VERTEX PHARMACEUTICALS INC / MA00008753202023FYfalsehttp://fasb.org/us-gaap/2023#ResearchAndDevelopmentExpenseExcludingAcquiredInProcessCosthttp://fasb.org/us-gaap/2023#PrepaidExpenseAndOtherAssetsCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrentP1Mhttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationhttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentAndFinanceLeaseRightOfUseAssetAfterAccumulatedDepreciationAndAmortizationhttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrent33.333.333.333.333.333.300008753202023-01-012023-12-3100008753202023-06-30iso4217:USD00008753202024-02-09xbrli:shares00008753202023-10-012023-12-310000875320us-gaap:ProductMember2023-01-012023-12-310000875320us-gaap:ProductMember2022-01-012022-12-310000875320us-gaap:ProductMember2021-01-012021-12-310000875320vrtx:CollaborativeandRoyaltyMember2023-01-012023-12-310000875320vrtx:CollaborativeandRoyaltyMember2022-01-012022-12-310000875320vrtx:CollaborativeandRoyaltyMember2021-01-012021-12-3100008753202022-01-012022-12-3100008753202021-01-012021-12-31iso4217:USDxbrli:shares00008753202023-12-3100008753202022-12-310000875320us-gaap:CommonStockMember2020-12-310000875320us-gaap:AdditionalPaidInCapitalMember2020-12-310000875320us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310000875320us-gaap:RetainedEarningsMember2020-12-3100008753202020-12-310000875320us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-12-310000875320us-gaap:RetainedEarningsMember2021-01-012021-12-310000875320us-gaap:CommonStockMember2021-01-012021-12-310000875320us-gaap:AdditionalPaidInCapitalMember2021-01-012021-12-310000875320us-gaap:CommonStockMember2021-12-310000875320us-gaap:AdditionalPaidInCapitalMember2021-12-310000875320us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000875320us-gaap:RetainedEarningsMember2021-12-3100008753202021-12-310000875320us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-12-310000875320us-gaap:RetainedEarningsMember2022-01-012022-12-310000875320us-gaap:CommonStockMember2022-01-012022-12-310000875320us-gaap:AdditionalPaidInCapitalMember2022-01-012022-12-310000875320us-gaap:CommonStockMember2022-12-310000875320us-gaap:AdditionalPaidInCapitalMember2022-12-310000875320us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000875320us-gaap:RetainedEarningsMember2022-12-310000875320us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-12-310000875320us-gaap:RetainedEarningsMember2023-01-012023-12-310000875320us-gaap:CommonStockMember2023-01-012023-12-310000875320us-gaap:AdditionalPaidInCapitalMember2023-01-012023-12-310000875320us-gaap:CommonStockMember2023-12-310000875320us-gaap:AdditionalPaidInCapitalMember2023-12-310000875320us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310000875320us-gaap:RetainedEarningsMember2023-12-31vrtx:medicinevrtx:segmentxbrli:pure0000875320us-gaap:BuildingAndBuildingImprovementsMembersrt:MinimumMember2023-12-310000875320us-gaap:BuildingAndBuildingImprovementsMembersrt:MaximumMember2023-12-310000875320srt:MinimumMembervrtx:LaboratoryEquipmentOtherEquipmentAndFurnitureMember2023-12-310000875320srt:MaximumMembervrtx:LaboratoryEquipmentOtherEquipmentAndFurnitureMember2023-12-310000875320srt:MinimumMemberus-gaap:TechnologyEquipmentMember2023-12-310000875320srt:MaximumMemberus-gaap:TechnologyEquipmentMember2023-12-310000875320us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2023-01-012023-12-310000875320vrtx:CRISPRTherapeuticsAGMember2019-01-012019-12-31vrtx:target0000875320vrtx:CRISPRARJDCAMember2021-04-012021-06-300000875320vrtx:CRISPRARJDCAMember2021-12-310000875320vrtx:CRISPRARJDCAMembervrtx:CRISPRMember2021-12-310000875320us-gaap:SubsequentEventMembervrtx:CRISPRARJDCAMember2024-01-012024-01-310000875320vrtx:CRISPRMember2023-12-310000875320vrtx:CRISPRARJDCAMember2023-01-012023-12-310000875320vrtx:CRISPRARJDCAMember2022-01-012022-12-310000875320vrtx:CRISPRARJDCAMember2021-01-012021-12-310000875320vrtx:CRISPRT1DMember2023-03-012023-03-310000875320vrtx:CRISPRT1DMember2023-04-012023-06-300000875320vrtx:CRISPRT1DMember2023-01-012023-12-310000875320vrtx:EntradaTherapeuticsMember2023-02-012023-02-280000875320vrtx:EntradaTherapeuticsMember2023-01-012023-12-310000875320vrtx:VerveMember2022-01-012022-12-310000875320vrtx:ApolLo1BioLLCMember2021-01-012021-12-310000875320vrtx:ModernaAgreementMember2016-01-012016-12-310000875320vrtx:ModernaAgreementMember2020-01-012020-12-310000875320vrtx:SepternaIncMember2023-09-012023-09-300000875320vrtx:CatalystBiosciencesMember2022-01-012022-12-310000875320vrtx:AdditionalInLicenseAgreementsAndOtherArrangementsMember2023-01-012023-12-310000875320vrtx:AdditionalInLicenseAgreementsAndOtherArrangementsMember2022-01-012022-12-310000875320vrtx:AdditionalInLicenseAgreementsAndOtherArrangementsMember2021-01-012021-12-310000875320vrtx:MammothBiosciencesIncMember2021-01-012021-12-310000875320vrtx:ArborBiotechnologiesIncMember2021-01-012021-12-310000875320vrtx:EditasMedicineIncMember2023-12-012023-12-310000875320vrtx:CRISPRMembervrtx:EditasMedicineIncMember2023-12-310000875320vrtx:CRISPRMembervrtx:EditasMedicineIncMember2023-12-012023-12-310000875320vrtx:EditasMedicineIncMember2023-12-310000875320us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-12-310000875320us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-12-310000875320us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-12-310000875320us-gaap:EmployeeStockOptionMember2023-01-012023-12-310000875320us-gaap:EmployeeStockOptionMember2022-01-012022-12-310000875320us-gaap:EmployeeStockOptionMember2021-01-012021-12-310000875320us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-12-310000875320us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-12-310000875320us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-12-310000875320us-gaap:EmployeeStockOptionMember2023-01-012023-12-310000875320us-gaap:EmployeeStockOptionMember2022-01-012022-12-310000875320us-gaap:EmployeeStockOptionMember2021-01-012021-12-310000875320us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000875320us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310000875320us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000875320us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000875320us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000875320us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310000875320us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000875320us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000875320us-gaap:BankTimeDepositsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000875320us-gaap:BankTimeDepositsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:BankTimeDepositsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:BankTimeDepositsMemberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000875320us-gaap:BankTimeDepositsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000875320us-gaap:BankTimeDepositsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:BankTimeDepositsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:BankTimeDepositsMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2022-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2022-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2022-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2022-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CorporateDebtSecuritiesMember2022-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CorporateDebtSecuritiesMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommercialPaperMember2023-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommercialPaperMember2022-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2022-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:EquitySecuritiesMember2022-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2022-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:AssetBackedSecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:AssetBackedSecuritiesMember2022-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2022-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:AssetBackedSecuritiesMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CertificatesOfDepositMember2023-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2023-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CertificatesOfDepositMember2022-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2022-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CertificatesOfDepositMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310000875320us-gaap:FairValueMeasurementsRecurringMember2022-12-310000875320us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310000875320us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000875320us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000875320us-gaap:EquitySecuritiesMember2023-12-310000875320us-gaap:FairValueInputsLevel3Member2023-12-310000875320us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMemberus-gaap:FairValueInputsLevel3Member2023-12-310000875320us-gaap:MeasurementInputDiscountRateMembersrt:MaximumMemberus-gaap:FairValueInputsLevel3Member2023-12-310000875320us-gaap:MoneyMarketFundsMember2023-12-310000875320us-gaap:MoneyMarketFundsMember2022-12-310000875320us-gaap:BankTimeDepositsMember2023-12-310000875320us-gaap:BankTimeDepositsMember2022-12-310000875320us-gaap:USTreasurySecuritiesMember2023-12-310000875320us-gaap:USTreasurySecuritiesMember2022-12-310000875320us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2023-12-310000875320us-gaap:USGovernmentSponsoredEnterprisesDebtSecuritiesMember2022-12-310000875320us-gaap:CorporateDebtSecuritiesMember2023-12-310000875320us-gaap:CorporateDebtSecuritiesMember2022-12-310000875320us-gaap:CommercialPaperMember2023-12-310000875320us-gaap:CommercialPaperMember2022-12-310000875320us-gaap:AssetBackedSecuritiesMember2023-12-310000875320us-gaap:AssetBackedSecuritiesMember2022-12-310000875320us-gaap:CertificatesOfDepositMember2023-12-310000875320us-gaap:CertificatesOfDepositMember2022-12-310000875320us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember2023-12-310000875320us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember2022-12-310000875320vrtx:MarketableSecuritiesAndOtherNoncurrentAssetsMember2023-12-310000875320vrtx:MarketableSecuritiesAndOtherNoncurrentAssetsMember2022-12-310000875320us-gaap:CashAndCashEquivalentsMember2023-12-310000875320us-gaap:CashAndCashEquivalentsMember2022-12-310000875320vrtx:MarketableSecuritiesMember2023-12-310000875320vrtx:MarketableSecuritiesMember2022-12-310000875320vrtx:MarketableSecuritiesNoncurrentMember2023-12-310000875320vrtx:MarketableSecuritiesNoncurrentMember2022-12-310000875320vrtx:PubliclyTradedCompaniesSaleMember2023-01-012023-12-310000875320vrtx:PubliclyTradedCompaniesSaleMember2023-12-310000875320vrtx:PubliclyTradedCompaniesSaleMember2022-01-012022-12-310000875320vrtx:PubliclyTradedCompaniesSaleMember2021-01-012021-12-310000875320us-gaap:OtherAssetsMember2023-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMember2020-12-310000875320us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2020-12-310000875320us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2020-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMember2021-01-012021-12-310000875320us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-01-012021-12-310000875320us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-01-012021-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMember2021-12-310000875320us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2021-12-310000875320us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2021-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-12-310000875320us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-01-012022-12-310000875320us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-01-012022-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMember2022-12-310000875320us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2022-12-310000875320us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2022-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMember2023-01-012023-12-310000875320us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-01-012023-12-310000875320us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-01-012023-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMember2023-12-310000875320us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember2023-12-310000875320us-gaap:AccumulatedGainLossNetCashFlowHedgeParentMember2023-12-310000875320us-gaap:CashFlowHedgingMembersrt:MinimumMemberus-gaap:ForeignExchangeForwardMember2023-01-012023-12-310000875320srt:MaximumMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2023-01-012023-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMembercurrency:EUR2023-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMembercurrency:EUR2022-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMembercurrency:CAD2023-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMembercurrency:CAD2022-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMembercurrency:GBP2023-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMembercurrency:GBP2022-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:AUDus-gaap:ForeignExchangeForwardMember2023-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMembercurrency:AUDus-gaap:ForeignExchangeForwardMember2022-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMembercurrency:CHF2023-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMembercurrency:CHF2022-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2023-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2022-12-310000875320us-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2023-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:ProductMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-01-012023-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:ProductMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-01-012022-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:ProductMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2023-01-012023-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2022-01-012022-12-310000875320us-gaap:AccumulatedTranslationAdjustmentMemberus-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMemberus-gaap:ReclassificationOutOfAccumulatedOtherComprehensiveIncomeMember2021-01-012021-12-310000875320us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2023-12-310000875320us-gaap:OtherCurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2023-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMemberus-gaap:OtherAssetsMember2023-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:ForeignExchangeForwardMember2023-12-310000875320us-gaap:PrepaidExpensesAndOtherCurrentAssetsMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2022-12-310000875320us-gaap:OtherCurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMember2022-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeForwardMemberus-gaap:OtherAssetsMember2022-12-310000875320us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:OtherNoncurrentLiabilitiesMemberus-gaap:ForeignExchangeForwardMember2022-12-310000875320us-gaap:BuildingMember2023-12-310000875320us-gaap:BuildingMember2022-12-310000875320vrtx:LaboratoryEquipmentOtherEquipmentAndFurnitureMember2023-12-310000875320vrtx:LaboratoryEquipmentOtherEquipmentAndFurnitureMember2022-12-310000875320us-gaap:LeaseholdImprovementsMember2023-12-310000875320us-gaap:LeaseholdImprovementsMember2022-12-310000875320us-gaap:ComputerSoftwareIntangibleAssetMember2023-12-310000875320us-gaap:ComputerSoftwareIntangibleAssetMember2022-12-310000875320us-gaap:LandMember2023-12-310000875320us-gaap:LandMember2022-12-310000875320srt:MinimumMember2023-12-310000875320srt:MaximumMember2023-12-310000875320us-gaap:InProcessResearchAndDevelopmentMember2023-12-310000875320us-gaap:InProcessResearchAndDevelopmentMember2022-12-310000875320us-gaap:InProcessResearchAndDevelopmentMember2022-01-012022-12-310000875320vrtx:FanPierLeasesMember2011-01-012011-12-31vrtx:lease0000875320vrtx:FanPierLeasesMember2011-12-31utr:sqftvrtx:building0000875320vrtx:SanDiegoLeaseMember2015-12-310000875320vrtx:SanDiegoLeaseMember2015-01-012015-12-31vrtx:renewal_option0000875320vrtx:JeffreyLeidenCenterForCellAndGeneticTherapiesMember2019-12-310000875320vrtx:JeffreyLeidenCenterForCellAndGeneticTherapiesMember2019-01-012019-12-31vrtx:vote0000875320vrtx:ShareRepurchaseProgram2020Member2020-11-300000875320vrtx:ShareRepurchaseProgram2020Member2021-01-012021-12-310000875320vrtx:ShareRepurchaseProgram2021Member2021-06-300000875320vrtx:ShareRepurchaseProgram2021Member2021-01-012021-12-310000875320vrtx:ShareRepurchaseProgram2021Member2022-12-310000875320vrtx:ShareRepurchaseProgram2023Member2023-02-280000875320vrtx:ShareRepurchaseProgram2023Member2023-01-012023-12-310000875320vrtx:ShareRepurchaseProgram2023Member2023-12-310000875320vrtx:StockandOptionPlan2013Member2023-12-310000875320vrtx:StockAndOptionPlan2006Member2023-12-310000875320us-gaap:RestrictedStockUnitsRSUMember2022-12-310000875320us-gaap:RestrictedStockUnitsRSUMember2023-12-310000875320us-gaap:PerformanceSharesMember2023-01-012023-12-310000875320us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:PerformanceSharesMember2023-01-012023-12-310000875320vrtx:FinancialPerformanceSharesMember2023-01-012023-12-31vrtx:installment0000875320us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:PerformanceSharesMember2023-01-012023-12-310000875320us-gaap:PerformanceSharesMember2022-12-310000875320us-gaap:PerformanceSharesMember2023-12-310000875320us-gaap:PerformanceSharesMember2022-01-012022-12-310000875320us-gaap:PerformanceSharesMember2021-01-012021-12-310000875320srt:MaximumMemberus-gaap:EmployeeStockOptionMember2023-01-012023-12-310000875320vrtx:ExercisePriceRangeFromDollars7731ToDollars10000Member2023-01-012023-12-310000875320vrtx:ExercisePriceRangeFromDollars7731ToDollars10000Member2023-12-310000875320vrtx:ExercisePriceRangeFromDollars10001ToDollars15000Member2023-01-012023-12-310000875320vrtx:ExercisePriceRangeFromDollars10001ToDollars15000Member2023-12-310000875320vrtx:ExercisePriceRangeFromDollars15001ToDollars20000Member2023-01-012023-12-310000875320vrtx:ExercisePriceRangeFromDollars15001ToDollars20000Member2023-12-310000875320vrtx:ExercisePriceRangeFromDollars20001ToDollars34273Member2023-01-012023-12-310000875320vrtx:ExercisePriceRangeFromDollars20001ToDollars34273Member2023-12-310000875320us-gaap:EmployeeStockMember2023-01-012023-12-31vrtx:period0000875320us-gaap:EmployeeStockMember2023-12-310000875320us-gaap:ShareBasedCompensationAwardTrancheOneMembervrtx:FinancialPerformanceSharesMember2023-01-012023-12-310000875320us-gaap:ShareBasedCompensationAwardTrancheTwoMembervrtx:FinancialPerformanceSharesMember2023-01-012023-12-310000875320us-gaap:ShareBasedCompensationAwardTrancheThreeMembervrtx:FinancialPerformanceSharesMember2023-01-012023-12-310000875320us-gaap:RestrictedStockMember2023-01-012023-12-310000875320us-gaap:RestrictedStockMember2022-01-012022-12-310000875320us-gaap:RestrictedStockMember2021-01-012021-12-310000875320us-gaap:EmployeeStockMember2022-01-012022-12-310000875320us-gaap:EmployeeStockMember2021-01-012021-12-310000875320us-gaap:CostOfSalesMember2023-01-012023-12-310000875320us-gaap:CostOfSalesMember2022-01-012022-12-310000875320us-gaap:CostOfSalesMember2021-01-012021-12-310000875320us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-12-310000875320us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-12-310000875320us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-12-310000875320us-gaap:SellingGeneralAndAdministrativeExpensesMember2023-01-012023-12-310000875320us-gaap:SellingGeneralAndAdministrativeExpensesMember2022-01-012022-12-310000875320us-gaap:SellingGeneralAndAdministrativeExpensesMember2021-01-012021-12-310000875320us-gaap:RestrictedStockMember2023-12-310000875320vrtx:NonFinancialPerformanceSharesMember2023-01-012023-12-310000875320vrtx:NonemployeeStockOptionMember2022-01-012022-12-310000875320vrtx:NonemployeeStockOptionMember2021-01-012021-12-310000875320vrtx:NonemployeeStockOptionMember2023-01-012023-12-310000875320us-gaap:DomesticCountryMember2023-12-310000875320us-gaap:StateAndLocalJurisdictionMember2023-12-310000875320us-gaap:ForeignCountryMember2023-12-310000875320vrtx:DeferredTaxAssetsMember2023-12-310000875320us-gaap:OtherNoncurrentLiabilitiesMember2023-12-310000875320us-gaap:RevolvingCreditFacilityMember2022-07-310000875320us-gaap:LetterOfCreditMember2022-07-310000875320us-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberus-gaap:BaseRateMember2022-07-012022-07-310000875320us-gaap:RevolvingCreditFacilityMembersrt:MaximumMemberus-gaap:BaseRateMember2022-07-012022-07-310000875320us-gaap:RevolvingCreditFacilityMembersrt:MinimumMembervrtx:SecuredOvernightFinancingRateSOFRMember2022-07-012022-07-310000875320us-gaap:RevolvingCreditFacilityMembersrt:MaximumMembervrtx:SecuredOvernightFinancingRateSOFRMember2022-07-012022-07-310000875320us-gaap:RevolvingCreditFacilityMember2022-07-012022-07-310000875320vrtx:TRIKAFTAKAFTRIOMember2023-01-012023-12-310000875320vrtx:TRIKAFTAKAFTRIOMember2022-01-012022-12-310000875320vrtx:TRIKAFTAKAFTRIOMember2021-01-012021-12-310000875320vrtx:KalydecoMember2023-01-012023-12-310000875320vrtx:KalydecoMember2022-01-012022-12-310000875320vrtx:KalydecoMember2021-01-012021-12-310000875320vrtx:ORKAMBIMember2023-01-012023-12-310000875320vrtx:ORKAMBIMember2022-01-012022-12-310000875320vrtx:ORKAMBIMember2021-01-012021-12-310000875320vrtx:SYMDEKOSYMKEVIMember2023-01-012023-12-310000875320vrtx:SYMDEKOSYMKEVIMember2022-01-012022-12-310000875320vrtx:SYMDEKOSYMKEVIMember2021-01-012021-12-310000875320country:USus-gaap:ProductMember2023-01-012023-12-310000875320country:USus-gaap:ProductMember2022-01-012022-12-310000875320country:USus-gaap:ProductMember2021-01-012021-12-310000875320srt:EuropeMemberus-gaap:ProductMember2023-01-012023-12-310000875320srt:EuropeMemberus-gaap:ProductMember2022-01-012022-12-310000875320srt:EuropeMemberus-gaap:ProductMember2021-01-012021-12-310000875320vrtx:OtherCountriesOutsideoftheUnitedStatesandEuropeMemberus-gaap:ProductMember2023-01-012023-12-310000875320vrtx:OtherCountriesOutsideoftheUnitedStatesandEuropeMemberus-gaap:ProductMember2022-01-012022-12-310000875320vrtx:OtherCountriesOutsideoftheUnitedStatesandEuropeMemberus-gaap:ProductMember2021-01-012021-12-310000875320vrtx:OutsidetheUnitedStatesMemberus-gaap:ProductMember2023-01-012023-12-310000875320vrtx:OutsidetheUnitedStatesMemberus-gaap:ProductMember2022-01-012022-12-310000875320vrtx:OutsidetheUnitedStatesMemberus-gaap:ProductMember2021-01-012021-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:McKessonCorporationMember2023-01-012023-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:McKessonCorporationMember2022-01-012022-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:McKessonCorporationMember2021-01-012021-12-310000875320us-gaap:CreditConcentrationRiskMembervrtx:McKessonCorporationMemberus-gaap:AccountsReceivableMember2023-01-012023-12-310000875320us-gaap:CreditConcentrationRiskMembervrtx:McKessonCorporationMemberus-gaap:AccountsReceivableMember2022-01-012022-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:AccredoHealthGroupIncMember2023-01-012023-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:AccredoHealthGroupIncMember2022-01-012022-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:AccredoHealthGroupIncMember2021-01-012021-12-310000875320us-gaap:CreditConcentrationRiskMemberus-gaap:AccountsReceivableMembervrtx:AccredoHealthGroupIncMember2023-01-012023-12-310000875320us-gaap:CreditConcentrationRiskMemberus-gaap:AccountsReceivableMembervrtx:AccredoHealthGroupIncMember2022-01-012022-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:WalgreenCo.Member2023-01-012023-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:WalgreenCo.Member2022-01-012022-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:WalgreenCo.Member2021-01-012021-12-310000875320vrtx:WalgreenCo.Memberus-gaap:CreditConcentrationRiskMemberus-gaap:AccountsReceivableMember2023-01-012023-12-310000875320vrtx:WalgreenCo.Memberus-gaap:CreditConcentrationRiskMemberus-gaap:AccountsReceivableMember2022-01-012022-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:LloydsPharmacyMember2023-01-012023-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:LloydsPharmacyMember2022-01-012022-12-310000875320us-gaap:ProductConcentrationRiskMemberus-gaap:SalesRevenueNetMembervrtx:LloydsPharmacyMember2021-01-012021-12-310000875320us-gaap:CreditConcentrationRiskMemberus-gaap:AccountsReceivableMembervrtx:LloydsPharmacyMember2023-01-012023-12-310000875320us-gaap:CreditConcentrationRiskMemberus-gaap:AccountsReceivableMembervrtx:LloydsPharmacyMember2022-01-012022-12-310000875320country:US2023-12-310000875320country:US2022-12-310000875320country:GB2023-12-310000875320country:GB2022-12-310000875320vrtx:OtherCountriesOutsideoftheUnitedStatesandtheUnitedKingdomMember2023-12-310000875320vrtx:OtherCountriesOutsideoftheUnitedStatesandtheUnitedKingdomMember2022-12-310000875320vrtx:OutsidetheUnitedStatesMember2023-12-310000875320vrtx:OutsidetheUnitedStatesMember2022-12-31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 2023
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM   TO    
Commission file number 000-19319
Vertex Pharmaceuticals Incorporated
(Exact name of registrant as specified in its charter)
Massachusetts
(State or other jurisdiction of incorporation or organization)
50 Northern Avenue, Boston, Massachusetts
(Address of principal executive offices)

04-3039129
(I.R.S. Employer Identification No.)
02210
(Zip Code)
Registrant’s telephone number, including area code (617341-6100
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, $0.01 Par Value Per ShareVRTXThe Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (Check one):
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.   
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No ☒
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant based on the closing price on June 30, 2023 (the last business day of the registrant’s most recently completed second fiscal quarter of 2023) was $90.7 billion.
As of February 9, 2024, the registrant had 258,307,816 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement for the 2024 Annual Meeting of Shareholders, which we expect to hold on May 15, 2024, are incorporated by reference into Part III of this Annual Report on Form 10-K.



VERTEX PHARMACEUTICALS INCORPORATED
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
“Vertex,” “we,” “us” and “our” as used in this Annual Report on Form 10-K refer to Vertex Pharmaceuticals Incorporated, a Massachusetts corporation, and its subsidiaries.
“VERTEX®,” “KALYDECO®,” “ORKAMBI®,” “SYMDEKO®,” “SYMKEVI®,” “TRIKAFTA®,” “KAFTRIO®,” and “CASGEVY™” are registered trademarks of Vertex. Other brands, names and trademarks contained in this Annual Report on Form 10-K are the property of their respective owners.
We use the brand name for our products when we refer to the product that has been approved and with respect to the indications on the approved label. Otherwise, including in discussions of our cystic fibrosis, sickle cell disease, and beta thalassemia development programs, we refer to our product candidates by their scientific (or generic) name or VX developmental designation.
This Annual Report on Form 10-K contains forward-looking statements. Words such as “anticipates,” “may,” “forecasts,” “expects,” “intends,” “plans,” “potentially,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words. Please refer to “Special Note Regarding Forward-Looking Statements” set forth in Part I, Item 1A, for a discussion of our forward-looking statements and the related risks and uncertainties of such statements.



PART I

ITEM 1.BUSINESS
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 four approved medicines that treat the underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, and one approved therapy that treats severe sickle cell disease (“SCD”) and transfusion dependent beta thalassemia (“TDT”), life shortening inherited blood disorders. Our pipeline includes clinical-stage programs in CF, sickle cell disease, beta thalassemia, acute and neuropathic pain, APOL1-mediated kidney disease, type 1 diabetes, myotonic dystrophy type 1 and alpha-1 antitrypsin deficiency.
Our goal in CF is to develop treatment regimens that will provide benefits to all people with CF and will enhance the benefits currently provided to people taking our medicines. Our marketed medicines that treat people with CF are TRIKAFTA/KAFTRIO (elexacaftor/tezacaftor/ivacaftor and ivacaftor), SYMDEKO/SYMKEVI (tezacaftor/ivacaftor and ivacaftor), ORKAMBI (lumacaftor/ivacaftor) and KALYDECO (ivacaftor). Collectively, our four marketed CF medicines are being used to treat nearly three quarters of the approximately 92,000 people with CF in North America, Europe and Australia.
Through label expansions, approval of new medicines, and expanded reimbursement, we are focused on increasing the number of people with CF who are eligible and able to receive our medicines. We are evaluating our current medicines in additional patient populations, including younger children, with the goal of having small molecule treatments for all people who have at least one mutation in their cystic fibrosis transmembrane conductance regulator (“CFTR”) gene that is responsive to our CFTR modulators. We have completed Phase 3 development of a triple combination of vanzacaftor/tezacaftor/deutivacaftor, which has demonstrated the potential to provide additional clinical benefits, as well as once-daily dosing, to people with CF who have at least one mutation in their CFTR gene that is responsive to CFTR modulators. This regimen also carries a lower royalty burden. We plan to submit global regulatory filings for this new triple combination regimen by mid-2024. In addition, we have initiated the multiple ascending dose portion of the Phase 1/2 clinical trial of VX-522, an investigational messenger ribonucleic acid (“mRNA”) therapeutic we are developing in collaboration with Moderna, Inc. (“Moderna”). We expect to share data from this clinical trial in late 2024 or early 2025. VX-522 has the potential to benefit the more than 5,000 people with CF in North America, Europe and Australia who do not make full-length CFTR protein and cannot benefit from CFTR modulators. In addition, we are continuing our research and development of CFTR modulators, with the aim of developing best-in-class medicines that can help more patients achieve carrier levels of CFTR function, and we are investigating additional potential treatments for people with CF who do not make full-length CFTR protein and cannot benefit from CFTR modulators.
In SCD and TDT, our goal is to eliminate vaso-occlusive crises (“VOCs”) (as well as vaso-occlusive organ damage) and transfusion dependence, respectively. Our marketed therapy is CASGEVY (exagamglogene autotemcel, or “exa-cel”), an ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, which has been approved in the United States (“U.S.”), the European Union (“E.U.”), the United Kingdom (“U.K.”), the Kingdom of Saudi Arabia (“Saudi Arabia”), and the Kingdom of Bahrain (“Bahrain”) for treatment of SCD and TDT. We estimate approximately 35,000 people with severe SCD or TDT could be eligible for CASGEVY in the U.S. and Europe, with additional eligible people in Saudi Arabia and Bahrain. In connection with our serial innovation approach, we are progressing preclinical assets for gentler conditioning for CASGEVY, which could broaden the eligible patient population, and we are investigating small molecules for the potential treatment of SCD and TDT.
In January 2024, we announced positive results from our Phase 3 clinical trials evaluating VX-548, a non-opioid investigational NaV 1.8 inhibitor, for the treatment of moderate-to-severe acute pain. We plan to submit for regulatory approval of VX-548 in moderate-to-severe acute pain in the U.S. by mid-2024. In addition, in December 2023, we announced positive results from the Phase 2 clinical trial evaluating VX-548 for the treatment of diabetic peripheral neuropathy (“DPN”), a type of peripheral neuropathic pain. We expect to advance VX-548 into pivotal development in DPN in 2024.

