects,” “intends,” “plans,” “potentially,”

“believes,” “seeks,” “estimates,” and other words and terms of similar meaning. Such statements may relate to:

• our expectations regarding the amount of, timing of, and trends with respect to our financial performance, including

revenues, costs and expenses, and other gains and losses;

• our expectations regarding clinical trials, including expectations for patient enrollment, development timelines, the

expected timing of data from our ongoing and planned clinical trials, and regulatory authority filings and other

submissions for our therapies;

• our beliefs, expectations, and plans with respect to the commercial launches of CASGEVY for the treatment of SCD

and TDT, ALYFTREK for the treatment of CF, and JOURNAVX for the treatment of moderate-to-severe acute

pain, and the anticipated launch of povetacicept for the treatment of IgAN;

• our ability to maintain and obtain adequate reimbursement for our products and product candidates, our ability to

launch, commercialize and market our products or any of our other therapies for which we obtain regulatory

approval, and our ability to obtain label expansions for existing therapies;

• our expectations regarding our ability to continue to grow our CF business by increasing the number of people with

CF eligible and able to receive our medicines and providing improved treatment options for people who are already

eligible for one of our medicines, and our beliefs that the majority of people with CF will transition to ALYFTREK

over time;

• our beliefs regarding the support provided by clinical trials and preclinical and nonclinical studies of our therapies

for further investigation, clinical trials or potential use as a treatment, including with respect to povetacicept as a

pipeline-in-a-product and as a potential best-in-class approach for the treatment of IgAN, pMN, and gMG;

• the data that will be generated by ongoing and planned clinical trials and the ability to use that data to advance

compounds, continue development, support regulatory filings, or accelerate regulatory approval, including our plans

to complete the full submission for potential accelerated approval of povetacicept in IgAN in the first half of 2026

and to share data from the interim analysis of the Phase 2/3 clinical trial of inaxaplin in AMKD in late 2026 or early

2027 and from the Phase 2 trial in people with AMKD in mid-2026;

• our beliefs that ALYFTREK will provide additional clinical benefits to eligible people with CF, regarding the

durable efficacy and effectiveness of CASGEVY as one-time functional cure for people with SCD and TDT, and

regarding the clinical benefits of JOURNAVX without the evidence of the several limitations of other available

therapies;

• our plans to continue investing in our research and development programs, including anticipated timelines for our

programs, and our strategy to develop our pipeline programs, alone or with third-party collaborators;

• our beliefs regarding the approximate patient populations for the disease areas on which we focus;
• the potential benefits and therapeutic scope of our acquisitions and collaborations, including our acquisition of

Alpine and its lead asset, povetacicept, its potential to become a pipeline-in-a-product, and our expectations

regarding our agreements with Zai, Ono and WuXi;

• our expectations regarding the lower royalty burden for ALYFTREK;
• our plans to expand, strengthen, and invest in our global supply chains and manufacturing infrastructure and

capabilities, including for biologic and cell and gene therapies;

• the effects of import and export licensing requirements, tariffs, trade barriers, and other trade and travel restrictions;
• potential business development activities, including the identification of potential collaborative partners or

acquisition targets;

39

• our ability to expand and protect our intellectual property portfolio and otherwise maintain exclusive rights to

products;

• our expectations or beliefs regarding any legal proceedings in which we are involved, including any litigation,

arbitration or other similar proceedings involving our products, product candidates or activities;

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

payments or other obligations;

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

program;

• our expectations regarding the amount of cash to generated by operations, our cash balance and expected generation

and interest income;

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

assets;

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

and significant unmet medical needs;

• the effectiveness of our governance, plans and strategy with respect to managing cybersecurity risks and other

threats to our information technology systems;

• our ability to effectively implement artificial intelligence systems and tools;
• our ability to attract and retain skilled personnel;
• our expectations involving governmental cost containment and other regulatory efforts;
• our expectations surrounding the competitive landscape facing our products and product candidates; and
• our liquidity and our expectations regarding the possibility of raising additional capital.

Forward-looking statements are subject to certain risks, uncertainties, or other factors that are difficult to predict and

could cause actual events or results to differ materially from those indicated in any such statements. These risks,

uncertainties, and other factors include, but are not limited to, those described in our Risk Factors, set forth in Part I, Item 1A,

and elsewhere in this report and those described from time to time in our future reports filed with the Securities and Exchange

Commission.

Any such forward-looking statements are made on the basis of our views and assumptions as of the date of the filing and

are not estimates of future performance. Except as required by law, we undertake no obligation to publicly update any

forward-looking statements. The reader is cautioned not to place undue reliance on any such statements.

Risk Management and Strategy

We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to

maintain the security, confidentiality, integrity, and availability of our business systems and confidential information,

including personal information and intellectual property. Our cybersecurity program includes systems and processes for

assessing, identifying and managing material risks from cybersecurity threats and include maintenance and monitoring of

information security policies aligned with global regulatory controls and aligned with National Institute of Standards and

Technology Cybersecurity Framework and System and Organization Controls 2. The program includes user and employee

awareness of cyber policies and practices; information systems configuration management; third-party risk management

systems; identity and information asset protection; infrastructure security systems; and cyber threat operations with

continuous monitoring and threat hunting. This program also includes processes to oversee and identify material risks from

cybersecurity threats associated with our use of third-party service providers. We engage a range of third-party experts in

connection with various development, implementation, and maintenance activities related to our cybersecurity program,

including audit and compliance, threat hunting, monitoring, and end-user support.

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Our cybersecurity program is integrated into our overall risk management systems, including our annual enterprise risk

management program, internal audit program, business continuity and crisis management programs, third-party risk

management program, insurance risk management program, and employee compliance programs. As part of our overall risk

management program, we maintain a global insurance portfolio with comprehensive cyber coverage. Our Chief Information

Security Officer (“CISO”) and the Information Security function advises, consults with, or provides input to each of these

programs to ensure that material risks from cybersecurity threats are appropriately assessed, identified, and managed.

As of the date of this report, there have been no cybersecurity threats that have materially affected or are reasonably

likely to materially affect our business, operations, or financial condition. Similar to other companies, we have experienced

cybersecurity incidents, including temporary service interruptions of third-party suppliers. As of the date of this report,

however, known cybersecurity incidents, individually or in aggregate, have not had a material impact on our company. Over

the last three years, net expenses incurred from any information security breaches, including any penalties and settlements,

are not material relative to our total revenue. For additional discussion on cybersecurity risks we face, see Item 1.A, Risk

Factors – “A breakdown or breach of our information technology systems, or unauthorized access to confidential

information could adversely affect our business.” of this Annual Report on Form 10-K

Governance

While our board of directors has oversight responsibility for risk management generally, the Audit and Finance

Committee (“Audit Committee”) is specifically responsible for overseeing our cybersecurity risk management program to

ensure that cybersecurity risks are identified, assessed, managed, and monitored. Our CISO provides quarterly updates to the

Audit Committee in this regard, and covers the state of our cybersecurity program, supported by key performance indicators

across the range of cybersecurity functions related to risk management and governance, identity and information asset

protection, core security and endpoint security, and cyber threat operations. These updates include descriptions of

cybersecurity incidents of interest, including those associated with our third-party service providers; the board will be

informed promptly of material risks from cybersecurity threats.

