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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________________________
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024
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 (617) 341-6100
____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.01 Par Value Per Share
VRTX
The Nasdaq Global Select Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, par value $0.01 per share
258,102,203
Outstanding at July 31, 2024

Table of Contents

VERTEX PHARMACEUTICALS INCORPORATED
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2024

TABLE OF CONTENTS
Page
Condensed Consolidated Statements of Income - Three and Six Months Ended June 30, 2024 and 2023
Condensed Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, 2024 and 2023
Condensed Consolidated Balance Sheets - June 30, 2024 and December 31, 2023
Condensed Consolidated Statements of Shareholders' Equity - Three and Six Months Ended June 30, 2024 and 2023
Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2024 and 2023
Item 1A.

“Vertex,” “we,” “us,” and “our” as used in this Quarterly Report on Form 10-Q refer to Vertex Pharmaceuticals Incorporated, a Massachusetts corporation, and its subsidiaries.
“Vertex®,” “KALYDECO®,” “ORKAMBI®,” “SYMDEKO®,” “SYMKEVI®,” “TRIKAFTA®,” “KAFTRIO®,” and CASGEVY™” are registered trademarks of Vertex. Other brands, names and trademarks contained in this Quarterly Report on Form 10-Q are the property of their respective owners.
We use the brand name for our products when we refer to the product that has been approved and with respect to the indications on the approved label. Otherwise, including in discussions of our development programs, we refer to our compounds and therapies by their scientific (or generic) name or VX developmental designation.


Table of Contents
Part I. Financial Information
Item 1.  Financial Statements
VERTEX PHARMACEUTICALS INCORPORATED
Condensed Consolidated Statements of Income
(in millions, except per share amounts)(unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Product revenues, net$2,645.6 $2,493.2 $5,336.2 $4,868.0 
Costs and expenses:
Cost of sales371.9 308.6 714.5 575.5 
Research and development expenses966.6 785.7 1,755.7 1,528.3 
Acquired in-process research and development expenses4,449.1 110.5 4,525.9 457.6 
Selling, general and administrative expenses372.2 262.6 714.9 503.7 
Change in fair value of contingent consideration0.5 (0.6)0.4 (2.5)
Total costs and expenses6,160.3 1,466.8 7,711.4 3,062.6 
(Loss) income from operations(3,514.7)1,026.4 (2,375.2)1,805.4 
Interest income156.5 144.7 337.7 267.3 
Interest expense(9.9)(11.2)(20.3)(22.6)
Other (expense) income, net(23.1)1.6 (54.3)2.9 
(Loss) income before provision for income taxes(3,391.2)1,161.5 (2,112.1)2,053.0 
Provision for income taxes202.4 245.8 381.9 437.5 
Net (loss) income$(3,593.6)$915.7 $(2,494.0)$1,615.5 
Net (loss) income per common share:
Basic$(13.92)$3.55 $(9.66)$6.27 
Diluted$(13.92)$3.52 $(9.66)$6.21 
Shares used in per share calculations:
Basic258.1 257.7 258.1 257.6 
Diluted258.1 260.4 258.1 260.3 
The accompanying notes are an integral part of these condensed consolidated financial statements.

2
Table of Contents
VERTEX PHARMACEUTICALS INCORPORATED
Condensed Consolidated Statements of Comprehensive Income
(in millions)(unaudited)

Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
Net (loss) income$(3,593.6)$915.7 $(2,494.0)$1,615.5 
Other comprehensive income (loss):
Unrealized holding losses on available-for-sale debt securities, net of tax of $1.5, $4.3, $6.9 and $3.5, respectively
(5.4)(15.5)(25.1)(12.6)
Unrealized gains (losses) on foreign currency forward contracts, net of tax of $(3.2), $4.2, $(15.5) and $11.6, respectively
11.8 (15.3)56.3 (42.1)
Foreign currency translation adjustment(1.2)4.1 5.6 14.1 
Total other comprehensive income (loss)
5.2 (26.7)36.8 (40.6)
Comprehensive (loss) income
$(3,588.4)$889.0 $(2,457.2)$1,574.9 
The accompanying notes are an integral part of these condensed consolidated financial statements.

3
Table of Contents
VERTEX PHARMACEUTICALS INCORPORATED
Condensed Consolidated Balance Sheets
(in millions, except share data)(unaudited)
June 30, 2024December 31, 2023
Assets
Current assets:
Cash and cash equivalents$4,580.1 $10,369.1 
Marketable securities1,215.4 849.2 
Accounts receivable, net1,656.1 1,563.4 
Inventories914.6 738.8 
Prepaid expenses and other current assets
575.4 623.7 
Total current assets
8,941.6 14,144.2 
Property and equipment, net1,200.9 1,159.3 
Goodwill1,088.0 1,088.0 
Other intangible assets, net
837.5 839.9 
Deferred tax assets
2,185.6 1,812.1 
Operating lease assets
569.8 293.6 
Long-term marketable securities4,393.1 2,497.8 
Other assets
915.6 895.3 
Total assets
$20,132.1 $22,730.2 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable$327.9 $364.9 
Accrued expenses2,940.0 2,655.3 
Other current liabilities
279.3 527.2 
Total current liabilities
3,547.2 3,547.4 
Long-term finance lease liabilities346.6 376.1 
Long-term operating lease liabilities586.8 348.6 
Other long-term liabilities
876.8 877.7 
Total liabilities
5,357.4 5,149.8 
Commitments and contingencies— — 
Shareholders’ equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued and outstanding
— — 
Common stock, $0.01 par value; 500,000,000 shares authorized, 258,015,301 and 257,695,221 shares issued and outstanding, respectively
2.6 2.6 
Additional paid-in capital7,101.2 7,449.7 
Accumulated other comprehensive income (loss)22.5 (14.3)
Retained earnings
7,648.4 10,142.4 
Total shareholders’ equity
14,774.7 17,580.4 
Total liabilities and shareholders’ equity
$20,132.1 $22,730.2 
The accompanying notes are an integral part of these condensed consolidated financial statements.

