|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2015
|
|
or
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
FOR THE TRANSITION PERIOD FROM
TO
|
Massachusetts
|
04-3039129
|
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
50 Northern Avenue, Boston, Massachusetts
|
02210
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
|
(Do not check if a smaller reporting company)
|
Common Stock, par value $0.01 per share
|
243,752,247
|
Class
|
Outstanding at April 24, 2015
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Revenues:
|
|
|
|
||||
Product revenues, net
|
$
|
130,875
|
|
|
$
|
103,461
|
|
Royalty revenues
|
6,792
|
|
|
10,733
|
|
||
Collaborative revenues
|
842
|
|
|
4,257
|
|
||
Total revenues
|
138,509
|
|
|
118,451
|
|
||
Costs and expenses:
|
|
|
|
||||
Cost of product revenues
|
9,381
|
|
|
8,572
|
|
||
Royalty expenses
|
2,926
|
|
|
6,904
|
|
||
Research and development expenses
|
215,599
|
|
|
238,617
|
|
||
Sales, general and administrative expenses
|
85,860
|
|
|
74,212
|
|
||
Restructuring (income) expenses
|
(3,272
|
)
|
|
6,188
|
|
||
Total costs and expenses
|
310,494
|
|
|
334,493
|
|
||
Loss from operations
|
(171,985
|
)
|
|
(216,042
|
)
|
||
Interest expense, net
|
(21,307
|
)
|
|
(15,717
|
)
|
||
Other (expense) income, net
|
(5,113
|
)
|
|
451
|
|
||
Loss from continuing operations before provision for income taxes
|
(198,405
|
)
|
|
(231,308
|
)
|
||
Provision for income taxes
|
299
|
|
|
803
|
|
||
Loss from continuing operations
|
(198,704
|
)
|
|
(232,111
|
)
|
||
Loss from discontinued operations, net of tax benefit of $0
|
—
|
|
|
(346
|
)
|
||
Net loss
|
(198,704
|
)
|
|
(232,457
|
)
|
||
Loss attributable to noncontrolling interest
|
98
|
|
|
—
|
|
||
Net loss attributable to Vertex
|
$
|
(198,606
|
)
|
|
$
|
(232,457
|
)
|
|
|
|
|
||||
Amounts attributable to Vertex:
|
|
|
|
||||
Loss from continuing operations
|
(198,606
|
)
|
|
(232,111
|
)
|
||
Loss from discontinued operations
|
—
|
|
|
(346
|
)
|
||
Net loss attributable to Vertex
|
(198,606
|
)
|
|
(232,457
|
)
|
||
|
|
|
|
||||
Amounts per share attributable to Vertex common shareholders:
|
|
|
|
||||
Net loss from continuing operations:
|
|
|
|
||||
Basic
|
$
|
(0.83
|
)
|
|
$
|
(1.00
|
)
|
Diluted
|
$
|
(0.83
|
)
|
|
$
|
(1.00
|
)
|
Net loss from discontinued operations:
|
|
|
|
||||
Basic
|
$
|
—
|
|
|
$
|
—
|
|
Diluted
|
$
|
—
|
|
|
$
|
—
|
|
Net loss:
|
|
|
|
||||
Basic
|
$
|
(0.83
|
)
|
|
$
|
(1.00
|
)
|
Diluted
|
$
|
(0.83
|
)
|
|
$
|
(1.00
|
)
|
Shares used in per share calculations:
|
|
|
|
||||
Basic
|
239,493
|
|
|
232,887
|
|
||
Diluted
|
239,493
|
|
|
232,887
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Net loss
|
$
|
(198,704
|
)
|
|
$
|
(232,457
|
)
|
Changes in other comprehensive loss:
|
|
|
|
||||
Unrealized holding gains (losses) on marketable securities
|
176
|
|
|
(27
|
)
|
||
Unrealized gains (losses) on foreign currency forward contracts
|
306
|
|
|
(36
|
)
|
||
Foreign currency translation adjustment
|
(608
|
)
|
|
72
|
|
||
Total changes in other comprehensive loss
|
(126
|
)
|
|
9
|
|
||
Comprehensive loss
|
(198,830
|
)
|
|
(232,448
|
)
|
||
Comprehensive loss attributable to noncontrolling interest
|
98
|
|
|
—
|
|
||
Comprehensive loss attributable to Vertex
|
$
|
(198,732
|
)
|
|
$
|
(232,448
|
)
|
|
March 31,
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
664,879
|
|
|
$
|
625,259
|
|
Marketable securities, available for sale
|
516,255
|
|
|
761,847
|
|
||
Accounts receivable, net
|
80,332
|
|
|
75,964
|
|
||
Inventories
|
34,089
|
|
|
30,848
|
|
||
Prepaid expenses and other current assets
|
62,648
|
|
|
52,593
|
|
||
Total current assets
|
1,358,203
|
|
|
1,546,511
|
|
||
Property and equipment, net
|
708,616
|
|
|
715,812
|
|
||