We strive to create a culture of cybersecurity resilience and awareness and believe that cybersecurity is the responsibility

of every employee and contractor. At the same time, primary responsibility for assessing, monitoring, and managing our

cybersecurity risks lies with our CISO. Our CISO has more than 35 years of experience in security and information systems

and spent 25 years with Raytheon Technologies, most recently as Chief Technology Officer of Cybersecurity, Special

Missions, Training & Services. Our CISO supported the U.S. President's National Security Telecommunications Advisory

Committee for more than 20 years, is a member of the Massachusetts Cybersecurity Strategy Council, and previously served

as Chair of the Kogod Cybersecurity Governance Center at American University. He also served on the Rhode Island

Homeland Security Advisory Board and was a member of various commercial cyber product councils.

Our CISO oversees a team of skilled cybersecurity professionals who have Certified Information Systems Security

Professional credentials, Global Information Assurance Certification from the SANS Institute, and other security and network

certifications. The cybersecurity team monitors and evaluates our cybersecurity posture and performance on an ongoing

basis, including through regular vulnerability scans, penetration tests, and threat intelligence feeds. The cybersecurity team

uses various tools and methodologies to manage cybersecurity risk that are tested on a regular cadence, and assesses and

evaluates cybersecurity incidents, escalating certain cybersecurity incidents to the CISO according to protocol. The CISO is

continually informed regarding the performance of the cybersecurity program, as well as the latest developments in

cybersecurity, including potential threats and innovative risk management techniques aligned with industry standards. The

CISO reports to our Chief Digital and Information Officer, who is a Senior Vice President of the Company and reports

directly to our Chief Operating and Financial Officer (“COFO”). Our COFO is an Executive Vice President and an executive

officer of the Company, and reports directly to our CEO.

Corporate Headquarters

We lease approximately 1.1 million square feet of office and laboratory space at our corporate headquarters in Boston,

Massachusetts in two buildings pursuant to two leases that we entered into in May 2011 and amended in August 2024 to,

among other terms, extend the lease termination dates from December 2028 to June 2044. We have the option to extend the

term of the leases for up to two additional ten-year periods.

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Additional United States and Worldwide Locations

In addition to our corporate headquarters, we lease an aggregate of approximately 865,000 square feet of space globally.

This space includes logistical, laboratory, commercial and manufacturing operations, as well as laboratory and office space to

support our research and development organizations. We also own approximately 213,000 square feet at our continuous

manufacturing facility in Massachusetts. Additionally, we are constructing the second building of our Leiden Campus in

Massachusetts (“Leiden II”), which will include approximately 348,000 square feet of office and laboratory space. We expect

Leiden II to be operational in late 2026.

Other than as described in Note P, “Commitments and Contingencies,” to our consolidated financial statements, we are

not currently subject to any material legal proceedings.

OPERATIONS

Our discussion and analysis of our financial condition and results of operations for 2025 as compared to 2024 are

discussed below. For a discussion of our financial condition and results of operations for 2024 as compared to 2023, please

refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024

Annual Report on Form 10-K, except as set forth below.

OVERVIEW

We are a global biotechnology company that invests in scientific innovation to create transformative medicines for

people with serious diseases, with a focus on specialty markets. We have approved medicines for cystic fibrosis (“CF”),

sickle cell disease (“SCD”), transfusion dependent beta thalassemia (“TDT”), and acute pain, and we continue to serially

innovate and advance next-generation clinical and research programs in these areas. Our mid- and late-stage clinical pipeline

includes programs across a range of modalities in additional serious diseases, including IgA nephropathy, APOL1-mediated

kidney disease, neuropathic pain, type 1 diabetes, primary membranous nephropathy, autosomal dominant polycystic kidney

disease, and myotonic dystrophy type 1.

Collectively, our five CF medicines, led by TRIKAFTA/KAFTRIO, are being used to treat nearly three quarters of the

people with CF in the U.S., Europe, Australia, and Canada. ALYFTREK, our newest CF medicine, is approved in the United

States (the “U.S.”), the United Kingdom (the “U.K.”), the European Union (the “E.U.”), Canada, New Zealand, Switzerland,

Australia and Israel.

CASGEVY, our ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, is approved in the U.S., the E.U., the U.K.,

the Kingdom of Saudi Arabia (“Saudi Arabia”), the Kingdom of Bahrain (“Bahrain”), Qatar, the United Arab Emirates (the

“UAE”), Kuwait, Switzerland and Canada for the treatment of people 12 years of age and older with SCD or TDT.

JOURNAVX, our selective non-opioid NaV1.8 pain signal inhibitor, is approved in the U.S. for the treatment of people

with moderate-to-severe acute pain. We are continuing our commercial launch of JOURNAVX for eligible adults.

Financial Highlights

$0.1

45

$0.1

2024

2025

December 31, 2025

December 31, 2024

Note: Charts above may not add due to rounding.

Business Updates

Marketed Products

Cystic Fibrosis

We expect that the number of people with CF taking our medicines will continue to grow through new approvals and

reimbursement agreements, treatment of younger patients, increased survival and expansion into additional geographies.

• ALYFTREK is reimbursed for eligible people with CF in the U.S., England, Ireland, Germany, Denmark, Northern

Ireland, Norway, Wales, Italy, Australia, New Zealand and Luxembourg. We are working to secure access for

eligible patients in additional countries.

Sickle Cell Disease and Beta Thalassemia

• In 2025, we recorded $115.8 million of CASGEVY product revenues. This reflects 64 patients receiving infusions

of CASGEVY in 2025, including 30 people infused in the fourth quarter. Globally, in 2025, 147 people with SCD or

TDT had their first cell collection for CASGEVY.

• As of the end of 2025, approximately 90 percent of people with SCD or TDT in the U.S. have reimbursed access to

CASGEVY, which is also reimbursed in the U.K., Italy, Austria, Denmark, Luxembourg, Saudi Arabia, the UAE,

Bahrain, and Kuwait. In January 2026, we secured reimbursed access to CASGEVY for eligible people with SCD in

Scotland, consistent with the reimbursement agreement reached in 2025 for people with TDT.

• We expect to begin global regulatory submissions for approvals for CASGEVY in children 5 to 11 years of age, in

the first half of 2026. The FDA awarded Vertex with a Commissioner’s National Priority Voucher for this pediatric

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

Acute Pain

• Since pharmacy availability in March 2025 through year-end 2025, more than 550,000 prescriptions for

JOURNAVX were written and filled across the hospital and retail settings in different acute pain conditions,

consistent with JOURNAVX’s broad label.

• We have secured access for JOURNAVX with all three national pharmacy benefit managers, and, as of January

2026, over 200 million individuals across commercial and government payers have coverage, representing two-

thirds of U.S. covered lives. In addition, 21 states provide coverage via Medicaid.