1


The following chart represents our clinical-stage programs, and select pre-clinical programs:
Pipeline Slide from Labrador 2.13.24.jpg
Beyond CF, SCD, TDT and pain, we are advancing programs across multiple disease areas and modalities, including:
APOL1-Mediated Kidney Disease. We are evaluating inaxaplin, formerly known as VX-147, our investigational small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”) in a Phase 2/3 clinical trial. We expect to select a dose and move to the Phase 3 portion of the clinical trial in the first quarter of 2024.
Type 1 Diabetes. We are evaluating VX-880, an investigational allogeneic stem-cell derived, fully differentiated islet cell therapy, for the treatment of type 1 diabetes (“T1D”) in a Phase 1/2 clinical trial in which patients also receive immunosuppressive therapy to protect the islet cells from immune rejection. We have completed enrollment in Part C of this clinical trial. VX-880 is on a protocol-specified pause, pending review of the totality of the data by the independent data monitoring committee and global regulators. Our second clinical program in T1D, VX-264, in which the implanted islet cells are encapsulated in an immunoprotective device, is ongoing. We have completed Part A of this Phase 1/2 clinical trial and we have initiated Part B in multiple centers and countries.
Myotonic Dystrophy Type 1. We are exploring multiple approaches to address the underlying causal biology for myotonic dystrophy type 1 (“DM1”), including small molecules. We initiated a Phase 1/2 clinical trial evaluating VX-670, an oligonucleotide-based approach that we have in-licensed from Entrada Therapeutics, Inc. (“Entrada”). The clinical trial is active and enrolling in Canada and will initiate in the U.K. in the near term.
Alpha-1 Antitrypsin Deficiency. We continue to enroll and dose healthy volunteers in Phase 1 clinical trials for VX-634 and VX-668, our next-wave investigational molecules with significantly improved potency and drug-like properties as compared to our previous alpha-1 antitrypsin (“AAT”) correctors.
In addition to the programs listed above, we have additional research programs aimed at diseases that fit our research and development strategy and follow-on programs in our existing disease areas in accord with our serial innovation approach.
Our core strategy is to discover and develop innovative medicines by combining transformative advances in the understanding of human disease and the science of therapeutics to dramatically advance human health. That strategy focuses 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 rapidly follow our first-in-class therapies that achieve proof-of-concept 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

2


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. Our CF medicines are the exemplar of this strategy, as we continue to reach more people with CF than ever before through label expansions, approvals of new medicines and expanded reimbursement. In addition, we have obtained historic approvals for CASGEVY for the treatment of SCD and TDT and are working towards broad access for eligible patients to this potentially curative treatment option. We continue to advance our broad and diverse pipeline and prepare for potential near-term global commercial launches in new disease areas, and further strengthen our financial profile.

3



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.
DiseaseInitial Approval
Eligible Age Group(1)
Cystic Fibrosis
TRIKAFTA_R_US_NoDose_RGB_nogeneric.jpg
20192 years of age and older
Kaftrio_R_Logo_RGB_nodose_nogeneric.jpg
20202 years of age and older
SYMDEKO_R_US_Logo_NoDose_RGB_nogeneric.jpg
20186 years of age and older
Symkevi_R_RGB_nodose_nogeneric.jpg
20186 years of age and older
ORKAMBI_Logo_R_US_NoDose_RGB_nogeneric.jpg
20151 year of age and older
Kalydeco_R_US_NoDose_RGB_nogeneric.jpg
20121 month of age and older
Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia
casgevy_logo_TM_RGB.jpg
202312 years of age and older
(1) Specifies the youngest eligible age group in any major market.
CF
Our CF medicines are collectively being used by nearly three quarters of the approximately 92,000 people with CF in North America, Europe, and Australia. CF is a life-shortening genetic disease caused by a defective or missing CFTR protein resulting from mutations in the CFTR gene. To develop CF, children must inherit two defective CFTR genes, which are referred to as alleles; one allele is inherited from each parent. The vast majority of patients with CF carry at least one F508del mutation. The F508del mutation results in a defect in the CFTR protein in which the CFTR protein does not reach the surface of the cells in sufficient quantities and does not adequately transport chloride ions.
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. As a result, thick, sticky mucus builds up and blocks the passages in many organs, leading to a variety of symptoms. In particular, mucus builds up and clogs the airways in the lungs, causing chronic lung infections and progressive lung damage. CFTR potentiators, such as ivacaftor, increase the probability that the CFTR protein channels open on the cell surface, increasing the flow of salt and water into and out of the cell. CFTR correctors, such as lumacaftor, tezacaftor, and elexacaftor, increase the proper protein processing and folding of mutant CFTR proteins, such that a larger amount of

4


functional CFTR protein reaches the cell surface. Our CFTR regimens target the underlying cause of disease and have been shown to improve CFTR protein function in people with CF, and as such have been shown to provide transformative benefit for people living with CF.
Our CF medicines are used by patients in over 60 countries, and TRIKAFTA/KAFTRIO is now approved and reimbursed or accessible in more than 40 of these countries. In addition to the E.U. and the U.S., we market our products in additional countries, including the U.K., Australia, Canada, Brazil and Switzerland. We continue to increase the number of patients eligible and able to receive our current medicines through label expansions and expanded reimbursement.
Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia
CASGEVY, our therapy for SCD and TDT, was recently approved in the U.S., the E.U., the U.K. Saudi Arabia, and Bahrain. SCD and TDT are hemoglobinopathies, a group of inherited blood disorders that result from gene mutations that alter hemoglobin, a protein in red blood cells that delivers oxygen throughout the body. We estimate approximately 35,000 people with severe SCD or TDT could be eligible for CASGEVY in the U.S. and Europe, with additional eligible people in Saudi Arabia and Bahrain.
SCD is caused by the change of a single amino acid in the β-hemoglobin gene that causes red cells to change shape in settings of low oxygen. These sickled cells block blood flow and can lead to severe pain, organ damage, and shortened life span. Treatment is typically focused on relieving pain and minimizing organ damage, requiring medication and, for some patients, monthly blood transfusions and frequent hospital visits.
Beta thalassemia is caused by loss-of-function mutations in the β-hemoglobin gene that lead to severe anemia in patients, which causes fatigue and shortness of breath. 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. Patients 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, our ex-vivo, non-viral CRISPR/Cas9-based gene-editing therapy, was developed for the treatment of severe SCD and TDT, with our collaborator, CRISPR Therapeutics AG (“CRISPR”). Patients first undergo a treatment at an authorized treatment center (an “ATC”) that mobilizes a population of hematopoietic stem and progenitor cells (“HSPC”) from the bone marrow into the bloodstream. Blood cells are collected from the patient’s bloodstream and transferred to a manufacturing facility where the HSPCs are purified and CRISPR/Cas9 gene-editing is performed. The gene editing procedure results in a precise and specific gene edit in a non-coding intron of the BCL11A gene. After the HSPC cells are returned to the patient and engraft, the gene edit results in significant increases in the levels of fetal hemoglobin erythrocytes, thereby reducing or eliminating symptoms associated with disease. 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 prior to infusion of CASGEVY. Efficacy data presented to date support the profile of CASGEVY as a potential one-time functional cure for people with severe SCD and TDT.
Our global launch strategy for CASGEVY is focused on disease education and awareness for patients, caregivers, health care professionals, payors, and policymakers, as well as engagement with the scientific and medical community regarding CASGEVY clinical data. Our strategy is also focused on activation of ATCs to ensure their readiness to treat patients and establishing a globally-enabled manufacturing and supply chain to meet patient demand. In addition, our approach concentrates on achieving access for patients through reimbursement agreements with governments and commercial payors, as well as through early access programs where applicable.

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;

5


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 for the treatment of the serious diseases on which we are focused, include CF, SCD, TDT, acute and neuropathic pain, AMKD, T1D, DM1, and AAT deficiency (“AATD”). 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 TRIKAFTA/KAFTRIO, KALYDECO, ORKAMBI, and SYMDEKO/SYMKEVI for the treatment of CF, and CASGEVY for the treatment of SCD and TDT. Our approach to drug discovery has been further validated by our successful demonstration of clinical proof-of-concept in four additional disease areas: in acute and neuropathic pain with our NaV1.8 inhibitors, in AMKD with inaxaplin, and in T1D with a stem cell-derived islet cell therapy.
Over the last several years, this strategy has led us to expand our capabilities to include additional innovative therapeutic modalities with a focus on cell and genetic therapies, which have the potential to treat, and in some cases, cure diseases by addressing the underlying cause of the disease. CASGEVY, recently approved in multiple geographies, including the U.S., is one such example. We continue to make significant internal investments in cell and genetic therapies. These investments include the development of a Boston-based campus for research and current Good Manufacturing Practices (“cGMP”) clinical manufacturing capabilities dedicated to our portfolio of cell and genetic therapy technologies and teams.
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 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 and the establishment and advancement of other pipeline programs, including our T1D program through our acquisition of Semma Therapeutics, Inc. (“Semma”), our mRNA therapeutic, VX-522, for treatment of CF through our collaboration with Moderna, and our intracellular therapeutics for DM1, including VX-670, through our collaboration with Entrada.
CF
We have completed the Phase 3 global program evaluating a once-daily investigational triple combination of vanzacaftor/tezacaftor/deutivacaftor. Our Phase 3 program consisted of two 52-week randomized, controlled clinical trials, SKYLINE 102 and SKYLINE 103, which evaluated the safety and efficacy of the new combination relative to TRIKAFTA in approximately 950 people with CF 12 years of age and older, and the single arm RIDGELINE trial, evaluating vanzacaftor/tezacaftor/deutivacaftor in children with CF 6 to 11 years of age. In February 2024, we announced positive data from this Phase 3 program. The data from these trials demonstrate that this triple combination provides additional benefit beyond TRIKAFTA for people with CF who have the F508del mutation on at least one allele that is CFTR modulator responsive. This new triple combination regimen was safe and well-tolerated in all three clinical trials. We expect to submit global regulatory filings for this triple combination by mid-2024, including a New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”), using a priority review voucher, and Marketing Authorization Applications to the EMA and Health Canada, for people with CF 6 years of age and older. We estimate that approximately 90% of people with CF could benefit from vanzacaftor/tezacaftor/deutivacaftor. We continue to identify and develop additional CFTR modulators with the goal of developing best-in-class medicines that can help more patients who respond to CFTR modulators achieve carrier levels of CFTR activity.
In order 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 CF mRNA therapeutic designed to treat the underlying cause of CF for these people by enabling cells in the lungs to produce functional CFTR protein. At the end of 2023, we completed dosing in the single ascending dose part of the Phase 1/2 clinical trial for VX-522 in people with CF, and we initiated the

6


multiple ascending dose part of the clinical trial. We expect to share data from this clinical trial in late 2024 or early 2025.
Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia
Two global Phase 3 clinical trials evaluating CASGEVY in people 5 to 11 years of age with severe SCD (the CLIMB SCD-151 clinical trial) and TDT (the CLIMB THAL-141 clinical trial) are ongoing. We have completed enrollment in these two clinical trials.
In connection with our serial innovation approach, we are working on preclinical assets for myeloablative conditioning agents with improved tolerability profiles which could be used in connection with treatment with CASGEVY, significantly broadening the eligible SCD and TDT patient population. In addition, we also are investigating small molecules for the potential treatment of SCD and TDT.
Pain
Pain can be debilitating and develop from a variety of conditions. Patients with pain can be categorized as suffering from one of three types of pain: acute pain, chronic neuropathic pain (caused primarily by damage or dysfunction of peripheral nerves), or chronic musculoskeletal pain (caused primarily by damage to muscle, joints or bone). 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. Currently, some available treatments have limited efficacy, others cause significant side effects and/or carry the risk of addiction. Because of these challenges, over- and under-utilization, as well as 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 all three clinical pain types: acute pain, chronic neuropathic pain, and chronic musculoskeletal pain.
In acute pain, we completed two randomized, placebo-controlled Phase 3 clinical trials for our lead compound, VX-548, evaluating patients with moderate-to-severe acute pain following abdominoplasty or bunionectomy surgery. We also completed a single-arm clinical trial evaluating the safety and effectiveness of VX-548 in multiple other types of moderate-to-severe acute pain. In January 2024, we announced positive results from these clinical trials. The clinical trials demonstrated that treatment with VX-548 led to statistically significant improvement on the primary endpoint of the time-weighted sum of the pain intensity difference compared to placebo, as well as clinically meaningful reduction in pain from baseline on the numeric pain rating scale after abdominoplasty surgery or bunionectomy surgery. VX-548 was safe and well tolerated in all three Phase 3 studies. We also announced our plans to submit an NDA to the FDA by mid-2024, with the goal of securing a broad label for the treatment of moderate-to-severe acute pain.
In neuropathic pain, in December 2023, we announced results from a Phase 2 clinical trial evaluating VX-548 in people with DPN, a common form of peripheral neuropathic pain. The clinical trial demonstrated that treatment with VX-548 led to a statistically significant and clinically meaningful reduction in the primary endpoint of change from baseline in the weekly average of daily pain intensity on a numeric pain rating scale at week 12. VX-548 was generally well-tolerated at all doses tested in the clinical trial. We also announced our plans to advance VX-548 for the treatment of DPN into pivotal development, with the ultimate goal of securing a broad label for the treatment of peripheral neuropathic pain.
In support of this broad peripheral neuropathic pain indication we seek, in December 2023, we initiated a second Phase 2 clinical trial in lumbosacral radiculopathy, which is pain caused by impairment or injury to nerve roots in the area of the lumbar spine, another type of peripheral neuropathic pain. There are no approved medicines in the U.S. that are labeled for the treatment of peripheral neuropathic pain.
In keeping with our serial innovation approach, we have also completed a Phase 1 clinical trial evaluating an oral formulation of VX-993, a next generation NaV1.8 inhibitor, and we anticipate initiating Phase 2 clinical trials evaluating VX-993 for the treatment of moderate-to-severe acute pain and for the treatment of peripheral neuropathic pain in 2024. We also anticipate initiating a Phase 1 clinical trial evaluating an intravenous formulation of VX-993 in 2024. Additionally, we are advancing multiple NaV1.8 inhibitors and NaV1.7 inhibitors through research and earlier stages of development for pain.

7


APOL1-Mediated Kidney Disease
Inherited mutations in the APOL1 gene play a causal role in the biology of severe proteinuric kidney diseases referred to as AMKD. 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, permanent kidney damage. Patients with proteinuria who inherited two copies of the APOL1 mutations demonstrate rapid progression to end-stage kidney disease. Some patients with AMKD have the histological finding of focal segmental glomerulosclerosis (“FSGS”) and co-morbidities such as hypertension. We are evaluating multiple novel small molecules that inhibit the function of the mutant APOL1 protein with the potential to treat APOL1-mediated kidney disease.
In a Phase 2 proof-of-concept clinical trial, patients with APOL1-mediated FSGS treated with inaxaplin on top of standard of care achieved a statistically significant, substantial, and clinically meaningful reduction of proteinuria. In this clinical trial, inaxaplin was well tolerated by patients. Based on this positive Phase 2 data, we initiated pivotal development of inaxaplin in a single Phase 2/3 adaptive clinical trial in patients with AMKD in 2022. Enrollment in the Phase 2B portion of the Phase 2/3 clinical trial has completed. We expect to select a dose and begin the Phase 3 portion of the clinical trial in the first quarter of 2024.
Type 1 Diabetes
T1D is a chronic metabolic disorder caused by insufficient insulin secretion by the beta cells in the pancreas. In patients 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. 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.
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. We are pursuing three programs for the transplant of functional islets into patients: transplantation of islet cells alone following immunosuppression to protect the implanted cells, implantation of the islet cells inside a novel immunoprotective device, and development of hypoimmune islet cells to optimize protection of the implanted islet cells from the immune system.
VX-880, 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. The Phase 1/2 study is designed as a sequential, multi-part clinical trial to evaluate the safety and efficacy of VX-880. In Part A, the first two patients received half the target dose of VX-880 cells and the results demonstrated proof-of-concept that VX-880 can restore glucose-regulated insulin production and improve glycemic control. In Part B, patients received the full target dose. We have completed enrollment in Part C of the clinical trial, with concurrent dosing at the full target dose, with trial sites in the U.S., Canada, Norway, the U.K., Italy, Germany, Switzerland, the Netherlands and France. Data presented to date from the VX-880 clinical trial continue to demonstrate unprecedented efficacy and curative potential. Safety data is consistent with the immunosuppressives, the perioperative period, and past medical history. We have placed the clinical trial on a protocol-specified pause, pending review of the totality of the data by an independent data monitoring committee and global regulators, following two patient deaths both of which were determined by the trial investigators to be unrelated to VX-880.
In our second program, we are evaluating VX-264, in which the allogeneic stem cell-derived, fully differentiated, insulin-producing islet cells are encapsulated in an immunoprotective device that is implanted in patients. We are enrolling and dosing patients with VX-264 in a Phase 1/2 clinical trial that is a sequential, multi-part study to evaluate the safety, tolerability and efficacy of VX-264. Part A of the study dosed patients with a partial dose of cells/devices and a stagger between patients, and Part B will dose patients with a full target dose and a stagger between patients before moving to concurrent, full dosing in Part C. The clinical trial is enrolling patients in the U.S., Canada, the U.K., Switzerland, Italy, Germany, and the Netherlands, with additional global sites to be activated in the coming months. We have completed Part A of the clinical trial and Part B has been initiated in multiple centers and countries.

In our third program, research is directed toward developing hypoimmune cells by gene-editing the same stem cells used in the VX-880 and VX-264 programs prior to differentiation into fully differentiated islets in order to cloak them from the immune system. This program continues to advance in pre-clinical development.

8


Myotonic Dystrophy Type 1
DM1 is an inherited disease that results in the weakening and destruction of skeletal muscles over time. We have an internal small molecule program for DM1 and, in 2022, we established a collaboration with Entrada focused on enabling efficient intracellular delivery of an oligonucleotide, which we believe will address the underlying pathophysiology and help restore normal cell function. Our Phase 1/2 clinical trial evaluating the first candidate, VX-670, in patients with DM1 has been initiated in Canada and will initiate in the U.K. in the near term.
Alpha-1 Antitrypsin Deficiency
AATD is a severe disease of the liver and lung, caused by inherited mutations in the SERPINA1 gene that encodes the AAT protein. We have discovered multiple small molecule correctors that restore folding of the mutant Z-AAT protein (the most common mutant form of SERPINA1 in AATD patients), leading to increased production of functional AAT protein. We continue to enroll and dose subjects in Phase 1 clinical trials evaluating VX-634 and VX-668, the next-wave of investigational small molecule AAT correctors with significantly improved potency and drug-like properties compared with our previous AATD correctors.

COMMERCIALIZATION OF OUR MEDICINES
Commercial Organization
Our commercial organization focuses on supporting the appropriate use of TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI, KALYDECO and CASGEVY in the markets where these products have been approved. Our sales and marketing organizations are responsible for promoting products to health care providers, ensuring our products are distributed effectively, ensuring the safe use of our products, and obtaining reimbursement for our products from third-party payors, including governmental organizations in the U.S. and ex-U.S. markets.
We market our products through personal interactions with physicians and allied health care professionals. In parallel, our government affairs and public policy group advocates for policies that promote life sciences innovation and increase awareness of the diseases on which we are focusing with state and federal legislatures, government agencies, public health officials and other policymakers.
Commercialization of CF Medicines
In the U.S., we primarily sell our CF products to a limited number of specialty pharmacy and specialty distributors. In international markets, we sell our CF products primarily through distributor arrangements and to retail pharmacies, as well as to hospitals and clinics, many of which are government-owned or supported.
Our U.S. field-based CF commercial team is comprised of a small number of individuals to support commercialization of our medicines for CF. We focus our CF marketing efforts in the U.S. on a relatively small number of physicians and health care professionals who write most of the prescriptions for CF medicines. Many of these physicians and health care professionals are located at a limited number of accredited centers in the U.S. focused on the treatment of CF. In international markets, we or our distributors have small sales forces that support TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI and KALYDECO in jurisdictions where these products are approved.
We also have established programs in the U.S. that provide our CF products to qualified uninsured or underinsured patients at no charge or at a reduced charge, based on specific eligibility criteria.
Commercialization of CASGEVY
We have begun the commercial launch of CASGEVY, following approvals in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain. We expect to obtain additional regulatory approvals for CASGEVY in Canada and Switzerland in 2024. We estimate that there are approximately 35,000 people with severe SCD and TDT in the U.S. and Europe, with additional eligible people in Saudi Arabia and Bahrain.
As CASGEVY is the first CRISPR-based therapy to be approved, our global launch strategy is focused on educating physicians, patients and caregivers, payors, and policymakers about the significant disease burden of SCD and TDT and the availability of CASGEVY as a treatment option. In addition, we are concentrating on communications with the scientific and

9


medical community regarding the clinical profile of CASGEVY and data demonstrating its safety and efficacy. We have also established a global manufacturing network to ensure adequate production and supply of CASGEVY at a commercial scale. Given the geographic concentration of patients, we expect to reach the majority of patients through our specialty commercial model, which is comprised of a small number of field-based individuals. Because the administration of CASGEVY requires specialized experience in stem cell transplantation, we are engaging with experienced hospitals to establish a network of approximately 75 authorized treatment centers (each, an “ATC”) across the U.S., Europe and the Middle East. We have activated 12 ATCs in the U.S., three ATCs in Europe, and one ATC in Saudi Arabia, and we are working to activate additional centers.
Our teams are actively engaged with key treatment centers, policymakers and third-party payors to ensure that patients who may be eligible for CASGEVY have access to this potentially curative therapy. We are seeking broad access with government and commercial payors for CASGEVY, both in and outside the U.S. In the U.S., we are working to develop medical policies and identify reimbursement pathways for people with SCD or TDT through both government and commercial payors. In the U.K., we also have begun engagement with the National Institute for Health and Care Excellence (“NICE”), which is the start of the process for seeking government reimbursement of CASGEVY. In the E.U., we are working with national health authorities to achieve access and reimbursement. In France, the National Authority for Health (“HAS”) approved our request for the implementation of an early access program (“EAP”) for the use of CASGEVY to treat eligible people with TDT, and we are pursuing a similar program for SCD. In the Middle East, we have established a local presence in the region and are working with local healthcare authorities in Saudi Arabia and Bahrain to achieve access and reimbursement.
Near-Term Launch Opportunities
We are also preparing for near-term potential launches for two product candidates: one for our triple combination of vanzacaftor/tezacaftor/deutivacaftor for the treatment of CF and one for VX-548 for the treatment of acute pain.
CF
We believe that the triple combination of vanzacaftor/tezacaftor/deutivacaftor will help more people with CF achieve carrier levels of CFTR function and in doing so, lead to improved clinical outcomes for patients and reinforce our established position as the leading company in CF. In addition, this new triple combination is a once-daily regimen and has a lower royalty burden. We believe the new triple combination will present an opportunity for three types of patients: (i) those who are currently on a CFTR modulator who may want to switch to the new triple combination, (ii) those patients who have not yet been initiated on a CFTR modulator, and (iii) those who have discontinued from a CFTR modulator. We expect to support the launch of the vanzacaftor/tezacaftor/deutivacaftor triple combination with our existing commercial infrastructure.
Acute Pain
We believe the innovation of VX-548 could provide a transformative option for acute pain, based on the suboptimal benefit risk profiles of existing agents, such as the adverse effects and addictive potential of opioids, and the benefit risk profile of VX-548 as established in the results from our Phase 3 clinical trials.
For our near-term opportunity in acute pain, we are focused on the estimated 80 million patients in the U.S. who are prescribed a medicine for their moderate-to-severe acute pain each year. Currently, more than two-thirds of patients receive acute pain prescriptions either during a hospital or ambulatory surgery center visit or at discharge. As hospital-driven prescribing is concentrated amongst approximately 2,000 hospitals and 200 integrated delivery networks, we believe we can reach a large portion of people treated for acute pain with a specialty sales force. We have made significant progress in building our organization to support the launch of VX-548 and are currently hiring additional key teams that will support the use of VX-548 at hospitals and other settings in the U.S. We plan to complete the buildout of our field team in 2024. In addition, we are working with policymakers and institutions that establish practice guidelines to support the appropriate use of non-opioid pain medications, including avoiding meaningful financial barriers to patients accessing such medicines relative to generic opioids.
Reimbursement of Approved Therapies
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, and managed health care organizations. Increasingly, these third-party payors are becoming stricter in the ways they evaluate and reimburse medical products and services.

10


Additionally, the containment of health care costs has become a priority of federal and state 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 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.
Our CF medicines are broadly reimbursed by third-party payors in the U.S., including the federal government. 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 include inpatient drugs reimbursed separately from a bundled payment rate that are dispensed to Medicaid beneficiaries. Medicaid rebates are based on pricing data reported by us on a monthly and quarterly basis to the Centers for Medicare & Medicaid Services (“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.
The Medicare program includes “Part A” that generally covers certain hospital services for eligible beneficiaries. In general, Part A covers inpatient hospital services, skilled nursing, and hospice care. Most individuals are enrolled in Medicare Part A upon reaching age 65 (although other individuals qualify for Part A, including those receiving services for end stage renal disease). 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).
The Medicare Part D program provides a voluntary prescription drug benefit to Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities, which provide coverage of outpatient prescription drugs such as our CF medicines. Unlike Medicare Part A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, including CF, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutics committee. U.S. government payment for some of the costs of prescription drugs may increase demand for products for which we receive marketing approval. However, any negotiated prices for our products covered by a Part D prescription drug plan likely will be lower than the prices we might otherwise obtain.
Private payors often follow Medicare coverage policy and payment limitations in setting their own payment rates. As a result, any reduction in payment that results from Part D reimbursement may result in a similar reduction in payments from non-governmental payors for our products. Additionally, private payors, including health maintenance organizations and pharmacy benefit managers in the U.S., are adopting more aggressive utilization management techniques, and are increasingly applying restrictive plan designs that can impact patients and manufacturers and they continue to push for significant discounts and rebates from manufacturers. As a consequence, these payors may not cover or adequately reimburse for use of our products or may do so at levels that disadvantage them relative to competitive products.
The U.S. government has shown significant interest in implementing cost-containment programs for medicines and has enacted reforms at the state and federal level designed to, among other things, modify prescription drug reimbursement amounts and methodologies, and otherwise control health care costs. For example, the American Recovery and Reinvestment Act of 2009 provided funding for the federal government to compare the effectiveness of different treatments for the same illness. Although the results of the comparative effectiveness studies are not intended to mandate coverage policies for public or private payors, it is not clear what effect, if any, the research will have on the sales of our products. In the future, it is possible that comparative effectiveness research demonstrating benefits of a competitor’s product could adversely affect the

11


sales of our products. If third-party payors do not consider our products to be cost-effective compared to other available therapies, they may not cover our products as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.
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 industry 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 orphan drugs, including our CF medicines, are excluded from the IRA negotiation program. 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. For example, in 2023, the Colorado PDAB selected five drugs for an affordability review, including TRIKAFTA, although it ultimately concluded that TRIKAFTA is not unaffordable, and thus not eligible for an upper payment limit.
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. 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. 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 ex-U.S. governments 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.
Our CF medicines are used by patients in more than 60 countries, and TRIKAFTA/KAFTRIO is reimbursed or accessible in more than 40 of these countries outside the U.S. We expect to continue to focus significant resources to maintain reimbursement and obtain expanded reimbursement for our CF medicines and pipeline therapies in ex-U.S. markets.
In SCD and TDT, CASGEVY is approved in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain, and we are actively engaged with relevant stakeholders to obtain broad access and reimbursement with government and commercial payors for CASGEVY. In the U.S., federal and private payors are taking different approaches to reimbursement of novel cell and genetic therapy products, including providing separate reimbursement outside of the bundled payment. We have been working with key government and commercial payors and policymakers in the U.S. to support access to CASGEVY, in part through an understanding of the burden of the diseases and the ability of CASGEVY to treat SCD and TDT effectively. Currently in the U.S., across commercial and government payors, all eligible CASGEVY patients have case-by-case coverage through single case agreements. We continue to make progress with payors, having identified potential reimbursement pathways and are engaging in targeted, innovative contract solutions. For example, we have signed an agreement with Synergie Medication Collective, which covers approximately 100 million people, to provide access to CASGEVY. Within Medicaid, we have engaged all of the Medicaid administrators in all 50 U.S. states, focused on the 25 states with the highest prevalence of SCD patients, and have confirmed pathways to reimbursement in nearly all 25 of those priority states. In addition, in February 2023, the Biden Administration demonstrated its commitment to paying for cell and gene therapies in

12


diseases such as SCD through the CMS program known as The Cell and Gene Therapy Access Model (“CGT Access Model”). The CGT Access Model was designed to provide an opportunity to accelerate and enhance broad Medicaid access for eligible patients across all 50 U.S. states by allowing state Medicaid agencies to delegate authority to CMS to coordinate and facilitate outcomes-based payment arrangements (“OBAs”) with cell and gene therapy manufacturers, such as ours.
In addition to payor administration for CASGEVY, hospitals will also seek reimbursement for the administration of CASGEVY, which requires procedures for the collection of cells from patients, followed by other procedures before and after infusion of the gene therapy. The same may be true for other pipeline cell and gene therapies. The manner and level at which reimbursement is provided for these services also are important. An inadequate reimbursement for such services may adversely affect ATCs and physicians’ decisions to recommend any product for which we obtain approval in the future and our ability to market or sell the related cell or genetic therapy. The potential treatment center network at launch and growth of such network could also impact uptake and necessitate out-of-state access for some beneficiaries if an ATC is not available within their home state, which could result in further underpayment from out-of-state Medicaid programs.
For CASGEVY in ex-U.S. markets, we anticipate some early access programs initially, such as the recently approved EAP for TDT in France, and in parallel we are pursuing long-term reimbursement arrangements. We have begun engagement with payors in the U.K., the E.U., Saudi Arabia and Bahrain.