Intangible assets
|
29,000
|
|
|
29,000
|
|
||
Goodwill
|
39,915
|
|
|
39,915
|
|
||
Restricted cash
|
22,141
|
|
|
176
|
|
||
Other assets
|
7,952
|
|
|
3,265
|
|
||
Total assets
|
$
|
2,165,827
|
|
|
$
|
2,334,679
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
43,524
|
|
|
$
|
71,194
|
|
Accrued expenses
|
176,981
|
|
|
209,676
|
|
||
Deferred revenues, current portion
|
15,918
|
|
|
17,468
|
|
||
Accrued restructuring expenses, current portion
|
13,133
|
|
|
33,107
|
|
||
Capital lease obligations, current portion
|
19,672
|
|
|
17,806
|
|
||
Senior secured term loan, current portion
|
28,527
|
|
|
14,206
|
|
||
Other liabilities, current portion
|
4,683
|
|
|
4,797
|
|
||
Total current liabilities
|
302,438
|
|
|
368,254
|
|
||
Deferred revenues, excluding current portion
|
24,000
|
|
|
27,808
|
|
||
Accrued restructuring expenses, excluding current portion
|
8,355
|
|
|
12,748
|
|
||
Capital lease obligations, excluding current portion
|
46,471
|
|
|
39,293
|
|
||
Deferred tax liability
|
15,093
|
|
|
15,044
|
|
||
Fan Pier lease obligation, excluding current portion
|
472,971
|
|
|
473,073
|
|
||
Senior secured term loan, excluding current portion
|
266,266
|
|
|
280,569
|
|
||
Other liabilities, excluding current portion
|
32,696
|
|
|
21,707
|
|
||
Total liabilities
|
1,168,290
|
|
|
1,238,496
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued and outstanding at March 31, 2015 and December 31, 2014
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 300,000,000 shares authorized at March 31, 2015 and December 31, 2014; 243,580,032 and 241,764,398 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively
|
2,399
|
|
|
2,385
|
|
||
Additional paid-in capital
|
5,877,324
|
|
|
5,777,154
|
|
||
Accumulated other comprehensive income
|
791
|
|
|
917
|
|
||
Accumulated deficit
|
(4,904,056
|
)
|
|
(4,705,450
|
)
|
||
Total Vertex shareholders' equity
|
976,458
|
|
|
1,075,006
|
|
||
Noncontrolling interest
|
21,079
|
|
|
21,177
|
|
||
Total shareholders’ equity
|
997,537
|
|
|
1,096,183
|
|
||
Total liabilities and shareholders’ equity
|
$
|
2,165,827
|
|
|
$
|
2,334,679
|
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated
Other Comprehensive Income (Loss) |
|
Accumulated Deficit
|
|
Total Vertex
Shareholders’ Equity |
|
Noncontrolling
Interest |
|
Total
Shareholders’ Equity |
|||||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
|
|||||||||||||||||||||
Balance at December 31, 2013
|
233,789
|
|
|
$
|
2,320
|
|
|
$
|
5,321,286
|
|
|
$
|
(306
|
)
|
|
$
|
(3,966,895
|
)
|
|
$
|
1,356,405
|
|
|
$
|
—
|
|
|
$
|
1,356,405
|
|
Other comprehensive income, net of tax
|
|
|
|
|
|
|
9
|
|
|
|
|
9
|
|
|
|
|
9
|
|
||||||||||||
Net loss
|
|
|
|
|
|
|
|
|
(232,457
|
)
|
|
(232,457
|
)
|
|
—
|
|
|
(232,457
|
)
|
|||||||||||
Issuance of common stock under benefit plans
|
2,412
|
|
|
14
|
|
|
60,120
|
|
|
|
|
|
|
60,134
|
|
|
|
|
60,134
|
|
||||||||||
Stock-based compensation
|
|
|
|
|
46,787
|
|
|
|
|
|
|
46,787
|
|
|
|
|
46,787
|
|
||||||||||||
Balance at March 31, 2014
|
236,201
|
|
|
$
|
2,334
|
|
|
$
|
5,428,193
|
|
|
$
|
(297
|
)
|
|
$
|
(4,199,352
|
)
|
|
$
|
1,230,878
|
|
|
$
|
—
|
|
|
$
|
1,230,878
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2014
|
241,764
|
|
|
$
|
2,385
|
|
|
$
|
5,777,154
|
|
|
$
|
917
|
|
|
$
|
(4,705,450
|
)
|
|
$
|
1,075,006
|
|
|
$
|
21,177
|
|
|
$
|
1,096,183
|
|
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
(126
|
)
|
|
|
|
(126
|
)
|
|
|
|
(126
|
)
|
||||||||||||
Net loss
|
|
|
|
|
|
|
|
|
(198,606
|
)
|
|
(198,606
|
)
|
|
(98
|
)
|
|
(198,704
|
)
|
|||||||||||
Issuance of common stock under benefit plans
|
1,816
|
|
|
14
|
|
|
41,902
|
|
|
|
|
|
|
41,916
|
|
|
|
|
41,916
|
|
||||||||||
Stock-based compensation
|
|
|
|
|
58,268
|
|
|
|