• More than 100 of the targeted 150 healthcare systems and more than 950 individual hospitals of the 2,000 targeted

institutions have added JOURNAVX to formularies, protocols or order sets.

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Select R&D Pipeline Programs

We continue to advance a diversified pipeline of potentially transformative medicines for serious diseases utilizing a

range of modalities. Recent and anticipated progress in activities supporting these efforts is included below:

Cystic Fibrosis

• We completed the global trial evaluating ALYFTREK in children 2 to 5 years of age. Following positive results

from this clinical trial, we expect to submit for approval with global regulators in this age group in the first half of

2026. We also initiated a pivotal trial of ALYFTREK in children 1 year to less than 2 years of age.

• Following positive results from the clinical trial evaluating TRIKAFTA in children 1 year to less than 2 years of age,

we expect to begin submissions for global regulatory approvals in this age group in the first half of 2026.

IgA Nephropathy

• We are developing povetacicept, a dual inhibitor of B cell activating factor (“BAFF”) and a proliferation-inducing

ligand (“APRIL”) cytokines, for multiple diseases. Povetacicept represents a potentially best-in-class approach to

control B cell activity in immunoglobulin A nephropathy (“IgAN”).

• We completed enrollment in the Phase 3 clinical trial evaluating povetacicept for IgAN and, in the fourth quarter of

2025, we initiated the rolling Biologics Licensing Application (“BLA”) filing for U.S. accelerated approval with

submission of the first module. We expect to release interim analysis data in the first half of 2026 and we expect to

complete the submission in the first half of 2026, if data from the interim analysis are supportive. We are using a

priority review voucher to expedite the review of the povetacicept BLA from ten months to six months.

APOL1-Mediated Kidney Disease

• Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”). We completed

enrollment in the interim analysis cohort of the global Phase 2/3 pivotal clinical trial evaluating inaxaplin in people

with primary AMKD (“AMPLITUDE”). We expect to conduct the pre-planned interim analysis once this cohort has

been treated for 48 weeks and we expect to share data from the interim analysis in late 2026 or early 2027. We

expect to complete full enrollment in AMPLITUDE in the second half of 2026.

Peripheral Neuropathic Pain

• We previously initiated the first Phase 3 clinical trial evaluating suzetrigine for the treatment of people with diabetic

peripheral neuropathy (“DPN”), a common form of peripheral neuropathic pain, and have initiated a second Phase 3

clinical trial evaluating suzetrigine in DPN in the fourth quarter of 2025. We expect to complete enrollment in both

Phase 3 clinical trials by the end of 2026.

Type 1 Diabetes

• Zimislecel is an allogeneic, stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy,

using standard immunosuppression to protect the implanted cells. We have completed enrollment in the Phase 1/2/3

clinical trial of zimislecel in people with type 1 diabetes (“T1D”). We have temporarily postponed completion of

dosing in this clinical trial, pending an internal manufacturing analysis.

Primary Membranous Nephropathy

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

nephropathy (“pMN”), another B cell-mediated disease. We are enrolling and dosing patients in the adaptive Phase

2/3 pivotal clinical trial of povetacicept for the treatment of people with pMN. We expect to complete the Phase 2

portion of the clinical trial and to initiate the Phase 3 portion in mid-2026.

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External Innovation

Recent investments in external innovation include:

• An exclusive global license agreement with WuXi Biologics to develop and commercialize a trispecific T cell

engager for B cell-mediated autoimmune diseases, which is currently in preclinical development.

Our Business Environment

In 2025, our net product revenues were primarily from the sale of our medicines for the treatment of CF. Our CF strategy

involves continuing to develop and obtain approval and reimbursement for treatment regimens that will provide benefits to all

people with CF and increasing the number of people with CF eligible and able to receive our medicines. Outside of CF, we

continue to advance the commercialization of CASGEVY for the treatment of SCD and TDT, and JOURNAVX for the

treatment of acute pain. In addition, we are advancing our pipeline of product candidates for the treatment of serious diseases

outside of CF, SCD, TDT and acute pain.

Our strategy is to combine transformative advances in the understanding of causal human biology and the science of

therapeutics to discover and develop innovative medicines. This approach includes advancing multiple compounds or

therapies from each program, spanning multiple modalities, into early clinical trials to obtain patient data that can inform

selection of the most promising therapies for later-stage development, as well as to inform discovery and development

efforts. We aim to serially innovate in our disease areas of interest and follow our first-in-class therapies with potential best-

in-class candidates to provide durable clinical and commercial success.

In pursuit of new product candidates and therapies in specialty markets, we invest in research and development. We

believe that pursuing research in diverse areas allows us to balance the risks inherent in product development and may

provide product candidates that will form our pipeline in future years. To supplement our internal research programs, we

acquire technologies and programs and collaborate with biopharmaceutical and technology companies, leading academic

research institutions, government laboratories, foundations and other organizations, as needed, to advance research in our

areas of therapeutic interest and to access technologies needed to execute on our strategy.

Discovery and development of a new pharmaceutical or biological product is a difficult and lengthy process that requires

significant financial resources along with extensive technical and regulatory expertise. Across the industry, most potential

drug or biological products never progress into development, and most products that advance into development never receive

marketing approval. Our investments in product candidates are subject to considerable risks. We closely monitor our research

and development activities, and frequently evaluate our pipeline programs in light of new data and scientific, business and

commercial insights, with the objective of balancing risk and potential. This process can result in rapid changes in focus and

priorities as new information becomes available and as we gain additional understanding of our ongoing programs and

potential new programs, as well as those of our competitors. In addition, our product candidates must satisfy rigorous

standards of safety and efficacy before they can be approved for sale by regulatory authorities. Our analysis of data obtained

from nonclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could

delay, limit or prevent regulatory approval.

Our business also requires ensuring appropriate manufacturing and supply of our products. As we advance our product

candidates through clinical development toward commercialization and market and sell our approved products, we build and

maintain our supply chain and quality assurance resources. We rely on a global network of third parties, including some in

China, and our internal capabilities to manufacture and distribute our products for commercial sale and post-approval clinical

trials and to manufacture and distribute our product candidates for clinical trials. In addition to establishing supply chains for

each newly approved product, we adapt our supply chain for existing products to include additional formulations or to

increase scale of production for existing products as needed. The processes for biological and cell and genetic therapies can

be more complex than those required for small molecule drugs and require additional investments in different systems,

equipment, facilities and expertise. We are focused on ensuring the stability of the supply chains for our current products, as

well as for our pipeline programs.

Sales of our products depend, to a large degree, on the extent to which our products are reimbursed by third-party payors,

such as government health programs, commercial insurance and managed health care organizations. Reimbursement for our

products, including our potential pipeline therapies, cannot be assured and may take significant periods of time to obtain. We

dedicate substantial management and other resources to obtain and maintain appropriate levels of reimbursement for our

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products from third-party payors, including governmental organizations in the U.S. and ex-U.S. markets. In the U.S., we

work with government and commercial payors to obtain and maintain appropriate levels of reimbursement for our medicines.