4
Table of Contents
VERTEX PHARMACEUTICALS INCORPORATED
Condensed Consolidated Statements of Shareholders’ Equity
(in millions)(unaudited)
Three Months Ended
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal Shareholders’ Equity
SharesAmount
Balance at March 31, 2023257.5 $2.6 $7,220.2 $(13.1)$7,222.6 $14,432.3 
Other comprehensive loss, net of tax— — — (26.7)— (26.7)
Net income— — — — 915.7 915.7 
Repurchases of common stock(0.0)(0.0)(25.5)— — (25.5)
Common stock withheld for employee tax obligations(0.0)(0.0)(3.1)— — (3.1)
Issuance of common stock under benefit plans0.3 0.0 57.6 — — 57.6 
Stock-based compensation expense
— — 119.9 — — 119.9 
Balance at June 30, 2023257.8 $2.6 $7,369.1 $(39.8)$8,138.3 $15,470.2 
Balance at March 31, 2024258.3 $2.6 $7,284.7 $17.3 $11,242.0 $18,546.6 
Other comprehensive income, net of tax— — — 5.2 — 5.2 
Net loss— — — — (3,593.6)(3,593.6)
Repurchases of common stock(0.8)0.0 (315.8)— — (315.8)
Common stock withheld for employee tax obligations(0.1)0.0 (80.5)— — (80.5)
Issuance of common stock under benefit plans0.6 0.0 55.8 — — 55.8 
Stock-based compensation expense
— — 157.0 — — 157.0 
Balance at June 30, 2024258.0 $2.6 $7,101.2 $22.5 $7,648.4 $14,774.7 
Six Months Ended
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal Shareholders’ Equity
SharesAmount
Balance at December 31, 2022257.0 $2.6 $7,386.5 $0.8 $6,522.8 $13,912.7 
Other comprehensive loss, net of tax— — — (40.6)— (40.6)
Net income
— — — — 1,615.5 1,615.5 
Repurchases of common stock(0.5)(0.0)(161.1)— — (161.1)
Common stock withheld for employee tax obligations(0.6)(0.0)(169.7)— — (169.7)
Issuance of common stock under benefit plans1.9 0.0 70.7 — — 70.7 
Stock-based compensation expense
— — 242.7 — — 242.7 
Balance at June 30, 2023257.8 $2.6 $7,369.1 $(39.8)$8,138.3 $15,470.2 
Balance at December 31, 2023257.7 $2.6 $7,449.7 $(14.3)$10,142.4 $17,580.4 
Other comprehensive income, net of tax— — — 36.8 — 36.8 
Net loss
— — — — (2,494.0)(2,494.0)
Repurchases of common stock(1.1)(0.0)(456.2)— — (456.2)
Common stock withheld for employee tax obligations(0.7)(0.0)(314.0)— — (314.0)
Issuance of common stock under benefit plans2.1 0.0 71.7 — — 71.7 
Stock-based compensation expense
— — 350.0 — — 350.0 
Balance at June 30, 2024258.0 $2.6 $7,101.2 $22.5 $7,648.4 $14,774.7 
The accompanying notes are an integral part of these condensed consolidated financial statements.

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VERTEX PHARMACEUTICALS INCORPORATED
Condensed Consolidated Statements of Cash Flows
(in millions)(unaudited)
Six Months Ended June 30,
20242023
Cash flows from operating activities:
Net (loss) income$(2,494.0)$1,615.5 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Stock-based compensation expense346.1 241.7 
Depreciation and amortization expense107.5 80.2 
Deferred income taxes(277.1)(290.0)
Losses (gains) on equity securities39.7 (6.0)
Increase (decrease) in fair value of contingent consideration0.4 (2.5)
Other non-cash items, net(57.5)11.1 
Changes in operating assets and liabilities:
Accounts receivable, net(116.5)(93.4)
Inventories(187.3)(155.4)
Prepaid expenses and other assets(56.7)26.6 
Accounts payable(25.0)71.3 
Accrued expenses362.4 417.4 
Other liabilities(89.0)117.8 
Net cash (used in) provided by operating activities(2,447.0)2,034.3 
Cash flows from investing activities:
Purchases of available-for-sale debt securities(3,895.1)(2,390.8)
Sales and maturities of available-for-sale debt securities1,893.1 289.8 
Acquisition of available-for-sale debt securities from Alpine Immune Sciences, Inc.(258.0)— 
Purchases of property and equipment(137.4)(101.7)
Net payments related to finite-lived intangible assets(187.7)— 
Sale of equity securities— 95.1 
Other investing activities(15.0)(29.9)
Net cash used in investing activities(2,600.1)(2,137.5)
Cash flows from financing activities:
Issuances of common stock under benefit plans71.9 72.8 
Repurchases of common stock(451.5)(161.1)
Payments in connection with common stock withheld for employee tax obligations(314.0)(169.7)
Payments on finance leases(26.9)(21.6)
Other financing activities4.4 2.2 
Net cash used in financing activities(716.1)(277.4)
Effect of changes in exchange rates on cash(18.1)22.0 
Net decrease in cash, cash equivalents and restricted cash(5,781.3)(358.6)
Cash, cash equivalents and restricted cash—beginning of period10,372.3 10,512.0 
Cash, cash equivalents and restricted cash—end of period$4,591.0 $10,153.4 
Supplemental disclosure of cash flow information:
Cash paid for income taxes$531.8 $618.7 
Cash paid for interest$19.7 $22.0 
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The accompanying notes are an integral part of these condensed consolidated financial statements.
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VERTEX PHARMACEUTICALS INCORPORATED
Notes to Condensed Consolidated Financial Statements (unaudited)