STRATEGIC TRANSACTIONS AND COLLABORATIONS
As part of our business strategy, we seek to license or acquire technologies, products, product candidates, and businesses that are aligned with our corporate and research and development strategies and complement and advance our ongoing research and development efforts. 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 or different from the transactions that we have engaged in previously.
Strategic Transactions
In 2017, we enhanced our CF portfolio through our acquisition of certain CF assets, including deutivacaftor, from Concert Pharmaceuticals Inc. We recently announced positive results from our Phase 3 clinical trials evaluating our new, once-daily investigational triple combination therapy, vanzacaftor/tezacaftor/deutivacaftor, for people with CF 6 years of age and older.
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 VX-880 for the potential treatment of T1D in a clinical trial and have completed enrollment in Part C of that trial. In addition, our second clinical program in T1D, VX-264, in which the implanted islet cells are encapsulated in an immunoprotective device, is ongoing. We have completed dosing in Part A of that trial and Part B is underway.
Collaboration and Licensing Arrangements
Joint Development and Commercialization Agreement with CRISPR
In December 2017, we entered into a joint development and commercialization agreement (“Original JDCA”) with CRISPR, pursuant to which we are co-developing and co-commercializing CASGEVY for SCD and TDT. We entered into the Original JDCA following our exercise of an option to co-develop and co-commercialize the hemoglobinopathies program that was contained in the collaboration agreement that we entered into with CRISPR in 2015.
In April 2021, we and CRISPR amended and restated the Original JDCA (the “A&R JDCA”). Pursuant to the A&R JDCA, the parties agreed to, among other things, (a) adjust the governance structure for the collaboration and adjust the responsibilities of each party thereunder; (b) adjust the allocation of net profits and net losses between the parties; and (c) exclusively license (subject to CRISPR’s reserved rights to conduct certain activities) certain intellectual property rights to us relating to the products that may be researched, developed, manufactured and commercialized under such agreement.
Pursuant to the A&R JDCA, 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,

13


development, manufacturing, and commercialization activities relating to the product candidates and products under the A&R JDCA (including CASGEVY) throughout the world, subject to CRISPR’s reserved right to conduct certain activities.
In connection with the A&R JDCA, we made a $900.0 million upfront payment to CRISPR in the second quarter of 2021. CRISPR earned an additional one-time $200.0 million milestone payment upon receipt of marketing approval of CASGEVY from the FDA.
We and CRISPR shared equally all expenses incurred under the Original JDCA. On July 1, 2021, with respect to CASGEVY, the net profits and net losses incurred pursuant to the A&R JDCA began to be allocated 60% to us and 40% to CRISPR, subject to certain adjustments, while all other product candidates and products continue to 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. In December 2022, the FDA cleared our Investigational New Drug Application (“IND”) for VX-522, an mRNA therapeutic we are developing with Moderna pursuant to this collaboration. At the end of 2023, we completed dosing in the single ascending dose part of the Phase 1/2 clinical trial for VX-522 in people with CF, and we initiated the multiple ascending dose part of the clinical trial.
Entrada Therapeutics, Inc. In 2022, we established a collaboration with Entrada focused on enabling efficient intracellular delivery of an oligonucleotide. This collaboration includes ENTR-701, now known as VX-670, an investigational candidate for the treatment of DM1 that is in clinical development. The clinical trial evaluating VX-670 is active and enrolling in Canada and will initiate in the U.K. in the near term.

14


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 all 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.
Cystic Fibrosis Foundation
In 2004, we entered into a collaboration agreement with the Cystic Fibrosis Foundation, as successor in interest to the Cystic Fibrosis Foundation Therapeutics, Inc., to support research and development activities. Pursuant to the collaboration agreement, as amended, we have agreed to pay tiered royalties ranging from single digits to sub-teens on covered compounds first synthesized and/or tested during a research term on or before February 28, 2014, including ivacaftor, lumacaftor and tezacaftor and royalties ranging from low-single digits to mid-single digits on potential net sales of certain compounds first synthesized and/or tested between March 1, 2014 and August 31, 2016, including elexacaftor. We do not have any royalty obligations on compounds first synthesized and tested on or after September 1, 2016. For combination products, such as ORKAMBI, SYMDEKO/SYMKEVI and TRIKAFTA/KAFTRIO, sales are allocated equally to each of the active pharmaceutical ingredients in the combination product.

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 and products.
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 have received regulatory exclusivity from U.S. and European regulatory agencies for the active pharmaceutical and biological agents and, where applicable, their approved orphan indications for a certain time period. Regulatory exclusivity runs concurrently with patent exclusivity and provides complementary protection for our products.
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 an 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 thirteen 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 20 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 24 issued U.S. patents listed in the Orange Book that cover the active pharmaceutical ingredients in SYMDEKO, its marketed formulation, and/or its approved indication. We have 28 issued U.S. patents listed in the Orange Book that cover the active pharmaceutical ingredients in TRIKAFTA, its marketed formulation, and/or its approved indication.
Products approved by the FDA under a Biologics Licensing Application (“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

15


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 and elexacaftor for TRIKAFTA/KAFTRIO). 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.
ProductExpiration Year
of U.S. Basic Product Patent
Expiration Year
of European Basic Product Patent
KALYDECO
2027
  2027 1
ORKAMBI
2030
  2030 1
SYMDEKO/SYMKEVI
2027
  2033 1
TRIKAFTA/KAFTRIO
2037
2037
CASGEVY
  2035 2
    2034 2, 3
1 Expiration date reflects SPCs granted in the five major European markets (France, Germany, Italy, Spain and the U.K.).
2 Expiration year reflects the expiration of regulatory exclusivity, which expires later than the basic product patent for this product in this market.
3 Product is approved in Great Britain with regulatory exclusivity until November 2033, which is later than the expiration of the basic product patent.
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:
Vanzacaftor, deutivacaftor, and other CF potentiators and correctors and many other related compounds, and the use of those compounds for the treatment CF.
VX-522 and other mRNA-based approaches for treating CF.
VX-548 and other compounds being studied for the potential treatment of pain.
Inaxaplin and other compounds being studied for the potential treatment of AMKD.
VX-880, VX-264, and other cell-based approaches for treating T1D.
VX-634, VX-668, and other compounds being studied for the potential treatment of AATD.
VX-670 for the treatment of DM1.
Other pre-clinical and clinical candidates and the use of such candidates to treat specified diseases.
The manufacture, pharmaceutical compositions, related solid forms, formulations, dosing regimens, and methods of use of many of the above compounds.
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

16


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.
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 each new approved product, we must adapt our supply chain for existing products to include additional formulations that are often required to treat younger patients or to increase scale of production for existing products. We are focused on ensuring the stability of the supply chains for our current products, including KALYDECO, ORKAMBI, SYMDECO/SYMKEVI, TRIKAFTA/KAFTRIO, CASGEVY, and for our pipeline programs. In addition, we are focused on identifying and ensuring efficient manufacturing and delivery processes for the cell and genetic therapies we are developing, including our stem cell therapy program for T1D.
We have established our own 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 expect to continue to rely on third parties to meet our commercial supply needs, including for TRIKAFTA/KAFTRIO and pipeline programs, and a significant portion of our clinical supply needs for the foreseeable future. We have established and continue to evaluate additional manufacturing capacity for our current and future products, including products with near-term launch potential (e.g., the triple combination of vanzacaftor/tezacaftor/deutivacaftor for CF and VX-548 for pain). 
Our supply chain for sourcing raw materials and manufacturing our products, 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 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. To manufacture our commercial CF products, we utilize continuous manufacturing technology as well as batch manufacturing processes. 
We have developed systems and processes to track, monitor, and oversee our and our third-party manufacturers’

17


activities, including a quality assurance program intended to ensure that our third-party manufacturers comply with cGMP. 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 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 may be delayed for a number of reasons.
The manufacturing processes for cell and genetic therapies are more complex than those required for small molecule drugs and require different systems, equipment, facilities, and expertise. Additionally, we are unable to utilize a single process for all of our cell and genetic therapies; they must be customized for each program and therapy. We are investing and plan to continue to invest significant resources in expanding and strengthening our manufacturing supplies, infrastructure and capabilities, such as cGMP clinical manufacturing, both independently and through third-party networks, in an effort to develop and commercialize our cell and genetic therapies. We have secured relationships with third parties globally for CASGEVY, and are identifying and evaluating various third parties that will enable us to expand and strengthen such capabilities to support our current and future cell and genetic therapy programs, including T1D.
We rely on third-party manufacturers to produce or process cell culture reagents, gene-editing components, such as Cas9 protein and guide RNA molecules for clinical trials and commercial supply of CASGEVY, and to generate gene-edited cells to supply CASGEVY. We continue to rely on third-party manufacturers for commercial supply of CASGEVY. 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 ATC where it is stored prior to infusion into the patient. Each step must be completed successfully, and in a timely manner, requiring coordination between us, ATCs, third-party manufacturers and shipping vendors. To increase production to commercial levels, we are making significant investments 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 expect to treat patients with CASGEVY. In addition to clinical data establishing the safety and efficacy of CASGEVY, regulatory approval of the processes and facilities used to manufacture and test critical gene-editing components is required.
We have established our own manufacturing capabilities in the Boston area to support our T1D program. In addition, to further expand our capabilities in cell therapy manufacturing, in June 2023, we announced a strategic agreement with Lonza to support the manufacture of our portfolio of investigational allogeneic stem cell-derived, fully differentiated, insulin-producing islet cell therapies. We expect to rely on third parties to meet significant portions of our future commercial supply needs for our T1D program.

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 drugs 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, marketing and human resources than we do.
We believe that competition in our industry is based on, among other factors, innovative research, the effective and rapid development of product candidates, the ability to market and obtain reimbursement for products and the ability to establish effective patent protection. We face competition based on the safety and efficacy of our product and product candidates, the timing and scope of regulatory approvals, the availability and cost of supply, marketing and sales capabilities, reimbursement coverage, price, patent protection and other factors. Our competitors may develop or commercialize more effective, safer, or more affordable products than we are able to develop or commercialize or obtain more effective patent protection. As a result, our competitors may commercialize products more rapidly or effectively than we do, which would adversely affect our

18


competitive position, the likelihood that our product candidates, if approved, would achieve and maintain market acceptance and our ability to generate meaningful revenues from our products. Future competitive products may render our products, or future products, obsolete or noncompetitive. Another key element of remaining competitive in our industry is recruiting and retaining leading scientific, technical and management personnel to conduct our research activities and advance our development programs, including with the commercial expertise to effectively market our products.
Cystic Fibrosis
A number of companies are seeking to identify and develop product candidates for the treatment of CF, including CFTR modulators and other therapies intended to address the underlying causes of CF.
Proteostasis Therapeutics, Inc. was developing potential CFTR modulator therapies prior to its acquisition by Yumanity Therapeutics, Inc. (“Yumanity”). Following the merger, Yumanity out-licensed the CF program to Fair Therapeutics. In August 2023, HIT-CF Europe, a research project from CF-Europe, a federation of European patient advocacy groups, announced plans to initiate a Phase 3 trial of a combination of Fair Therapeutics’ CFTR modulators in European CF patients with rare mutations of the CFTR gene. Sionna Therapeutics has at least two CFTR modulator in Phase 1 development, and several CFTR modulators in preclinical development.
Other therapeutic approaches include addressing CF utilizing nucleic acid therapies, which are compounds that allow expression of a functional CFTR protein and are relevant for the more than 5,000 people with CF who cannot make full-length CFTR protein and cannot benefit from CFTR modulators. Nucleic acid therapies are under development by companies such as Arcturus Therapeutics Holdings, Inc., ReCode Therapeutics, Inc., Krystal Biotech, Inc., Spirovant Sciences, Inc. Boehringer Ingelheim International, GmbH, 4D Molecular Therapeutics, Inc and SpliSense, Ltd.
Our success in rapidly developing and commercializing our products may increase the resources that our competitors allocate to the development of these potential treatments for CF. In addition, clinical trials conducted by our competitors could take place simultaneously with our own trials and may slow down our pace of development if we are unable to recruit sufficient clinical trial subjects. If one or more competing therapies are successfully developed as a treatment for people with CF, our revenues from our current products and/or additional CF products, if then approved, could face significant competitive pressure.
Sickle Cell and Beta Thalassemia
There are multiple approved small molecule and biologic treatments for SCD and beta thalassemia, including products from Novartis International AG (“Novartis”), Pfizer Inc. (“Pfizer”), and Bristol Myers Squibb together with Merck & Co. In addition, bluebird bio, Inc. (“bluebird”), obtained FDA approval of its gene therapy, Zynteglo (betibeglogene autotemcel) in August 2022 for the treatment of patients with beta thalassemia who require regular red blood cell transfusions. In late 2023, bluebird also obtained FDA approval for its gene therapy for SCD, Lyfgenia (lovotibeglogene autotemcel).
Editas is also investigating a CRISPR gene-editing asset that is currently in clinical trials. In addition, various companies and private academic/medical institutes are developing gene therapy or gene-editing candidates for the treatment of SCD or beta thalassemia utilizing CRISPR technology, lentiviral vectors, zinc finger nuclease technology, or transcription activator-like effector nuclease, gene correction, base, or prime editing.
Pipeline
In recent years, we have committed significant research resources to, and made significant investments in, our pipeline of potential new therapies for pain, AMKD, T1D, muscular dystrophies, AATD and other diseases.
Pain
The acute pain market largely consists of conventional analgesics, including opioids, non-steroidal anti-inflammatory drugs, acetaminophen and local anesthetics, low-cost generics, and reformulations aiming to provide safer, more tolerable, or more convenient therapies. Peripheral neuropathic pain is a type of chronic pain caused by injury or dysfunction of peripheral nerves. The peripheral neuropathic pain market largely consists of generic anticonvulsants and anti-depressant drugs.
Several companies are pursuing clinical development of novel mechanisms of action for acute and chronic pain indications, including a selective NaV1.8 inhibitor in a Phase 1 clinical trial by Orion Corporation. Several additional

19


NaV1.8/1.7 inhibitors are in preclinical development for pain, including programs by Merck and Grünenthal.
Additional Programs
Certain of our other product candidates face competition from many pharmaceutical and biotechnology companies. For example, other pharmaceutical and biotechnology companies are actively engaged in the research and development of products for T1D, including strategies to prevent the destruction of beta cells, to protect beta cell function, or to replace missing beta cells, as well as other cell therapy approaches such as immune evasive technologies to hide the cell from the immune system, micro- and macro-encapsulation technologies that potentially require no immunosuppression, and islets cell in combination with immunosuppression. In addition to CellTrans, Inc.’s Lantidra, the first FDA-approved cadaveric islet therapy for the treatment of T1D, other companies developing cell therapies for T1D include Novo Nordisk A/S, Eli Lilly & Co., Sernova Corp, Sana Biotechnology, Inc., Seraxis, Inc., and Evotec A.G. The T1D standard of care of exogenous insulin injections continues to progress toward an artificial pancreas as multiple companies are developing novel insulin formulations, advanced pumps and glucose sensors, and closed loop systems.
There are no approved therapies targeting AMKD. People with chronic kidney disease (“CKD”) take angiotensin-converting enzyme inhibitors and angiotensin receptor blockers to treat hypertension; steroids and immunosuppressants to reduce proteinuria; and SGLT2 inhibitors to reduce the risk of CKD progression. These CKD treatments may reduce proteinuria, but do not stop the rapid disease progression seen in AMKD patients. Several companies have early programs developing APOL1-targeted assets for patients with AMKD, including AstraZeneca, Maze Therapeutics, and OmniAb. Eli Lilly and Company’s Janus kinase inhibitor (baricitinib) is being investigated in AMKD patients in a Phase 2 study by Duke University.
Several new therapies are under development specifically for the treatment of patients with FSGS. We are not aware of any of these therapies having a mechanism of action targeting FSGS patients with two APOL1 mutations. Travere’s sparsentan is currently under regulatory review while Dimerix’s QYTOVRA is in a pivotal study.
Many other pharmaceutical and biotechnology companies are investing resources for the discovery and development of small molecules and cell and gene therapies to treat the same disease areas for which we are developing therapies in our pipeline. If any of these competitors develop or successfully commercialize products involving therapies competitive with our pipeline therapies, the potential return on our investment in those pipeline therapies could be impacted.

GOVERNMENT REGULATION
Our operations and activities are subject to extensive regulation by numerous government authorities in the U.S., Europe and other countries. In the U.S., Europe and other countries, our products are subject to rigorous regulations governing their testing, manufacture, labeling, storage, record keeping, approval, and advertising and promotion. As a result of these regulations, product development and product approval processes are very expensive and time consuming. The regulatory requirements applicable to drug and biologic development, approval, and marketing are subject to change. In addition, regulations and administrative guidance often are revised or reinterpreted by the agencies in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be enacted, or FDA or comparable ex-U.S. regulations, guidance or interpretations will change.
United States Government Regulation
New Drug Application and Biologics License Application Approval Processes
The process required by the FDA before a drug or biologic may be marketed in the U.S. generally involves the following:
completion of preclinical laboratory tests, animal studies and formulation studies conducted according to Good Laboratory Practices (“GLP”), and other applicable regulations;
submission to the FDA of an IND, which must become effective before clinical trials in the U.S. may begin;
performance of adequate and well-controlled clinical trials according to Good Clinical Practices (“GCP”), and other clinical trial-related regulations to establish the safety and efficacy of the proposed drug for its intended use;

20


submission to the FDA of an NDA or a BLA;
satisfactory completion of a pre-approval FDA inspection of the manufacturing facility or facilities at which the product will be produced to assess compliance with cGMP; and
FDA review and approval of the NDA or BLA.
Once a drug or biologic is identified for development, it enters the preclinical testing stage. Preclinical tests include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal pharmacology and toxicology studies. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information and analytical data, to the FDA as part of the IND, which seeks FDA approval to test the drug or biologic in humans. Preclinical or nonclinical testing typically continues even after the IND is submitted.
If the FDA accepts the IND, the drug or biologic can then be studied in human clinical trials to determine if the product candidate is safe and effective. Clinical trials involve three separate phases that often overlap, can take many years and are expensive. These three phases, which are subject to considerable regulation, are as follows:
Phase 1. The drug or biologic initially is introduced into a limited number of healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution and elimination. In the case of some drugs or biologics for severe or life-threatening diseases, such as cancer, especially when the drug or biologic may be inherently too toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.
Phase 2. Clinical trials are next initiated in a limited patient population with the specified disease or condition the drug or biologic is intended to treat to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the drug or biologic candidate for the disease or condition it is intended to treat and to determine dosage tolerance and optimal dosage.
Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk-benefit ratio of the drug or biologic and provide an adequate basis for regulatory approval and product labeling.
It is possible that Phase 1, Phase 2 and Phase 3 testing may not be completed successfully within any specified period, if at all. The FDA or the sponsor may, at any time during the initial 30-day IND review period or while clinical trials are ongoing under the IND, impose a partial or complete clinical hold or suspend a clinical trial at any time for a variety of reasons, including a finding that the healthy volunteers or patients are being exposed to an unacceptable health risk. Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently in other situations, and the occurrence of serious adverse events must also be reported. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health for public dissemination on the www.clinicaltrials.gov website.
Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication and are commonly intended to generate additional safety data regarding use of the product in a clinical setting. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of an NDA or BLA.
The results of drug or biologic development, preclinical studies and clinical trials, along with descriptions of the manufacturing process, analytical tests conducted on the chemistry of the drug or biologic, proposed labeling and other relevant information are submitted to the FDA as part of an NDA or BLA requesting approval to market the drug or biologic. The FDA reviews each NDA or BLA submitted to ensure that it is sufficiently complete for substantive review before it accepts it for filing. It may request additional information rather than accept an NDA or BLA for filing.
Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA reviews an NDA or BLA to determine, among other things, whether a drug or biologic is safe and effective for its intended use and whether its manufacturing is cGMP-compliant to assure and preserve the drug or biologic’s identity, strength, quality and purity. The FDA may refer the NDA or BLA to an advisory committee for review and recommendation as to whether the NDA or BLA should be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA or BLA, the FDA will inspect the facility or facilities

21


where the drug or biologic is manufactured and tested. Additionally, before approving an NDA or BLA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.
The FDA may require, as a condition of approval, restricted distribution and use, enhanced labeling, special packaging or labeling, expedited reporting of certain adverse events, pre-approval of promotional materials, restrictions on direct-to-consumer advertising or commitments to conduct additional research post-approval. The FDA will issue a complete response letter if the agency decides not to approve the NDA or BLA in its present form.
Expedited Review and Approval
The FDA has developed a number of distinct approaches to make new drugs or biologics available as rapidly as possible in cases where there is no available treatment or there are advantages over existing treatments.
The FDA may grant “accelerated approval” to products that have been studied for their safety and effectiveness in treating serious illnesses and that provide meaningful therapeutic benefit to patients over existing treatments. For accelerated approval, the product must have an effect on a surrogate endpoint or an intermediate clinical endpoint that is considered reasonably likely to predict the clinical benefit of a drug, such as an effect on irreversible morbidity and mortality. When approval is based on surrogate endpoints or clinical endpoints other than survival or morbidity, the sponsor will be required to conduct additional post-approval clinical studies to verify and describe the clinical benefit. These studies are known as “confirmatory trials.” Approval of a drug may be withdrawn, or the labeled indication of the drug changed if these trials fail to verify clinical benefit or do not demonstrate sufficient clinical benefit to justify the risks associated with the drug or biologic.
The FDA may grant “fast track” status to products that treat serious diseases or conditions and demonstrate the potential to address an unmet medical need. Fast track is a process designed to facilitate the development and expedite the review of such products by providing, among other things, more frequent meetings with the FDA to discuss the product’s development plan and rolling review, which allows submission of individually completed sections of an NDA or BLA for FDA review before the entire submission is completed. Fast track status does not ensure that a product will be developed more quickly or receive FDA approval.
“Breakthrough Therapy” designation is a process designed to expedite the development and review of drugs or biologics that are intended to treat a serious condition and preliminary clinical evidence indicates that the drug or biologic may demonstrate substantial improvement over available therapy on one or more clinically significant endpoints. Breakthrough Therapy designation provides all of the benefits of fast-track designation in addition to robust FDA-sponsor interaction and communication to help to identify the most efficient and expeditious path for clinical development while minimizing the number of patients placed in ineffective control regimens.
“Regenerative Medicine Advanced Therapy,” (“RMAT”) designation is a process created by the 21st Century Cures Act in December 2016. A product is eligible for RMAT designation if it is a regenerative medicine therapy that is intended to treat, modify, reverse or cure a serious disease or condition, and if preliminary clinical evidence indicates that the product has the potential to address unmet medical needs for such disease or condition. The benefits of RMAT designation include the benefits available to breakthrough therapies, including potential eligibility for priority review and accelerated approval based on surrogate or intermediate endpoints.
The FDA may grant “priority review” status to a product that, if approved, would provide significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions. Priority review is intended to reduce the time it takes for the FDA to review an NDA or BLA, with the goal to take action on the application within six months from when the application is filed, compared to ten months for a standard review.
Manufacturing Quality Control
Among the conditions for NDA or BLA approval is the requirement that the prospective manufacturer’s quality control and manufacturing procedures continually conform with cGMP. Manufacturers must devote substantial time, money and effort in the areas of production, quality control, and quality assurance to maintain cGMP compliance. Material changes in manufacturing equipment, location, or process, may result in additional regulatory review and approval. The FDA, and other regulatory agencies, conduct periodic visits to inspect equipment, facilities, and processes following the initial approval of a product. If a manufacturing facility is not in substantial compliance with the applicable regulations and requirements imposed when the product was approved, regulatory or judicial enforcement action may be initiated, which may include a warning

22


letter, suspension of manufacturing, product seizure, or an injunction against shipment of products from the facility and/or recall of products previously shipped. We rely, and expect to continue to rely, on third parties for the production of our products. Future FDA, state, and foreign inspections may identify compliance issues at the facilities of our contract manufacturers that may disrupt manufacture or distribution of our products or require substantial resources to correct.
Post-approval Requirements
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product may result in restrictions on the product or complete withdrawal of the product from the market. In addition, the sponsor of an approved drug in the U.S. may not promote that drug for unapproved, or off-label, uses, although a physician may prescribe a drug for an off-label use in accordance with the practice of medicine. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. Further, after approval, some types of changes to the approved product, such as adding new indications, manufacturing changes and additional labeling claims, are subject to further FDA review and approval. In addition, the FDA may require testing, including Phase 4 trials, and surveillance programs to monitor the effect of approved products that have been commercialized, and the FDA has the power to prevent or limit further marketing of a product based on the results of these post-marketing programs.
The FDA typically advises that patients treated with gene therapy undergo follow-up observations for potential adverse events for a 15-year period. As part of the FDA approval of CASGEVY for the treatment of SCD and TDT, we are required to conduct two post-marketing requirement (“PMR”) safety studies to assess the long-term risk of hematologic malignancies and off-target genome editing effects by CRISPR/Cas9. Both PMR safety studies are consistent with the FDA’s guidance for industry on Long Term Follow-up After Administration of Human Gene Therapy Products.
Products we manufacture or distribute pursuant to FDA approvals are subject to continuing regulation by the FDA, including, among other things:
•    record-keeping requirements;
•    reporting of adverse experiences with the product;
•    providing the FDA with updated safety and efficacy information;
•    drug sampling and distribution requirements;
•    notifying the FDA and gaining its approval of specified manufacturing or labeling changes;
•    complying with certain electronic records and signature requirements; and
•    complying with FDA promotion and advertising requirements.
Failure to comply with the applicable U.S. requirements at any time during the drug or biologic development process, approval process or after approval, may subject us or our collaborators to administrative or judicial sanctions, any of which could have a material adverse effect on us. These sanctions could include:
•    restrictions on marketing or manufacturing of the product;
•    safety alerts, Dear Healthcare Provider letters, press releases, or other communications containing warnings or other safety information about the product;
•    refusal to approve or delay in review of pending applications;
•    withdrawal of an approval or the implementation of limitations on a previously approved indication for use;
•    imposition of a clinical hold, a risk evaluation and mitigation strategy (“REMS”) or other safety-related limitations;
•    warning letters or “untitled letters;”
•    product seizures, recalls, or detentions, or refusal to permit the import or export of products;

23


•    total or partial suspension of production or distribution;
•    consent decrees, corporate integrity agreements, debarment or exclusion from federal healthcare programs; or
•    injunctions, fines, disgorgement, refusals of government contracts, or civil or criminal penalties.
United States Patent Term Restoration and Regulatory Exclusivity
Upon approval, products may be entitled to certain kinds of exclusivity under applicable intellectual property and regulatory regimes. The Drug Price Competition and Patent Term Restoration Act of 1984 (commonly known as the Hatch-Waxman Act) permits a patent restoration term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process. The length of the patent extension is roughly based on 50 percent of the period of time from the filing of an IND for a compound to the submission of the NDA for such compound, plus 100 percent of the time period from NDA submission to regulatory approval. The extension, however, cannot exceed five years and the patent term remaining after regulatory approval cannot exceed 14 years.
If the FDA approves a drug product that contains a new chemical entity not previously approved, the product is typically entitled to five years of non-patent regulatory exclusivity. Other products may be entitled to three years of exclusivity if approval was based on the FDA’s reliance on new clinical studies essential to approval submitted by the NDA applicant.
Biologics are also entitled to exclusivity under the Biologics Price Competition and Innovation Act (the “BPCIA”), which was passed as Title VII to the ACA. The law provides a pathway for approval of products that are biosimilar to or interchangeable with an FDA-licensed reference biological product. Under the BPCIA, a reference biological product is granted 12 years of data exclusivity, the period of time during which an innovator’s clinical data cannot be used by other companies, from the time of first licensure of the product, and an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. At this juncture, it is unclear whether products deemed “interchangeable” by the FDA will, in fact, be readily substituted by pharmacies, which are governed by state pharmacy law. Biologics are also eligible for orphan drug exclusivity, as discussed below. The law also includes an extensive process for the innovator biologic and biosimilar manufacturer to litigate patent infringement, validity, and enforceability prior to the approval of the biosimilar. There have been ongoing federal legislative and administrative efforts as well as judicial challenges seeking to repeal, modify or invalidate some or all of the provisions of the ACA. While none of those efforts have focused on changes to the provisions of the ACA related to the biosimilar regulatory framework, if the ACA is repealed, substantially modified, or invalidated, it is unclear what, if any, impact such action would have on biosimilar regulation.
If the NDA or BLA applicant studies the product for use by children, the FDA may grant pediatric exclusivity, which extends by 180 days each existing exclusivity (patent and regulatory) related to the product.
Orphan Drug Designation and Exclusivity
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs or biologics intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 people in the U.S.
If a drug or biologic that has orphan drug designation subsequently receives the first FDA approval for that drug or biologic for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same disease or condition for seven years following marketing approval, except in certain very limited circumstances, such as if the later product is shown to be clinically superior to the orphan product. Orphan drug exclusivity, however, also could block the approval of our products for seven years if a competitor first obtains approval of the same drug, as defined by the FDA, for the same disease or condition for which we were seeking approval. KALYDECO, ORKAMBI, SYMDEKO, TRIKAFTA, and CASGEVY have been granted orphan drug exclusivity by the FDA.
We may pursue orphan drug designation for certain of our future product candidates. Even if we obtain orphan drug designation for a product candidate, we may not be the first to obtain marketing approval for the product candidate for any particular orphan indication due to the uncertainties associated with developing novel therapies. Further, even if we obtain orphan drug exclusivity for a product candidate, that exclusivity may not effectively protect the product from competition

24


because orphan drug exclusivity does not prevent different drugs from being approved for the same condition. Moreover, orphan drug exclusivity may not prevent the approval of another sponsor’s product that is considered to be the same drug for a different disease or condition, even where such product could be used off-label for the indication that is protected by orphan drug exclusivity. Even after an orphan drug is approved, regulators may subsequently approve the same drug made by another manufacturer for the same condition if the regulator concludes that the later drug is safer, more effective, or makes a major contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug or biologic nor gives the drug or biologic any advantage in the regulatory review or approval process.
Foreign Regulation
We conduct clinical trials and market our products in numerous jurisdictions outside the U.S. Most of these jurisdictions have clinical trial, product approval and post-approval regulatory processes that are similar in principle to those in the U.S. Thus, whether or not we obtain FDA approval for a product candidate, we must obtain approval by the comparable regulatory authorities of foreign countries or economic areas, such as the E.U., before we can commence clinical trials or market products in those countries or areas. The approval process and requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from place to place, and the time may be longer or shorter than that required for FDA approval.
Under the E.U. regulatory system, a company may submit marketing authorization applications either under a centralized or decentralized procedure. The centralized procedure, which is compulsory for orphan medicines, medicines produced by biotechnology, and those medicines intended to treat AIDS, cancer, neurodegenerative disorders, or diabetes, and optional for those medicines that are highly innovative, provides for the grant of a single marketing authorization that is valid for all E.U. member states. In addition to the centralized procedure, the E.U. also has a nationalized procedure, which requires a separate application to and approval determination by each country; a decentralized procedure, whereby applicants submit identical applications to several countries and receive simultaneous approval; and a mutual recognition procedure, where applicants submit an application to one country for review and other countries may accept or reject the initial decision.
Additionally, our European headquarters and European research facility are located in the U.K. Despite the U.K. formally withdrawing from the E.U. on January 31, 2020, a number of E.U. regulations were retained in U.K. law. The U.K. government has communicated an intent to remove or replace some of these E.U. provisions, which may increase some regulatory divergence between the U.K. and the E.U. Given the uncertainty as to what changes may be incorporated into U.K. law, it is unclear if any such changes could adversely affect our business, financial condition, and operating results.
Other Regulations
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 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.