In ex-U.S. markets, we seek government reimbursement for our medicines on a country-by-country or region-by-region, as

required. This is necessary for each new medicine, as well as for label expansions for our current medicines. We expect to

continue to focus significant resources to expand and maintain reimbursement for our CF medicines, CASGEVY,

JOURNAVX, and, ultimately, our pipeline therapies, in U.S. and ex-U.S. markets.

Strategic Transactions

Acquisitions

As part of our business strategy, we seek to acquire technologies, products, product candidates and other businesses that

are aligned with our corporate and research and development strategies and complement and advance our ongoing research

and development efforts. We have acquired multiple biotechnology companies over the last several years and expect to

continue to identify and evaluate such opportunities. The accounting for these acquisitions can vary significantly based on

whether we conclude the transactions represent business combinations or asset acquisitions. In 2024, we acquired Alpine and

its lead molecule, povetacicept, for approximately $5.0 billion. Povetacicept has shown potential to treat multiple diseases or

conditions and become a pipeline-in-a-product. We accounted for the Alpine transaction as an asset acquisition because

povetacicept represented substantially all of the fair value of the gross assets that we acquired. As a result, $4.4 billion of the

fair value attributed to povetacicept was expensed as AIPR&D in 2024. In 2019 and 2022, we acquired Semma Therapeutics,

Inc. (“Semma”) and ViaCyte, Inc. (“ViaCyte”), respectively, pursuant to which we established and accelerated the

development of our T1D program. We accounted for each of these acquisitions as a business combination.

Please refer to our critical accounting policies, “Acquisitions,” for further information regarding the significant

judgments and estimates related to our acquisitions.

Collaboration and In-Licensing Arrangements

We enter into arrangements with third parties, including collaboration and licensing arrangements, for the development,

manufacture and commercialization of products, product candidates, and other technologies that have the potential to

complement our ongoing research and development efforts.

Over the last several years, we entered into collaboration agreements with a number of companies, including CRISPR

Therapeutics AG (“CRISPR”), Entrada Therapeutics, Inc. (“Entrada”), and Moderna, Inc.

Generally, when we in-license a technology or product candidate, we make upfront payments to the collaborator, assume

the costs of the program and/or agree to make contingent payments, which could consist of milestone, royalty and option

payments. Most of these collaboration payments are expensed as AIPR&D, including, a $75.0 million milestone paid to

Entrada in 2024, and, in 2023, total payments of $242.6 million to Entrada and total upfront and milestone payments of

$170.0 million to CRISPR related to T1D. These payments were expensed to AIPR&D because they were primarily

attributable to acquired in-process research and development for which there was no alternative future use. However,

depending on many factors, including the structure of the collaboration, the stage of development of the acquired technology,

the significance of the in-licensed product candidate to the collaborator’s operations and the other activities in which our

collaborators are engaged, the accounting for these transactions can vary significantly. We expect to continue to identify and

evaluate collaboration and licensing opportunities that may be similar to or different from the collaborations and licenses that

we have engaged in previously.

Joint Development and Commercialization Agreement with CRISPR

In 2017, we entered into a joint development and commercialization agreement with CRISPR (the “CRISPR JDCA”),

which we amended and restated in 2021.

Pursuant to the CRISPR JDCA, we lead global development, manufacturing and commercialization of CASGEVY, with

support from CRISPR. We also conduct all research, development, manufacturing and commercialization activities relating

to other product candidates and products under the CRISPR JDCA throughout the world subject to CRISPR’s reserved right

to conduct certain activities.

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CASGEVY was approved by the FDA in December 2023 for the treatment of SCD. In connection with this approval, we

made a $200.0 million milestone payment to CRISPR in January 2024. We are recording intangible asset amortization

expense to “Cost of sales” related to this intangible asset. Subsequent to receiving marketing approval for CASGEVY, we

continue to lead the research and development activities under the CRISPR JDCA, subject to CRISPR’s reserved right to

conduct certain activities. We are reimbursed by CRISPR for its 40% share of these research and development activities,

subject to certain adjustments, and we record this reimbursement from CRISPR as a credit within “Research and development

expenses.” We also share with CRISPR 40% of the net commercial profits or losses incurred with respect to CASGEVY,

subject to certain adjustments, which is recorded to “Cost of sales.” The net commercial profits or losses equal the sum of the

product revenues, cost of sales and selling, general and administrative expenses that we have recognized related to the

CRISPR JDCA.

Prior to receiving marketing approval from the FDA for CASGEVY in December 2023, we accounted for the CRISPR

JDCA as a cost-sharing arrangement, with costs incurred related to CASGEVY allocated 60% to us and 40% to CRISPR,

subject to certain adjustments. In 2023, we recognized net reimbursements from CRISPR as credits to “Research and

development expenses” and to “Selling, general and administrative expenses,” related to CRISPR’s share of the CRISPR

JDCA’s operating expenses.

Acquired In-Process Research and Development Expenses

In 2025 and 2024, our AIPR&D included $133.0 million and $4.6 billion, respectively, related to upfront, contingent

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

collaborations, and licenses of third-party technologies described above. Please refer to Note B, “Collaboration, License and

Other Arrangements,” for further information regarding our asset acquisitions, collaborations, and in-license agreements.

Out-licensing Arrangements

We also have out-licensed certain development programs to collaborators who are leading the development or

commercialization of these programs, either globally or within certain geographic regions.

In 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

(in millions, except percentages)

Product Revenues, Net

In 2025, our net product revenues increased $950.5 million, or 9%, as compared to 2024, primarily due to continued

strong demand for TRIKAFTA/KAFTRIO as well as contributions from our launches of ALYFTREK, JOURNAVX and

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CASGEVY. In 2025, “Other product revenues” included $115.8 million from CASGEVY and $59.6 million from

JOURNAVX. In 2024, “Other product revenues” included CASGEVY product revenues of $10.0 million. Our remaining

“Other product revenues” are related to KALYDECO, ORKAMBI, and SYMDEKO/SYMKEVI, our other CF products.

Other Revenues

In 2025, other revenues were $30.7 million, which included $20.6 million and $10.0 million related to upfront payments

received from our agreements with Ono and Zai, respectively.

Revenues by Geographic Location

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

(in millions, except percentages)

Our U.S. total revenues increased 13% in 2025, as compared to 2024, due to continued strong patient demand, new

patient initiations and higher realized net prices. Our ex-U.S. total revenues increased 3% in 2025, as compared to 2024,

primarily due to solid CF performance across multiple geographies and increased CASGEVY product revenues, partially

offset by a decline in product revenues in Russia, where we are continuing to experience a violation of our intellectual

property rights.

In 2026, we expect our total revenues to increase due to continued growth of our CF product revenues, including from

ALYFTREK globally, and increased contributions from CASGEVY and JOURNAVX.