A.Basis of Presentation and Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited and have been prepared by Vertex Pharmaceuticals Incorporated (“Vertex,” “we,” “us” or “our”) in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The condensed consolidated financial statements reflect the operations of Vertex and our wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated. We operate in one segment, pharmaceuticals.
Certain information and footnote disclosures normally included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report on Form 10-K”) have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position and results of income for the interim periods ended June 30, 2024 and 2023.
The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full fiscal year. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2023, which are contained in our 2023 Annual Report on Form 10-K.
Use of Estimates
The preparation of condensed consolidated financial statements in accordance with U.S. GAAP requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of our condensed consolidated financial statements, and the amounts of revenues and expenses during the reported periods. We base our estimates on historical experience and various other assumptions, including in certain circumstances future projections that we believe to be reasonable under the circumstances. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.
Recently Adopted Accounting Standards
As noted in Note A, “Nature of Business and Accounting Policies,” in our 2023 Annual Report on Form 10-K, we did not adopt any accounting standards that had a significant impact on our consolidated financial statements in the three years ended December 31, 2023.
Recently Issued Accounting Standards
Segment Reporting
In 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public entities to disclose significant segment expenses and other segment items. ASU 2023-07 also requires public entities to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. ASU 2023-07 becomes effective for the annual period starting on January 1, 2024, and for the interim periods starting on January 1, 2025. We are in the process of analyzing the impact that the adoption of ASU 2023-07 will have on our segment disclosures.
Income Tax Disclosures
In 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public entities to disclose in their rate reconciliation table additional categories of information about federal, state and foreign income taxes and to provide more details about the reconciling items in some categories if items meet a quantitative threshold. ASU 2023-09 becomes effective for the annual period starting on January 1, 2025. We are in the process of analyzing the impact that the adoption of ASU 2023-09 will have on our income tax disclosures.
Summary of Significant Accounting Policies
Our significant accounting policies are described in Note A, “Nature of Business and Accounting Policies,” in our 2023 Annual Report on Form 10-K.


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VERTEX PHARMACEUTICALS INCORPORATED
Notes to Condensed Consolidated Financial Statements (unaudited)
B.Revenue Recognition
Disaggregation of Revenue
Revenues by Product
“Product revenues, net” consisted of the following:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions)
TRIKAFTA/KAFTRIO$2,449.2 $2,240.4 $4,932.8 $4,337.1 
Other CF products196.4 252.8 403.4 530.9 
Total product revenues, net$2,645.6 $2,493.2 $5,336.2 $4,868.0 
Product Revenues by Geographic Location
“Product revenues, net” by geographic region, based on the location of the customer, consisted of the following:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions)
United States$1,614.3 $1,507.8 $3,134.2 $2,911.6 
Outside of the United States
Europe806.8 800.0 1,774.2 1,607.2 
Other
224.5 185.4 427.8 349.2 
Total product revenues outside of the United States1,031.3 985.4 2,202.0 1,956.4 
Total product revenues, net
$2,645.6 $2,493.2 $5,336.2 $4,868.0 
Contract Liabilities
We had contract liabilities of $128.3 million and $170.3 million as of June 30, 2024 and December 31, 2023, respectively, related to annual contracts with government-owned and supported customers in international markets that limit the amount of annual reimbursement we can receive for our cystic fibrosis (“CF”) products. Upon exceeding the annual reimbursement amount provided by the customer’s contract with us, our CF products are provided free of charge, which is a material right. These contracts include upfront payments and fees. If we estimate that we will exceed the annual reimbursement amount under a contract, we defer a portion of the consideration received for shipments made up to the annual reimbursement limit as a portion of “Other current liabilities.” Once the reimbursement limit has been reached, we recognize the deferred amount as revenue when we ship the free products. Our CF product revenue contracts include performance obligations that are one year or less.
Our contract liabilities at the end of each fiscal year relate to contracts with CF annual reimbursement limits in international markets in which the annual period associated with the contract is not the same as our fiscal year. In these markets, we recognize revenues related to performance obligations satisfied in previous years; however, these revenues do not relate to any performance obligations that were satisfied more than 12 months prior to the beginning of the current year.

C.Collaboration, License and Other Arrangements
We have entered into numerous business development agreements with third parties to collaborate on research, development and commercialization programs, license technologies, or acquire assets. Our “Acquired in-process research and development expenses” (“AIPR&D”) included $4.4 billion and $4.5 billion in the three and six months ended June 30, 2024, respectively, primarily due to our acquisition of Alpine Immune Sciences, Inc. (“Alpine”) as discussed below. Our AIPR&D

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VERTEX PHARMACEUTICALS INCORPORATED
Notes to Condensed Consolidated Financial Statements (unaudited)
included $110.5 million and $457.6 million in the three and six months ended June 30, 2023, respectively, related to upfront, contingent milestone, or other payments pursuant to our business development transactions.
Our collaboration, licensing and asset acquisition agreements that had a significant impact on our financial statements for the three and six months ended June 30, 2024 and 2023 or were new or materially revised during the three and six months ended June 30, 2024, are described below. Additional agreements were described in Note B, “Collaboration, License and Other Arrangements,” of our 2023 Annual Report on Form 10-K.
Asset Acquisition
Alpine Immune Sciences, Inc. - povetacicept
On May 20, 2024, we acquired all of the issued and outstanding shares of common stock of Alpine, a publicly traded biotechnology company focused on discovering and developing innovative, protein-based immunotherapies for approximately $5.0 billion in cash. We funded the Alpine acquisition with our cash and cash equivalents.
Alpine’s lead molecule, povetacicept, is a highly potent and effective dual antagonist of B cell activating factor (“BAFF”) and a proliferation inducing ligand (“APRIL”). Through Phase 2 development, povetacicept has shown potential best-in-class efficacy in IgA nephropathy (“IgAN”), a serious, progressive, autoimmune disease of the kidney that can lead to end-stage-renal disease. Due to its mechanism of action as a dual BAFF/APRIL antagonist, povetacicept also holds the potential to benefit patients with other serious autoimmune diseases of the kidney, such as membranous nephropathy and lupus nephritis. We accounted for the Alpine transaction as an asset acquisition because povetacicept represents substantially all of the fair value of the gross assets that we acquired. As a result, $4.4 billion of fair value attributed to povetacicept was expensed to AIPR&D in the three and six months ended June 30, 2024.
We paid total cash of $5.0 billion at the acquisition date, which included $4.8 billion to acquire Alpine and $197.6 million for cash-settled unvested Alpine equity awards. The $197.6 million represents post-acquisition expense, which was recorded as $165.0 million of “Research and development expenses” and $32.6 million of “Selling, general and administrative expense” in the three and six months ended June 30, 2024.
The total cash paid to acquire Alpine, allocation of consideration to the assets acquired and liabilities assumed and AIPR&D was as follows:
(in millions)
Cash consideration to acquire Alpine’s outstanding common stock$4,536.9 
Cash consideration for Alpine’s vested and unvested equity awards420.6 
Total cash consideration paid to Alpine4,957.5 
Less: Expense related to unvested equity awards(197.6)
Transaction costs40.7 
Total consideration allocated$4,800.6 
Cash and cash equivalents$31.9 
Current marketable securities209.5 
Long-term marketable securities48.5 
Deferred tax asset105.5 
Total other assets19.5 
Total liabilities(37.5)
Total identifiable assets acquired, net377.4 
Acquired in-process research and development expense4,423.2 
Total consideration allocated$4,800.6 