|
|
|
58,268
|
|
|
|
|
58,268
|
|
||||||||||||
Balance at March 31, 2015
|
243,580
|
|
|
$
|
2,399
|
|
|
$
|
5,877,324
|
|
|
$
|
791
|
|
|
$
|
(4,904,056
|
)
|
|
$
|
976,458
|
|
|
$
|
21,079
|
|
|
$
|
997,537
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(198,704
|
)
|
|
$
|
(232,457
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization expense
|
16,363
|
|
|
15,788
|
|
||
Stock-based compensation expense
|
57,384
|
|
|
46,580
|
|
||
Other non-cash items, net
|
629
|
|
|
(173
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(5,863
|
)
|
|
25,237
|
|
||
Inventories
|
(2,635
|
)
|
|
2,488
|
|
||
Prepaid expenses and other assets
|
(15,233
|
)
|
|
(17,937
|
)
|
||
Accounts payable
|
(23,556
|
)
|
|
978
|
|
||
Accrued expenses and other liabilities
|
(5,866
|
)
|
|
(13,536
|
)
|
||
Accrued restructuring expense
|
(24,367
|
)
|
|
(4,486
|
)
|
||
Deferred revenues
|
(5,333
|
)
|
|
1,756
|
|
||
Net cash used in operating activities
|
(207,181
|
)
|
|
(175,762
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of marketable securities
|
(125,655
|
)
|
|
(380,949
|
)
|
||
Sales and maturities of marketable securities
|
371,423
|
|
|
376,544
|
|
||
Expenditures for property and equipment
|
(10,558
|
)
|
|
(15,526
|
)
|
||
Increase in restricted cash and cash equivalents
|
(21,971
|
)
|
|
—
|
|
||
Decrease (increase) in other assets
|
799
|
|
|
(476
|
)
|
||
Net cash provided by (used in) investing activities
|
214,038
|
|
|
(20,407
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Issuances of common stock under benefit plans
|
41,616
|
|
|
60,134
|
|
||
Payments on capital lease obligations
|
(4,497
|
)
|
|
(2,622
|
)
|
||
Proceeds from capital lease financing
|
13,386
|
|
|
—
|
|
||
Payments on Fan Pier lease obligation
|
(15,146
|
)
|
|
(15,146
|
)
|
||
Payments returned related to Fan Pier lease obligation
|
—
|
|
|
8,050
|
|
||
Net cash provided by financing activities
|
35,359
|
|
|
50,416
|
|
||
Effect of changes in exchange rates on cash
|
(2,596
|
)
|
|
499
|
|
||
Net increase (decrease) in cash and cash equivalents
|
39,620
|
|
|
(145,254
|
)
|
||
Cash and cash equivalents—beginning of period
|
625,259
|
|
|
569,299
|
|
||
Cash and cash equivalents—end of period
|
$
|
664,879
|
|
|
$
|
424,045
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
6,483
|
|
|
$
|
15,970
|
|
Cash paid for income taxes
|
$
|
60
|
|
|
$
|
140
|
|
Capitalization of costs related to Fan Pier lease obligation
|
$
|
—
|
|
|
$
|
25,564
|
|
Assets acquired under capital lease
|
$
|
—
|
|
|
$
|
3,619
|
|
Issuances of common stock exercises from employee benefit plans receivable
|
$
|
964
|
|
|
$
|
—
|
|
B.
|
Product Revenues, Net
|
|
Trade
Allowances |
|
Rebates,
Chargebacks and Discounts |
|
Product
Returns |
|
Other
Incentives |
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Balance at December 31, 2014
|
$
|
1,463
|
|
|
$
|
29,102
|
|
|
$
|
4,713
|
|
|
$
|
745
|
|
|
$
|
36,023
|
|
Provision related to current period sales
|
1,297
|
|
|
9,027
|
|
|
79
|
|
|
830
|
|
|
11,233
|
|
|||||
Adjustments related to prior period sales
|
(87
|
)
|
|
(1,128
|
)
|
|
(410
|
)
|
|
—
|
|
|
(1,625
|
)
|
|||||
Credits/payments made
|
(1,366
|
)
|
|
(7,162
|
)
|
|
(2,788
|
)
|
|
(763
|
)
|
|
(12,079
|
)
|
|||||
Balance at March 31, 2015
|
$
|
1,307
|
|
|
$
|
29,839
|
|
|
$
|
1,594
|
|
|
$
|
812
|
|
|
$
|
33,552
|
|
C.
|
Collaborative Arrangements
|
D.
|
Earnings Per Share
|
|
Three Months Ended March 31,
|
||||
|
2015
|
|
2014
|
||
|
(in thousands)
|
||||
Stock options
|
12,682
|
|
|
16,078
|
|
Unvested restricted stock and restricted stock units
|
3,474
|
|
|
2,842
|
|
E.
|
Fair Value Measurements
|
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 the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.