25


Many of these laws and regulations contain requirements that are subject to interpretation. Outside the U.S., other countries have implemented requirements for disclosure of financial interactions with healthcare providers and additional countries may consider or implement such laws.
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 federal laws, including the Medicaid Drug Rebate Program, the 340 program, and the FSS pricing program, that require pharmaceutical manufacturers to report certain calculated product prices to the government or provide certain discounts or rebates to government authorities or private entities, often as a condition of reimbursement under government healthcare programs.
Our collection and use of personal data as part of our business activities is subject to various privacy and data security laws and regulations, including oversight by various regulatory or other governmental bodies, in the U.S., E.U., U.K., Canada, Australia, Brazil and other jurisdictions. Such laws and regulations have the potential to affect our business materially, continue to evolve and increasingly are being enforced.
Our present and future business has been and will continue to be subject to various other laws and regulations. Various laws, regulations, and recommendations relating to safe working conditions, laboratory practices, the experimental use of animals, and the purchase, storage, movement, import, export and use and disposal of hazardous or potentially hazardous substances are or may be applicable to our activities. 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.
We have a global corporate compliance program designed to actively identify, prevent, and mitigate healthcare fraud and abuse risk through, among other things, the implementation of compliance policies and systems and through the promotion of a culture of compliance. We will continue to devote substantial resources to enhance and expand our corporate compliance program as necessary to help us manage and mitigate our evolving compliance risk environment as our business grows and expands globally. Even with these measures, however, we cannot guarantee compliance with the various complex laws and regulations to which we are subject now or in the future.

EMPLOYEES AND HUMAN CAPITAL MANAGEMENT
As of December 31, 2023, we had approximately 5,400 employees. Of these employees, approximately 4,400 were based in the U.S. and approximately 1,000 were based outside the U.S. 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 face intense competition for our personnel from our competitors and other companies throughout our industry and from universities and research institutions. Over the last several years, the challenges in recruiting and retaining employees across the biotechnology industry have increased substantially due to current industry job market dynamics.
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 inclusion, diversity, and equity for all employees. We believe that each employee brings unique perspectives and strengths, and by embracing these strengths, we can do our best work for patients. We focus on recruiting, retaining, and

26


developing employees from a diverse range of backgrounds to conduct our research, development, commercial, and other business activities.
Our executive management team reflects our commitment to inclusion, diversity, and equity: five of the ten members are women and/or from underrepresented communities. On our Board of Directors, four of our eleven members are women and four members are from underrepresented communities. As of December 31, 2023, women represented 54.5% of our global workforce and 40.0% of our leadership (VP and above). As of December 31, 2023, 40.5% of our U.S. workforce, and 20.5% of our U.S. leadership (VP and above), were from underrepresented ethnic and racial groups.
Our inclusion, diversity, and equity strategy and efforts are important to our culture. We view diversity through a broad lens that encompasses culture, backgrounds, experiences, and worldview to foster creativity and innovation. Our initiatives include learning, resources, and forums that promote inclusion, diversity, and equity in our workplaces; efforts to develop a diverse pipeline of talent from early career through leadership; four global employee resource networks that promote connectivity and collaboration across levels and functions, and engage colleagues in personal and professional development opportunities, including mentoring, community outreach, and cultural awareness activities; and investments to support efforts to address racism and social injustice in our surrounding communities.
To promote our employees’ continued well-being and development, we offer a variety of inclusive benefits and opportunities. We offer comprehensive work-life benefits, including health, dental, and income protection, such as life insurance and retirement savings programs and we enhanced and expanded those employee benefits. For example, we increased company-wide personal time off, continued to promote and expand mental wellness tools, and enhanced child/elder care benefits for all employees. We continually review and augment our programs to include benefits such as expanded parental bonding, increased support for family planning, and gender affirming benefits. Our management continues to assess and respond to the evolving needs of our workforce.
In addition, we provide our employees with career development and advancement opportunities, including job rotations, mentoring, and managerial training. We are committed to identifying and developing our next generation of leaders and have developed programs focused on manager excellence, talent and succession 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. 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.


27


INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The names, ages and positions held by our executive officers are as follows:
Name
Age
Position
Reshma Kewalramani, M.D.51Chief Executive Officer and President
Jeffrey M. Leiden, M.D., Ph.D.68Executive Chairman
David Altshuler, M.D., Ph.D. 59Executive Vice President, Global Research and Chief Scientific Officer
Stuart A. Arbuckle58Executive Vice President and Chief Operating Officer
E. Morrow Atkinson, III, Ph.D.58Executive Vice President, Chief Technical Operations Officer, Head of Biopharmaceutical Science and Manufacturing Operations
Jonathan Biller, J.D.60Executive Vice President, Chief Legal Officer
Carmen Bozic, M.D.61Executive Vice President, Global Medicines Development and Medical Affairs, and Chief Medical Officer
Amit K. Sachdev, J.D.56Executive Vice President, Chief Patient and External Affairs Officer
Ourania “Nia” Tatsis, Ph.D.54Executive Vice President and Chief Regulatory and Quality Officer
Charles F. Wagner, Jr.55Executive Vice President and Chief Financial Officer
Kristen C. Ambrose, CPA47Senior Vice President and Chief Accounting Officer
Dr. Kewalramani has been our Chief Executive Officer and President since April 2020 and a member of our Board of Directors since February 2020. Dr. Kewalramani was our Executive Vice President and Chief Medical Officer from April 2018 through April 2020. She was our Senior Vice President, Late Development from February 2017 until April 2018. 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. Dr. Kewalramani also has served on the board of Ginkgo Bioworks since September 2021. 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. Dr. Kewalramani also completed the General Management Program at Harvard Business School and is an alumna of the school.
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 is a member of the Board of Directors of the Massachusetts Mutual Life Insurance Company, a private insurance company, since 2015. Dr. Leiden is the Executive Chairman of the Board of Directors of Odyssey Therapeutics, a private biotechnology company, since 2022, and is the Chairman of the Board of Directors of Casana, a private healthcare technology company, since 2021. Dr. Leiden was a director and the non-executive Vice Chairman of the board of Shire plc, a specialty biopharmaceutical company, from 2006 to January 2012, a director of Quest Diagnostics, a publicly traded medical diagnostics company, from December 2014 to May 2019, and the Chairman of Revolution Healthcare Acquisition Corp., a special purpose acquisition corporation, from April 2021 to December 2022. Dr. Leiden received his M.D., Ph.D. and B.A. degrees from the University of Chicago.
Dr. Altshuler has been our Executive Vice President, Global Research and Chief Scientific Officer since January 2015 and was a member of our Board of Directors from May 2012 through December 2014. Dr. Altshuler was one of four founding members of the Broad Institute, a research collaboration of Harvard University and the Massachusetts Institute of Technology, The Whitehead Institute and the Harvard Hospitals. He served as the Director of the Institute’s Program in

28


Medical and Population Genetics from 2003 through December 2014 and as the Institute’s Deputy Director and Chief Academic Officer from 2009 through December 2014. Dr. Altshuler joined the faculty at Harvard Medical School and the Massachusetts General Hospital in 2000 and held the academic rank of Professor of Genetics and Medicine from 2008 through December 2014. He served as Adjunct Professor of Biology at MIT from 2012 through December 2014. Dr. Altshuler earned a B.S. from MIT, a Ph.D. from Harvard University and an M.D. from Harvard Medical School. Dr. Altshuler completed his clinical training in Internal Medicine, and in Endocrinology, Diabetes and Metabolism, at the Massachusetts General Hospital.
Mr. Arbuckle is our Executive Vice President, Chief Operating Officer, a position he has held since July 2021. Previously, Mr. Arbuckle served as Executive Vice President, Chief Commercial and Operations Officer from March 2021 to July 2021, and as our Executive Vice President, Chief Commercial Officer from September 2012 to February 2021. Prior to joining us, Mr. Arbuckle held multiple commercial leadership roles at Amgen, Inc. from July 2004 through August 2012. Mr. Arbuckle has worked in the biopharmaceuticals industry since 1986, including more than 15 years at GlaxoSmithKline plc, where he held sales and marketing roles of increasing responsibility for medicines aimed at treating respiratory, metabolic, musculoskeletal, cardiovascular and other diseases. He served as a member of the Board of Directors of Cerulean Pharma, Inc. from June 2015 through July 2017 and has served as a member of the Board of Directors of ImmunoGen, Inc. since January 2018 and of Rhythm Pharmaceuticals Inc. since July 2019. Mr. Arbuckle holds a BSc in Pharmacology and Physiology from the University of Leeds.
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 Catalent, Inc.) and Eli Lilly & Co. Dr. Atkinson has served as a member of the Board of Directors of 89bio, Inc., a public biopharmaceutical company, since February 2022. 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.
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 has served in the role of Chief of Staff to the CEO since April 2020. 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.

29


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 has served as a member of the Board of Directors of Eiger BioPharmaceuticals since April 2019. Mr. Sachdev holds a B.S from Carnegie Mellon University and a J.D. from Emory University School of Law.
Dr. 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. 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 and Chief Financial Officer, a position he has held since April 2019. Prior to joining us, 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, and also had shared leadership for several enterprise-wide projects. 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 and chairman of the Audit Committee of Good Start Genetics, Inc., a molecular diagnostics company, 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., a public department store company, 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.

30


ITEM 1A. RISK FACTORS
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 actually occurs, 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.
SUMMARY OF RISK FACTORS
Our business is subject to numerous risks and uncertainties, discussed in more detail in the following section. These risks include, among others, the following key risks:
Risks Related to Our Business
We invest significant resources in the research, development, manufacturing and supply of therapies for serious diseases, and if we are unable to successfully develop and commercialize additional products, our business could be materially harmed.
Over the last several years all of our product revenues were derived from sales of our CF medicines. If we are unable to continue to increase revenues from sales of our CF medicines, our business would be materially harmed and the market price of our common stock would likely decline.
If we are not successful in commercializing CASGEVY, our revenue growth could be limited and our business could be materially harmed.
If we are unable to successfully develop, obtain approval, and commercialize treatments for acute and neuropathic pain, our business could be materially harmed.
If our competitors bring products with superior product profiles to market, our products may not be competitive, and our revenues could decline.
If we discover safety issues with any of our products or if we fail to comply with continuing U.S. and applicable foreign regulations, commercialization efforts for the product could be negatively affected, the approved product could lose its approval or sales could be suspended, and our business could be materially harmed.
If physicians and patients do not accept our products, or if patients do not remain on treatment or comply with their prescribed dosing regimen, our product revenues would be materially harmed in future periods.
Cell and genetic therapies face increased scrutiny from the public and medical communities and commercial success will depend, in part, upon the acceptance of those communities.
Risks Related to Pricing of Our Products
Government and other third-party payors seek to contain costs of health care through legislative and other means. If they fail to provide coverage and adequate reimbursement rates for our products, our revenues will be harmed.
We may experience pricing pressure on our products, which could reduce our revenues and future profitability.
Current health care laws and regulations in the U.S. and future legislative or regulatory reforms to the U.S. health care system may affect our ability to commercialize our marketed products profitably.
We have experienced challenges commercializing products outside of the U.S., and our future revenues will be dependent on our ability to obtain adequate reimbursement for our products in ex-U.S. markets.
Insurance coverage and reimbursement of our cell or genetic therapies is uncertain.
Risks Related to Development and Clinical Testing of Our Products and Product Candidates
Our product candidates remain subject to clinical testing and regulatory approval, and our future success is dependent on our ability to successfully develop additional product candidates for both CF and non-CF indications.
If we are unable to obtain or are delayed in obtaining regulatory approval, we may incur additional costs, experience delays in commercialization, or be unable to commercialize our product candidates.
If clinical trials are prolonged or delayed, our development timelines for the affected development program could be extended, our costs to develop the product candidate could increase and the competitive position of the product candidate could be adversely affected.

31


Difficulty in enrolling patients could delay or prevent clinical trials of our product candidates, and ultimately delay or prevent regulatory approval.
Enrollment for clinical trials for our cell and gene therapies may face additional and unique challenges and adverse developments associated with these clinical trials could result in action by regulatory bodies, including revised requirements for approval.
Risks Related to Government Regulation
If regulatory authorities interpret any of our conduct, including our marketing practices, as being in violation of applicable health care laws, including fraud and abuse laws, laws prohibiting off-label promotion, disclosure laws or other similar laws, we may be subject to civil or criminal penalties.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental pricing programs in the U.S., we could be subject to additional reimbursement requirements, penalties, sanctions, and fines that could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
If our processes and systems are not compliant with regulatory requirements, we could be subject to restrictions on marketing our products or could be delayed in submitting regulatory filings seeking approvals for our product candidates.
The regulatory approval process for our cell and genetic therapies involves additional consultations with regulatory agencies, costs, and potentially longer timelines as compared to those for small molecules.
Risks Related to Supply, Manufacturing and Reliance on Third Parties
We depend on third-party manufacturers and our internal capabilities to manufacture our products and the materials we require for our clinical trials. We rely on third party logistics providers to manage our shipments globally. We may not be able to maintain our third-party relationships and could experience supply disruptions outside of our control.
We rely on third parties to conduct pre-clinical work, clinical trials and other activities, and those third parties may not perform satisfactorily, including failing to meet established deadlines for the completion of such studies and/or trials or failing to satisfy regulatory requirements.
Risks Related to Business Development Activities
Our ability to execute on our long-term strategy depends in part on our ability to engage in transactions and collaborations with other entities that add to our pipeline or provide us with new commercial opportunities.
We face risks in connection with existing and future collaborations with respect to the development, manufacture and commercialization of our products and product candidates.
We may not realize the anticipated benefits of existing or future acquisitions of businesses or technologies, and the integration following any such acquisition may disrupt our business and management.
Risks Related to Intellectual Property
If our patents do not protect our products and our products infringe third-party patents, we could be subject to litigation which could result in injunctions preventing us from selling out products, substantial damages, or circumvention of our patents by third parties.
Uncertainty over intellectual property in the pharmaceutical and biotechnology industry has been the source of litigation and other disputes that are inherently costly and unpredictable.
We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.
Risks Related to Our Operations
If we fail to scale our operations to accommodate growth, our business may suffer.
A variety of risks associated with operating in foreign countries could materially adversely affect our business.
If we fail to attract and retain skilled employees, our business could be materially harmed.
A breakdown or breach of our information technology systems could subject us to liability or interrupt the operation of our business.
Risks Related to Financial Results and Holding Our Common Stock
Our effective tax rate fluctuates, and changes in tax laws, regulations and treaties, unfavorable resolution to the tax positions we have taken or exposure to additional income tax liabilities could have a material impact on our future taxable income.

32


Risks Related to Our Business
We invest significant resources in the research, development, manufacturing and supply of therapies for serious diseases, and if we are unable to successfully develop and commercialize additional products, our business could be materially harmed.
We invest significant resources in the research and development of therapies for serious diseases, including CF, SCD, TDT, acute and neuropathic pain, AMKD, T1D, DM1, and AATD. Product development is highly uncertain and expensive, and we may experience unforeseen delays, including regulatory and commercialization delays. Product candidates that may appear promising in the early phases of research and development may fail to reach commercial success for many reasons, including the failure to demonstrate acceptable clinical trial results or obtain marketing approval, the inability to manufacture or commercialize the product candidate on economically feasible terms, or the appearance of safety issues.
When we receive marketing approval for a pipeline product, we cannot be sure that we will obtain market acceptance or adequate reimbursement levels from third-party payors or foreign governments for such product. Additionally, many of the therapies that we are developing in our pipeline target rare diseases that affect a limited number of patients. There can be no guarantee that we will effectively identify patients that are eligible for enrollment in our clinical trials or treatment with our product candidates. Even if we do successfully identify eligible patients, the number of patients that our product candidates are able to treat may turn out to be lower than we expect or new patients may become increasingly difficult to identify, each of which may adversely affect our revenues and materially harm our business. If we are not able to successfully develop and commercialize additional products our business could be materially harmed.
Over the last several years all of our product revenues were derived from sales of our CF medicines. If we are unable to continue to increase revenues from sales of our CF medicines, our business would be materially harmed and the market price of our common stock would likely decline.
Substantially all of our net product revenues have been derived from the sale of our CF medicines over the last several years. As a result, our business is dependent upon our ability to sustain and increase revenues from sales of our CF medicines. We seek to continue to increase our CF product revenue through serial innovation, including the potential approval of our vanzacaftor/tezacaftor/deutivacaftor triple combination, development and commercialization CF medicines in younger children with CF and through securing additional approvals and reimbursements for our CF medicines in ex-U.S. markets.
Our concentrated source of revenues presents a number of risks to our business, including:
that one or more competing therapies may be developed successfully as a treatment for people with CF;
that reimbursement policies of payors and other third parties may make it difficult to obtain reimbursement or reduce the net price we receive for our products;
that we may experience manufacturing or supply disruptions for our CF medicines; and
that we may experience adverse developments with respect to development or commercialization of our CF medicines.
If any of the above risks were to materialize, if we are otherwise unable to increase revenues from sales of our CF medicines, or if we do not meet the expectations of investors or public equity market analysts, our business would be materially harmed and our ability to fund our operations could be adversely affected.
If we are not successful in commercializing CASGEVY, our revenue growth could be limited and our business could be materially harmed.
We recently obtained approval for CASGEVY for the treatment of people 12 years and older with SCD and TDT in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain. We invested significant resources in the research and development of CASGEVY. While we have previously successfully commercialized several small molecule drugs, we have limited experience with the commercialization of cell and genetic therapies. Manufacturing and commercialization of CASGEVY is subject to similar risks and uncertainties as small molecules. In addition:
the manufacturing process for CASGEVY is more complex than the manufacturing processes for our CF medicines and we may encounter difficulties in the production of CASGEVY and ensuring that the product meets required

33


specifications;
there are multiple steps along the CASGEVY patient treatment journey, many of which involve significant clinical complexities performed by third parties, including the collection of blood cells from patients, transfer of those cells to and from a manufacturing facility, and other procedures either before or after delivery of CASGEVY;
the commercial success of CASGEVY will depend in part on the medical community, patients, governments, and third-party or governmental payors accepting and providing adequate reimbursement of CASGEVY products, and recognizing the applicable medicine as medically useful, cost-effective, ethical, and safe; and
market acceptance will be dependent in part on the prevalence and severity of side effects associated with the procedure by which CASGEVY is administered, the prevalence and severity of any side effects resulting from the myeloablative preconditioning regime.
If we are not successful in commercializing CASGEVY, our revenue growth could be limited and our business could be materially harmed.
If we are unable to successfully develop, obtain approval and commercialize treatments for acute and neuropathic pain, our business could be materially harmed.
We believe that a portion of the value attributed to our company by investors is based on our potential treatments for acute and neuropathic pain, including VX-548. We have completed the Phase 3 development program for VX-548 in acute pain and we are planning to submit an NDA to the FDA by mid-2024. We are planning to initiate a Phase 3 development program for VX-548 in neuropathic pain based on positive Phase 2 clinical results we received in the fourth quarter of 2023.
Obtaining approval for VX-548 is uncertain process and we may not be successful. If we do not obtain approval of VX-548, our business may be materially harmed. VX-548, if approved, may not gain or maintain market acceptance among physicians and patients or other members of the medical community. In addition to the risks normally associated with launching a new branded product, VX-548 will need to compete in an acute pain market that largely consists of low-cost generic drugs, including opioids, non-steroidal anti-inflammatory drugs, acetaminophen and local anesthetics. Similarly, if we are successful in developing and obtaining approval for VX-548 in neuropathic pain, VX-548 will face competition from generic anticonvulsant and antidepressant drugs. If we are not able to successfully develop, obtain approval for and commercialize treatments for acute and neuropathic pain, our future net product revenues and cash flows will be adversely affected and our business could be materially harmed.
If our competitors bring products with superior product profiles to market, our products may not be competitive, and our revenues could decline.
A number of companies are seeking to identify and develop product candidates for the treatment of CF, SCD, TDT, pain, and other therapeutic areas we are targeting with our research and development activities. Our success in rapidly developing and commercializing our CF medicines may increase the resources that our competitors allocate to the development of potential competitive treatments. If one or more competing therapies are successfully developed as a treatment for people with CF, SCD, TDT, pain or any of the other disease areas we are currently targeting in our pipeline, our products and our net product revenues could face competitive pressures. If one or more competing therapies prove to be superior to our then-existing products and/or product candidates, our business could be materially adversely affected.
In addition, our business faces competition from major pharmaceutical companies possessing substantially greater financial resources than we possess, as well as from numerous smaller public and private companies, academic institutions, government agencies, 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 and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies also may prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
Our products and any products that we develop in the future may not be able to compete effectively with marketed

34


therapies or new therapies that may be developed by competitors. The risk of competition is particularly important to our company because substantially all of our revenues are related to the treatment of people with CF. There are many other companies developing products for the same patient populations that we are pursuing. To compete successfully in these areas, we must demonstrate improved safety, efficacy and/or tolerability, ease of manufacturing, and gain and maintain market acceptance over competing products.
If we discover safety issues with any of our products or if we fail to comply with continuing U.S. and applicable foreign regulations, commercialization efforts for the product could be negatively affected, the approved product could lose its approval or sales could be suspended, and our business could be materially harmed.
Our products are subject to continuing regulatory oversight, including the review of additional safety information. Products are more widely used by patients once approval has been obtained and therefore side effects and other problems may be observed after approval that were not seen or anticipated, or were not as prevalent or severe, during pre-approval clinical trials or nonclinical studies. The subsequent discovery of previously unknown or underestimated problems with a product could negatively affect commercial sales of the product, result in restrictions on the product or lead to the withdrawal of the product from the market. Each of our CF products shares at least one active pharmaceutical ingredient with another of our products. As a result, if any of our CF products were to experience safety issues, our other CF products may be adversely affected. In SCD and TDT, as part of the FDA approval for CASGEVY, we are required to conduct two post-marketing requirement safety studies to assess the long-term risk of hematologic malignancies and off-target genome editing effects by CRISPR/Cas9. Negative or ambiguous results from these studies could also have a significant impact on our ability to commercialize CASGEVY. The reporting of adverse safety events involving our products or public speculation about such events could cause our stock price to decline or experience periods of volatility. Our business also may be materially harmed by impaired sales of our products, denial or withdrawal of regulatory approvals, non-renewal of conditional regulatory approvals, required label changes or additional clinical trials, reputational harm, or government investigations or lawsuits brought against us.
Our products are subject to ongoing regulatory requirements governing the testing, manufacturing, labeling, packaging, storage, advertising, promotion, sale, distribution, import, export, recordkeeping, and submission of safety and other post-market information. We and our third-party manufacturers must comply with cGMP and other applicable regulations governing the manufacturing and distribution of our products. Regulatory authorities periodically inspect our drug manufacturing facilities, and those of our third-party manufacturers, to evaluate compliance with cGMP and other regulatory requirements.
If we or our collaborators, or third-parties acting on our behalf, fail to comply with applicable continuing regulatory requirements, we or our collaborators may be subject to fines, suspension or withdrawal of regulatory approvals for specific products, product recalls and seizures, operating restrictions and/or criminal prosecutions, any of which could have a material adverse effect on our business, reputation, financial condition, and results of operations.
If physicians and patients do not accept our products, or if patients do not remain on treatment or comply with their prescribed dosing regimen, our product revenues would be materially harmed in future periods.
Our approved products may not gain or maintain market acceptance among physicians and patients or other members of the medical community. Effectively marketing our products and any of our product candidates or investigational therapies, if approved, requires substantial efforts, both prior to launch and after approval. Physicians may elect not to prescribe our products or recommend our cell or genetic therapies, and patients may elect not to take them or receive them or they may discontinue use of our products after initiation of treatment, for a variety of reasons including:
prevalence and severity of adverse side effects;
lack of reimbursement availability from third-party payors, including governmental entities;
lower demonstrated efficacy, safety and/or tolerability compared to alternative treatment methods;
lack of cost-effectiveness;
a decision to wait for the approval of other therapies in development that have significant perceived advantages over our product;