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VERTEX PHARMACEUTICALS INCORPORATED
Notes to Condensed Consolidated Financial Statements (unaudited)
In-license Agreements
CRISPR Therapeutics AG
CRISPR-Cas9 Gene-editing Therapies Agreements
In 2015, we entered into a strategic collaboration, option, and license agreement (the “CRISPR Agreement”) with CRISPR Therapeutics AG and its affiliates (“CRISPR”) to collaborate on the discovery and development of potential new treatments aimed at the underlying genetic causes of human diseases using CRISPR-Cas9 gene-editing technology. We had the exclusive right to license certain targets. In 2019, we elected to exclusively license three targets, including CF, pursuant to the CRISPR Agreement. For each of the three targets that we elected to license, CRISPR has the potential to receive up to an additional $410.0 million in development, regulatory and commercial milestones as well as royalties on resulting net product sales.
In 2017, we entered into a joint development and commercialization agreement with CRISPR (the “CRISPR JDCA”), which we amended and restated in 2021, pursuant to the terms of the CRISPR Agreement. Under the CRISPR JDCA, we and CRISPR were co-developing and preparing to co-commercialize CASGEVY for the treatment of hemoglobinopathies, including treatments for severe sickle cell disease (“SCD”) and transfusion-dependent beta thalassemia.
Pursuant to the CRISPR JDCA, we lead global development, manufacturing and commercialization of CASGEVY, with support from CRISPR. We also conduct all research, development, manufacturing, and commercialization activities relating to other product candidates and products under the CRISPR JDCA throughout the world subject to CRISPR’s reserved right to conduct certain activities.
CASGEVY was approved by the U.S. Food and Drug Administration in December 2023 for the treatment of SCD. In connection with this approval, we made a $200.0 million milestone payment to CRISPR in January 2024, which we accrued to “Other current liabilities” and recorded within “Other intangible assets, net” on our consolidated balance sheet as of December 31, 2023. Subsequent to receiving marketing approval for CASGEVY, we continue to lead the research and development activities under the CRISPR JDCA, subject to CRISPR’s reserved right to conduct certain activities. We are reimbursed by CRISPR for its 40% share of these research and development activities, subject to certain adjustments, and we record this reimbursement from CRISPR as a credit within “Research and development expenses.” We also share with CRISPR 40% of the net commercial profits or losses incurred with respect to CASGEVY, subject to certain adjustments, which is recorded to “Cost of sales.” The net commercial profits or losses equal the sum of the product revenues, cost of sales and selling, general and administrative expenses that we have recognized related to the CRISPR JDCA.
In the three and six months ended June 30, 2024, we recognized net reimbursements from CRISPR pursuant to the CRISPR JDCA as credits to “Cost of sales” of $15.9 million and $31.7 million, respectively, related to CRISPR’s share of the CRISPR JDCA’s net commercial loss, and to “Research and development expenses” of $11.6 million and $23.3 million, respectively, related to CRISPR’s share of the CRISPR JDCA’s research and development activities.
Prior to receiving marketing approvals for CASGEVY in various markets beginning in December 2023, we accounted for the CRISPR JDCA as a cost-sharing arrangement, with costs incurred related to CASGEVY allocated 60% to us and 40% to CRISPR, subject to certain adjustments. In the three and six months ended June 30, 2023, we recognized net reimbursements from CRISPR as credits to “Research and development expenses” of $17.9 million and $35.8 million, respectively, and to “Selling, general and administrative expenses” of $8.3 million and $14.2 million, respectively, related to CRISPR’s share of the CRISPR JDCA’s operating expenses.
CRISPR-Cas9 Gene-editing Hypoimmune Cell Therapies Agreement
In March 2023, we entered into a non-exclusive license agreement (the “CRISPR T1D Agreement”) for the use of CRISPR’s CRISPR-Cas9 gene-editing technology to accelerate the development of our hypoimmune cell therapies for type 1 diabetes (“T1D”). Pursuant to the CRISPR T1D Agreement, we made a $100.0 million upfront payment to CRISPR, and we determined that substantially all the fair value of our upfront payment was attributable to in-process research and development, for which there is no alternative future use, and that no substantive processes were acquired that would constitute a business. In the second quarter of 2023, we achieved a research milestone that resulted in a $70.0 million payment to CRISPR. We recorded the upfront payment and the research milestone to AIPR&D in the first and second quarters of 2023, respectively, resulting in $70.0 million and $170.0 million of AIPR&D in the three and six month ended June 30, 2023, respectively. CRISPR is eligible to receive up to an additional $160.0 million in research, development, regulatory and commercial milestones for any products that may result from the agreement, as well as royalties on resulting net product sales.