Operating Costs and Expenses

(in millions, except percentages)

Cost of Sales

Our cost of sales primarily consists of third-party royalties payable on net sales of our CF products as well as the cost of

producing inventories. Pursuant to our agreement (the “CFF Agreement”) with the Cystic Fibrosis Foundation (the “CFF”),

our tiered third-party royalties on sales of ALYFTREK, TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, KALYDECO, and

ORKAMBI, calculated as a percentage of net sales, range from the single digits to the sub-teens, with lower royalties on sales

of ALYFTREK and TRIKAFTA/KAFTRIO than for our other products. The royalty burden associated with TRIKAFTA/

KAFTRIO is 9.33% and our position is that the royalty burden associated with ALYFTREK is 4%. On October 10, 2025,

Royalty Pharma plc (“RP”), the third party to whom the CFF assigned its rights (and the CFF, which remains a party to the

CFF Agreement), initiated a confidential arbitration alleging the royalty burden on ALYFTREK is approximately 8%. RP is

seeking a declaratory judgment regarding the royalty burden on ALYFTREK as well as alleged unpaid royalties and other

alleged damages available under the CFF Agreement or applicable law, costs, expenses, attorneys’ fees, and interest. We

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believe RP’s position is contrary to the plain terms of the CFF Agreement and intend to vigorously defend our position under

the CFF Agreement.

Our cost of sales as a percentage of our net product revenues was 13.8% and 13.9% in 2025 and 2024, respectively,

primarily due to ALYFTREK sales in 2025, which has the royalty burden lower than TRIKAFTA/KAFTRIO, partially offset

by changes in product mix, and investments in network expansion and manufacturing process improvements.

In 2026, we expect our cost of sales as a percentage of our net product revenues to increase due to a higher proportion of

products outside of CF, which currently have greater manufacturing costs relative to their net product revenue contributions,

and continued investments in efficient manufacturing and delivery processes.

Research and Development Expenses

(in millions, except percentages)

Over the past three years, we have incurred approximately $10.7 billion in research and development expenses

associated with product discovery and development. Our research and development expenses include internal and external

costs incurred for research and development of our products and product candidates. We assign external costs of services

provided to us by clinical research organizations and other outsourced research by individual program. Our internal costs

include salary and benefits, stock-based compensation expense, laboratory supplies and other direct expenses and

infrastructure costs, the majority of which are not assigned to individual products or product candidates.

Research Expenses

(in millions, except percentages)

Our research expenses reflect investment in our pipeline and expansion of our cell and genetic therapy capabilities,

which has increased our outsourced services and other direct expenses and infrastructure costs in 2025 as compared to 2024.

Salary and benefits in 2024 included $13.1 million associated with cash-settled unvested Alpine equity awards. Compared to

2024, our total research expenses in 2025 increased $23.4 million, or 3%. We expect to continue to invest in our research

programs with a focus on creating transformative medicines for serious diseases.

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Development Expenses

(in millions, except percentages)

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. These include our povetacicept programs acquired

from Alpine, pain and T1D programs, which together have increased our outsourced services and other direct expenses. In

conjunction with our acquisition of Alpine, we incurred $151.9 million associated with cash-settled unvested Alpine equity

awards within development expenses in 2024. Compared to 2024, our total development expenses in 2025 increased by

$255.8 million, or 9%. In 2026, we expect our development expenses to continue to increase due to our advancing pipeline

programs, including our T1D programs.

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

(in millions, except percentages)

In 2025, AIPR&D included various upfront and milestone payments related to our collaboration and in-licensing

arrangements. In 2024, AIPR&D included $4.4 billion resulting from our acquisition of Alpine, which was accounted for as

an asset acquisition, and various other upfront and milestone payments. Our AIPR&D has historically fluctuated, and is

expected to continue to fluctuate, from one period to another due to upfront, contingent milestone, and other payments

pursuant to our existing and future business development transactions, including collaborations, licenses of third-party

technologies, and asset acquisitions.

Selling, General and Administrative Expenses

(in millions, except percentages)

Selling, general and administrative expenses increased by 20% in 2025 as compared to 2024, primarily due to increased

commercial investment to support the launch of JOURNAVX. We expect our selling, general and administrative expenses to

continue to increase in 2026 to as we expand the commercialization of JOURNAVX, prepare for our anticipated launch of

povetacicept for the treatment of IgAN, and further investments in infrastructure to scale our organization.

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Intangible Asset Impairment Charge

In the first quarter of 2025, based on results from a Phase 1/2 clinical trial evaluating our VX-264 clinical program in

patients with T1D, we concluded that VX-264 will not be advancing further in clinical development. Based on this event, we

performed an interim impairment test on the fair value of our VX-264 indefinite-lived in-process research and development

asset that we acquired from Semma Therapeutics, Inc. As a result, we recorded a full intangible asset impairment charge of

$379.0 million associated with VX-264 in the first quarter of 2025.

Non-Operating Income (Expense), Net

Interest Income

Interest income decreased from $598.1 million in 2024 to $490.9 million in 2025, primarily due to decreased market

interest rates. Our future interest income is 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 were expenses of $7.7 million and $86.1 million in 2025 and 2024, respectively. These

amounts primarily related to net unrealized and realized losses resulting from changes in the fair value of certain of our

strategic equity investments and net foreign currency exchange losses.

Income Taxes

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

significantly impact our effective tax rate include changes in tax laws, variability in the amount and allocation of our taxable

earnings among multiple jurisdictions, the amount and characterization of our research and development expenses, the levels

of certain deductions and credits, adjustments to the value of our uncertain tax positions, acquisitions and third-party

collaboration and licensing transactions.

In July 2025, the U.S. enacted H.R.1, which includes significant provisions modifying the U.S. tax framework, including

the ability for companies to immediately deduct research and development expenditures for 2025 and provisions for

deducting previously capitalized amounts. H.R.1 does not have a material impact on our 2025 U.S. taxes, but we expect

further guidance to be issued. We will review guidance when issued for impacts on future years and disclose any impacts if

needed at that time. These legislative changes could have an impact on our future effective tax rates, tax liabilities, and cash

taxes.

Our provision for income taxes was $690.0 million in 2025 and $784.1 million in 2024. In 2025, our 14.9% effective tax

rate was lower than the U.S. statutory rate primarily due to research and development tax credits, increased utilization of

foreign tax credits, and excess tax benefits related to stock-based compensation.

In 2024, our 315.5% effective tax rate was materially different than the U.S. statutory rate primarily due to the

$4.4 billion of non-deductible AIPR&D resulting from our acquisition of Alpine, which significantly lowered our pre-tax

income. The non-deductible AIPR&D was partially offset by a benefit from a research and development tax credit study that

was completed in 2024 and excess tax benefits related to stock-based compensation.

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LIQUIDITY AND CAPITAL RESOURCES

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

(in millions, except percentages)

Working Capital

As of December 31, 2025, total working capital was $7.3 billion, which represented an increase of $1.3 billion, or 22%,

from $6.0 billion as of December 31, 2024, primarily due to increased cash and marketable securities due to product revenue

growth, as well as increased inventories to support our recent commercial launches.

Cash Flows

(in millions)

Operating Activities

Cash provided by operating activities was $3.6 billion in 2025, primarily due to income from operations of $4.2 billion

driven by our net product revenues partially offset by purchases of inventory and other changes in operating assets and

liabilities. Cash used in operating activities was $492.6 million in 2024, primarily due to our acquisition of Alpine partially

offset by cash flows provided by other operating activities.