|
|
Fair Value Measurements as of March 31, 2015
|
||||||||||||||
|
|
|
Fair Value Hierarchy
|
||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets carried at fair value:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
286,581
|
|
|
$
|
286,581
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Government-sponsored enterprise securities
|
284,115
|
|
|
284,115
|
|
|
—
|
|
|
—
|
|
||||
Corporate debt securities
|
172,395
|
|
|
—
|
|
|
172,395
|
|
|
—
|
|
||||
Commercial paper
|
59,745
|
|
|
—
|
|
|
59,745
|
|
|
—
|
|
||||
Prepaid and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
2,934
|
|
|
—
|
|
|
2,934
|
|
|
—
|
|
||||
Total financial assets
|
$
|
805,770
|
|
|
$
|
570,696
|
|
|
$
|
235,074
|
|
|
$
|
—
|
|
Financial liabilities carried at fair value:
|
|
|
|
|
|
|
|
||||||||
Other liabilities, current portion:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
(282
|
)
|
|
$
|
—
|
|
|
$
|
(282
|
)
|
|
$
|
—
|
|
Other liabilities, excluding current portion:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
(335
|
)
|
|
—
|
|
|
(335
|
)
|
|
—
|
|
||||
Total financial liabilities
|
$
|
(617
|
)
|
|
$
|
—
|
|
|
$
|
(617
|
)
|
|
$
|
—
|
|
F.
|
Marketable Securities
|
|
Amortized Cost
|
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
As of March 31, 2015
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Cash and money market funds
|
$
|
664,879
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
664,879
|
|
Total cash and cash equivalents
|
$
|
664,879
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
664,879
|
|
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Government-sponsored enterprise securities (due within 1 year)
|
$
|
284,126
|
|
|
$
|
5
|
|
|
$
|
(16
|
)
|
|
$
|
284,115
|
|
Commercial paper (due within 1 year)
|
59,688
|
|
|
57
|
|
|
—
|
|
|
59,745
|
|
||||
Corporate debt securities (due within 1 year)
|
148,958
|
|
|
18
|
|
|
(24
|
)
|
|
148,952
|
|
||||
Corporate debt securities (due after 1 year through 5 years)
|
23,430
|
|
|
13
|
|
|
—
|
|
|
23,443
|
|
||||
Total marketable securities
|
$
|
516,202
|
|
|
$
|
93
|
|
|
$
|
(40
|
)
|
|
$
|
516,255
|
|
Total cash, cash equivalents and marketable securities
|
$
|
1,181,081
|
|
|
$
|
93
|
|
|
$
|
(40
|
)
|
|
$
|
1,181,134
|
|
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2014
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Cash and money market funds
|
$
|
625,259
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
625,259
|
|
Total cash and cash equivalents
|
$
|
625,259
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
625,259
|
|
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Government-sponsored enterprise securities (due within 1 year)
|
$
|
463,788
|
|
|
$
|
14
|
|
|
$
|
(52
|
)
|
|
$
|
463,750
|
|
Commercial paper (due within 1 year)
|
51,674
|
|
|
72
|
|
|
—
|
|
|
51,746
|
|
||||
Corporate debt securities (due within 1 year)
|
196,065
|
|
|
2
|
|
|
(66
|
)
|
|
196,001
|
|
||||
Corporate debt securities (due after 1 year through 5 years)
|
50,443
|
|
|
—
|
|
|
(93
|
)
|
|
50,350
|
|
||||
Total marketable securities
|
$
|
761,970
|
|
|
$
|
88
|
|
|
$
|
(211
|
)
|
|
$
|
761,847
|
|
Total cash, cash equivalents and marketable securities
|
$
|
1,387,229
|
|
|
$
|
88
|
|
|
$
|
(211
|
)
|
|
$
|
1,387,106
|
|
G.
|
Accumulated Other Comprehensive Income (Loss)
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized Holding Gains (Losses) on Marketable Securities
|
|
Unrealized Gains (Losses) on Foreign Currency Forward Contracts
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Balance at December 31, 2014
|
$
|
(971
|
)
|
|
$
|
(123
|
)
|
|
$
|
2,011
|
|
|
$
|
917
|
|
Other comprehensive (loss) income before reclassifications
|
(608
|
)
|
|
176
|
|
|
2,004
|
|
|
1,572
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
(1,698
|
)
|
|
(1,698
|
)
|
||||
Net current period other comprehensive (loss) income
|
$
|
(608
|
)
|
|
$
|
176
|
|
|
$
|
306
|
|
|
$
|
(126
|
)
|
Balance at March 31, 2015
|
$
|
(1,579
|
)
|
|
$
|
53
|
|
|
$
|
2,317
|
|
|
$
|
791
|
|
|
Foreign Currency Translation Adjustment
|
|
Unrealized Holding Gains (Losses) on Marketable Securities
|
|
Unrealized Gains (Losses) on Foreign Currency Forward Contracts
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Balance at December 31, 2013
|
$
|
(325
|
)
|
|
$
|
42
|
|
|
$
|
(23
|
)
|
|
$
|
(306
|
)
|
Other comprehensive income (loss) before reclassifications
|
72
|
|
|
(27
|
)
|
|
(39
|
)
|
|
6
|
|
||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
3
|
|
|
3
|
|
||||
Net current period other comprehensive income (loss)
|
$
|
72
|
|
|
$
|
(27
|
)
|
|
$
|
(36
|
)
|
|
$
|
9
|
|
Balance at March 31, 2014
|
$
|
(253
|
)
|
|
$
|
15
|
|
|
$
|
(59
|
)
|
|
$
|
(297
|
)
|
H.