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VERTEX PHARMACEUTICALS INCORPORATED
Notes to Condensed Consolidated Financial Statements (unaudited)
Entrada Therapeutics, Inc.
In February 2023, we closed a strategic collaboration and license agreement (the “Entrada Agreement”) with Entrada Therapeutics, Inc. (“Entrada”) focused on discovering and developing intracellular therapeutics for myotonic dystrophy type 1 (“DM1”). Upon closing, we made an upfront payment of $225.1 million to Entrada, and purchased $24.9 million of Entrada’s common stock in connection with the Entrada Agreement. We determined that substantially all the fair value of our upfront payment was attributable to in-process research and development, for which there is no alternative future use, and that no substantive processes were acquired that would constitute a business. We recorded the upfront payment to AIPR&D in the first quarter of 2023. We recorded the investment in Entrada’s common stock at fair value on our condensed consolidated balance sheet within “Marketable securities.” In the first quarter of 2024, Entrada earned a $75.0 million milestone, which we recorded to AIPR&D in the three months ended March 31, 2024 and paid in the second quarter of 2024. We had accrued the milestone to “Other current liabilities” as of March 31, 2024. Entrada is eligible to receive up to an additional $335.0 million in development, regulatory and commercial milestones for any products that may result from the Entrada Agreement, as well as royalties on resulting net product sales.
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. We record expenses related to these royalty obligations to “Cost of sales.”

D.Earnings Per Share
The following table sets forth the computation of basic and diluted net (loss) income per common share for the periods ended:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions, except per share amounts)
Net (loss) income$(3,593.6)$915.7 $(2,494.0)$1,615.5 
Basic weighted-average common shares outstanding258.1 257.7 258.1 257.6 
Effect of potentially dilutive securities:
Restricted stock units (including performance-based restricted stock units (“PSUs”))
— 1.4 — 1.5 
Stock options— 1.3 — 1.2 
Employee stock purchase program
— 0.0 — 0.0 
Diluted weighted-average common shares outstanding258.1 260.4 258.1 260.3 
Basic net (loss) income per common share$(13.92)$3.55 $(9.66)$6.27 
Diluted net (loss) income per common share$(13.92)$3.52 $(9.66)$6.21 

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VERTEX PHARMACEUTICALS INCORPORATED
Notes to Condensed Consolidated Financial Statements (unaudited)
We did not include the securities in the following table in the computation of the diluted net (loss) income per common share because the effect would have been anti-dilutive during each period:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions)
Unvested restricted stock units (including PSUs)3.2 — 1.6 0.3 
Stock options1.7 0.0 0.8 0.0 

E.Fair Value Measurements
The following fair value hierarchy is used to classify assets and liabilities based on observable inputs and unobservable inputs used to determine the fair value of our financial assets and liabilities:
Level 1:
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
The following tables set forth our financial assets and liabilities subject to fair value measurements by level within the fair value hierarchy:
As of June 30, 2024As of December 31, 2023
Total
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
(in millions)
Financial instruments carried at fair value (asset positions):
Cash equivalents$1,836.1 $1,152.5 $683.6 $— $7,033.9 $5,397.3 $1,636.6 $— 
Marketable securities:
Corporate equity securities30.6 30.6 — — 46.0 46.0 — — 
U.S. Treasury securities1,389.5 1,389.5 — — 546.5 546.5 — — 
U.S. government agency securities
367.6 — 367.6 — 425.2 — 425.2 — 
Asset-backed securities891.9 — 891.9 — 306.0 — 306.0 — 
Certificates of deposit20.2 — 20.2 — 33.7 — 33.7 — 
Corporate debt securities2,776.9 — 2,776.9 — 1,802.8 — 1,802.8 — 
Commercial paper131.8 — 131.8 — 186.8 — 186.8 — 
Prepaid expenses and other current assets:
Foreign currency forward contracts36.0 — 36.0 — 1.8 — 1.8 — 
Other assets:
Foreign currency forward contracts4.8 — 4.8 — — — — — 
Total financial assets
$7,485.4 $2,572.6 $4,912.8 $— $10,382.7 $5,989.8 $4,392.9 $— 
Financial instruments carried at fair value (liability positions):
Other current liabilities:
Foreign currency forward contracts
$(0.9)$— $(0.9)$— $(33.7)$— $(33.7)$— 
Other long-term liabilities:
Contingent consideration(77.8)— — (77.8)(77.4)— — (77.4)
Total financial liabilities
$(78.7)$— $(0.9)$(77.8)$(111.1)$— $(33.7)$(77.4)
Please refer to Note F, “Marketable Securities and Equity Investments,” for the carrying amount and related unrealized gains (losses) by type of investment. Our cash equivalents primarily include money market funds and time deposits.

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VERTEX PHARMACEUTICALS INCORPORATED
Notes to Condensed Consolidated Financial Statements (unaudited)
Fair Value of Corporate Equity Securities
We classify our investments in publicly traded corporate equity securities as “Marketable securities” on our condensed consolidated balance sheets. Generally, our investments in the common stock of publicly traded companies are valued based on Level 1 inputs because they have readily determinable fair values. However, certain of our investments in publicly traded companies have been or continue to be valued based on Level 2 inputs due to transfer restrictions associated with these investments.
As of June 30, 2024, one of our investments in publicly traded corporate equity securities was subject to a contractual sales restriction expiring partially in the third quarter of 2024 and partially in the first quarter of 2025 with a total fair value of $23.1 million. We purchased this investment directly from the publicly traded company in the first quarter of 2023, and do not anticipate any circumstances that would cause this restriction to lapse prior to the periods listed above.
Please refer to Note F, “Marketable Securities and Equity Investments,” for further information on these investments.
Fair Value of Contingent Consideration
In 2019, we acquired Exonics Therapeutics, Inc. (“Exonics”), a privately-held company focused on creating transformative gene-editing therapies to repair mutations that cause Duchenne muscular dystrophy (“DMD”) and other severe neuromuscular diseases, including DM1. Our Level 3 contingent consideration liabilities are related to $678.3 million of development and regulatory milestones potentially payable to former Exonics equity holders. We base our estimates of the probability of achieving the milestones relevant to the fair value of contingent payments on industry data attributable to gene therapies and our knowledge of the progress and viability of the programs. The discount rates used in the valuation model for contingent payments, which were between 5.1% and 5.6% as of June 30, 2024, represent a measure of credit risk and market risk associated with settling the liabilities. Significant judgment is used in determining the appropriateness of these assumptions at each reporting period.
The following table represents a rollforward of the fair value of our contingent consideration liabilities:
Six Months Ended June 30, 2024
(in millions)
Balance at December 31, 2023$77.4 
Increase in fair value of contingent payments
0.4 
Balance at June 30, 2024$77.8 