35


convenience and ease of administration;
limitations or warnings contained in the labeling;
the timing of market introduction of our product as well as competitive products;
other potential advantages of alternative treatment methods; and
inadequate sales, marketing and/or distribution support.
If our medicines fail to achieve or maintain market acceptance, we may not be able to generate significant revenues in future periods.
Cell and genetic therapies face increased scrutiny from the public and medical communities and commercial success will depend, in part, upon the acceptance of those communities.
We face uncertainty as to whether cell and gene therapy treatments will gain the acceptance of the public or the medical community. The commercial success of cell and gene therapy treatments, including CASGEVY, will depend, in part, on the acceptance of physicians, patients, and third-party payors of gene therapy products in general, and our product candidates in particular, as medically necessary, cost-effective and safe. In particular, our success will depend upon physicians prescribing our therapies in lieu of existing treatments they are already familiar with and for which greater clinical data may be available. Moreover, physicians and patients may delay acceptance of cell and gene therapies until the therapies have been on the market for a certain amount of time. In addition, medical centers, including ATCs, that administer procedures accompanying treatment could experience capacity constraints, and these centers are subject to competing priorities that could delay patient access to procedures associated with cell and gene therapy products. Negative public opinion or more restrictive government regulations may delay or impair the successful commercialization of, and demand for, cell and gene therapies.
Risks Related to Pricing of Our Products
Government and other third-party payors seek to contain costs of health care through legislative and other means. If they fail to provide coverage and adequate reimbursement rates for our products, our revenues will be harmed.
Sales of our products depend in part upon the availability of reimbursement from third-party payors. Third-party payors include government health programs such as Medicare and Medicaid in the U.S. and the national health care systems in ex-U.S. markets, managed care providers, private health insurers and other organizations. The trend in the health care industry is cost containment, and efforts of third-party payors to contain or reduce health care costs may adversely affect our ability to establish or maintain appropriate prices for our products or any drugs that we may develop and commercialize.
In the U.S., there have been, and we expect that there will continue to be, a number of federal and state proposals to implement governmental controls that are similar to those that currently exist in Europe. For example, the ACA required manufacturers of Medicare Part D brand name drugs to provide discounts on those drugs to Medicare Part D beneficiaries during the coverage gap; increased the rebates paid by pharmaceutical companies to state Medicaid programs on drugs covered by Medicaid; and imposed an annual fee, which increases annually, on sales by branded pharmaceutical manufacturers. Additionally, private payors, including health maintenance organizations and pharmacy benefit managers in the U.S., are adopting more aggressive utilization management techniques and are increasingly applying restrictive plan designs that can impact patients and manufacturers, and they continue to push for significant discounts and rebates from manufacturers.
Additionally, on August 16, 2022, the IRA was enacted. Among other things, the IRA establishes a Drug Price Negotiation Program, under which the government may negotiate maximum fair prices for certain drugs covered by Medicare that do not have generic or biosimilar competition. The first set of maximum fair prices will be effective in 2026. Certain products are excluded from the negotiation program including drugs that have a single orphan drug designation and that are not approved for any other orphan or non-orphan diseases or conditions. We cannot predict with certainty whether there will be future legislative changes to the scope of these exclusions. The law also requires manufacturers to pay a rebate to Medicare if the price of a Medicare drug (under both Part B and Part D) increases faster than the rate of inflation. The law also redesigns the Part D benefit. The current Coverage Gap Discount Program, which requires manufacturers to provide a 70% discount on brand drugs and biologics during the coverage gap phase, will be eliminated after the 2024 plan year. Starting in 2025, manufacturers of brand drugs and biologics will be required to provide a 10% discount during the initial

36


phase and a 20% discount during the catastrophic phase of the Part D benefit. The IRA continues a trend in the U.S. toward reducing drug prices and limiting spending by the federal health care programs on drugs. We cannot predict how CMS will interpret the IRA or how the provisions of the law will affect our business once fully implemented, but it is possible that these changes or other legislative updates will have an adverse impact on our revenue. The IRA also requires the Secretary of the Department of Health and Human Services (the “Secretary”) to issue program guidance on numerous areas associated with implementation of the law’s requirements, including for drug price negotiation and inflation rebates. We cannot know what form this program guidance would take or how it would affect our business.
It is possible the U.S. Congress or administration may take further actions to address health care costs and access to medicine, and specifically address coverage and reimbursement of cell and gene therapies. For example, in October 2022, President Biden issued an Executive Order directing the Center for Medicare and Medicaid Innovation (“CMMI”), to consider new healthcare payment and delivery models that would lower drug costs and promote access to innovative drug therapies for Medicare and Medicaid beneficiaries. In February 2023, the Secretary submitted a report to the White House describing three models that the Secretary selected for testing. Among the selected models is a Cell & Gene Therapy Access Model, under which CMS would structure and coordinate multi-state Medicaid outcomes-based agreements between participating states and manufacturers. The report also directs CMS to consider potential Medicare fee-for-service options to support cell and gene therapy access and affordability. In October 2023, CMMI further announced that it will move the start-date for the Cell & Gene Therapy Access Model from 2026 to 2025. On January 30, 2024,CMMI released additional information about the Cell & Gene Therapy Access Model, including the initial focus on cell and gene therapies for sickle cell disease. CMS intends to negotiate outcomes-based agreements with manufacturers between May 2024 and November 2024. In addition to the supplemental rebate negotiated under the outcomes-based agreement, participating manufacturers would be required to cover certain fertility preservation services and supports for ancillary services (e.g., travel, case management, behavioral health services). CMS is requesting that states submit an optional, non-binding letter of intent by April 2024. States may begin participating in the Cell & Gene Therapy Access Model on a rolling-basis, between January 2025 and January 2026.
Third-party payors throughout the world also have been attempting to control drug spending in light of the global economic pressures. In reimbursement negotiations, many payors are requesting price discounts and caps on total expenditures and limiting both the types and variety of drugs that they will cover if they are not able to secure them. Some payors restrict reimbursement to certain patient groups or by indication. As part of these negotiations, many ex-U.S. government payors also are requiring companies to establish product cost-effectiveness as a condition of reimbursement. These cost-effectiveness reviews may overlook many of the benefits provided by innovative medicines, and for the most part, have not taken into account the specific circumstances of products that treat rare diseases. This has led to conclusions that certain medicines, including our products in certain jurisdictions, are not cost-effective. As a result, certain countries have declined to reimburse, or delayed their reimbursement of, some of our products. Although not mandated in the U.S., various organizations have started advocating for cost-effectiveness analyses in the U.S. as well as value-based contracting in which the amount of reimbursement for a product is based on patient outcomes and other clinical or economic metrics related to the performance of such product. If U.S. payors were to adopt such assessments and make negative coverage determinations or utilize value-based contracts that result in penalties to, or lower rates of, reimbursement, it could adversely affect our product revenues. Our business would be materially adversely affected if we are not able to obtain or maintain coverage and reimbursement of our products from third-party payors on a broad, timely, or satisfactory basis, or if such coverage is subject to overly broad or restrictive utilization management controls.
The increasing availability and use of innovative specialty pharmaceuticals for rare diseases, combined with their higher cost as compared to other types of pharmaceutical products, is generating significant third-party payor interest in developing cost-containment strategies targeted to this sector. Government regulations in both U.S. and ex-U.S. markets could further limit the prices that can be charged for our products and may limit our commercial opportunity. The increasing use of cost-effectiveness assessments in markets around the world and the financial challenges faced by many governments may lead to significant adverse effects on our business.
We may experience pricing pressure on our products, which could reduce our revenues and future profitability.
There also has been an increase in state legislation and regulations related to drug pricing and drug pricing transparency. In the U.S., various states, including Nevada, Maryland, Louisiana, New York, California, Washington, Massachusetts, New Jersey, Connecticut, Vermont, New Hampshire, Utah, Minnesota, Oregon, Colorado, New Mexico, Virginia, Maine, Texas, North Dakota, West Virginia, Florida, and New Jersey have passed legislation requiring companies to disclose extensive

37


information relating to drug prices, drug price increases, and spending on research, development, and marketing, among other things. Although it is not always clear what states will do with the collected information, some laws were designed to obtain additional product discounts. Additionally, certain states have enacted laws establishing PDABs. Some state PDABs either have the authority or have defined a pathway where they may be granted the authority to establish upper payment limits for prescription drugs, including Colorado, Maryland, Washington, and Minnesota. Under the Washington law, the PDAB cannot select for an affordability review drugs that are solely for the treatment of an orphan-designated disease or condition. In August 2023, the Colorado PDAB selected five drugs for an affordability review, including TRIKAFTA; in December, it found TRIKAFTA to be not unaffordable, and thus not eligible for an upper payment limit. We cannot, however, 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. We may continue to see more state action requiring additional disclosures or other actions. Additional state actions, including the importation of drugs from other countries, also may affect the availability and accessibility of our medicines. For example, on January 5, 2024, the FDA authorized Florida’s Agency for Health Care Administration’s drug importation program under section 804 of the Federal Food, Drug, and Cosmetic Act, which eventually would allow Florida to import certain prescription drugs from Canada. The importation of drugs from Canada or other countries that potentially could compete with our medicines could create increased pressure on our revenue and profitability. In addition, we could see increased federal activity related to drug pricing and transparency requiring disclosures or other actions instead of, or in addition to, state requirements. Similar initiatives also are occurring in, or being considered by, some of our ex-U.S. markets, including Italy and Brazil.
Complying with these laws can be expensive and requires significant personnel and operational resources. Furthermore, any additional required discounts would adversely affect the pricing of, and revenues from, our products. Finally, while we seek to comply with all statutory and regulatory requirements, we face increased enforcement activity by the U.S. federal government, state governments, and private payors against pharmaceutical and biotechnology companies for pricing and reimbursement-related issues as well as inquiries from the U.S. Congress.
Other federal activities seeking to specifically address drug pricing and reimbursement include:
rulemaking related to importation of prescription drugs from Canada, as well as guidance related to importation of prescription drugs from other foreign countries;
attempts to establish reference pricing for certain physician-administered drugs;
executive orders relating to drug pricing that are intended to broadly impact the pharmaceutical industry;
changes to the federal anti-kickback statute safe harbors that eliminate anti-kickback statute discount safe harbor protection for certain manufacturer rebate arrangements; and
legislation relating to drug pricing, including enhanced transparency measures into drug pricing.
We expect government scrutiny over drug pricing, reimbursement, and distribution to continue. Potential future government regulation of drug prices or reimbursement creates uncertainties about our portfolio and could have a material adverse effect on our operations. Moreover, antitrust and/or competition laws are increasingly being used to scrutinize pricing on high-value medicines. Defending against an antitrust or competition claim can be expensive and requires significant personnel and operational resources, may ultimately lead to a reduction in the prices of our products, and can ultimately result a material adverse effect on profitability and our business overall. Additionally, governmental efforts to pursue compulsory licensing, including the Biden Administration’s proposed framework to pursue so-called “march in” rights, could affect our pricing strategy and result in an adverse impact on our revenue.
Current health care laws and regulations in the U.S. and future legislative or regulatory reforms to the U.S. health care system may affect our ability to commercialize our marketed products profitably.
The U.S. government, individual states and some foreign jurisdictions also have been aggressively pursuing legislative and regulatory reforms that could affect our ability to sell products. For example, in the U.S., there have been federal legislative and administrative efforts to repeal, substantially modify, or invalidate some or all of the provisions of the ACA, which could affect coverage and payment for medicines. The federal government additionally has proposed and enacted legislation leading to aggregate reductions of Medicare payments to providers, which ultimately could affect utilization of medicines.

38


Other reforms include the Bipartisan Budget Act of 2018, which contained various provisions that affect coverage and reimbursement of drugs, including an increase in the discount that manufacturers of Medicare Part D brand name drugs must provide to Medicare Part D beneficiaries during the coverage gap from 50% to 70%. Under the IRA, the coverage gap phase and the associated coverage gap discount program will be eliminated after the 2024 plan year. Starting in 2025, there will be a new Part D manufacturer discount program, which requires a 10% discount in the initial phase and a 20% discount in the catastrophic phase of the benefit. The IRA also authorizes the government to negotiate maximum fair prices for certain Medicare drugs. It also establishes mandatory rebates for Part B and Part D drugs with prices that increase faster than inflation. These new laws or any other similar laws introduced in the future may result in additional reductions in Medicare and other health care funding, which could negatively affect our customers and accordingly, our financial operations. Moreover, payment methodologies may be subject to changes in health care legislation and regulatory initiatives. For example, CMS may develop new payment and delivery models, such as bundled payment models.
Adoption of new health care reform legislation at the federal or state level could affect demand for, or pricing of, our products or product candidates if approved for sale. We cannot, however, predict the ultimate content, timing, or effect of any health care reform legislation or action, or its impact on us, including increased compliance requirements and costs, all of which may adversely affect our future business, operations, and financial results.
We have experienced challenges commercializing products outside of the U.S., and our future revenues will be dependent on our ability to obtain adequate reimbursement for our products in ex-U.S. markets.
In most ex-U.S. markets, the pricing and reimbursement of therapeutic and other pharmaceutical products is subject to governmental control and government authorities are making greater efforts to limit or regulate the price of drug products. The reimbursement process in ex-U.S. markets can take a significant time to conclude and reimbursement decisions are made on a country by country or region by region basis. Further, many ex-U.S. governments are introducing new legislation focusing on cost containment measures in the pharmaceutical industry. The final form of these laws and the relevant practical application is unknown at this time, but may lead to lower prices, paybacks or other forms of discounts or special taxes.
Our medicines treat life-threatening conditions and address relatively small patient populations, and our research and development programs are primarily focused on developing medicines to treat similar diseases. Both government and private payors are targeting these types of therapies, in some cases refusing to pay for them. We have experienced challenges in obtaining timely reimbursement for our products in various countries outside the U.S. Our future product revenues, including from TRIKAFTA/KAFTRIO, depend on, among other things, our ability to maintain reimbursement in ex-U.S. markets for our products. There is no assurance that coverage and reimbursement will be available outside of the U.S. for our five approved medicines or any future medicine, and, even if it is available, whether the timing or the level of reimbursement will be sufficient to allow us to market our medicines. Adverse pricing limitations or a delay in obtaining coverage and reimbursement would decrease our future net product revenues and harm our business.
Insurance coverage and reimbursement of cell and genetic therapies is uncertain.
There is significant uncertainty related to the insurance coverage and reimbursement of cell or genetic therapy products, including gene therapies that are potential one-time treatments (e.g., CASGEVY). It is difficult to predict what third party payors, including U.S. or ex-U.S. governments or private insurance companies, will decide with respect to reimbursement for CASGEVY and the other novel cell and genetic therapies in our pipeline. Additionally, reimbursement rates for cell and genetic therapies approved before ours could create an adverse environment for reimbursement of any therapies we ultimately commercialize. The administration of our products may require procedures for the collection of cells from patients, followed by other procedures either before or after delivery of the cell or genetic therapy. The manner and level at which reimbursement is provided for these services also is important. Inadequate reimbursement for such services may discourage physicians from recommending decisions to recommend any product for which we obtain approval in the future and impair our ability to market or sell the associated cell or genetic therapy.
Risks Related to Development and Clinical Testing of Our Products and Product Candidates
Our product candidates remain subject to clinical testing and regulatory approval, and our future success is dependent on our ability to successfully develop additional product candidates for both CF and non-CF indications.
Our business depends upon the successful development and commercialization of product candidates. These product candidates are in various stages of development and must satisfy rigorous standards of safety and efficacy before they can be

39


approved for sale by the FDA or comparable foreign regulatory authorities. To satisfy these standards, we must allocate resources among our various development programs and must engage in expensive and lengthy testing of our product candidates. Discovery and development efforts for new pharmaceutical and biological products, including new combination therapies, are resource-intensive and may take 10 to 15 years or longer for each product candidate. It is impossible to predict when or if any of our product candidates will prove effective and safe in humans or will receive regulatory approval. Despite our efforts, our product candidates may not:
offer therapeutic or other improvement over existing competitive therapies;
show the level of safety and efficacy, including the level of statistical significance, required by the FDA or other regulatory authorities for approval of a drug or biologic;
meet applicable regulatory standards;
be capable of being produced in commercial quantities at acceptable costs; or
if approved for commercial sale, be successfully marketed as pharmaceutical or biological products.
We have recently completed and/or have ongoing or planned clinical trials for several of our product candidates. The strength of our product portfolio and pipeline will depend in large part upon the outcomes of these clinical trials, including those evaluating TRIKAFTA/KAFTRIO and vanzacaftor/tezacaftor/deutivacaftor in younger children with CF, VX-522 in CF, VX-548 in neuropathic pain, and VX-880 and VX-264 in T1D. Failure to advance product candidates through clinical development could impair our ability to ultimately commercialize products, which could materially harm our business and long-term prospects.
Results of our clinical trials and findings from our nonclinical studies, including toxicology findings in nonclinical studies conducted concurrently with clinical trials, 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, in October 2023, we decided not to progress VX-864, a drug candidate for the treatment of AATD, into further development due to non-serious rash events in some patients.
Moreover, clinical data are often susceptible to varying interpretations, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval of their product candidate. Furthermore, results from our clinical trials may not meet the level of statistical significance or otherwise provide the level of evidence or safety and efficacy required by the FDA or other regulatory authorities for approval of a product candidate. Finally, clinical trials are expensive and require significant operational resources to implement and maintain.
Many companies in the pharmaceutical and biotechnology industries, including our company, have suffered significant setbacks in later-stage clinical trials even after achieving promising results in earlier-stage clinical trials. For example, the results from completed preclinical studies and clinical trials may not be replicated in later clinical trials, and ongoing clinical trials for our product candidates may not be predictive of the results we may obtain in later-stage clinical trials or of the likelihood of approval of a product candidate for commercial sale.
In addition, from time to time, we report interim, topline, and preliminary data from our clinical trials, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change. 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 and more patient data become available or as patients from our clinical trials continue other treatments for their disease. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available. If the interim, topline, or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.
The ability of third parties to review and/or analyze data from our clinical trials, including as a result of government disclosure, also may increase the risk of commercial confidentiality breaches and result in enhanced scrutiny of our clinical trial results. For example, Clinical Trial Regulation (EU) No. 536/2014, and the EMA policy on publication of clinical data

40


for medicinal products for human use, both permit the EMA to publish clinical information submitted in marketing authorization applications. Third party review and scrutiny could result in public misconceptions regarding our drugs and product candidates. These publications could also result in the disclosure of information to our competitors that we might otherwise deem confidential, which could harm our business.
If we are unable to obtain or are delayed in obtaining regulatory approval, we may incur additional costs, experience delays in commercialization, or be unable to commercialize our product candidates.
The time required to complete clinical trials and to satisfy the FDA and other countries’ regulatory review processes is uncertain and typically takes many years. 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. We also may encounter unanticipated delays or increased costs due to government regulation from future legislation or administrative action or changes in governmental policy during the period of drug development, clinical trials and governmental regulatory review.
We may seek a Fast Track, Priority Review, Breakthrough Therapy, and/or RMAT designation for some of our product candidates. Product candidates that receive one or more of these designations may be eligible for, among other things, a priority regulatory review. Each of these designations is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for Fast Track, Priority Review, Breakthrough Therapy and/or RMAT designation, the FDA may disagree and instead determine not to make such designation. The receipt of one or more of these designations for a product candidate does not guarantee a faster development process, review or approval compared to products developed or considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our products or product candidates qualifies for Fast Track, Priority Review, Breakthrough Therapy and/or RMAT designation, the FDA may later decide to withdraw such designation if it determines that the product or product candidate no longer meets the conditions for qualification.
Any failure to obtain regulatory approvals for a product candidate would prevent us from commercializing that product candidate. Any delay in obtaining required regulatory approvals could materially adversely affect our ability to successfully commercialize a product candidate. Furthermore, any regulatory approval to market a product may be subject to limitations that we do not expect on the indicated uses for which we may market the product. Any such limitations could reduce the size or demand of the market for the drug.
We also are subject to numerous foreign regulatory requirements governing the conduct of clinical trials, manufacturing and marketing authorization, pricing and third-party reimbursement. Non-U.S. jurisdictions have different approval procedures than those required by the FDA, and these jurisdictions may impose additional testing requirements for our product candidates. The foreign regulatory approval process includes all of the risks associated with the FDA approval process described above, as well as risks attributable to the satisfaction of foreign requirements. Approval by the FDA does not ensure approval by regulatory authorities outside the U.S. and approval by a foreign regulatory authority does not ensure approval by the FDA. In addition, although the FDA may accept data from clinical trials conducted outside the U.S., acceptance of this data is subject to conditions imposed by the FDA. For example, the clinical trial must be well designed and conducted and performed by qualified investigators in accordance with ethical principles. The trial population also must adequately represent the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. In addition, while these clinical trials are subject to applicable local laws, FDA acceptance of the data will depend on its determination that the trials also complied with all applicable U.S. laws and regulations. If the FDA does not accept the data from any trial that we conduct outside the U.S., it would likely result in the need for additional trials, which would be costly and time-consuming and delay or permanently halt our development of the applicable product candidate.
If clinical trials are prolonged or delayed, our development timelines for the affected development program could be extended, our costs to develop the product candidate could increase and the competitive position of the product candidate could be adversely affected.
We cannot predict whether or not we will encounter problems with any of our completed, ongoing or planned clinical trials that will cause us or regulatory authorities to delay or suspend clinical trials, or delay the analysis of data from our completed or ongoing clinical trials. Among the factors that could delay our development programs are:

41


ongoing discussions with the FDA or comparable foreign authorities regarding the scope or design of our clinical trials and the number of clinical trials we must conduct;
failure or delay in reaching agreement on acceptable terms with prospective contract research organizations (“CROs”) and clinical trial sites;
failure to add or delay in adding a sufficient number of clinical trial sites and obtaining institutional review board or independent ethics committee approval at each clinical trial site;
suspension or termination of clinical trials of product candidates for various reasons, including non-compliance with regulatory requirements;
clinical trial sites deviating from clinical trial protocol or dropping out of a clinical trial;
delays in enrolling volunteers or patients into clinical trials, including as a result of low numbers of patients that meet the eligibility criteria for the trial;
a lower than anticipated retention rate of volunteers or patients in clinical trials;
the need to repeat clinical trials as a result of unfavorable or inconclusive results, unforeseen complications in testing or clinical investigator error;
inadequate supply or deficient quality of product candidate materials or other materials necessary for the conduct of our clinical trials;
unfavorable FDA or foreign regulatory authority inspection and review of a manufacturing facility that supplied clinical trial materials or its relevant manufacturing records or a clinical trial site or records of any clinical or preclinical investigation;
unfavorable or inconclusive scientific results from clinical trials;
serious and unexpected treatment-related side-effects experienced by participants in our clinical trials or by participants in clinical trials being conducted by our competitors to evaluate product candidates with similar mechanisms of action or structures to therapies that we are developing;
favorable results in testing of our competitors’ product candidates, or FDA or foreign regulatory authority approval of our competitors’ product candidates; or
action by the FDA or a foreign regulatory authority to place a clinical hold or partial clinical hold on a trial or compound or deeming the clinical trial conduct as problematic.
For planning purposes, we estimate the timing of the accomplishment of various scientific, clinical, regulatory, and other product development goals, which we sometimes refer to as milestones. These milestones may include the commencement or completion of scientific studies and clinical trials and the submission of regulatory filings. From time to time, we publicly announce the expected timing of some of these milestones. All of these milestones are based on a variety of assumptions. The actual timing of these milestones can vary dramatically compared to our estimates, in many cases for reasons beyond our control. If we do not meet these milestones as publicly announced, the commercialization of our products may be delayed and the credibility of our estimates may be adversely affected and, as a result, our stock price may decline.
Difficulty in enrolling patients could delay or prevent clinical trials of our product candidates, and ultimately delay or prevent regulatory approval.
Our ability to enroll patients in our clinical trials in sufficient numbers and on a timely basis is subject to a number of factors. Clinical trials are expensive and require significant operational resources. Delays in patient enrollment or unforeseen drop-out rates may result in increased costs and longer development times. The enrollment of patients further depends on many factors, including:
the proximity of patients to clinical trial sites;
the size of the patient population, the nature of the protocol, and the design of the clinical trial;

42


our ability to recruit clinical trial investigators with the appropriate competencies and experience;
the number of other clinical trials ongoing and competing for patients in the same indication;
our ability to obtain and maintain patient consents;
reporting of the preliminary results of any of our clinical trials;
the availability of effective treatments for the relevant disease and eligibility criteria for the clinical trial;
the risk that patients enrolled in clinical trials will drop out of the clinical trials before clinical trial completion; and
factors we may not be able to control, such as current or potential pandemics that may limit patients, principal investigators or staff or clinical site availability.
We, our collaborators, the FDA, or other applicable regulatory authorities may suspend clinical trials of a product candidate at any time if we or they believe the healthy volunteers or patients participating in such clinical trials are being exposed to unacceptable health risks or for other reasons. Any such suspension could materially adversely affect the development of a particular product candidate and our business.
Enrollment for clinical trials for our cell and gene therapies may face additional and unique challenges and adverse developments associated with these clinical trials could result in action by regulatory bodies, including revised requirements for approval.
For cell and genetic therapy programs addressing rare genetic diseases with small patient populations, we may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired characteristics, to complete our clinical studies in an adequate and timely manner. Additionally, patients may be unwilling to participate in our clinical trials because of concerns that cell and genetic therapies are unsafe or unethical, negative publicity from adverse safety events in the biotechnology or gene therapy industries, or for other reasons, including competitive clinical studies for similar patient populations. Moreover, adverse developments in clinical trials conducted by others of cell and genetic therapy products or products created using similar technology, or adverse public perception of the field of cell and genetic therapies, may cause the FDA and other regulatory bodies to revise the requirements for approval of any cell or genetic therapy product candidates we may develop or limit the use of products utilizing technologies such as ours, either of which could materially harm our business.
Risks Related to Government Regulation
If regulatory authorities interpret any of our conduct, including our marketing practices, as being in violation of applicable health care laws, including fraud and abuse laws, laws prohibiting off-label promotion, disclosure laws or other similar laws, we may be subject to civil or criminal penalties.
We are subject to health care fraud and abuse laws, such as the FCA and the AKS, and other similar laws and regulations both in the U.S. and in non-U.S. markets.
In the U.S., the Federal Anti-Kickback Statute prohibits knowingly and willfully offering, paying, soliciting, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual, or the ordering, furnishing, arranging for or recommending of an item or service that is reimbursable, in whole or in part, by a federal health care program, such as Medicare or Medicaid. Because of the broad scope of the prohibition, most financial interactions between pharmaceutical manufacturers and prescribers, purchasers, third party payors and patients would be subject to the statute. Although there are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution, financial interactions must be structured carefully to qualify for protection or otherwise withstand scrutiny.
Federal false claims laws, including the FCA, prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to get a false claim paid. Pharmaceutical companies have been prosecuted under these laws for a variety of alleged promotional and marketing activities, such as providing free product to customers with the expectation that the customers would bill federal programs for the product; reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates; engaging in promotion for uses that the FDA has not approved, known as “off-label” uses, that caused claims to be submitted to Medicaid for those off-label uses; submitting inflated “best price” information to

43


the Medicaid Rebate Program; and certain manufacturing-related violations. The scope of this and other laws may expand in ways that make compliance more difficult and expensive.
The FDA and other regulatory agencies closely regulate the post-approval marketing and promotion of products to ensure that they are marketed only for the approved indications and in accordance with the provisions of the approved labeling. Although physicians are generally permitted, based on their medical judgment, to prescribe products for indications other than those approved by the applicable regulatory agency, manufacturers are prohibited from promoting their products for such off-label uses. We market our products to eligible people with CF, SCD, and TDT for whom the applicable product has been approved and provide promotional materials and informational programs to physicians regarding the use of each product in these patient populations. These eligible people do not represent all people with CF, SCD, and TDT. If a regulatory agency determines that our promotional materials, or other activities constitute off-label promotion, it could request that we modify our promotional materials or other activities, conduct corrective advertising, or subject us to regulatory enforcement actions, such as the issuance of a warning or untitled letter, injunction, seizure, civil fines and criminal penalties. It also is possible that other federal, state, or foreign enforcement authorities might take action if they believe that the alleged improper promotion led to the submission and payment of claims for an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. 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.
In the U.S., federal and state laws regulate financial interactions between pharmaceutical manufacturers and healthcare providers, require disclosure to government authorities and the public of such interactions, and mandate the adoption of compliance standards or programs. For example, the so-called federal “sunshine law” requires pharmaceutical manufacturers to report annually to CMS payments or other transfers of value made by that entity to physicians, physicians assistants, advanced practice registered nurses, and teaching hospitals. We also have similar reporting obligations with respect to financial interactions throughout the E.U. We expended significant efforts to establish, and are continuing to devote significant resources to maintain and enhance, systems and processes to comply with these regulations. Requirements to track and disclose financial interactions with health care providers and organizations increase government and public scrutiny of these financial interactions. Failure to comply with the reporting requirements could result in significant civil monetary penalties.
The sales and marketing practices of our industry have been the subject of increased scrutiny from government authorities in the U.S. and other countries in which we market our products, and we believe that this trend will continue. Many of these laws have not been fully interpreted by the government authorities or the courts, and their provisions are subject to a variety of interpretations. While we have a corporate compliance program which, together with our policies and procedures, is designed to actively identify, prevent and mitigate risk through the implementation of compliance policies and systems and the promotion of a culture of compliance, if we are found not to be in full compliance with these laws and regulations, our business could be materially harmed. We may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from federal health care programs and/or the curtailment or restructuring of our operations. Even if we successfully defend against government challenge, responding to the challenge may cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental pricing programs in the U.S., we could be subject to additional reimbursement requirements, penalties, sanctions, and fines that could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
We participate in the Medicaid Drug Rebate Program, the 340B program, and a number of other federal and state government pricing programs in the U.S. to obtain coverage for our products by certain government health care programs. These programs require us to pay rebates or provide discounts to certain government payors or private purchasers in connection with our products when dispensed to beneficiaries of these programs. In some cases, such as with the Medicaid Drug Rebate Program, the rebates are based on pricing and rebate calculations that we report on a monthly and quarterly basis to the government agencies that administer the programs. The terms, scope and complexity of these government pricing programs change frequently. For example, regulations finalized in December 2020 created an alternative Medicaid rebate formula for “line extensions” of oral solid dosage forms. Moreover, in December 2020, CMS finalized changes to Medicaid Drug Rebate Program pricing calculations regarding the provision of co-payment assistance to patients that may be impacted by so-called accumulator programs operated by private insurers or pharmacy benefit managers. The portion of this rule