|
Hedging
|
|
As of March 31, 2015
|
|
As of December 31, 2014
|
||||
Foreign Currency
|
(in thousands)
|
||||||
Euro
|
$
|
34,749
|
|
|
$
|
20,209
|
|
British pound sterling
|
33,696
|
|
|
13,515
|
|
||
Australian dollar
|
20,494
|
|
|
—
|
|
||
Total foreign currency forward contracts
|
$
|
88,939
|
|
|
$
|
33,724
|
|
As of March 31, 2015
|
||||||||||
Assets
|
|
Liabilities
|
||||||||
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
||||
(in thousands)
|
||||||||||
Prepaid and other current assets
|
|
$
|
2,934
|
|
|
Other liabilities, current portion
|
|
$
|
(282
|
)
|
Other assets
|
|
—
|
|
|
Other liabilities, excluding current portion
|
|
(335
|
)
|
||
Total assets
|
|
$
|
2,934
|
|
|
Total liabilities
|
|
$
|
(617
|
)
|
As of December 31, 2014
|
||||||||||
Assets
|
|
Liabilities
|
||||||||
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
||||
(in thousands)
|
||||||||||
Prepaid and other current assets
|
|
$
|
2,011
|
|
|
Other liabilities, current portion
|
|
$
|
—
|
|
Total assets
|
|
$
|
2,011
|
|
|
Total liabilities
|
|
$
|
—
|
|
|
As of March 31, 2015
|
|||||||||||||
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Gross Amount Presented
|
|
Gross Amount Not Offset
|
|
Legal Offset
|
|||||
Foreign currency forward contracts
|
(in thousands)
|
|||||||||||||
Total assets
|
2,934
|
|
|
—
|
|
|
2,934
|
|
|
(617
|
)
|
|
2,317
|
|
Total liabilities
|
(617
|
)
|
|
—
|
|
|
(617
|
)
|
|
617
|
|
|
—
|
|
|
As of December 31, 2014
|
|||||||||||||
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Gross Amount Presented
|
|
Gross Amount Not Offset
|
|
Legal Offset
|
|||||
Foreign currency forward contracts
|
(in thousands)
|
|||||||||||||
Total assets
|
2,011
|
|
|
—
|
|
|
2,011
|
|
|
—
|
|
|
2,011
|
|
|
As of March 31, 2015
|
|
As of December 31, 2014
|
||||
|
(in thousands)
|
||||||
Raw materials
|
$
|
7,833
|
|
|
$
|
8,506
|
|
Work-in-process
|
22,564
|
|
|
20,508
|
|
||
Finished goods
|
3,692
|
|
|
1,834
|
|
||
Total
|
$
|
34,089
|
|
|
$
|
30,848
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Stock-based compensation expense by type of award:
|
|
|
|
||||
Stock options
|
$
|
28,959
|
|
|
$
|
25,127
|
|
Restricted stock and restricted stock units
|
27,169
|
|
|
18,993
|
|
||
ESPP share issuances
|
2,140
|
|
|
2,667
|
|
||
Less stock-based compensation expense capitalized to inventories
|
(884
|
)
|
|
(207
|
)
|
||
Total stock-based compensation included in costs and expenses
|
$
|
57,384
|
|
|
$
|
46,580
|
|
|
|
|
|
||||
Stock-based compensation expense by line item:
|
|
|
|
||||
Research and development expenses
|
$
|
38,217
|
|
|
$
|
32,900
|
|
Sales, general and administrative expenses
|
19,167
|
|
|
13,680
|
|
||
Total stock-based compensation included in costs and expenses
|
$
|
57,384
|
|
|
$
|
46,580
|
|
|
As of March 31, 2015
|
||||
|
Unrecognized Expense,
Net of Estimated Forfeitures |
|
Weighted-average
Recognition Period |
||
|
(in thousands)
|
|
(in years)
|
||
Type of award:
|
|
|
|
||
Stock options
|
$
|
199,256
|
|
|
2.31
|
Restricted stock and restricted stock units
|
$
|
201,465
|
|
|
2.88
|
ESPP share issuances
|
$
|
2,205
|
|
|
0.45
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
|
Number
Outstanding |
|
Weighted-average
Remaining Contractual Life |
|
Weighted-average
Exercise Price |
|
Number
Exercisable |
|
Weighted-average
Exercise Price |
||||||
|
|
(in thousands)
|
|
(in years)
|
|
(per share)
|
|
(in thousands)
|
|
(per share)
|
||||||
$17.16–$20.00
|
|
165
|
|
|
2.51
|
|
$
|
18.69
|
|
|
165
|
|
|
$
|
18.69
|
|
$20.01–$40.00
|
|
3,207
|
|
|
4.24
|
|
$
|
34.97
|
|
|
2,711
|
|
|
$
|
34.73
|
|
$40.01–$60.00
|
|
3,339
|
|
|
7.33
|
|
$
|
48.55
|
|
|
1,499
|
|
|
$
|