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VERTEX PHARMACEUTICALS INCORPORATED
Notes to Condensed Consolidated Financial Statements (unaudited)
F.Marketable Securities and Equity Investments
A summary of our cash equivalents and marketable debt and equity securities, which are recorded at fair value, is shown below:
As of June 30, 2024As of December 31, 2023
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
Amortized Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
(in millions)
Cash equivalents
$1,836.1 $— $— $1,836.1 $7,033.9 $— $— $7,033.9 
Marketable securities:
U.S. Treasury securities1,394.8 0.5 (5.8)1,389.5 544.5 3.0 (1.0)546.5 
U.S. government agency securities
369.0 0.1 (1.5)367.6 424.8 0.9 (0.5)425.2 
Asset-backed securities893.3 0.7 (2.1)891.9 304.9 1.4 (0.3)306.0 
Certificates of deposit20.2 0.0 (0.0)20.2 33.7 0.0 (0.0)33.7 
Corporate debt securities
2,788.4 2.4 (13.9)2,776.9 1,794.0 10.5 (1.7)1,802.8 
Commercial paper
131.9 — (0.1)131.8 186.8 0.1 (0.1)186.8 
Total marketable available-for-sale debt securities
5,597.6 3.7 (23.4)5,577.9 3,288.7 15.9 (3.6)3,301.0 
Corporate equity securities
72.1 — (41.5)30.6 72.1 — (26.1)46.0 
Total marketable securities
5,669.7 3.7 (64.9)5,608.5 3,360.8 15.9 (29.7)3,347.0 
Total cash equivalents and marketable securities$7,505.8 $3.7 $(64.9)$7,444.6 $10,394.7 $15.9 $(29.7)$10,380.9 
Amounts in the table above at fair value were classified on our condensed consolidated balance sheets as follows:
As of June 30, 2024As of December 31, 2023
(in millions)
Cash and cash equivalents$1,836.1 $7,033.9 
Marketable securities
1,215.4 849.2 
Long-term marketable securities4,393.1 2,497.8 
Total
$7,444.6 $10,380.9 
Marketable available-for-sale debt securities by contractual maturity were as follows:
As of June 30, 2024As of December 31, 2023
(in millions)
Matures within one year$1,184.8 $803.2 
Matures after one year through five years
4,334.3 2,495.6 
Matures after five years58.8 2.2 
Total
$5,577.9 $3,301.0 
We did not record any allowances for credit losses to adjust the fair value of our marketable available-for-sale debt securities or gross realized gains or losses in the three and six months ended June 30, 2024 and 2023. Additionally, we did not record any realized gains or losses that were material to our condensed consolidated statements of income during the three and six months ended June 30, 2024 and 2023. As of June 30, 2024, we held marketable available-for-sale debt securities with a total fair value of $4.6 billion that were in unrealized loss positions totaling $23.4 million. Included in this amount were marketable available-for sale debt securities with a total fair value of $382.4 million and total unrealized loss of $3.5 million that had been in unrealized loss positions for greater than twelve months. We intend to hold these investments until maturity and do not expect to incur realized losses on these investments when they mature.
We record changes in the fair value of our investments in corporate equity securities to “Other (expense) income, net” in our condensed consolidated statements of income. During the three and six months ended June 30, 2024 and 2023, our net

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Notes to Condensed Consolidated Financial Statements (unaudited)
unrealized (losses) gains on corporate equity securities with readily determinable fair values held at the conclusion of each period were as follows:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions)
Net unrealized (losses) gains
$(12.7)$9.2 $(15.4)$(0.9)
        
During the six months ended June 30, 2023, we received proceeds of $95.1 million related to the sale of the common stock of a publicly traded company, which had a total original cost basis of $57.3 million. There were no sales of the common stock of publicly traded companies during the six months ended June 30, 2024.
As of June 30, 2024, the carrying value of our equity investments without readily determinable fair values, which are recorded in “Other assets” on our condensed consolidated balance sheets, was $85.3 million. During the six months ended June 30, 2024, we reduced the carrying value of one of our equity investments without a readily determinable fair value by $24.3 million based on an observable change in price.

G.Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes in accumulated other comprehensive income (loss) by component:
Unrealized Holding Gains (Losses), Net of Tax
Foreign Currency Translation AdjustmentOn Available-For-Sale Debt SecuritiesOn Foreign Currency Forward ContractsTotal
(in millions)
Balance at December 31, 2023$1.1 $9.6 $(25.0)$(14.3)
Other comprehensive income (loss) before reclassifications5.6 (29.2)67.5 43.9 
Amounts reclassified from accumulated other comprehensive income (loss)— 4.1 (11.2)(7.1)
Net current period other comprehensive income (loss)5.6 (25.1)56.3 36.8 
Balance at June 30, 2024$6.7 $(15.5)$31.3 $22.5 
Balance at December 31, 2022$(25.0)$(0.1)$25.9 $0.8 
Other comprehensive income (loss) before reclassifications14.1 (12.6)(18.4)(16.9)
Amounts reclassified from accumulated other comprehensive income (loss)— — (23.7)(23.7)
Net current period other comprehensive income (loss)14.1 (12.6)(42.1)(40.6)
Balance at June 30, 2023$(10.9)$(12.7)$(16.2)$(39.8)