44


dealing with manufacturer co-payment assistance was struck down by the U.S. District Court for the District of Columbia in May 2022 (and the deadline for an appeal has lapsed). In May 2023, CMS issued a proposed rule, which would withdraw the challenged accumulator adjustment regulations, consistent with the Court’s order. The rule also proposes significant changes, which, if finalized, could have an impact on our Medicaid rebate liability, impact our participation in the Medicaid Drug Rebate Program, and impose new reporting requirements.
Additionally, the expansion of the 340B Drug Discount Program through the ACA has increased the number of purchasers who are eligible for significant discounts on branded drugs. These and future changes to government pricing programs, laws, and regulations may have a material adverse impact on our revenue and operations.
We also may have reimbursement obligations or be subject to penalties if we fail to provide timely and accurate information to the government, pay the correct rebates, or offer the correct discounted pricing. Changes to the price reporting or rebate requirements of these programs would affect our obligations to pay rebates or offer discounts. For example, the removal of the current statutory 100% of Average Manufacturer Price per-unit cap on Medicaid rebate liability for single source and innovator multiple source drugs, effective as of January 1, 2024, under the American Rescue Plan Act of 2021 may affect the amount of rebates paid on prescription drugs under Medicaid and the prices that are required to be charged to covered entities under the 340B Drug Discount Program. Additionally, the IRA requires manufacturers to pay rebates for Medicare Part B and Part D drugs with prices that increase faster than the rate of inflation. Responding to current and future changes to these and other Medicaid Drug Rebate Program requirements may reduce our net revenues and the complexity of compliance, will be time-consuming, and could have a material adverse effect on our results of operations.
If our processes and systems are not compliant with regulatory requirements, we could be subject to restrictions on marketing our products or could be delayed in submitting regulatory filings seeking approvals for our product candidates.
We have a number of regulated processes and systems that are required both prior to and following approval of our drugs and product candidates. These processes and systems are subject to continual review and periodic inspection by the FDA and other regulatory bodies. In addition, the clinical research organizations and other third parties that we work with in our non-clinical studies and clinical trials and our oversight of such parties are subject to similar reviews and periodic inspection by the FDA and other regulatory bodies. If compliance issues are identified at any point in the development and approval process, we may experience delays in filing for regulatory approval for our product candidates, or delays in obtaining regulatory approval after filing, if at all. Any later discovery of previously unknown problems or safety issues with approved drugs or manufacturing processes, or failure to comply with regulatory requirements, may result in restrictions on such drugs or manufacturing processes, withdrawal of drugs from the market, the imposition of civil or criminal penalties or a refusal by the FDA and/or other regulatory bodies to approve pending applications for marketing approval of new drugs or supplements to approved applications, any of which could have a material adverse effect on our business. In addition, we are party to agreements that transfer responsibility for complying with specified regulatory requirements, such as filing and maintenance of marketing authorizations and safety reporting or compliance with manufacturing requirements, to our collaborators and third-party manufacturers. If our collaborators or third-party manufacturers do not fulfill these regulatory obligations, any drugs for which we or they obtain approval may be subject to later restrictions on manufacturing or sale, which could have a material adverse effect on our business.
The regulatory approval process for our cell or genetic therapies involves additional consultations with regulatory agencies, costs, and potentially longer timelines as compared to those for small molecules.
As we advance our cell and genetic therapy product candidates, we will be required to consult with various regulatory authorities, and we must comply with all applicable laws, rules, and regulations, which may change from time to time, including during the course of development of our cell and genetic therapy product candidates. If we fail to do so, we may be required to delay or discontinue the clinical development of certain of our cell and genetic therapy product candidates. These additional processes may result in a review and approval process that is longer than we otherwise would have expected. Even if we comply with applicable laws, rules, and regulations, and even if we maintain close coordination with the applicable regulatory authorities with oversight over our cell and genetic therapy product candidates, our development programs may experience delays or fail to succeed. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential cell or genetic therapy product to market would materially adversely affect our business, financial condition, results of operations and prospects.
The regulatory approval process and clinical trial requirements for cell and genetic therapies can be more expensive and take longer than for other, better known or more extensively studied product candidates, and regulatory requirements

45


governing cell and genetic therapy products have changed frequently and may continue to change in the future. For example, the FDA established the Office of Tissues and Advanced Therapies within its Center for Biologics Evaluation and Research (“CBER”) to consolidate the review of cell therapies and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review. These and other regulatory review agencies, committees and advisory groups, and the requirements and guidelines they promulgate, may lengthen the regulatory review process, require us to perform additional preclinical studies or clinical trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of these treatment candidates or lead to significant post-approval limitations or restrictions.
We are subject to various and evolving laws and regulations governing the privacy and security of personal data, and our failure to comply could adversely affect our business, result in fines and/or criminal penalties, and damage our reputation.
We are subject to data privacy and security laws and regulations in various jurisdictions that apply to the collection, storage, use, sharing, and security of personal data, including health information, and impose significant compliance obligations. In addition, numerous other federal and state laws, including state security breach notification laws, state health information privacy laws and federal and state consumer protection laws, govern the collection, use, disclosure and security of personal information. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues with the potential to affect our business.
For example, the E.U. General Data Protection Regulation (“GDPR”) went into effect in 2018 and has imposed new 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. Different E.U. member states have interpreted the GDPR differently and many have imposed additional requirements, which add to the complexity of processing personal data in the E.U. The GDPR also imposes strict rules on the transfer of personal data to countries outside the E.U., including the U.S. and the U.K., and permits data protection authorities to impose large penalties for violations of the GDPR. The GDPR rules related to cross border data transfers continue to evolve based on E.U. court decisions and regulator guidance, which presents certain practical challenges to compliance. Regulators also continue to focus enforcement efforts on behavioral advertising and other online tracking technologies commonly used by companies. Compliance with these evolving rules is challenging, as country specific guidance and rules are continually changing and limited alternatives currently exist in the market. Compliance with the GDPR is a rigorous and time-intensive process that may increase our cost of doing business or require us to change our business practices, and despite those efforts, there is a risk that we may be subject to fines and penalties, litigation, and reputational harm in connection with any activities falling within the scope of the GDPR.
In the U.S., California has passed the California Consumer Privacy Act (the “CCPA”), which went into effect on January 1, 2020. In November 2020, California also passed the California Privacy Rights Act (the “CPRA”), which expands and builds upon the consumer privacy rights of the CCPA. The CPRA came into effect January 1, 2023. Certain other states have also enacted legislation governing the protection of personal data and several other states and the federal government are actively considering similar proposed legislation. A number of other states have also introduced privacy legislation, with some focusing specifically on health data. Additionally, Brazil passed the General Data Protection Law, which went into effect in August 2020. While we continue to address the implications of the new data privacy regulations, data privacy remains an evolving landscape at both the domestic and international level, with new regulations coming into effect and continued legal challenges. Each law is also subject to various interpretations by courts and regulatory agencies, creating even more uncertainty. While we have a global privacy program that addresses such laws and regulations, our efforts to comply with the evolving data protection rules may be unsuccessful.
We must devote significant resources to understanding and complying with the changing landscape in this area. Failure to comply with data protection laws may expose us to risk of enforcement actions taken by data protection authorities, private rights of action in some jurisdictions, and potential significant penalties if we are found to be non-compliant. Failure to comply with the GDPR and applicable national data protection laws of European Economic Area member states could lead to fines of up to €20,000,000 or up to 4% of the total worldwide annual revenue of the preceding financial year, whichever is higher. Some of these laws and regulations also carry the possibility of criminal sanctions. For example, while we are not directly subject to the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (“HIPAA”), we could be subject to penalties, including criminal penalties if we knowingly obtain or disclose individually identifiable health information from a HIPAA-covered health care provider or

46


research institution that has not complied with HIPAA’s requirements for disclosing such information. In addition, the commercialization of cell and gene therapies requires the collection and processing of a greater amount of personal data than traditional therapies, potentially increasing risk. Furthermore, the number of government investigations related to data security incidents and privacy violations, with a specific focus on online data sharing, continue to increase and government investigations typically require significant resources and generate negative publicity, which could harm our business and our reputation.
The COVID-19 pandemic has added further complexity to the processing of personal data. For example, safety measures and government health regulations intended to protect our employees, contractors, and other visitors to our sites may require the collection of certain personal data. Although we are focused on ensuring that personal data is properly protected, our efforts may be unsuccessful and we could unintentionally be subject to unauthorized access or disclosure of such personal data.
If we do not comply with laws regulating the protection of the environment and health and human safety, our business could be adversely affected.
Our research and development efforts involve the regulated use of hazardous materials, chemicals, and various controlled and radioactive compounds. Although we believe that our safety procedures for handling and disposing of these materials comply with the standards prescribed by state, federal and foreign regulations, the risk of loss of, or accidental contamination or injury from, these materials cannot be eliminated. If an accident occurs, we could be held liable for resulting damages, which could be substantial. We also are subject to numerous environmental, health, and workplace safety laws and regulations, including those governing laboratory procedures, exposure to blood-borne pathogens, and the handling of biohazardous materials. Although we maintain workers’ compensation insurance to cover us for costs we may incur due to injuries to our employees resulting from the use of these materials, this insurance may not provide adequate coverage against potential liabilities. We maintain insurance to cover pollution conditions or other extraordinary or unanticipated events relating to our use and disposal of hazardous materials that we believe is appropriate based on the small amount of hazardous materials we generate. Additional federal, state and local laws and regulations affecting our operations may be adopted in the future. We may incur substantial costs to comply with, and substantial fines or penalties if we violate, any of these laws or regulations.
Risks Related to Supply, Manufacturing and Reliance on Third Parties
We depend on third-party manufacturers and our internal capabilities to manufacture our products and the materials we require for our clinical trials. We rely on third party logistics providers to manage our shipments globally. We may not be able to maintain our third-party relationships and could experience supply disruptions outside of our control.
We rely on a worldwide network of third-party manufacturers and our internal capabilities, including our own manufacturing facilities in Boston, to manufacture product candidates for clinical trials as well as our medicines for commercial use. While we have developed internal capabilities to supply product candidates for use in our clinical trials as well as our products for commercial sale, a majority of the manufacturing steps needed to produce our medicines, product candidates, and drug products are performed through a third-party manufacturing network. The manufacture of our products and product candidates can be complex, which may require lengthy technology transfers between us and the third parties on which we rely. We expect that we will 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.
We could be subject to significant supply interruptions as a result of disruptions to third party or our internal manufacturing capabilities. Our supply chain for sourcing raw materials and manufacturing drug product ready for distribution, including obtaining necessary supplies, is a multi-step international endeavor. Third-party contract manufacturers, including some in China, perform different parts of our manufacturing process. Contract manufacturers may supply us with raw materials, convert these raw materials into drug substance and/or convert the drug substance into final dosage form. Third parties are used for packaging, warehousing and distribution of products.
The manufacturing and logistics for cell and genetic therapies are highly complex, short lead time operations that require partnership with an extensive network of third parties to deliver product. These manufacturing and logistics operations require significant investment by us to secure capacity at third parties with expertise to meet our requirements. Even with the relevant experience and expertise, manufacturers of cell and genetic therapy products often encounter difficulties in production, including difficulties with production costs and yields, quality control, and compliance with federal, state and

47


foreign regulations. 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. This capacity may be limited by the number of other clinical trials and commercial manufacturing ongoing for other companies seeking similar support.
If third parties are unwilling or unable to meet our requirements, we could experience supply disruptions outside of our control. Additionally, manufacturing facilities, both foreign and domestic, are subject to inspections by the FDA and other U.S. and foreign government authorities. Although we actively engage with regulatory authorities, the timing of regulatory approvals for each of these facilities may be delayed for a variety of reasons. We may experience supply disruptions if regulatory agencies are unable to inspect the manufacturing facilities on which we rely. In addition, we and the third parties with whom we engage are required to maintain compliance with quality regulations globally. An inability to maintain compliance with such regulations, including cGMP requirements, could cause significant disruptions to our business and operations.
Additionally, establishing, managing and expanding our global manufacturing and supply chain requires a significant financial commitment and the creation and maintenance of our numerous third-party contractual relationships. We may not be able to agree on contractual terms with third parties as needed for manufacturing of our products. Although we attempt to manage the business relationships with our partners, we could be subject to supply disruptions outside of our control.
Supply disruptions may result from a number of factors, including shortages in product raw materials, labor or technical difficulties, regulatory inspections or restrictions, shipping or customs delays, general global supply chain disruptions, or any other performance failure by us or any third-party manufacturer on which we rely. Additionally, unfavorable geopolitical events or situations 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. Any such disruptions could disrupt sales of our products and/or the timing or advancement of our clinical trials.
If we or our third-party manufacturers become unable or unwilling to continue manufacturing product and we are not able to promptly identify another manufacturer, we could experience a disruption in the commercial supply of our then-marketed medicines, which would have a significant effect on patients, our business, and our product revenues. Similarly, a disruption in the clinical supply of product candidates could delay the completion of clinical trials and affect timelines for regulatory filings. We have a limited number of critical steps in our manufacturing process that are single sourced, including for commercialized products. To ensure the stability of our supply chains, we continue to develop alternative suppliers for our manufacturing processes. However, there can be no assurance that we will be able to establish and maintain additional manufacturers or capacity for all of our product candidates and products on a timely basis or at all.
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.
We rely on third parties to conduct pre-clinical work, clinical trials and other activities, and those third parties may not perform satisfactorily, including failing to meet established deadlines for the completion of such studies and/or trials or failing to satisfy regulatory requirements.
We rely on third parties such as CROs to help manage certain pre-clinical work and our clinical trials and on medical institutions, clinical investigators, and clinical research organizations such as the Therapeutic Development Network, which is primarily funded by the Cystic Fibrosis Foundation, to assist in the design and review of, and to conduct our clinical trials, including enrolling qualified patients. In addition, we engage third party contractors to support numerous other research, commercial and administrative activities. Our reliance on these third parties for clinical development activities reduces our control over these activities but does not relieve us of our responsibilities. For example, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan and protocols for the clinical trial. Moreover, the FDA requires us to comply with standards, commonly referred to as good laboratory practices and good clinical practices, for conducting, recording and reporting the results of pre-clinical and clinical trials to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Such standards, particularly with respect to newer cell and genetic therapies, will continue to evolve and subject us and third parties to new or changing requirements.
If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be

48


required to replace them. Although we believe that there are a number of other third-party contractors we could engage to continue the activities, it may result in a delay of the affected clinical trial, drug development program or applicable activity. If clinical trials are not conducted in accordance with our contractual expectations or regulatory requirements, action by regulatory authorities might significantly and adversely affect the conduct or progress of these clinical trials or in specific circumstances might result in a requirement that a clinical trial be redone. Accordingly, our efforts to obtain regulatory approvals for and commercialize our product candidates could be delayed. In addition, failure of any third-party contractor to conduct activities in accordance with our expectations, could adversely affect the relevant research, development, commercial or administrative activity.
Risks Related to Business Development Activities
Our ability to execute on our long-term strategy depends in part on our ability to engage in transactions and collaborations with other entities that add to our pipeline or provide us with new commercial opportunities.
To achieve our long-term business objectives, we seek to license or acquire products, product candidates and other technologies that have the potential to complement our ongoing research and development efforts, access emerging technologies and license or acquire pipeline assets. These transactions may be similar to prior transactions, may be structured differently than prior transactions, or may involve larger transactions or later-stage assets. We have faced and will continue to face significant competition for the acquisition of rights to these types of products, product candidates and other technologies from a variety of other companies, some of which have significantly more financial resources and experience in business development activities than we have. In addition, non-profit organizations may be willing to provide capital to the companies that control additional products, product candidates or technologies, which may provide incentives for companies to advance these products, product candidates or technologies independently. Also, the cost of acquiring, in-licensing or otherwise obtaining rights to such products, product candidates or other technologies has grown dramatically in recent years and may be at levels that we cannot afford or that we believe are not justified by market potential. As a result, we may not be able to acquire, in-license or otherwise obtain rights to additional products, product candidates or other technologies on acceptable terms or at all.
We face risks in connection with existing and future collaborations with respect to the development, manufacture and commercialization of our products and product candidates.
The risks that we face in connection with our current collaborations, including with CRISPR, Moderna, and Entrada, and any future collaborations, include the following:
Collaborators may develop and commercialize, either alone or with others, drugs or therapies that are similar to or competitive with the products or product candidates that are the subject of their collaborations with us.
Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of product candidates, might lead to additional responsibilities or costs for us with respect to product candidates, or might result in litigation or arbitration. Any such disagreements would divert management attention and resources and would be time-consuming and expensive.
Collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation.
Collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability.
Investigations and/or compliance or enforcement actions against a collaborator, which may expose us to indirect liability as a result of our partnership with such collaborator.
If a collaborator were to be involved in a business combination with a third party, it might de-emphasize or terminate the development or commercialization of any product candidate licensed to it by us. If one of our collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and our perception in the business and financial communities could be harmed.

49


Moreover, as part of our ongoing strategy, we may seek additional collaborative arrangements for certain of our development programs and/or seek to expand existing collaborations to cover additional commercialization and/or development activities. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA, EMA or other regulatory authorities, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of the applicable intellectual property, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. No assurance can be given that any efforts we make to seek additional collaborative arrangements will be successfully completed on a timely basis or at all.
We may not realize the anticipated benefits of existing or future acquisitions of businesses or technologies, and the integration following any such acquisition may disrupt our business and management.
Effectively integrating acquired businesses, technologies and exclusive licenses is challenging. We may not realize the benefits anticipated from our external innovation transactions. Achieving the anticipated benefits of any transaction and successfully integrating acquired businesses or technologies involves a number of risks, including:
failure to successfully develop and commercialize the acquired products, product candidates or technologies or to achieve other strategic objectives;
delays or inability to progress preclinical programs into clinical development or unfavorable data from clinical trials evaluating the acquired or licensed product or product candidates;
difficulty in integrating the products, product candidates, technologies, business operations and personnel of an acquired asset or company;
disruption of our ongoing business and distraction of our management and employees from daily operations or other opportunities and challenges;
the potential loss of key employees of an acquired company;
entry into markets in which we have no or limited direct prior experience or where competitors in such markets have stronger market positions;
potential failure of the due diligence processes to identify significant problems, liabilities or challenges of an acquired company, or acquired or licensed products, product candidate or technology, including problems, liabilities or challenges with respect to intellectual property, clinical or non-clinical data, safety, accounting practices, employee, or third-party relations and other known and unknown liabilities;
liability for activities of the acquired company or licensor before the acquisition or license, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities;
exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of an acquisition or license, including claims from terminated employees, customers, former equity holders or other third parties; and
difficulties in the integration of the acquired company’s departments, systems, including accounting, human resource and other administrative systems, technologies, books and records, and procedures, as well as in maintaining uniform standards, controls, including internal control over financial reporting required by the Sarbanes-Oxley Act of 2002 and related procedures and policies.
Acquisitions, licensing arrangements and other strategic transactions are inherently risky, and ultimately, if we do not complete an announced acquisition, collaboration or strategic transaction or integrate an acquired or licensed asset, business or technology successfully and in a timely manner, we may not realize the anticipated benefits of the strategic transaction.
We may later incur impairment charges related to assets acquired in any such transaction. Even if we achieve the long-

50


term benefits associated with our strategic transactions, our expenses and short-term costs may increase materially and adversely affect our liquidity and short-term net income. Future strategic transactions could result in increased operating expenses, potentially dilutive issuances of equity securities, the incurrence of debt, the creation of contingent liabilities, impairment expenses related to goodwill, or impairment or amortization expenses related to other intangible assets, all of which could harm our financial condition.
Risks Related to Intellectual Property
If our patents do not protect our products or our products infringe third-party patents, we could be subject to litigation which could result in injunctions preventing us from selling our products, substantial damages, or circumvention of our patents by third parties.
We own and/or control numerous issued patents and pending patent applications in the U.S., as well as counterparts in other countries. Our success will depend, in significant part, on our ability to obtain and defend U.S. and foreign patents covering our products, their uses and our processes, to preserve our trade secrets and to operate without infringing the proprietary rights of third parties. We cannot be certain that any patents will issue from our pending patent applications or, even if patents issue or have issued, that the issued claims will provide us with adequate protection against competitive products or otherwise be commercially valuable. U.S. and foreign patent applications typically are maintained in confidence for a period of time after they initially are filed with the applicable patent office. Consequently, we cannot be certain that we were the first to file patent applications on our products or product candidates or their use. If a third-party has an earlier filed patent application relating to our product or product candidates, their uses, or a similar invention, we may be unable to obtain an issued patent from our application.
Due to evolving legal standards 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 patents is uncertain and involves complex legal and factual questions.
The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability. Our patents may be challenged by third parties and certain of our patents have been challenged. This could result in the patent being deemed invalid, unenforceable or narrowed in scope, or the third party may circumvent any such issued patents, including through compulsory licensing mechanisms. Also, our pending patent applications may not issue, and we may not receive any additional patents.
Our patents or patents we license might not contain claims that are sufficiently broad to prevent others from developing competing products. For instance, issued patents, or patents that may issue in the future, (i) relating to our small molecules may be limited to a particular molecule or molecules and may not cover similar molecules that have similar clinical properties, and (ii) relating to cell or genetic therapies may not cover similar technologies that would allow competitors to achieve similar results. Consequently, our competitors may independently develop competing products that do not infringe our patents or other intellectual property.
The laws of many foreign jurisdictions do not protect intellectual property rights to the same extent as in the U.S. and many companies in our segment of the pharmaceutical industry have encountered significant difficulties in protecting and defending such rights in foreign jurisdictions. If we encounter such difficulties in protecting or are otherwise precluded from effectively protecting our intellectual property rights in foreign jurisdictions, including through compulsory licensing, our business could be substantially harmed.
Because of the extensive time required for the discovery, development, testing and regulatory review of product candidates, it is possible that a patent may expire before a product candidate can be commercialized, or a patent may expire or remain in effect for only a short period following commercialization of such product candidate. This would result in a minimal or non-existent period of patent exclusivity. If our product candidates are not commercialized significantly ahead of the expiration date of any applicable patent, or if we have no patent protection on such product candidates, then, to the extent available we would rely on other forms of exclusivity, such as data exclusivity or orphan drug exclusivity.
Uncertainty over intellectual property in the pharmaceutical and biotechnology industry has been the source of litigation and other disputes that are inherently costly and unpredictable.
There is considerable uncertainty within our industry about the validity, scope, and enforceability of many issued patents in the U.S. and elsewhere in the world, and, to date, the law and practice remains in flux both in the agencies that grant

51


patents and in the courts. We cannot currently determine the ultimate scope and validity of patents which may be granted to third parties in the future or which patents might be asserted as being infringed by the manufacture, use and sale of our products.
There has been, and we expect that there may continue to be, significant litigation in the pharmaceutical industry regarding patents and other intellectual property rights. Litigation, arbitrations, administrative proceedings, and other legal actions with private parties and governmental authorities concerning patents and other intellectual property rights may be protracted, expensive, and distracting to management. Competitors may sue us as a way of delaying the introduction of our products or to remove our products from the market. 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, may be costly and time consuming and could harm our business. We expect that litigation may be necessary in some instances to determine the validity and scope of certain of our proprietary rights. Litigation may be necessary in other instances to determine the validity, scope or non-infringement of certain patent rights claimed by third parties to be pertinent to the manufacture, use or sale of our products. Ultimately, the outcome of such litigation could adversely affect the validity and scope of our patent or other proprietary rights, hinder our ability to manufacture and market our products, or result in the assessment of significant monetary damages against us that may exceed amounts, if any, accrued in our consolidated financial statements.
On July 24, 2020, we filed a lawsuit against Sun Pharmaceutical Industries Limited (“Sun”) in the U.S. District Court for the District of Delaware alleging infringement of our U.S. Patent No. 10,646,481 (“the ’481 patent”). The lawsuit follows our receipt of a Notice Letter on June 11, 2020, advising that Sun had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of the 150 mg tablet of KALYDECO in the U.S. The Notice Letter indicated that Sun submitted a “Paragraph IV” certification to the FDA in which Sun asserts that the ’481 patent is invalid or would not be infringed by Sun’s generic product. The ’481 patent, which expires on August 13, 2029, was issued on May 12, 2020, and listed in the Orange Book with respect to the KALYDECO tablet on June 1, 2020. By letter dated June 5, 2023, Sun notified us that it had amended its ANDA to include a Paragraph IV certification with respect to our U.S. Patent No. 11,564,916 (“the ’916 patent”), which issued on January 31, 2023, is related to the ’481 patent and was listed in the FDA’s Orange Book on February 28, 2023. On June 16, 2023, we filed a lawsuit against Sun in the U.S. District Court for the District of Delaware alleging infringement of the ’916 patent. In December 2023, we settled the case against Sun. The terms of the settlement are confidential.
On July 13, 2021, we filed a lawsuit against Lupin Limited and Lupin Pharmaceuticals, Inc. (collectively, “Lupin”) in the U.S. District Court for the District of Delaware alleging infringement of the ’481 patent. The lawsuit follows our receipt of a Notice Letter on June 2, 2021, advising that Lupin had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of the 150 mg tablet of KALYDECO in the U.S. The Notice Letter indicated that Lupin submitted a “Paragraph IV” certification to the FDA in which Lupin asserts that the ’481 patent is invalid or would not be infringed by Lupin’s generic product. By letter dated April 25, 2023, Lupin notified us that it had amended its ANDA to include a Paragraph IV certification with respect to the ’916 patent. On May 26, 2023, we filed a lawsuit against Lupin in the U.S. District Court for the District of Delaware alleging infringement of the ’916 patent. In November 2023, we settled the case against Lupin. The terms of the settlement agreement are confidential.
On June 2, 2022, we filed a lawsuit against Aurobindo Pharma Limited (“Aurobindo”) in the U.S. District Court for the District of Delaware alleging infringement of the ’481 patent. The lawsuit follows our receipt of a Notice Letter on April 21, 2022, advising that Aurobindo had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of the 150 mg tablet of KALYDECO in the U.S. The Notice Letter indicated that Aurobindo submitted a “Paragraph IV” certification to the FDA in which Aurobindo asserts that the ’481 patent is invalid or would not be infringed by Aurobindo’s generic product. By letter dated April 12, 2023, Aurobindo notified us that it had amended its ANDA to include a Paragraph IV certification with respect to the ’916 patent. On May 26, 2023, we filed a lawsuit against Aurobindo in the U.S. District Court for the District of Delaware alleging infringement of the ’916 patent. In November 2023, we settled the case against Aurobindo. The terms of the settlement agreement are confidential.
On July 22, 2022, we filed a lawsuit against Lupin in the U.S. District Court for the District of Delaware alleging infringement of the ’481 patent and U.S. Patent Nos. 8,883,206 (“the ’206 patent”), 10,272,046 (“the ’046 patent”), and 11,147,770 (“the ’770 patent”). The lawsuit follows our receipt of a Notice Letter on June 9, 2022, advising that Lupin had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of KALYDECO granules in

52


the U.S. The Notice Letter indicated that Lupin submitted a “Paragraph IV” certification to the FDA in which Lupin asserts that the ’481 patent, the ’206 patent, and the ’046 patent are invalid or would not be infringed by Lupin’s generic product. By letter dated April 25, 2023, Lupin notified us that it had amended its ANDA to include a Paragraph IV certification with respect to the ’916 patent. On May 26, 2023, we filed a lawsuit against Lupin in the U.S. District Court for the District of Delaware alleging infringement of the ’916 patent. On October 11, 2023, U.S. Patent No. 11,752,106 (the “’106 patent”) was listed in the Orange Book as covering KALYDECO granules. We have not yet received notification that Lupin has submitted a “Paragraph IV” certification for the ’106 patent. Other than the ’770 patent, which was listed in the Orange Book on April 14, 2022, Lupin does not appear to challenge our other U.S. patents covering KALYDECO granules, the last of which expires on August 5, 2027. Therefore, regardless of the outcome of the litigation, Lupin cannot receive final approval of its ANDA before that date. A scheduling order has been entered by the court and trial is set for April 2025. We intend to vigorously enforce our intellectual property rights relating to KALYDECO granules and the ’481, ’206, ’046, ’770, ’916, and ’106 patents.
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 in targeting or cutting DNA from Dr. Emmanuelle Charpentier, one of the named inventors of this patent portfolio. The patent portfolio also has named inventors who assigned their rights to the CVC Group. For example, in connection with their collaboration, Novartis and Intellia Therapeutics, Inc. have reportedly obtained a license to this patent portfolio in certain fields. Both the CVC Group and Broad have obtained granted patents that purport to cover aspects of CRISPR/Cas9 editing platform technology. Patents and patent applications in this patent portfolio have been the subject of numerous contentious proceedings in the U.S., Europe, and other jurisdictions, including interference proceedings in the USPTO between the CVC Group and (separately) Broad, Sigma-Aldrich and ToolGen. On February 28, 2021, the USPTO issued a decision in Interference No. 106, 115, concluding that Broad invented certain applications of CRISPR/Cas9 technology in eukaryotic cells before the CVC Group. The CVC Group has appealed the decision to the U.S. Court of Appeals for the Federal Circuit. If the decision is upheld on appeal (including a potential subsequent appeal to the Supreme Court), Broad would maintain its granted patents directed to those applications CRISPR/Cas9 technology in eukaryotic cells, and the CVC Group’s pending patent applications directed to that subject matter would not proceed to grant. We can give no assurances to the ultimate outcome of these proceedings or the disputes between the CVC Group and Broad, Sigma-Aldrich and ToolGen. In December 2023, we entered into an agreement with 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 Broad, other third parties have filed patent applications claiming CRISPR/Cas9-related inventions and may allege that they invented one or more of the inventions claimed by the CVC Group. Thus, the USPTO may, in the future, declare an interference between certain CVC Group patent applications and one or more patent applications. Third parties could seek to assert their patents, if issued, against us based on our CRISPR/Cas9-based activities, including commercialization. Defense of these claims, regardless of their merit, could involve substantial litigation expense and could result in a substantial diversion of management and other employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure. In that event, we could be unable to further develop and commercialize CASGEVY or other products that we may develop using the CRISPR/Cas9 technology we license from CRISPR.
To the extent that valid present or future third-party patents or other intellectual property rights cover our products, product candidates or technologies, we or our strategic collaborators may seek licenses or other agreements from the holders of such rights to avoid or settle legal claims. Such licenses may not be available on acceptable terms, which may hinder our ability to, or prevent us from being able to, manufacture and market our products. Payments under any licenses that we are able to obtain would reduce our profits derived from the covered products.
We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.
Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these employees or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these claims.