Investing Activities

Cash used in investing activities was $945.4 million in 2025, primarily related to net purchases of available-for-sale debt

securities and purchases of property and equipment. Cash used in investing activities was $3.8 billion in 2024, which

included net purchases of available-for-sale debt securities of $3.0 billion.

Financing Activities

Cash used in financing activities were $2.3 billion and $1.5 billion in 2025 and 2024, respectively. Our financing

activities in each year were primarily related to repurchases of our common stock pursuant to our share repurchase programs

and payments in connection with common stock withheld for employee tax obligations.

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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

December 31, 2025, the facility was undrawn, and we were in compliance with these covenants.

We may also raise additional capital by borrowing under credit agreements, through public offerings or private

placements of our securities, or securing new collaborative agreements or other methods of financing. We will continue to

manage our capital structure and will consider all financing opportunities, whenever they may occur, that could strengthen

our long-term liquidity profile. There can be no assurance that any such financing opportunities will be available on

acceptable terms, if at all.

Future Capital Requirements

We have significant future capital requirements, including:

• Expected operating expenses to conduct research and development activities, manufacture and commercialize our

existing and future products, and to operate our organization.

• Cash that we pay for income taxes.
• Royalties we pay related to sales of our CF products.
• Facility, operating and finance lease obligations as described below.
• Firm purchase obligations related to our supply and manufacturing processes.

In addition, other potential significant future capital requirements may include:

• We have entered into certain agreements with third parties that include the funding of certain research, development,

manufacturing and commercialization efforts. Certain of our transactions, including collaborations, licensing

arrangements, and asset acquisitions, include the potential for future milestone and royalty payments by us upon the

achievement of pre-established developmental and regulatory targets and/or commercial targets. Other transactions

include the potential for future lease-related expenses and other costs. Our obligation to fund these research and

development and commercialization efforts and to pay these potential milestones, expenses and royalties is

contingent upon continued involvement in the programs and/or the lack of any adverse events that could cause their

discontinuance. We may enter into additional agreements, including acquisitions, collaborations, licensing

arrangements and equity investments, which require additional capital.

• To the extent we borrow amounts under our existing credit agreement, we would be required to repay any

outstanding principal amounts in 2027.

• As of December 31, 2025, we had $3.4 billion remaining authorization available under the share repurchase program

that our Board of Directors approved in May 2025. The program does not have an expiration date and can be

discontinued at any time. We expect to fund the program through a combination of cash on hand and cash generated

by operations.

Additional information on several of our future capital requirements is provided below.

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Research and Development Costs

We have ongoing clinical trials of product candidates at various stages of clinical development. Our clinical trial costs

are dependent on, among other things, the size, number, and length of our clinical trials. These costs can increase as product

candidates move from earlier-stage clinical trials into later-stage clinical development.

Leases

We account for the majority of our real estate leases and each of our embedded leases with contract manufacturing

organizations as operating leases. These include leases for our corporate headquarters at Fan Pier in Boston, Massachusetts,

which continues through June 2044, and office and laboratory space at the Jeffrey Leiden Center for Biologics, Cell and

Genetic Therapies Campus (the “Leiden Campus”) near our corporate headquarters. As of December 31, 2025, the longest

lease at the Leiden Campus continues through the first quarter of 2042. We also have several embedded leases with contract

manufacturing organizations related to the manufacturing and commercialization of our products with remaining lease terms

up to 7 years as of December 31, 2025.

Our total future minimum lease payments for our leases for each of the next five years and in total are included in Note

L, “Leases.” The total future undiscounted minimum lease payments were $3.2 billion and $178.1 million related to our

operating and finance leases, respectively, as of December 31, 2025.

In addition to the items described above, we have a strategic agreement with Lonza to support the manufacture of T1D

cell therapy product candidates, pursuant to which we have partnered with Lonza to build a 130,000 square foot dedicated

new facility operated by Lonza in New Hampshire. Lease payments will begin in the first quarter of 2026 and continue

through the tenth anniversary of the facility’s regulatory approval for commercial production. We may enter into additional

lease agreements to support future product development and commercialization efforts, which would require additional

capital.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

statements prepared in accordance with generally accepted accounting principles in the U.S. The preparation of these

financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and

liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the

reported amounts of revenues and expenses during the reported periods. These items are monitored and analyzed by

management for changes in facts and circumstances, and material changes in these estimates could occur in the future.

Changes in estimates are reflected in reported results for the period in which the change occurs. We base our estimates on

historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results

may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.

We believe that our application of the following accounting policies, each of which requires significant judgments and

estimates on the part of management, are the most critical to aid in fully understanding and evaluating our reported financial

results:

• revenue recognition;
• acquisitions, including intangible assets;
• pre-launch inventories; and
• income taxes.

Our accounting policies, including the ones discussed below, are more fully described in Note A, “Nature of Business

and Accounting Policies.”

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Revenue Recognition

Product Revenues, Net

We generate product revenues from sales in the U.S. and in international markets. We sell our products principally to a

limited number of specialty pharmacy and specialty distributors as well as certain major wholesalers in the U.S., which

account for the largest portion of our total revenues. Our customers in the U.S. subsequently resell our products to patients,

health care providers, retail pharmacies, hospitals, or authorized treatment centers (“ATCs”) for CASGEVY. We contract

with government agencies so that our products will be eligible for purchase by, or partial or full reimbursement from, such

third-party payors. We make international sales primarily through distributor arrangements and to retail pharmacies, as well

as to hospitals and clinics, many of which are government-owned or supported customers. In certain markets, we may not

utilize a specialty distributor or specialty pharmacy to distribute CASGEVY. In these markets, we sell CASGEVY directly to

ATCs. We recognize net product revenues from sales of our products when our customers obtain control of our products,

which typically occurs upon delivery to customers for our small molecule products, including our CF products and

JOURNAVX, and upon infusion of our gene-therapy products, including CASGEVY. Revenues from our product sales are

recorded at the net sales price, or transaction price, which requires us to make several significant estimates regarding the net

sales price.

We are required to make estimates for our product revenues related to government, commercial, and private payor

rebates, chargebacks, discounts and fees, collectively rebates. The values of the rebates provided to third-party payors per

course of treatment vary significantly and are based on government-mandated discounts and our arrangements with other

third-party payors. Our most significant estimate relates to determining amounts due pursuant to the Medicaid Drug Rebate

Program, including estimating the level of expected utilization of the rebates based on the amount of product sold to eligible

patients. We track available information regarding changes, if any, to the payor mix for our products, to our contractual terms

with third-party payors and to applicable governmental programs and regulations and levels of our products in the

distribution channel. We adjust our estimated rebates based upon new information as it becomes available, including

information regarding actual rebates for our products. Claims by third-party payors for rebates are submitted to us

significantly after the related sales, potentially resulting in adjustments in the period in which the new information becomes

known.