H.Hedging
Foreign currency forward contracts - Designated as hedging instruments
We maintain a hedging program intended to mitigate the effect of changes in foreign exchange rates for a portion of our forecasted product revenues denominated in certain foreign currencies. The program includes foreign currency forward contracts that are designated as cash flow hedges under U.S. GAAP having contractual durations from one to eighteen

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Notes to Condensed Consolidated Financial Statements (unaudited)
months. We recognize realized gains and losses for the effective portion of such contracts in “Product revenues, net” in our condensed consolidated statements of income in the same period that we recognize the product revenues that were impacted by the hedged foreign exchange rate changes.
We formally document the relationship between foreign currency forward contracts (hedging instruments) and forecasted product revenues (hedged items), as well as our risk management objective and strategy for undertaking various hedging activities, which includes matching all foreign currency forward contracts that are designated as cash flow hedges to forecasted transactions. We also formally assess, both at the hedge’s inception and on an ongoing basis, whether the foreign currency forward contracts are highly effective in offsetting changes in cash flows of hedged items on a prospective and retrospective basis. If we were to determine that a (i) foreign currency forward contract is not highly effective as a cash flow hedge, (ii) foreign currency forward contract has ceased to be a highly effective hedge or (iii) forecasted transaction is no longer probable of occurring, we would discontinue hedge accounting treatment prospectively. We measure effectiveness based on the change in fair value of the forward contracts and the fair value of the hypothetical foreign currency forward contracts with terms that match the critical terms of the risk being hedged. As of June 30, 2024, all hedges were determined to be highly effective.
We consider the impact of our counterparties’ credit risk on the fair value of the foreign currency forward contracts. As of June 30, 2024 and December 31, 2023, credit risk did not change the fair value of our foreign currency forward contracts.
The following table summarizes the notional amount in U.S. dollars of our outstanding foreign currency forward contracts designated as cash flow hedges under U.S. GAAP:
As of June 30, 2024As of December 31, 2023
Foreign Currency(in millions)
Euro$2,045.4 $1,720.6 
British pound sterling
128.0 225.0 
Canadian dollar
127.5 229.5 
Australian dollar
83.1 153.3 
Swiss Franc34.7 63.9 
Total foreign currency forward contracts
$2,418.7 $2,392.3 
Foreign currency forward contracts - Not designated as hedging instruments
We also enter into foreign currency forward contracts with contractual maturities of less than one month, which are designed to mitigate the effect of changes in foreign exchange rates on monetary assets and liabilities, including intercompany balances. These contracts are not designated as hedging instruments under U.S. GAAP. We recognize realized gains and losses for such contracts in “Other (expense) income, net” in our condensed consolidated statements of income each period. As of June 30, 2024, we did not have any outstanding foreign currency forward contracts where hedge accounting under U.S. GAAP was not applied.
During the three and six months ended June 30, 2024 and 2023, we recognized the following related to foreign currency forward contracts in our condensed consolidated statements of income:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions)
Designated as hedging instruments - Reclassified from AOCI
Product revenues, net$10.9 $8.2 $14.3 $30.2 
Not designated as hedging instruments
Other (expense) income, net$(13.4)$0.6 $(15.8)$4.2 
Total reported in the Condensed Consolidated Statements of Income
Product revenues, net$2,645.6 $2,493.2 $5,336.2 $4,868.0 
Other (expense) income, net$(23.1)$1.6 $(54.3)$2.9 

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Notes to Condensed Consolidated Financial Statements (unaudited)
The following table summarizes the fair value of our outstanding foreign currency forward contracts designated as cash flow hedges under U.S. GAAP included on our condensed consolidated balance sheets:
As of June 30, 2024
AssetsLiabilities
ClassificationFair ValueClassificationFair Value
(in millions)
Prepaid expenses and other current assets$36.0 Other current liabilities$(0.9)
Other assets4.8 Other long-term liabilities— 
Total assets
$40.8 
Total liabilities
$(0.9)
As of December 31, 2023
AssetsLiabilities
ClassificationFair ValueClassificationFair Value
(in millions)
Prepaid expenses and other current assets$1.8 Other current liabilities$(33.7)
As of June 30, 2024, we expect the amounts that are related to foreign exchange forward contracts designated as cash flow hedges under U.S. GAAP recorded in “Prepaid expenses and other current assets” and “Other current liabilities” to be reclassified to earnings within twelve months.
We present the fair value of our foreign currency forward contracts on a gross basis within our condensed consolidated balance sheets. The following table summarizes the potential effect of offsetting derivatives by type of financial instrument designated as cash flow hedges under U.S. GAAP on our condensed consolidated balance sheets:

As of June 30, 2024
Gross Amounts RecognizedGross Amounts OffsetGross Amounts PresentedGross Amounts Not OffsetLegal Offset
Foreign currency forward contracts(in millions)
Total assets$40.8 $— $40.8 $(0.9)$39.9 
Total liabilities(0.9)— (0.9)0.9 — 
As of December 31, 2023
Gross Amounts RecognizedGross Amounts OffsetGross Amounts PresentedGross Amounts Not OffsetLegal Offset
Foreign currency forward contracts(in millions)
Total assets$1.8 $— $1.8 $(1.8)$— 
Total liabilities(33.7)— (33.7)1.8 (31.9)


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Notes to Condensed Consolidated Financial Statements (unaudited)
I.Inventories
Inventories consisted of the following:
As of June 30, 2024As of December 31, 2023
(in millions)
Raw materials$112.1 $78.7 
Work-in-process657.6 525.1 
Finished goods
144.9 135.0 
Total
$914.6 $738.8 
During the first quarter of 2024, following positive results we announced related to our two Phase 3 trials for suzetrigine (formerly VX-548) for acute pain and vanzacaftor/tezacaftor/deutivacaftor for CF, we began capitalizing inventories produced in preparation for our planned product launches. As of June 30, 2024, we continued to conclude that capitalization of these inventories was appropriate. We made these determinations based on our evaluation, among other factors, the safety and efficacy results, and expected likelihood of regulatory approval and commercial success. Prior to the first quarter of 2024, we expensed inventoriable and related costs associated with these product candidates as “Research and development expenses.” As of June 30, 2024, these inventories were not material to our condensed consolidated financial statements.