50.27
|
|
$60.01–$80.00
|
|
1,837
|
|
|
8.59
|
|
$
|
76.07
|
|
|
492
|
|
|
$
|
74.88
|
|
$80.01–$100.00
|
|
2,232
|
|
|
8.70
|
|
$
|
90.29
|
|
|
542
|
|
|
$
|
86.07
|
|
$100.01–$120.00
|
|
1,898
|
|
|
9.84
|
|
$
|
109.23
|
|
|
1
|
|
|
$
|
110.59
|
|
$120.01–$125.63
|
|
4
|
|
|
9.82
|
|
$
|
125.63
|
|
|
—
|
|
|
$
|
—
|
|
Total
|
|
12,682
|
|
|
7.28
|
|
$
|
65.17
|
|
|
5,410
|
|
|
$
|
47.36
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Liability, beginning of the period
|
$
|
11,596
|
|
|
$
|
19,115
|
|
Cash payments
|
(3,985
|
)
|
|
(3,862
|
)
|
||
Cash received from subleases
|
2,476
|
|
|
2,689
|
|
||
Restructuring (income) expense
|
(581
|
)
|
|
382
|
|
||
Liability, end of the period
|
$
|
9,506
|
|
|
$
|
18,324
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Liability, beginning of the period
|
$
|
33,390
|
|
|
$
|
1,079
|
|
Cash payments
|
(19,256
|
)
|
|
(2,516
|
)
|
||
Restructuring (income) expense
|
(2,997
|
)
|
|
5,159
|
|
||
Liability, end of the period
|
$
|
11,137
|
|
|
$
|
3,722
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Liability, beginning of the period
|
$
|
869
|
|
|
$
|
8,441
|
|
Cash payments
|
(330
|
)
|
|
(7,267
|
)
|
||
Restructuring expense
|
306
|
|
|
647
|
|
||
Liability, end of the period
|
$
|
845
|
|
|
$
|
1,821
|
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Revenues
|
$
|
138,509
|
|
|
$
|
118,451
|
|
|
$
|
20,058
|
|
|
17
|
%
|
Operating costs and expenses
|
310,494
|
|
|
334,493
|
|
|
(23,999
|
)
|
|
(7
|
)%
|
|||
Other items, net
|
(26,621
|
)
|
|
(16,415
|
)
|
|
N/A
|
|
|
N/A
|
|
|||
Net loss attributable to Vertex
|
$
|
(198,606
|
)
|
|
$
|
(232,457
|
)
|
|
$
|
(33,851
|
)
|
|
(15
|
)%
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Product revenues, net
|
$
|
130,875
|
|
|
$
|
103,461
|
|
|
$
|
27,414
|
|
|
26
|
%
|
Royalty revenues
|
6,792
|
|
|
10,733
|
|
|
(3,941
|
)
|
|
(37
|
)%
|
|||
Collaborative revenues
|
842
|
|
|
4,257
|
|
|
(3,415
|
)
|
|
(80
|
)%
|
|||
Total revenues
|
$
|
138,509
|
|
|
$
|
118,451
|
|
|
$
|
20,058
|
|
|
17
|
%
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
KALYDECO
|
$
|
130,174
|
|
|
$
|
99,515
|
|
|
$
|
30,659
|
|
|
31
|
%
|
INCIVEK
|
701
|
|
|
3,946
|
|
|
(3,245
|
)
|
|
(82
|
)%
|
|||
Total product revenues, net
|
$
|
130,875
|
|
|
$
|
103,461
|
|
|
$
|
27,414
|
|
|
26
|
%
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Cost of product revenues
|
$
|
9,381
|
|
|
$
|
8,572
|
|
|
$
|
809
|
|
|
9
|
%
|
Royalty expenses
|
2,926
|
|
|
6,904
|
|
|
(3,978
|
)
|
|
(58
|
)%
|
|||
Research and development expenses
|
215,599
|
|
|
238,617
|
|
|
(23,018
|
)
|
|
(10
|
)%
|
|||
Sales, general and administrative expenses
|
85,860
|
|
|
74,212
|
|
|
11,648
|
|
|
16
|
%
|
|||
Restructuring (income) expenses
|
(3,272
|
)
|
|
6,188
|
|
|
N/A
|
|
|
N/A
|
|
|||
Total costs and expenses
|
$
|
310,494
|
|
|
$
|
334,493
|
|
|
$
|
(23,999
|
)
|
|
(7
|
)%
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Research expenses
|
$
|
65,562
|
|
|
$
|
67,023
|
|
|
$
|
(1,461
|
)
|
|
(2
|
)%
|
Development expenses
|
150,037
|
|
|
171,594
|
|
|
(21,557
|
)
|
|
(13
|
)%
|
|||
Total research and development expenses
|
$
|
215,599
|
|
|
$
|
238,617
|
|
|
$
|
(23,018
|
)
|
|
(10
|
)%
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Research Expenses:
|
|
|
|
|
|
|
|
|||||||
Salary and benefits
|
$
|
20,456
|
|
|
$
|
20,427
|
|
|
$
|
29
|
|
|
—
|
%
|
Stock-based compensation expense
|
13,776
|
|
|
12,054
|
|
|
1,722
|
|
|
14
|
%
|
|||
Laboratory supplies and other direct expenses
|
9,168
|
|
|
9,279
|
|
|
(111
|
)
|
|
(1
|
)%
|
|||
Outsourced services
|
4,558
|
|
|
4,484
|
|
|
74
|
|
|
2
|
%
|
|||
Infrastructure costs
|
17,604
|
|