The following table summarizes activity related to our product revenue accruals for rebates for 2025, 2024 and 2023:

(in millions)

We have also entered into annual contracts with government-owned and supported customers in international markets

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

amount provided by the customer’s contract with us, products are provided free of charge, which is a material right. If we

estimate that the annual reimbursement amount under a contract will be exceeded for an annual period, we defer a portion of

the consideration received, which includes upfront payments and fees, for shipments made up to the annual reimbursement

limit as “Other current liabilities.” Once the annual reimbursement limit has been reached, we recognize the deferred amount

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as revenue when we deliver the free products. To estimate the portion of the consideration received to be recognized as

revenue and the portion of the amount to be deferred, we rely on our forecast of the number of units we will distribute during

the applicable annual period in each international market in which our contracts with government-owned and supported

customers limit the amount of annual reimbursement we can receive. Our forecasts are based on, among other things, our

historical experience.

The preceding estimates and judgments materially affect our recognition of net product revenues. Changes in our

estimates of net product revenues could have a material effect on net product revenues recorded in the period in which we

determine that change occurs.

Acquisitions

As part of our business strategy, we seek to acquire products, product candidates and other technologies and businesses

that are aligned with our corporate and research and development strategies and complement and advance our ongoing

research and development efforts.

We are required to make several significant judgments and estimates to determine the accounting treatment for each

acquisition transaction. If we determine that substantially all the fair value associated with an acquisition is concentrated in a

single asset, or the acquisition does not constitute a business, we account for it as an asset acquisition. For example, we

accounted for our $5.0 billion acquisition of Alpine in 2024 as an asset acquisition because povetacicept, Alpine’s lead

molecule, represented substantially all of the fair value of the gross assets that we acquired. As a result, $4.4 billion of the fair

value attributed to povetacicept was expensed to AIPR&D in 2024. If the fair value that we acquired in an acquisition is

distributed among more than one asset, and the acquisition constitutes a business, we account for it as a business

combination.

For an asset acquisition involving rights to intellectual property related to in-process research and development that is not

yet associated with a product that has achieved regulatory approval, we generally expense our upfront payment to AIPR&D,

because there is no alternative future use for the asset that was acquired.

For business combinations, we are required to make several significant judgments and estimates to calculate and allocate

the purchase price, including the fair value of contingent consideration liabilities, to the assets that we have acquired and the

liabilities that we have assumed on our consolidated balance sheet. The most significant judgment and estimate we have

made for our business combinations relates to the fair value of the in-process research and development assets.

In-process Research and Development Intangible Assets

As of December 31, 2025 and 2024, we had $224.6 million and $603.6 million, respectively, of in-process research and

development assets on our consolidated balance sheet within “Other intangible assets, net.” During 2025, we recorded a

$379.0 million impairment of one of these assets, which was classified as an “Intangible asset impairment charge.” As of

December 31, 2025, our remaining indefinite-lived in-process research and development assets were associated with our T1D

program.

We characterize in-process research and development assets on our consolidated balance sheets as indefinite-lived

intangible assets until the completion or abandonment of the associated research and development efforts. We test our in-

process research and development intangible assets for impairment on an annual basis, and more frequently if indicators are

present or changes in circumstances suggest that impairment may exist. When we determine that an indefinite-lived

intangible asset has become impaired or we abandon the associated research and development project, we write down the

carrying value to its fair value and record an impairment charge in the period in which the impairment occurs.

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

with T1D, we concluded that VX-264 will not be advancing further in clinical development. Based on this event, we

performed an interim impairment test on the fair value of our VX-264 indefinite-lived in-process research and development

asset that we acquired from Semma Therapeutics, Inc. in 2019. We recorded the $379.0 million impairment charge based on

the results of this impairment test.

We use significant judgment to determine the fair value of our in-process research and development assets and have

utilized either the multi-period excess earnings or the relief from royalty methods of the income approach. Each method

requires us to estimate the probability of technical and regulatory success, revenue projections and growth rates, and

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appropriate discount and tax rates. The multi-period excess earnings method also requires us to estimate development and

commercial costs. The relief from royalty method also requires us to estimate the after-tax royalty savings expected from

ownership of the asset that we acquired. In 2025, we used the multi-period earnings method to record the impairment

described above.

If one of our product candidates achieves regulatory approval, the in-process research and development intangible assets

associated with the product candidate become finite-lived intangible assets as described below.

Finite-lived Intangible Assets

As of December 31, 2025 and 2024, we had $199.6 million and $222.3 million, respectively, of finite-lived intangible

assets on our consolidated balance sheet within “Other intangible assets, net.” These finite-lived intangible assets primarily

relate to $208.0 million of CASGEVY regulatory approval milestones recorded in 2023.

We amortize our finite-lived intangible assets related to our marketed products, which represent the majority of our

finite-lived intangible assets, using the straight-line method within “Cost of sales” over the remaining estimated life of the

assets beginning in the period in which regulatory approval is achieved or the assets are acquired and continuing through the

period that we no longer have either exclusive rights to market the products associated with the assets or in-license rights to

the intellectual property underlying the assets. We test finite-lived intangible assets for impairment if indicators are present or

changes in circumstances suggest that the carrying value of an asset may not be recoverable. If we determine that the carrying

value of a finite-lived intangible asset may not be recoverable, we compare the carrying value of the asset to the undiscounted

cash flows that we expect the asset to generate. When we determine that a finite-lived intangible asset has become impaired,

we write down the carrying value of the asset to its fair value and record an impairment charge in the period in which the

impairment occurs.

Pre-Launch Inventories

We capitalize inventories prior to regulatory approval when we consider the related product candidate to have a high

likelihood of regulatory approval and expect to recover the related costs. In making this determination, we evaluate, among

other factors, the status of regulatory submissions and communications with regulatory authorities, information regarding the

product candidate’s safety and efficacy, and the outlook for commercial sales, including the existence of any competition. As

an example, during the first quarter of 2024, following positive results related to our Phase 3 trials for JOURNAVX, we

began capitalizing inventories produced in preparation for our planned product launch. In January 2025, we received approval

from the FDA to market JOURNAVX in the U.S. Prior to making this determination, we expensed inventoriable and related

costs associated with JOURNAVX as “Research and development expenses.”

Income Taxes

We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and

liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and

liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. If our estimate

of the tax effect of reversing temporary differences is (i) not reflective of actual outcomes, (ii) modified to reflect new

developments or interpretations of the tax law, or (iii) revised to incorporate new accounting principles, or changes in the

expected timing or manner of the reversal, our results of operations could be materially impacted.

We provide a valuation allowance when it is more likely than not that deferred tax assets will not be realized. On a

periodic basis, we reassess our valuation allowances on our deferred tax assets, weighing positive and negative evidence to

assess the recoverability of the deferred tax assets. Judgment is required in making these assessments to maintain or adjust

our valuation allowances and, to the extent our future expectations change we would have to assess the recoverability of these

deferred tax assets at that time. As of December 31, 2025, we maintained a valuation allowance of $326.2 million related

primarily to U.S. state tax attributes.