J.Stock-based Compensation Expense and Share Repurchase Programs
Stock-based compensation expense
During the three and six months ended June 30, 2024 and 2023, we recognized the following stock-based compensation expense:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions)
Stock-based compensation expense by type of award:
Restricted stock units (including PSUs)$150.7 $113.6 $337.9 $229.5 
ESPP share issuances4.5 3.9 10.3 9.4 
Stock options1.8 2.4 1.8 3.8 
Stock-based compensation expense related to inventories
(2.8)(0.6)(3.9)(1.0)
Total stock-based compensation expense included in “Total costs and expenses”
$154.2 $119.3 $346.1 $241.7 
Stock-based compensation expense by line item:
Cost of sales$1.8 $1.8 $3.6 $3.7 
Research and development expenses97.1 74.5 216.5 150.8 
Selling, general and administrative expenses55.3 43.0 126.0 87.2 
Total stock-based compensation expense included in costs and expenses
154.2 119.3 346.1 241.7 
Income tax effect(80.7)(31.3)(159.7)(71.9)
Total stock-based compensation expense, net of tax
$73.5 $88.0 $186.4 $169.8 
Share repurchase program
In February 2023, our Board of Directors approved a share repurchase program, pursuant to which we are authorized to repurchase up to $3.0 billion of our common stock. The program does not have an expiration date and can be discontinued at any time. During the six months ended June 30, 2024 and 2023, we repurchased 1.1 million and 0.5 million shares of our

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Notes to Condensed Consolidated Financial Statements (unaudited)
common stock under the program, respectively, for aggregate repurchases of $456.2 million and $161.1 million, respectively. As of June 30, 2024, we had $2.1 billion remaining authorization under this program.

K.Income Taxes
We are subject to U.S. federal, state, and foreign income taxes. During the three and six months ended June 30, 2024 and 2023, we recorded the following provisions for income taxes and effective tax rates as compared to our income (loss) before provision for income taxes.
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions, except percentages)
(Loss) income before provision for income taxes$(3,391.2)$1,161.5 $(2,112.1)$2,053.0 
Provision for income taxes$202.4 $245.8 $381.9 $437.5 
Effective tax rate(6.0)%21.2 %(18.1)%21.3 %
Our effective tax rate for the three and six months ended June 30, 2024 was materially different than the U.S. statutory rate primarily due to the $4.4 billion of non-deductible AIPR&D resulting from our acquisition of Alpine, which drove our pre-tax loss in each of these periods.
Our effective tax rate for the three and six months ended June 30, 2023 was similar to the U.S. statutory rate.
We have reviewed the tax positions taken, or to be taken, in our tax returns for all tax years currently open to examination by a taxing authority. As of June 30, 2024 and December 31, 2023, we had $309.3 million and $288.7 million, respectively, of net unrecognized tax benefits, which would affect our tax rate if recognized.
We file U.S. federal income tax returns and income tax returns in various state, local and foreign jurisdictions. We have various income tax audits ongoing at any time throughout the world. Except for jurisdictions where we have net operating losses or tax credit carryforwards, we are no longer subject to any tax assessment from tax authorities for years prior to 2015 in jurisdictions that have a material impact on our consolidated financial statements. In 2023, we came to settlement with the United Kingdom’s HM Revenue & Customs (“HMRC”) with respect to our tax positions for 2015 through 2020 and subsequently received Closure Notices for those periods during the three months ended March 31, 2024. Due to the nature of the adjustments, we are asserting our rights under the U.S./U.K. Income Tax Convention pursuant to the mutual agreement procedures for the relief of double taxation for these matters.
In December 2022, European Union member states reached an agreement to implement the minimum tax component (“Pillar Two”) of the Organization for Economic Co-operation and Development’s (the “OECD’s”), global international tax reform initiative with effective dates of January 1, 2024 and 2025. In July 2023, the OECD published Administrative Guidance proposing certain safe harbors that effectively extend certain effective dates to January 1, 2027. The assessment of our potential 2024 exposure for the global per-country minimum tax of 15%, based on our forecasted 2024 results, is immaterial to our condensed consolidated financial statements as the effective tax rates in most of the jurisdictions in which we operate are above 15%.

L.Commitments and Contingencies
2022 Credit Facility
In July 2022, Vertex and certain of its subsidiaries entered into a $500.0 million unsecured revolving facility (the “Credit Agreement”) with Bank of America, N.A., as administrative agent and the lenders referred to therein (the “Lenders”), which matures on July 1, 2027. The Credit Agreement was not drawn upon at closing and we have not drawn upon it to date. Amounts drawn pursuant to the Credit Agreement, if any, will be used for general corporate purposes. Subject to satisfaction of certain conditions, we may request that the borrowing capacity for the Credit Agreement be increased by an additional $500.0 million. Additionally, the Credit Agreement provides a sublimit of $100.0 million for letters of credit.

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Notes to Condensed Consolidated Financial Statements (unaudited)
Any amounts borrowed under the Credit Agreement will bear interest, at our option, at either a base rate or a Secured Overnight Financing Rate (“SOFR”), in each case plus an applicable margin. Under the Credit Agreement, the applicable margins on base rate loans range from 0.000% to 0.500% and the applicable margins on SOFR loans range from 1.000% to 1.500%, in each case based on our consolidated leverage ratio (the ratio of our total consolidated funded indebtedness to our consolidated EBITDA for the most recently completed four fiscal quarter period).