|
20,779
|
|
|
(3,175
|
)
|
|
(15
|
)%
|
|||
Total research expenses
|
$
|
65,562
|
|
|
$
|
67,023
|
|
|
$
|
(1,461
|
)
|
|
(2
|
)%
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Development Expenses:
|
|
|
|
|
|
|
|
|||||||
Salary and benefits
|
$
|
42,195
|
|
|
$
|
42,011
|
|
|
$
|
184
|
|
|
—
|
%
|
Stock-based compensation expense
|
24,441
|
|
|
20,846
|
|
|
3,595
|
|
|
17
|
%
|
|||
Laboratory supplies and other direct expenses
|
6,944
|
|
|
8,634
|
|
|
(1,690
|
)
|
|
(20
|
)%
|
|||
Outsourced services
|
50,094
|
|
|
65,192
|
|
|
(15,098
|
)
|
|
(23
|
)%
|
|||
Drug supply costs
|
1,583
|
|
|
2,967
|
|
|
(1,384
|
)
|
|
(47
|
)%
|
|||
Infrastructure costs
|
24,780
|
|
|
31,944
|
|
|
(7,164
|
)
|
|
(22
|
)%
|
|||
Total development expenses
|
$
|
150,037
|
|
|
$
|
171,594
|
|
|
$
|
(21,557
|
)
|
|
(13
|
)%
|
|
Three Months Ended March 31,
|
|
Increase/(Decrease)
|
|||||||||||
|
2015
|
|
2014
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Sales, general and administrative expenses
|
$
|
85,860
|
|
|
$
|
74,212
|
|
|
$
|
11,648
|
|
|
16
|
%
|
•
|
our expectations regarding the amount of, timing of and trends with respect to our revenues, costs and expenses and other gains and losses, including those related to net product revenues from KALYDECO and potential net product revenues from ORKAMBI, if approved;
|
•
|
our expectations regarding clinical trials, development timelines and regulatory authority filings and submissions for ivacaftor, lumacaftor and VX-661;
|
•
|
expectations regarding potential marketing approvals for ORKAMBI in the United States and ex-U.S. markets;
|
•
|
our ability to successfully market KALYDECO, ORKAMBI, if approved, or any of our other drug candidates for which we obtain regulatory approval;
|
•
|
our expectations regarding the timing and structure of clinical trials of our drugs and drug candidates, including, ivacaftor, lumacaftor and VX-661, and the expected timing of our receipt of data from our ongoing and planned clinical trials;
|
•
|
the data that will be generated by ongoing and planned clinical trials and the ability to use that data to advance compounds, continue development or support regulatory filings;
|
•
|
our beliefs regarding the support provided by clinical trials and preclinical and nonclinical studies of our drug candidates for further investigation, clinical trials or potential use as a treatment;
|
•
|
our plan to continue investing in our research and development programs and our strategy to develop our drug candidates, alone or with third party-collaborators;
|
•
|
the establishment, development and maintenance of collaborative relationships;
|
•
|
potential business development activities;
|
•
|
our ability to use our research programs to identify and develop new drug candidates to address serious diseases and significant unmet medical needs; and
|
•
|
our liquidity and our expectations regarding the possibility of raising additional capital.
|
Period
|
|
Total Number
of Shares Purchased |
Average Price
Paid per Share |
Total Number of Shares
Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number of
Shares that May Yet be Purchased Under the Plans or Programs |
January 1, 2015 to January 31, 2015
|
47,510
|
$0.01
|
—
|
—
|
|
February 1, 2015 to February 28, 2015
|
47,863
|
$0.01
|
—
|
—
|
|
March 1, 2015 to March 31, 2015
|
21,221
|
$0.01
|
—
|
—
|
Exhibit Number
|
Exhibit Description
|
10.1
|
Employment Agreement, dated as of December 2, 2013, between Vertex Pharmaceuticals Incorporated and Jeffrey Chodakewitz.
|
10.2
|
Change of Control Agreement, dated as of December 2, 2013, between Vertex Pharmaceuticals Incorporated and Jeffrey Chodakewitz.