53


In addition, while it is our policy to require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Our and their assignment agreements may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.
If we fail in prosecuting or defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to management.
Risks Related To Our Operations
If we fail to scale our operations to accommodate growth, our business may suffer.
We have expanded and are continuing to expand our global operations and capabilities, which has placed, and will continue to place, significant demands on our management and our operational, research and development and financial infrastructure. To effectively manage our business, we need to continue to adapt as our business grows in scale and complexity across multiple disease states, modalities, and geographies, including by:
implement and clearly communicating our corporate-wide strategies;
enhancing our operational and financial infrastructure, including expansion of our controls over data, records and information;
enhancing our operational, administrative, financial and management processes, including our cross-functional decision-making processes and our budget prioritization systems;
effectively growing, training and managing our global employee base; and
expanding our compliance and legal resources.
A variety of risks associated with operating in foreign countries could materially adversely affect our business.
We have expanded our international operations over the past several years to market our medicines and expand our research and development capabilities. New laws and industry codes in the E.U. and elsewhere have expanded transparency requirements regarding payments and transfers of value to healthcare professionals, requirements surrounding patient-level clinical trial data, the protection of personal data and increased sanctions for violations. Collectively, our expansion and these new requirements are adding to our compliance costs and potentially exposes us to sanctions in the event of an infringement or failure to report in these jurisdictions. In addition, a significant portion of our commercial supply chain, including sourcing of raw materials and manufacturing, is located in China and the E.U. Consequently, we are, and will continue to be, subject to risks related to operating in foreign countries, including risks relating to intellectual property protections and business interruptions. These risks are increased with respect to countries such as China that have substantially different local laws and business practices and weaker protections for intellectual property. Risks associated with operating a global biotechnology company include:
differing regulatory requirements for drug approvals and regulation of approved drugs in foreign countries;
varying reimbursement regimes and difficulties or the inability to obtain reimbursement for our products in foreign countries in a timely manner;
differing patient treatment infrastructures, particularly since our business is focused on the treatment of serious diseases that affect relatively smaller numbers of patients and are typically prescribed by specialist physicians;
collectability of accounts receivable;
changes in tariffs, trade barriers, and regulatory requirements, the risks of which appear to have increased in the current political environment;

54


economic weakness, including recession and inflation, or political instability in particular foreign economies and markets;
differing levels of enforcement and/or recognition of contractual and intellectual property rights;
complying with local laws and regulations, which can change significantly over time;
foreign taxes, including withholding of payroll taxes;
foreign currency fluctuations, which could result in reduced revenues or increased operating expenses, and other obligations incident to doing business or operating in another country;
workforce uncertainty in countries where labor unrest is more common than in the U.S.;
reliance on third-party vendors, distributors and suppliers;
import and export licensing requirements, tariffs, and other trade and travel restrictions;
global or regional public health emergencies that could affect our operations or business;
production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and
business interruptions resulting from geo-political actions, including war and terrorism.
Our revenues are subject to foreign exchange rate fluctuations due to the global nature of our operations. Although we have foreign currency forward contracts to hedge certain forecasted product revenues denominated in foreign currencies, our efforts to reduce currency exchange losses may not be successful. As a result, currency fluctuations among our reporting currency, the U.S. dollar, and the currencies in which we do business will affect our operating results, often in unpredictable ways.
In addition, our international operations are subject to regulation under U.S. law. For example, the FCPA prohibits U.S. companies and their representatives from offering, promising, authorizing or making payments to foreign officials for the purpose of obtaining or retaining business abroad. In many countries, the health care professionals we regularly interact with may meet the definition of a foreign government official for purposes of the FCPA. We also are subject to import/export control laws. Failure to comply with domestic or foreign laws could result in various adverse consequences, including the possible delay in approval or refusal to approve a product, recalls, seizures, withdrawal of an approved product from the market, the imposition of civil or criminal sanctions, the prosecution of executives overseeing our international operations and corresponding bad publicity and negative perception of our company in foreign countries.
If we fail to attract and retain skilled employees, our business could be materially harmed.
Due to the highly technical nature of our drug discovery and development activities, we require the services of highly qualified and trained scientists who have the skills necessary to conduct these activities. In addition, we need to attract and retain employees with experience in development, marketing and commercialization of medicines and therapies, including cell and genetic therapies. We provide stock-related compensation benefits to all of our key employees that vest over time and therefore induce them to remain with us and have entered into employment agreements with some executives. However, the employment agreements can be terminated by the executive on relatively short notice. The value to employees of stock-related benefits that vest over time can be significantly affected by movements in our stock price and business performance, and may, at any point in time, be insufficient to counteract more lucrative offers from other companies. We face intense competition for our personnel from our competitors and other companies throughout our industry, especially with respect to employees with expertise in cell or genetic therapies. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. Moreover, the growth of local biotechnology companies and the expansion of major pharmaceutical companies into the Boston area has increased competition for the available pool of skilled employees, especially in technical fields. The high cost of living can make it difficult to attract employees to our global headquarters in Boston and our international headquarters in London. Current job market dynamics, caused in part by the effects of COVID-19 and other macro-level events, with many employers unable to fill existing openings at all levels of their organizations, could result in significant increases to our costs to recruit and retain employees. Challenges could adversely affect our operations and financial results if we do not have sufficient staff to perform necessary functions. In addition, the

55


available pool of skilled employees would be further reduced if immigration laws change in a manner that increases restrictions on immigration. Our ability to continue 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, there could be a material adverse effect on our business.
A breakdown or breach of our information technology systems could subject us to liability or interrupt the operation of our business.
We maintain and rely extensively on information technology systems and network infrastructures for the effective operation of our business. In the course of our business, we collect, store, and transmit confidential information (including personal information and intellectual property), and it is critical that we do so in a secure manner to maintain the confidentiality, integrity, and availability of such confidential information. A disruption, infiltration, or failure of our information technology systems or any of our data centers as a result of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or misuse, power disruptions, natural disasters, floods or accidents could cause breaches of data security and loss of critical data, which in turn could materially adversely affect our business and subject us to both private and governmental causes of action. While we have implemented security measures to minimize these risks to our data and information technology systems and have adopted a business continuity plan to deal with a disruption to our information technology systems, 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. In addition, we maintain cyber liability insurance, however, 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.
Cyber-attacks are increasing in their frequency, sophistication, and intensity, and are becoming increasingly difficult to detect. They are often carried out by well-resourced and skilled parties, including nation states, organized crime groups, “hacktivists” and employees or contractors acting carelessly or with malicious intent. Cyber-attacks include deployment of harmful malware and key loggers, ransomware, denial-of-service attacks, malicious websites, the use of social engineering, and other means to affect the confidentiality, integrity and availability of our technology systems and data. Cyber-attacks also include manufacturing, hardware or software supply chain attacks, which could cause a delay in the manufacturing of products or products produced for contract manufacturing or lead to a data privacy or security breach. Our key business partners face similar risks, and any security breach of their systems could adversely affect our security. In addition, our increased use of cloud technologies heightens these third party and other operational risks, and any failure by cloud or other technology service providers to adequately safeguard their systems and prevent cyber-attacks could disrupt our operations and result in misappropriation, corruption, or loss of confidential or propriety information. A significant portion of our workforce continues to leverage hybrid work. Risk of cyber-attack is increased with employees working remotely. Remote work increases the risk we may be vulnerable to cybersecurity-related events such as phishing attacks and other security threats.
Our business has a substantial risk of product liability claims and other litigation liability.
We are or may be involved in various legal proceedings, including securities/shareholder matters and claims related to product liability, intellectual property, employment law, competition law, data privacy, and breach of contract. Such proceedings may involve claims for, or the possibility of, damages or fines and penalties involving substantial amounts of money or other relief, including civil or criminal fines and penalties. If any of these legal proceedings were to result in an adverse outcome, it could have a material adverse effect on our business.
With respect to product liability and clinical trial risks, in the ordinary course of business we are subject to liability claims and lawsuits, including potential class actions, alleging that our products or product candidates have caused, or could cause, serious adverse events or other injury. We have product liability insurance and clinical trial insurance in amounts that we believe are adequate to cover this risk. However, our insurance may not provide adequate coverage against all potential liabilities. If a claim is brought against us, we might be required to pay legal and other expenses to defend the claim, as well as pay uncovered damage awards resulting from a claim brought successfully against us and these damages could be significant and have a material adverse effect on our financial condition. Furthermore, whether or not we are ultimately successful in defending any such claims, we might be required to direct significant financial and managerial resources to such defense and adverse publicity is likely to result.

56


If our facilities were to experience a catastrophic loss, our operations would be seriously harmed.
Most of our operations, including our research and development activities, are conducted in a limited number of facilities. If any of our major facilities were to experience a catastrophic loss, due to an earthquake, severe storms, fire or similar event, our operations could 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. We have adopted business continuity plans to address most crises. However, if we are unable to fully 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 research, development, manufacturing and/or commercial activities, large expenses to repair or replace the facility and/or the loss of critical data, which could have a material adverse effect on our business.
The use of social media platforms and artificial intelligence tools presents risks and challenges.
Social media is being used by third parties to communicate about our products and product candidates and the diseases our therapies are designed to treat. We believe that members of the communities supporting serious diseases may be more active on social media as compared to other patient populations due to the demographics of those patient populations. Social media practices in the pharmaceutical and biotechnology industries are evolving, which creates uncertainty and risk of noncompliance with regulations applicable to our business. For example, patients may use social media platforms to comment on the effectiveness of, or adverse experiences with, a product or a product candidate, which could result in reporting obligations. In addition, our employees may engage on social media in ways that may not comply with legal or regulatory requirements, which may give rise to liability, lead to the loss of trade secrets and other intellectual property, or result in public disclosure of protected personal information. There is a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social networking website. Negative sentiment about us or our business shared over social media, or misinformation disseminated from fraudulent accounts impersonating our employees or our business, or otherwise, could harm our business and reputation, whether or not it is based in fact. Certain data protection regulations, such as the GDPR, apply to personal data contained on social media. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions or incur harm to our business, including damage to our reputation. Similar risks relating to inappropriate disclosure of sensitive information or inaccurate information appearing in the public domain may also apply from our employees engaging with and use of new artificial intelligence tools, such as ChatGPT.
Risks Related to Financial Results and Holding Our Common Stock
Our stock price may fluctuate.
Market prices for securities of companies such as ours are highly volatile. From January 1, 2023 to December 31, 2023, our common stock traded between $282.21 and $413.00 per share. The market for our stock, like that of other companies in the biotechnology industry, has experienced significant price and volume fluctuations. The future market price of our securities could be significantly and adversely affected by factors such as:
the information contained in our quarterly earnings releases, including updates regarding our commercialized products or our product candidates, our net product revenues and operating expenses for completed periods and financial guidance regarding future periods;
announcements of FDA actions with respect to our therapies or those of our competitors, or regulatory filings for our therapies or those of our competitors, or announcements of interim or final results of clinical trials or nonclinical studies relating to our therapies or those of our competitors;
announcements we make or commentary by public equity analysts with respect to clinical development of the product candidates in our pain program;
developments in domestic and international governmental policy or regulation, for example, relating to drug pricing and tax reform;
technological innovations or the introduction of new drugs by our competitors;
government regulatory action;

57


public concern as to the safety of drugs developed by us or our competitors;
developments in patent or other intellectual property rights or announcements relating to these matters;
information disclosed by third parties regarding our business or products;
developments relating specifically to other companies and market conditions for pharmaceutical and biotechnology stocks or stocks in general;
business development, capital structuring or financing activities; and
general worldwide or national economic, political and capital market conditions, including as a result of inflation and rapid fluctuations in interest rates.
Following periods of volatility in the market price of a company’s securities, stockholder 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 a diversion of management’s attention and resources.
Our effective tax rate fluctuates, and changes in tax laws, regulations and treaties, unfavorable resolution to the tax positions we have taken or 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.
On December 12, 2022, E.U. member states reached an agreement to implement the minimum tax component (“Pillar Two”) of the Organization for Economic Co-operation and Development’s (the “OECD’s”), global international tax reform initiative with effective dates of January 1, 2024 and 2025. On July 17, 2023, the OECD published Administrative Guidance proposing certain safe harbors that effectively extend certain effective dates to January 1, 2027. E.U. member states need to adopt this Administrative Guidance in their local Pillar Two legislation for such safe harbors to apply. In addition, the U.K. has independently released draft legislation to introduce the OECD’s Pillar Two reforms into U.K. law. We are continuing to evaluate the potential impact on future periods of the Pillar Two guidance, pending legislative adoption by individual countries, including those in which we do business.
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.
Our quarterly operating results are subject to significant fluctuation.
Our operating results have fluctuated from quarter to quarter in the past, and we expect that they will continue to do so in the future. Our revenues are primarily dependent on the amount of net product revenues from sales of our CF medicines. Our total net product revenues could vary on a quarterly basis based on, among other factors, the timing of orders from our significant customers. Additional factors that have caused quarterly fluctuations to our operating results in recent years include variable amounts of revenues; expenses resulting from our significant investments in research and development, acquired in-process research and development, and commercialization activities; changes in the fair value of our strategic investments, derivative instruments and contingent consideration liabilities; charges for excess and obsolete inventories, interest income, interest expenses; and our provision for income taxes. Our revenues also are subject to foreign exchange rate fluctuations due to the global nature of our operations. Although we have foreign currency forward contracts to hedge forecasted product revenues denominated in foreign currencies, our efforts to reduce currency exchange losses may not be successful. As a result, currency fluctuations among our reporting currency, the U.S. dollar, and the currencies in which we

58


do business may affect our operating results, often in unpredictable ways. Our quarterly results also could be materially affected by significant charges, which may or may not be similar to charges we have experienced in the past. Most of our operating expenses relate to our research and development activities, do not vary directly with the amount of revenues and are difficult to adjust in the short term. As a result, if revenues in a particular quarter are below expectations, we are unlikely to reduce operating expenses proportionately for that quarter. These examples are only illustrative and other risks, including those discussed in these “Risk Factors,” could also cause fluctuations in our reported financial results. Our operating results during any one period do not necessarily suggest the results of future periods.
We expect that results from our clinical development activities and the clinical development activities of our competitors will continue to be released periodically, and may result in significant volatility in the price of our common stock.
Any new information regarding our products and product candidates, or competitive products or potentially competitive product candidates, can substantially affect investors’ perceptions regarding our future prospects. We, our collaborators, and our competitors periodically provide updates regarding drug and therapy development programs, typically through press releases, conference calls and presentations at medical conferences. These periodic updates often include interim or final results from clinical trials conducted by us or our competitors and/or information about our or our competitors’ expectations regarding regulatory filings and submissions as well as future clinical development of our products or product candidates, competitive products or potentially competitive product candidates. The timing of the release of information by us regarding our drug and therapy development programs is often beyond our control and is influenced by the timing of receipt of data from our clinical trials and by the general preference among pharmaceutical companies to disclose clinical data during medical conferences. In addition, the information disclosed about our clinical trials, or our competitors’ clinical trials, may be based on interim rather than final data that may involve interpretation difficulties and may in any event not accurately predict final results. The release of such information may result in volatility in the price of our common stock.
General Risk Factors
Future indebtedness could materially and adversely affect our financial condition, and the terms of our credit agreements impose restrictions on our business, reducing our operational flexibility and creating default risks.
In July 2022, we entered into a credit agreement providing for a $500.0 million revolving credit facility and terminated an existing $500.0 million credit agreement entered into in 2019. In September 2022, our $2.0 billion credit agreement that was entered into in 2020 expired in accordance with its terms. Subject to certain conditions, our current credit agreement provides that we may request the borrowing capacity be increased by an additional $500.0 million for a total of $1.0 billion. If we borrow under our current credit agreement or any future credit agreements, such indebtedness could have important consequences to our business, including increasing our vulnerability to general adverse financial, business, economic and industry conditions, as well as other factors that are beyond our control. The credit agreement requires that we comply with certain financial covenants, including a consolidated leverage ratio covenant. Further, the credit agreement includes negative covenants, subject to exceptions, 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, which would require us to repay all amounts owed under the credit agreements and/or our finance leases and could have a material adverse effect on our business. Additionally, our obligations under the credit agreement are unconditionally guaranteed by certain of our domestic subsidiaries. If we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.
Issuances of additional shares of our common stock could cause the price of our common stock to decline.
As of December 31, 2023, we had 257.7 million shares of common stock issued and outstanding. As of December 31, 2023, we also had 3.0 million unvested restricted stock units (“RSUs”), 1.2 million unvested performance stock units (“PSUs”), and outstanding options to purchase 1.9 million shares of common stock with a weighted-average exercise price of $151.37 per share.
The majority of our unvested RSUs are likely to vest based on our employees’ continued employment. The number of PSUs that vest is dependent on a potential range of shares issuable pursuant to certain financial and non-financial milestones, and our employees’ continued employment. Outstanding vested options are likely to be exercised if the market price of our common stock exceeds the applicable exercise price. In the future, we expect to issue a limited number of additional options

59


to our directors.
In addition, we may issue additional common stock or restricted securities in the future as part of financing activities or business development activities and any such issuances may have a dilutive effect on our then-existing shareholders. Sales of substantial amounts of our common stock in the open market, or the availability of such shares for sale, could adversely affect the price of our common stock. The issuance of restricted common stock or common stock upon exercise of any outstanding options would be dilutive, and may cause the market price for a share of our common stock to decline.
There can be no assurance that we will repurchase shares of common stock or that we will repurchase shares at favorable prices.
In February 2023, our Board of Directors approved a share repurchase program (the “Share Repurchase Program”) pursuant to which we are authorized to repurchase up to $3.0 billion of our common stock from time to time through open market or privately negotiated transactions. Our stock repurchases will depend 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.
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, places 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 ability to maintain and obtain adequate reimbursement for our products and product candidates, our ability to launch, commercialize and market our products or any of our other therapies for which we obtain regulatory approval, including CASGEVY, and our ability to obtain label expansions for existing therapies;
our expectations regarding our ability to continue to grow our CF business by increasing the number of people with CF eligible and able to receive our medicines and providing improved treatment options for people who are already eligible for one of our medicines;

60


the data that will be generated by ongoing and planned clinical trials and the ability to use that data to advance compounds, continue development or support regulatory filings, including from the multiple ascending dose portion of the Phase 1/2 clinical trial of VX-522, the durable efficacy and effectiveness of CASGEVY as one-time functional cure for people with SCD and TDT, and the benefit risk profile supporting VX-548 as a transformative option for acute pain as compared to existing agents, and that our triple combinations of vanzacaftor/tezacaftor/deutivacaftor will provide additional clinical benefits to people with CF who have at least one mutation in their CFTR;
our beliefs and plans with respect to the potential near-term launch of our triple combinations of vanzacaftor/tezacaftor/deutivacaftor for treatment of CF and for VX-548 for the treatment of acute pain;
our beliefs regarding the support provided by clinical trials and preclinical and nonclinical studies of our therapies for further investigation, clinical trials or potential use as a treatment;
our plans to continue investing in our research and development programs, including anticipated timelines for our programs, and our strategy to develop our pipeline programs, alone or with third party-collaborators;
our beliefs regarding the approximate patient populations for the disease areas on which we focus;
the potential benefits and therapeutic scope of our acquisitions and collaborations, including our acquisition of ViaCyte and its potential to accelerate development of our stem-cell based T1D programs, and our collaboration with CRISPR for their gene-editing technology to accelerate the development of our hypoimmune cell therapies for T1D;
potential business development activities, including the identification of potential collaborative partners or acquisition targets;
the establishment, development and maintenance of collaborative relationships, including potential milestone payments or other obligations;
our ability to expand and protect our intellectual property portfolio and otherwise maintain exclusive rights to products;
potential fluctuations in foreign currency exchange rates and the effectiveness of our foreign currency management program;
our expectations regarding the amount of cash to generated by operations, our cash balance and expected generation and interest income;
our expectations regarding our provision for or benefit from income taxes and the utilization of our deferred tax assets;
our ability to use our research programs to identify and develop new product candidates to address serious diseases and significant unmet medical needs;
the effectiveness of our governance, plans and strategy with respect to managing cybersecurity risks and other threats to our information technology systems;
our plans to expand, strengthen, and invest in our global supply chains and manufacturing infrastructure and capabilities, including for cell and gene therapies;
our ability to attract and retain skilled personnel;
our expectations involving governmental cost containment and other regulatory efforts;
our expectations surrounding the competitive landscape facing our products and product candidates; and
our liquidity and our expectations regarding the possibility of raising additional capital.
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.

61



ITEM 1B.UNRESOLVED STAFF COMMENTS
We did not receive any written comments from the Securities and Exchange Commission prior to the date 180 days before the end of the fiscal year ended December 31, 2023 regarding our filings under the Securities Exchange Act of 1934, as amended, that have not been resolved.

ITEM 1C.CYBERSECURITY
Risk Management and Strategy
We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to maintain the security, confidentiality, integrity, and availability of our business systems and confidential information, including personal information and intellectual property. Our cybersecurity program includes systems and processes for assessing, identifying and managing material risks from cybersecurity threats and include maintenance and monitoring of information security policies aligned with global regulatory controls; 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 includes processes to oversee and identify material risks from cybersecurity threats associated with our use of third-party service providers. We also engage a range of third-party experts in connection with various development, implementation, and maintenance activities related to our cybersecurity program.
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.
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 periodic updates to the Audit Committee in this regard, and covers the state of our cybersecurity program, supported by key performance indicators across the range of cybersecurity functions related to risk management and governance, identity and information asset protection, core security and endpoint security, and cyber threat operations. 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, Michael Daly. Mr. Daly has more than 35 years of experience in security and information systems and spent 25 years with Raytheon Technologies, most recently as Chief Technology Officer of Cybersecurity, Special Missions, Training & Services. Mr. Daly supported the U.S. President's National Security Telecommunications Advisory Committee for more than 20 years, is a member of the Massachusetts Cybersecurity Strategy Council, and is Chair of the Kogod Cybersecurity Governance Center at American University. Formerly, he served on the Rhode Island Homeland Security Advisory Board and was a member of various commercial cyber product councils.
Mr. Daly oversees a team of skilled cybersecurity professionals who have Certified Information Systems Security Professional (“CISSP”) credentials, Global Information Assurance Certification from the SANS Institute, and other security and network certifications. The cybersecurity team monitors and evaluates our cybersecurity posture and performance on an ongoing basis, including through regular vulnerability scans, penetration tests, and threat intelligence feeds. The cybersecurity team uses various tools and methodologies to manage cybersecurity risk that are tested on a regular cadence,

62


and assesses and evaluates cybersecurity incidents, escalating certain cybersecurity incidents to Mr. Daly according to protocol. Mr. Daly is continually informed regarding the performance of the cybersecurity program, as well as the latest developments in cybersecurity, including potential threats and innovative risk management techniques.

ITEM 2.PROPERTIES
Corporate Headquarters
We lease approximately 1.1 million square feet of office and laboratory space at our corporate headquarters in Boston, Massachusetts in two buildings pursuant to two leases that we entered into in May 2011. These leases commenced in December 2013 and extend until December 2028. We have an option to extend the term of the leases for an additional ten years.
Additional United States and Worldwide Locations
In addition to our corporate headquarters, we lease an aggregate of approximately 840,000 square feet of space globally. This space includes logistical, laboratory, commercial and manufacturing operations, as well as laboratory and office space to support our research and development organizations. We also own approximately 213,000 square feet at our continuous manufacturing facility in Massachusetts.

ITEM 3.LEGAL PROCEEDINGS
We are not currently subject to any material legal proceedings.

ITEM 4.MINE SAFETY DISCLOSURES
Not applicable.

63


PART II

ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our common stock is traded on The Nasdaq Global Select Market under the symbol “VRTX.”
Shareholders
As of February 9, 2024, there were 106 holders of record of our common stock.
Performance Graph
Our performance graph includes the NASDAQ Biotechnology Index, which we believe is a comparable index consisting of companies with similar industry classifications, and which we plan to use in our future performance graphs.
Stock Performance Chart_2023.jpg

64


Dividends
We have never paid any cash dividends on our common stock, and we do not anticipate paying any in the foreseeable future.
Issuer Repurchases of Equity Securities
In February 2023, our Board of Directors approved a share repurchase program (the “Share Repurchase Program”) pursuant to which we are authorized to repurchase up to $3.0 billion of our common stock. Our Share Repurchase Program does not have an expiration date and can be discontinued at any time. The table set forth below shows repurchases of securities by us during the three months ended December 31, 2023 under our Share Repurchase Program.

Period
Total Number
of Shares Purchased
Average Price
Paid per Share
Total Number of Shares Purchased as Part of
Publicly Announced Programs (1)
Approximate Dollar Value of Shares that May Yet Be
Purchased Under the Programs (1)
Oct. 1, 2023 to Oct. 31, 2023
179,000 $360.95 179,000 $2,651,316,977 
Nov. 1, 2023 to Nov. 30, 2023
172,552 $362.50 172,552 $2,588,767,489 
Dec. 1, 2023 to Dec. 31, 2023
46,464 $352.39 46,464 $2,572,394,027 
Total398,016 $360.62 398,016 $2,572,394,027 
(1)Under our Share Repurchase Program, we are authorized to purchase shares from time to time through open market or privately negotiated transactions. Such purchases may be made pursuant to Rule 10b5-1 plans or other means as determined by our management and in accordance with the requirements of the Securities and Exchange Commission.

ITEM 6.[RESERVED]

65


ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our discussion and analysis of our financial condition and results of operations for 2023 as compared to 2022 are discussed below. For a discussion of our financial condition and results of operations for 2022 as compared to 2021, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2022 Annual Report on Form 10-K, except as set forth below.
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 four approved medicines that treat the underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, and one approved therapy that treats severe sickle cell disease (“SCD”) and transfusion dependent beta thalassemia (“TDT”), life shortening inherited blood disorders. Our pipeline includes clinical-stage programs in CF, sickle cell disease, beta thalassemia, acute and neuropathic pain, APOL1-mediated kidney disease, type 1 diabetes, myotonic dystrophy type 1 and alpha-1 antitrypsin deficiency.
Our triple combination regimen, TRIKAFTA/KAFTRIO (elexacaftor/tezacaftor/ivacaftor and ivacaftor), was approved in 2019 in the United States (“U.S.”) and in 2020 in the European Union (“E.U.”). Collectively, our four medicines are being used to treat nearly three quarters of the approximately 92,000 people with CF in North America, Europe, and Australia. We are evaluating our CF medicines in additional patient populations, including younger children, with the goal of having small molecule treatments for all people who have at least one mutation in their cystic fibrosis transmembrane conductance regulator (“CFTR”) gene that is responsive to our CFTR modulators. We also are pursuing messenger ribonucleic acid (“mRNA”) and genetic therapies for people with CF who do not make full-length CFTR protein and, as a result, cannot benefit from our current CF medicines.
CASGEVY (exagamglogene autotemcel or “exa-cel”), an ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, was recently approved in the U.S., the E.U., the United Kingdom (“U.K.”), the Kingdom of Saudi Arabia (“Saudi Arabia”), and the Kingdom of Bahrain (“Bahrain”) for the treatment of people 12 years of age and older with SCD and TDT. We estimate approximately 35,000 people with severe SCD or TDT could be eligible for CASGEVY in the U.S. and Europe, with additional people in Saudi Arabia and Bahrain. In addition, we are preparing for near-term launches of potential new products in CF and acute pain.
Financial Highlights
Revenues
In 2023, our net product revenues increased to $9.9 billion as compared to $8.9 billion in 2022. The increase was primarily due to the continued strong uptake of TRIKAFTA/KAFTRIO in ex-U.S. markets and label extensions in younger age groups, and the continued performance of TRIKAFTA in the U.S., following the launch of TRIKAFTA in children with CF 2 to 5 years of age.
Expenses
Our total research and development (“R&D”), acquired in-process research and development (“AIPR&D”), and selling, general and administrative (“SG&A”) expenses increased to $4.8 billion in 2023 as compared to $3.6 billion in 2022. The increase was primarily due to increased AIPR&D, the progression of several product candidates in mid- to late-stage clinical development and costs to support global launches. Cost of sales was 13% and 12% of our net product revenues in 2023 and 2022, respectively.
Cash
Our total cash, cash equivalents and marketable securities increased to $13.7 billion as of December 31, 2023 as compared to $10.9 billion as of December 31, 2022 primarily due to our income from operations driven by our net product revenues, and interest income, partially offset by our income tax payments and repurchases of our common stock.