We record liabilities related to uncertain tax positions by prescribing a minimum recognition threshold and measurement

attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax

return. We adjust our liability to reflect any subsequent changes in the relevant facts and circumstances surrounding the

uncertain positions. We are subject to tax laws and audits in multiple jurisdictions and judgment is required in making this

assessment. Consequently, we regularly re-evaluate uncertain tax positions and consider various factors, including changes in

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tax law, the measurement of tax positions taken or expected to be taken in tax returns, and changes in facts or circumstances

related to a tax position. As of December 31, 2025, our liability for uncertain tax positions was $852.1 million.

RECENT ACCOUNTING PRONOUNCEMENTS

Refer to Note A, “Nature of Business and Accounting Policies,” in the accompanying notes to the consolidated financial

statements for a discussion of recent accounting pronouncements and new accounting pronouncements adopted during 2025.

Interest Rate Risk

Financial Instruments

As part of our investment portfolio, we own financial instruments that are sensitive to market risks. The investment

portfolio is used to preserve our capital, provide adequate liquidity and earn returns commensurate with our risk appetite. We

invest in instruments that meet the credit quality standards outlined in our investment policy, which also limits the amount of

credit exposure to any one issue or type of instrument. These instruments primarily include securities issued by the U.S.

government and its agencies, investment-grade corporate bonds, asset-backed securities and money market funds. These

investments are primarily denominated in U.S. Dollars and none are held for trading purposes.

All of our interest-bearing securities are subject to interest rate risk and could change in value if interest rates fluctuate.

Substantially all of our investment portfolio consists of marketable securities with active secondary or resale markets to help

ensure portfolio liquidity, and we have implemented guidelines limiting the term-to-maturity of our investment instruments.

Since we account for these securities as available-for-sale, no gains or losses are realized due to changes in the fair value of

our investments unless we sell our investments prior to maturity or incur a credit loss. Due to the conservative nature of these

instruments, we do not believe that the fair value of our investments has a material exposure to interest rate risk.

While we are exposed to global interest rate fluctuations, our investment portfolio is most affected by fluctuations in U.S.

interest rates, which affect the interest earned on our cash, cash equivalents and marketable securities.

Credit Agreement

In 2022, we entered into a $500.0 million unsecured revolving credit facility (“credit agreement”). Loans under this

credit agreement bear interest, at our option, at a base rate or a Secured Overnight Financing Rate (“SOFR”), plus an

applicable margin based on our consolidated leverage ratio (the ratio of our total consolidated funded indebtedness to our

consolidated EBITDA for the most recently completed four fiscal quarter period). Pursuant to our credit agreement, the

applicable margin on base rate loans ranges from 0.000% to 0.500% and the applicable margin on SOFR loans ranges from

1.000% to 1.500%. We do not believe that changes in interest rates related to our credit agreement would have a material

effect on our consolidated financial statements. As of December 31, 2025, we had no principal or interest outstanding under

our credit facility. A portion of our “Interest expense” in 2026 will be dependent on whether, and to what extent, we borrow

amounts under this facility.

Foreign Exchange Market Risk

As a result of our foreign operations, we face significant exposure to movements in foreign currency exchange rates

between the U.S. dollar and various foreign currencies, the most significant of which is the Euro. Fluctuations in the amounts

of our foreign revenues and fluctuations in foreign currency exchange rates, may have a positive or negative effect on our

foreign exchange rate exposure. The current exposures arise primarily from cash, accounts receivable, intercompany

receivables and payables, payables, and accruals, and inventories.

We have a foreign currency management program, which is separate from our investment policy and portfolio, with the

objective of reducing the effect of exchange rate fluctuations on our operating results and forecasted revenues denominated in

foreign currencies. We have cash flow hedges related to a portion of our forecasted product revenues that qualify for hedge

accounting treatment under U.S. GAAP. We do not seek hedge accounting treatment for our foreign currency forward

contracts related to monetary assets and liabilities that impact our operating results. As of December 31, 2025, we held

foreign exchange forward contracts that were designated as cash flow hedges with notional amounts totaling $6.1 billion

representing a net liability of $111.5 million on our consolidated balance sheet.

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Although not predictive in nature, we believe a hypothetical 10% threshold reflects a reasonably possible near-term

change in exchange rates. If the December 31, 2025 exchange rates were to change by a hypothetical 10%, the fair value

recorded on our consolidated balance sheet related to our foreign exchange forward contracts that were designated as cash

flow hedges as of December 31, 2025 would change by approximately $608.0 million. However, since these contracts hedge

a specific portion of our forecasted product revenues denominated in certain foreign currencies, any change in the fair value

of these contracts is recorded in “Accumulated other comprehensive (loss) income” on our consolidated balance sheets and is

reclassified to earnings in the same periods during which the underlying product revenues affect earnings. Therefore, any

change in the fair value of these contracts that would result from a hypothetical 10% change in exchange rates would be

entirely offset by the change in value associated with the underlying hedged product revenues resulting in no impact on our

future anticipated earnings and cash flows with respect to the hedged portion of our forecasted product revenues.

(1) Evaluation of Disclosure Controls and Procedures. Our chief executive officer and chief financial officer, after

evaluating the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e)

promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period

covered by this Annual Report on Form 10-K, have concluded that, based on such evaluation, our disclosure controls and

procedures were effective. In designing and evaluating the disclosure controls and procedures, management recognized that

any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving

the desired control objectives, and management necessarily was required to apply our judgment in evaluating the cost-benefit

relationship of possible controls and procedures.

(2) Management’s Annual Report on Internal Control Over Financial Reporting. Management is responsible for

establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is

defined in Rule 13a-15(f) and Rule 15d-15(f) promulgated under the Exchange Act, as a process designed by, or under the

supervision of, our principal executive and principal financial officers and effected by our board of directors, management

and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of

financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control

over financial reporting include those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of our assets;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial

statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are

being made only in accordance with authorizations of management and our directors; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or

disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become

inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may

deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In

making this assessment, we used the criteria set forth in the Internal Control—Integrated Framework (2013) issued by the

Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on our assessment, management has

concluded that, as of December 31, 2025, our internal control over financial reporting is effective based on those criteria.

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Our independent registered public accounting firm, Ernst & Young LLP, issued an attestation report on our internal

control over financial reporting. See Section 4 below.

(3) Changes in Internal Controls. During the quarter ended December 31, 2025, there were no changes in our internal

control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over

financial reporting.

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(4) Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Vertex Pharmaceuticals Incorporated

Opinion on Internal Control Over Financial Reporting

We have audited Vertex Pharmaceuticals Incorporated’s internal control over financial reporting as of December 31, 2025,

based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring

Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Vertex Pharmaceuticals

Incorporated (the Company) maintained, in all material respects, effective internal control over financial reporting as of

December 31, 2025, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)

(PCAOB), the 2025 consolidated financial statements of the Company and our report dated February 13, 2026 expressed an

unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its

assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s

Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s

internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and

are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the

applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform

the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in

all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material

weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,

and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a

reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the

reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally

accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures

that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and

dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to

permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and

expenditures of the company are being made only in accordance with authorizations of management and directors of the

company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or

disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,

projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate

because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Boston, Massachusetts

February 13, 2026

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