66


MDA Chart.gif
Note: Charts above may not add due to rounding.
Business Updates
Marketed Products
Cystic Fibrosis
We expect to grow our CF business with (i) continued uptake by patients in countries where we are early in our launch, such as those with recently achieved reimbursement agreements, (ii) label expansions, including into younger patient groups, and (iii) growth in the number of people living with CF. Recent progress in activities supporting continued uptake and label expansions is included below:
The U.S. Food and Drug Administration (“FDA”), the European Commission, the Medicines and Healthcare Products Regulatory Agency (“MHRA”), and Health Canada approved TRIKAFTA/KAFTRIO for the treatment of children with CF 2 to 5 years of age who have at least one F508del mutation in the CFTR gene.
The European Medicines Agency (“EMA”) validated the Marketing Authorization Application (“MAA”) extension for KAFTRIO in combination with ivacaftor to include people with CF who have a rare mutation in the CFTR gene that is responsive based on clinical and/or in vitro data, including the N1303K mutation. We plan to submit regulatory filings for these mutations in Australia, Brazil, Canada, New Zealand and Switzerland, and we plan to submit for regulatory approval of a subset of these mutations not currently included in the U.S. TRIKAFTA label to the FDA.
The FDA and the European Commission approved the use of ORKAMBI for children with CF 12 to less than 24 months of age who are homozygous for the F508del mutation in the CFTR gene.
The FDA and MHRA approved KALYDECO in children with CF from 1 month to less than 4 months of age.
Sickle Cell Disease and Beta Thalassemia
CASGEVY is now approved in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain for people 12 years of age and older with SCD or TDT.
The French National Authority for Health (“HAS”) approved our request for the implementation of an early access program (“EAP”) for the use of CASGEVY to treat eligible people with TDT from 12 to 35 years of age. We are also pursuing an EAP submission for SCD in France and we expect to receive the outcome of this decision in the coming months.
Our regulatory submission for CASGEVY in both SCD and TDT is currently under review in Switzerland. We expect to submit for regulatory approval of CASGEVY in Canada in the first half of 2024.

67


We have activated 12 authorized treatment centers (“ATCs”) in the U.S. and three ATCs in Europe. We are aiming to activate approximately 50 ATCs in the U.S. and 25 in Europe. We also have activated one of two planned ATCs in Saudi Arabia.
We entered into an agreement with Synergie Medication Collective, a medication contracting organization, which covers approximately 100 million people, to provide access to CASGEVY.
Potential Near-Term Launch Opportunities
We are preparing for the following near-term launches of potential new products:
Vanzacaftor/tezacaftor/deutivacaftor in CF
We completed the pivotal SKYLINE 102 and SKYLINE 103 clinical trials, which evaluate the efficacy and safety of our new once-daily investigational triple combination vanzacaftor/tezacaftor/deutivacaftor relative to TRIKAFTA in people with CF 12 years of age and older, and the RIDGELINE clinical trial of vanzacaftor/tezacaftor/deutivacaftor in children with CF 6 to 11 years of age, at the end of 2023.
In February 2024, we announced positive data from this Phase 3 program evaluating the new triple combination regimen. We expect to submit global regulatory filings by mid-2024, including a New Drug Application (“NDA”) to the FDA, using a priority review voucher, and MAAs to the EMA and Health Canada.
VX-548 in Acute Pain
We completed the pivotal program evaluating our lead compound, VX-548, for the treatment of moderate-to-severe acute pain, which included one randomized controlled Phase 3 pivotal trial in abdominoplasty, one randomized, controlled Phase 3 clinical trial in bunionectomy, and one single-arm safety and effectiveness clinical trial. In January 2024, we announced positive results from these clinical trials and we announced our plans to submit an NDA to the FDA for VX-548 in moderate-to-severe acute pain by mid-2024.
In the U.S., VX-548 has been granted Breakthrough Therapy and Fast Track designations for moderate-to-severe acute pain.
Pipeline
We continue to advance a diversified pipeline of potentially transformative medicines for serious diseases utilizing a range of modalities. Recent and anticipated progress in activities supporting these efforts is included below:
Cystic Fibrosis
In collaboration with Moderna, we are developing VX-522, a CFTR mRNA therapeutic for the treatment of people with CF who do not produce full-length CFTR protein. We completed dosing in the single ascending dose part of the clinical trial for VX-522 and initiated the multiple ascending dose part of the clinical trial in late 2023. We expect to share data from this clinical trial in late 2024 or early 2025. In the U.S., the FDA has granted Fast Track designation for VX-522.
We are investigating a portfolio of other small molecules targeting the underlying cause of CF with the aim of achieving carrier levels of CFTR function. We also are investigating additional potential treatments for people with CF who do not make full-length CFTR protein and cannot benefit from CFTR modulators.
Sickle Cell Disease and Beta Thalassemia
We have completed enrollment in two global Phase 3 clinical trials evaluating CASGEVY in children 5 to 11 years of age with SCD or TDT.
We continue to work on preclinical assets for myeloablative conditioning agents that would have milder side-effects and could be used in connection with CASGEVY, which could broaden the eligible patient population.

68


Peripheral Neuropathic Pain
We have completed the Phase 2 dose-ranging clinical trial evaluating VX-548 in patients with diabetic peripheral neuropathy, a common form of chronic peripheral neuropathic pain, and announced positive results from this clinical trial. We plan to meet with regulators in the first quarter of 2024 and then we expect to advance VX-548 for the treatment of diabetic peripheral neuropathy into pivotal development.
We initiated a second Phase 2 clinical trial evaluating VX-548 in patients with peripheral neuropathic pain in December 2023. This clinical trial will evaluate VX-548 in patients with lumbosacral radiculopathy, a second type of peripheral neuropathic pain. Screening, enrollment and dosing are underway in this clinical trial.
We expect to initiate a Phase 2 clinical trial evaluating the oral formulation of VX-993, a next generation NaV1.8 inhibitor, for the treatment of peripheral neuropathic pain in 2024.
Acute Pain
We have completed a Phase 1 clinical trial evaluating an oral formulation of VX-993, a next generation NaV1.8 inhibitor. We expect to initiate a Phase 2 clinical trial evaluating the oral formulation of VX-993 for the treatment of moderate-to-severe acute pain in the second half of 2024.
We anticipate completing IND-enabling studies and filing an Investigational New Drug Application (“IND”) for an intravenous formulation of VX-993 for the treatment of moderate-to-severe acute pain in 2024.
We are advancing multiple NaV1.7 inhibitors, including in combination with NaV1.8 inhibitors, through research and earlier stages of development for both acute and peripheral neuropathic pain.
APOL1-Mediated Kidney Disease
Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”), including APOL1-mediated focal segmental glomerulosclerosis (“FSGS”). We completed enrollment in the Phase 2B dose-ranging portion of the pivotal program for inaxaplin, a single Phase 2/3 clinical trial in patients with AMKD. We expect to select a dose and begin the Phase 3 portion of the clinical trial in the first quarter of 2024.
The FDA granted Breakthrough Therapy designation to inaxaplin for APOL1-mediated FSGS and the EMA granted Orphan Drug and PRIME designations to inaxaplin for AMKD.
Type 1 Diabetes
VX-880 is an allogeneic stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy, using standard immunosuppression to protect the implanted cells. We are evaluating VX-880 as a potential treatment for type 1 diabetes (“T1D”) in a sequential, three-part Phase 1/2 clinical trial. We have completed enrollment in Part C of the clinical trial. We have placed the clinical trial on a protocol-specified pause, pending review of the totality of the data by an independent data monitoring committee and global regulators, following two patient deaths, both unrelated to VX-880.
Our second Phase 1/2 program in T1D evaluates VX-264, which encapsulates the same VX-880 cells in a novel device designed to eliminate the need for immunosuppression. This trial is a sequential, multi-part study to evaluate the safety, tolerability and efficacy of VX-264. We have completed Part A of the clinical trial and Part B has been initiated in multiple centers and countries.
Our hypoimmune islet cell program uses CRISPR/Cas9 technology to gene-edit the same allogeneic stem cell-derived, fully differentiated islets used in the VX-880 and VX-264 programs. The goal is to cloak the cells from the immune system to explore another possible path to eliminate the need for immunosuppressive therapy. This program continues to progress through the research stage.

69


Myotonic Dystrophy Type 1
We have established a collaboration with Entrada Therapeutics, Inc. (“Entrada”) to address the functional impact of the causal mutation in the gene that causes myotonic dystrophy type 1 (“DM1”), which includes VX-670. VX-670 is designed to enable efficient intracellular delivery of an oligonucleotide, which we believe will address the underlying pathophysiology and restore normal cell function.
We initiated a Phase 1/2 clinical trial evaluating VX-670 in patients with DM1. The clinical trial is active and enrolling in Canada and will initiate in the U.K. in the near term.
Alpha-1 Antitrypsin Deficiency
We are working to address the underlying genetic cause of alpha-1 antitrypsin (“AAT”) deficiency (“AATD”). We are developing novel small molecule correctors of Z-AAT protein folding, with the goal of enabling the secretion of functional AAT into the blood and addressing both the lung and the liver aspects of AATD. We continue to enroll and dose healthy volunteers in Phase 1 clinical trials evaluating VX-634 and VX-668, our next-wave investigational molecule AAT correctors with significantly improved potency and drug-like properties as compared to the first-generation AATD correctors.
Our Business Environment
In 2023, our net product revenues came 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, including through label expansions, expanded reimbursement, and the development of new medicines. We are advancing our pipeline of product candidates for the treatment of serious diseases outside of CF, including CASGEVY, which recently received marketing approvals in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain for the treatment of SCD and TDT. We anticipate broad access with government and commercial payors for CASGEVY in the U.S., and we anticipate early access programs initially, such as the recently approved early access program for TDT in France, and are pursuing long-term reimbursement agreements outside of the U.S.
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 rapidly follow our first-in-class therapies that achieve proof-of-concept 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 do advance into development never receive marketing approval. Our investments in product candidates are subject to considerable risks. We closely monitor the results of our discovery, research, clinical trials and nonclinical studies and frequently evaluate our product development programs in light of new data and scientific, business and commercial insights, with the objective of balancing risk and potential. This process can result in rapid changes in focus and priorities as new information becomes available and as we gain additional understanding of our ongoing programs and potential new programs, as well as those of our competitors.
Our business also requires ensuring appropriate manufacturing and reimbursement of our products. 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 and our internal capabilities to manufacture and distribute our products for commercial sale and post-approval clinical trials and to

70


manufacture and distribute our product candidates for clinical trials. In addition to establishing supply chains for each new 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 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 products from third-party payors, including governmental organizations in the U.S. and ex-U.S. markets.
In the U.S., we have worked successfully with third-party payors to promptly obtain appropriate levels of reimbursement for our CF medicines and are currently working with U.S. government and commercial payors with respect to CASGEVY. We plan to continue to engage in discussions with numerous commercial insurers and managed health care organizations, along with government health programs that are typically managed by authorities in the individual states, to ensure that payors recognize the significant benefits that our therapies provide and provide patients with appropriate levels of access to our medicines and therapies now and in the future. We cannot, however, predict how recent changes in the law, including through the Inflation Reduction Act of 2022 and passage of state laws (e.g., transparency laws and prescription drug affordability boards), will affect our ability to negotiate successfully with third-party payors and distribute our products. Similarly, in ex-U.S. markets, we seek government reimbursement for our medicines on a country-by-country or region-by-region basis, as required. This is necessary for each new medicine, as well as for label expansions for our current medicines. We are beginning to work with ex-U.S. payors with respect to CASGEVY. We expect to continue to focus significant resources to expand and maintain reimbursement for our CF medicines, CASGEVY and, ultimately, pipeline therapies, in U.S. and ex-U.S. markets.
Strategic Transactions
Acquisitions
As part of our business strategy, we seek to acquire technologies, products, product candidates and other businesses that are aligned with our corporate and research and development strategies and complement and advance our ongoing research and development efforts. We have engaged in a number of acquisitions of privately held biotechnology companies over the last several years. In 2019, we acquired Semma Therapeutics, Inc., pursuant to which we established our T1D program, and Exonics Therapeutics, Inc., which enhanced our gene-editing capabilities to repair mutations that cause severe neuromuscular diseases, such as DM1 and Duchenne muscular dystrophy. In 2022, we acquired ViaCyte, Inc. (“ViaCyte”), which had intellectual property, tools, technologies and assets with the potential to accelerate development of our T1D programs. Our acquisition of ViaCyte, for $315.0 million, was accounted for as a business combination. As of the acquisition date, the cash payment was allocated primarily to goodwill and the fair value of an in-process research and development asset.
In 2023 and 2022, we also acquired programs that were accounted for as asset acquisitions resulting in $47.5 million and $60.0 million of AIPR&D, respectively.
Please refer to our critical accounting policies, “Acquisitions,” for further information regarding the significant judgments and estimates related to our acquisitions.
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, 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, in 2023, our total payments of $242.6 million to Entrada and our total upfront and milestone payments of $170.0 million to CRISPR related to T1D, because they are primarily attributable to acquired in-process research and development for which there is no

71


alternative future use. 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 (the “Original JDCA”) with CRISPR, pursuant to which we are developing and commercializing CASGEVY for SCD and TDT. The Original JDCA was entered into following our exercise of an option to co-develop and co-commercialize the hemoglobinopathies program that was contained in a collaboration agreement that we entered into with CRISPR in 2015.
In April 2021, we and CRISPR entered into an amendment and restatement of the Original JDCA (the “A&R JDCA”). In June 2021, we made a $900.0 million upfront payment to CRISPR in connection with the closing of the transactions contemplated by the A&R JDCA. We concluded that we did not have any alternative future use for the acquired in-process research and development and recorded this upfront payment to AIPR&D. Under the terms of the A&R JDCA, we lead worldwide development, manufacturing, and commercialization of CASGEVY. As of July 1, 2021, 60% of the net profits and net losses for CASGEVY are allocated to us and 40% of the net profits and net losses for CASGEVY are allocated to CRISPR, subject to certain adjustments. We concluded that the Original JDCA and the A&R JDCA are cost-sharing arrangements, which result in the net impact of the arrangements, excluding amounts recorded to AIPR&D, being recorded in “Research and development expenses” or “Selling, general and administrative expenses.” in our consolidated statements of income.
CASGEVY was approved by the FDA in December 2023 for the treatment of SCD. Upon this approval, we made a $200.0 million milestone payment to CRISPR, which we recorded within “Other intangible assets, net” on our consolidated balance sheet as of December 31, 2023. We also recorded an immaterial amount of intangible asset amortization expense to “Cost of sales” in the fourth quarter of 2023 related to this intangible asset. Subsequent to receiving marketing approval for CASGEVY, we continue to lead the research and development activities under the A&R JDCA, subject to CRISPR’s reserved right to conduct certain activities. We are reimbursed by CRISPR for its 40% share of these research and development activities, subject to certain adjustments, and we continue to record this reimbursement from CRISPR within “Research and development expenses.” We also share with CRISPR 40% of the net commercial profits or losses incurred with respect to CASGEVY, subject to certain adjustments. In 2023, the net commercial loss incurred with respect to CASGEVY was not material to our consolidated statement of income.
Acquired In-Process Research and Development Expenses
In 2023 and 2022, our AIPR&D included $527.1 million and $115.5 million, respectively, related to upfront, contingent milestone, or other payments pursuant to our business development transactions, including the collaborations, licenses of third-party technologies, and asset acquisitions described above. Please refer to Note B, “Collaboration, License and Other Arrangements,” for further information regarding our collaboration, in-license agreements and asset acquisitions.


72


RESULTS OF OPERATIONS
2023% Change2022% Change2021
(in millions, except percentages and per share amounts)
Revenues$9,869.2 11%$8,930.7 18%$7,574.4 
Operating costs and expenses6,037.2 31%4,623.3 (4)%4,792.3 
Income from operations3,832.0 (11)%4,307.4 55%2,782.1 
Other non-operating income (expense), net547.8 **(75.0)45%(51.7)
Provision for income taxes760.2 (16)%910.4 134%388.3 
Net income
$3,619.6 9%$3,322.0 42%$2,342.1 
Net income per diluted common share$13.89 $12.82 $9.01 
Diluted shares used in per share calculations260.5 259.1 259.9 
** Not meaningful
Revenues
2023
% Change
2022
% Change
2021
(in millions, except percentages)
TRIKAFTA/KAFTRIO$8,944.7 16%$7,686.8 35%$5,697.2 
KALYDECO475.5 (14)%553.2 (19)%684.2 
ORKAMBI326.0 (36)%510.7 (34)%771.6 
SYMDEKO/SYMKEVI123.0 (32)%180.0 (57)%420.4 
Product revenues, net9,869.2 11%8,930.7 18%7,573.4 
Other revenues
— **— **1.0 
Total revenues$9,869.2 11%$8,930.7 18%$7,574.4 
** Not meaningful
Product Revenues, Net
In 2023, our net product revenues increased by $938.5 million, or 11%, as compared to 2022. The increase was primarily due to the continued strong uptake of TRIKAFTA/KAFTRIO in ex-U.S. markets and label extensions in younger age groups, and the continued performance of TRIKAFTA in the U.S., following the launch of TRIKAFTA in children with CF 2 to 5 years of age. Decreases in revenues for our products other than TRIKAFTA/KAFTRIO were primarily the result of patients switching from these medicines to TRIKAFTA/KAFTRIO.
Our net product revenues from the U.S. and from ex-U.S. markets were as follows:
2023
% Change
2022
% Change
2021
(in millions, except percentages)
United States$6,040.4 6%$5,699.3 8%$5,287.3 
ex-U.S.3,828.8 18%3,231.4 41%2,286.1 
Product revenues, net$9,869.2 11%$8,930.7 18%$7,573.4 
We expect that our CF net product revenues will increase in 2024 as a result of the continued performance of TRIKAFTA/KAFTRIO, label expansions into younger age groups for our previously approved products, and expanded access to our medicines. Starting in the fourth quarter of 2023, we have received approval for CASGEVY in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain for the treatment of SCD and TDT. We expect 2024 to be a foundational year for CASGEVY, as we lay the groundwork for the first patients to initiate this multi-month treatment.

73


Operating Costs and Expenses
2023
% Change
2022
% Change
2021
(in millions, except percentages)
Cost of sales$1,262.2 17%$1,080.3 19%$904.2 
Research and development expenses3,162.9 25%2,540.3 31%1,937.8 
Acquired in-process research and development expenses527.1 356%115.5 (90)%1,113.3 
Selling, general and administrative expenses1,136.6 20%944.7 12%840.1 
Change in fair value of contingent consideration(51.6)**(57.5)**(3.1)
Total costs and expenses$6,037.2 31%$4,623.3 (4)%$4,792.3 
** Not meaningful
Beginning in 2022, we separately classify upfront, contingent milestone, or other payments pursuant to our business development transactions, including collaborations, licenses of third-party technologies, and asset acquisitions as “Acquired in-process research and development expenses,” in our consolidated statements of income in cases where such acquired assets do not have an alternative future use. To conform prior periods to our current presentation, we have reclassified $1.1 billion from “Research and development expenses” to AIPR&D for 2021.
Cost of Sales
Our cost of sales primarily consists of third-party royalties payable on net sales of our products as well as the cost of producing inventories. Pursuant to our agreement with the Cystic Fibrosis Foundation, our tiered third-party royalties on sales of TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, KALYDECO, and ORKAMBI, calculated as a percentage of net sales, range from the single digits to the sub-teens, with lower royalties on sales of TRIKAFTA/KAFTRIO than for our other products. Over the last several years, our cost of sales has been increasing due to increased net product revenues. Our cost of sales as a percentage of our net product revenues was 13% and 12% in 2023 and 2022, respectively. In 2024, we expect our total cost of sales, including as a percentage of our net product revenues, will increase due to expected increases in our CF net product revenues and costs associated with CASGEVY.
Research and Development Expenses
2023
% Change
2022
% Change
2021
(in millions, except percentages)
Research expenses$705.6 13%$626.7 22%$512.3 
Development expenses
2,457.3 28%1,913.6 34%1,425.5 
Total research and development expenses
$3,162.9 25%$2,540.3 31%$1,937.8 
Our research and development expenses include internal and external costs incurred for research and development of our products and product candidates. We do not assign our internal costs, such as salary and benefits, stock-based compensation expense, laboratory supplies and other direct expenses and infrastructure costs, to individual products or product candidates, because the employees within our research and development groups typically are deployed across multiple research and development programs. We assign external costs of services provided to us by clinical research organizations and other outsourced research by individual program. Our internal costs are greater than our external costs. All research and development costs for our products and product candidates are expensed as incurred.
Over the past three years, we have incurred $9.4 billion in total research and development and AIPR&D expenses associated with product discovery and development. The successful development of our product candidates is highly uncertain and subject to a number of risks. In addition, the duration of clinical trials may vary substantially according to the type, complexity and novelty of the product candidate and the disease indication being targeted. The FDA and comparable agencies in foreign countries impose substantial requirements on the introduction of therapeutic pharmaceutical products, typically requiring lengthy and detailed laboratory and clinical testing procedures, sampling activities and other costly and time-consuming procedures. Data obtained from nonclinical and clinical activities at any step in the testing process may be adverse and lead to discontinuation or redirection of development activities. Data obtained from these activities also are susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The duration and cost of

74


discovery, nonclinical studies and clinical trials may vary significantly over the life of a project and are difficult to predict. Therefore, accurate and meaningful estimates of the ultimate costs to bring our product candidates to market are not available.
Any estimates regarding development and regulatory timelines for our product candidates are highly subjective and subject to change. Until we have data from Phase 3 clinical trials, we cannot make a meaningful estimate regarding when, or if, a clinical development program will generate revenues and cash flows.
Research Expenses
2023Change %2022Change %2021
(in millions, except percentages)
Research Expenses:
Salary and benefits$184.1 15%$159.5 17%$136.7 
Stock-based compensation expense92.4 10%84.0 9%77.3 
Outsourced services and other direct expenses237.0 25%189.6 19%160.0 
Intangible asset impairment charge— **13.0 **— 
Infrastructure costs
192.1 6%180.6 31%138.3 
Total research expenses
$705.6 13%$626.7 22%$512.3 
** Not meaningful
Our research expenses have been increasing over the last several years as we have invested in our pipeline and expanded our cell and genetic therapy capabilities, resulting in increased headcount, outside services and other direct expenses, and infrastructure costs associated with our research facilities. We expect to continue to invest in our research programs with a focus on creating transformative medicines for serious diseases.
Development Expenses
2023Change %2022Change %2021
(in millions, except percentages)
Development Expenses:
Salary and benefits$590.9 24%$475.1 37%$347.6 
Stock-based compensation expense262.5 23%213.9 12%191.0 
Outsourced services and other direct expenses1,238.7 36%912.9 45%629.4 
Infrastructure costs
365.2 17%311.7 21%257.5 
Total development expenses
$2,457.3 28%$1,913.6 34%$1,425.5 
Our development expenses increased by $543.7 million, or 28%, in 2023 as compared to 2022, primarily due to increased costs to support clinical trials and drug supply associated with our advancing pipeline programs, including pain and T1D, and our stock-based compensation expense. We are investing significantly in headcount, leveraging outsourced services, and in infrastructure to support these programs. Our stock-based compensation expense increased in 2023 as compared to 2022, primarily due increased headcount eligible for our employee stock programs and the timing of expense recognition related to certain performance-based restricted stock units. We expect our development expenses to continue to increase in 2024 due to our advancing pipeline programs, including our T1D program.
Acquired In-process Research and Development Expenses
2023
% Change
2022
% Change
2021
(in millions, except percentages)
Acquired in-process research and development expenses$527.1 356%$115.5 (90)%$1,113.3 
AIPR&D in 2023 was primarily related to our $225.1 million upfront payment to Entrada, $100.0 million upfront

75


payment and $70.0 million T1D research milestone to CRISPR, $47.5 million acquisition of a novel GPCR program from Septerna, and various other payments. AIPR&D in 2022 was primarily related to the $60.0 million payment to acquire Catalyst’s complement portfolio, a $25.0 million upfront payment pursuant to our license agreement with Verve, and various other 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.
AIPR&D in 2021 primarily related to the $900.0 million upfront payment we made to CRISPR in connection with the A&R JDCA.
Selling, General and Administrative Expenses
2023
% Change
2022
% Change
2021
(in millions, except percentages)
Selling, general and administrative expenses$1,136.6 20%$944.7 12%$840.1 
Selling, general and administrative expenses increased by 20% in 2023 as compared to 2022, primarily due to the continued investment to support the commercialization of our medicines, including increased commercial headcount, outsourced services to support our pipeline product candidates and stock-based compensation expense. We expect our selling, general and administrative expenses to continue to increase in 2024 as we progress our efforts in preparation for the potential commercialization of VX-548 and launch CASGEVY.
Contingent Consideration
In 2023, the fair value of our contingent consideration decreased by $51.6 million primarily due to our determination that additional pre-clinical studies of the delivery system for our gene-editing components for Duchenne muscular dystrophy (“DMD”) will be required. In 2022, the fair value of our contingent consideration decreased by $57.5 million, primarily as a result of a revision to the scope of certain gene-editing programs in the second quarter of 2022. In future periods, we expect the fair value of contingent consideration to increase or decrease based on, among other things, our estimates of the probability of achieving and the timing of these contingent development and regulatory milestone payments, as well as the time value of money and changes in market interest rates.
Other Non-Operating Income (Expense), Net
Interest Income
Interest income increased to $614.7 million in 2023, as compared to $144.6 million in 2022, primarily due to increased market interest rates and increased cash equivalents and available-for-sale debt securities. Our future interest income is dependent on the amount of, and prevailing market interest rates on, our outstanding cash equivalents and available-for-sale debt securities.
Interest Expense
Interest expense was $44.1 million in 2023, as compared to $54.8 million in 2022. The majority of our interest expense in these periods was related to imputed interest expense associated with our leased corporate headquarters in Boston.
Other Income (Expense), Net
Other income (expense), net was expenses of $22.8 million and $164.8 million in 2023 and 2022, respectively. These amounts related primarily to net unrealized gains or losses resulting from changes in the fair value or sales of certain of our strategic equity investments, which consist of investments in our collaborators that may be public or private companies. To the extent that we continue to hold strategic equity investments in publicly traded companies, we expect that due to the volatility of the stock price of biotechnology companies, our other income (expense), net will fluctuate in future periods based on increases or decreases in the fair value of our strategic equity investments. As of December 31, 2023, these investments had a fair value of $46.0 million. We discuss these potential future fluctuations further in Item 7a. Quantitative and Qualitative Disclosures About Market Risk.

76


Income Taxes
Our effective tax rate fluctuates from year to year due to the global nature of our operations. The factors that most significantly impact our effective tax rate include changes in tax laws, variability in the allocation of our taxable earnings among multiple jurisdictions, the amount and characterization of our research and development expenses, the levels of certain deductions and credits, adjustments to the value of our uncertain tax positions, acquisitions and third-party collaboration and licensing transactions.
Our provision for income taxes was $760.2 million for 2023 and $910.4 million for 2022. Our effective tax rate of 17.4% for 2023 was lower than the U.S. statutory rate primarily due to a benefit from a research and development tax credit study that was completed in 2023 and excess tax benefits related to stock-based compensation, partially offset by changes in uncertain tax positions.
Our effective tax rate of 21.5% for 2022 was higher than the U.S. statutory rate primarily due to an increase in our uncertain tax positions associated with intercompany transfer pricing matters partially offset by excess tax benefits related to stock-based compensation, tax credits, and changes in our estimated prior-year tax liabilities.

LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes the components of our financial condition as of December 31, 2023 and 2022:
20232022
% Change
(in millions, except percentages)
Cash, cash equivalents and marketable securities:
Cash and cash equivalents$10,369.1 $10,504.0 
Marketable securities849.2 274.5 
Long-term marketable securities2,497.8 112.2 
Total cash, cash equivalents and marketable securities$13,716.1 $10,890.7 26%
Working Capital:
Total current assets$14,144.2 $13,234.8 7%
Total current liabilities(3,547.4)(2,742.1)29%
Total working capital$10,596.8 $10,492.7 1%
Working Capital
Our total working capital of $10.6 billion as of December 31, 2023 was similar to our total working capital of $10.5 billion as of December 31, 2022 primarily due to $3.8 billion of income from operations mostly offset by net purchases of long-term marketable securities of $2.4 billion, income tax payments and repurchases of our common stock of $427.6 million.
Cash Flows
202320222021
(in millions)
Net cash provided by (used in):
Operating activities$3,537.3 $4,129.9 $2,643.5 
Investing activities
$(3,141.7)$(321.1)$(340.9)
Financing activities$(562.2)$(67.7)$(1,478.0)
Operating Activities
Cash provided by operating activities was $3.5 billion in 2023 as compared to $4.1 billion in 2022. The largest driver of

77


the decrease in cash provided by operating activities in 2023 as compared to 2022 was an increase in cash paid for income taxes.
Investing Activities