|
31.1
|
Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of the Chief Executive Officer and the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
XBRL Instance
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation
|
101.LAB
|
XBRL Taxonomy Extension Labels
|
101.PRE
|
XBRL Taxonomy Extension Presentation
|
101.DEF
|
XBRL Taxonomy Extension Definition
|
|
Vertex Pharmaceuticals Incorporated
|
|
|
|
|
May 4, 2015
|
By:
|
/s/ Ian F. Smith
|
|
|
Ian F. Smith
|
|
|
Executive Vice President and Chief Financial Officer
(principal financial officer and duly authorized officer) |
(i)
|
the Executive's duties are materially diminished and, as a result, the Executive ceases to be a member of the Executive Team or a similar group of senior leadership of the Company;
|
(ii)
|
the Executive’s Base Salary is decreased unless such reduction is part of an across-the-board proportionate reduction in the salaries of the Company’s senior management team; or
|
(iii)
|
the office to which the Executive is assigned is relocated to a place 35 or more miles away and such relocation is not at the Executive’s request or with the Executive’s prior agreement (and other than, for Executives assigned to the Company’s principal executive offices, in connection with a change in location of the Company’s principal executive offices);
|
(i)
|
Base Salary earned by Executive but not paid through the date of termination of Executive’s employment under this Section 9(b); and
|
(ii)
|
any amounts earned, accrued or owing to the Executive but not yet paid under Sections 5, 6, or 7 above.
|
(i)
|
Base Salary earned by Executive but not paid through the date of termination of Executive’s employment under this Section 9(c);
|
(ii)
|
all incentive compensation awards earned by Executive but not paid prior to the date of termination of Executive’s employment under this Section 9(c);
|
(iii)
|
a cash payment to the Executive in an amount equal to the Severance Payment, payable within ten days after the execution of a general release and expiration, without revocation, of any applicable revocation periods under the general release provided that if the 60-day period during which the release is required to become effective and irrevocable begins in one calendar year and ends in another calendar year, the Severance Payment shall not be made before the first day of the second calendar year;
|
(iv)
|
the Company’s right to repurchase the shares of restricted stock subject to the Special Grant shall lapse in full;
|
(v)
|
any amounts earned, accrued or owing to the Executive but not yet paid under Sections 5, 6 or 7 above;
|
(vi)
|
if COBRA coverage is elected by the Executive, the Company shall pay the cost of insurance continuation premiums on the Executive’s behalf (whether or not covered by COBRA) to continue standard medical, dental and life insurance coverage for the Executive (or the cash equivalent of same in the event the Executive is ineligible for continued coverage) until the earlier of:
|
(A)
|
the date 12 months after the date the Executive’s employment is terminated; or
|
(B)
|
the date, or dates, on which the Executive receives equivalent coverage and benefits under the plans, programs and/or arrangements of a subsequent employer (such coverage and benefits to be determined on a coverage-by-coverage or benefit-by-benefit basis).
|
I.
|
Definitions
. For the purposes of this Change of Control Agreement (this “
Agreement
”), capitalized terms shall have the following meanings:
|
1.
|
“
Cause
” shall mean:
|
(a)
|
your conviction of a crime involving moral turpitude;
|
(b)
|
your willful refusal or failure to follow a lawful directive or instruction of the Company’s Board of Directors or the individual(s) to whom you report,
provided
that you receive prior written notice of the directive(s) or instruction(s) that you failed to follow, and
provided
further
that the Company, in good faith, gives you 30 days to correct such failure and
further
provided
that if you correct the failure(s), any termination of your employment on account of such failure shall not be treated for purposes of this Agreement as a termination of employment for “Cause”;
|
(c)
|
in carrying out your duties you commit (i) willful gross negligence, or (ii) willful gross misconduct, resulting in either case in material harm to the Company,
unless
such act, or failure to act, was believed by you, in good faith, to be in the best interests of the Company; or
|
(d)
|
your violation of the Company’s policies made known to you regarding confidentiality, securities trading or inside information.
|
2.
|
“
Change of Control
” shall mean that:
|
(a)
|
any “person” or “group” as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (the “
Act
”), becomes a beneficial owner, as such term is used in Rule 13d-3 promulgated under the Act, of securities of the Company representing more than 50% of the combined voting power of the outstanding securities of the Company having the right to vote in the election of directors; or
|
(b)
|
all or substantially all the business or assets of the Company are sold or disposed of, or the Company or a subsidiary of the Company combines with another company pursuant to a merger, consolidation, or other similar transaction,
other
than
(i) a transaction solely for the purpose of reincorporating the Company or one of its subsidiaries in a different jurisdiction or recapitalizing or reclassifying the Company’s stock; or (ii) a merger or consolidation in which the shareholders of the Company immediately prior to such merger or consolidation continue to own at least a majority of the outstanding voting securities of the Company or the surviving entity immediately after the merger or consolidation.
|
3.
|
“
Code
” shall mean the Internal Revenue Code of 1986, as amended.
|
4.
|
“
Disability
” shall mean a disability as determined under the Company's long-term disability plan or program in effect at the time the disability first occurs, or if no such plan or program exists at the time of disability, then a “disability” as defined Section 22(e)(3) of the Code.
|
5.
|
“
Good Reason
” shall mean one of the following events has occurred without your consent:
|
(a)
|
you suffer a material reduction in the authorities, duties or job title and responsibilities associated with your position as Chief Medical Officer and
Senior Vice President, Global Medicines Development and Affairs
for the Company as of the date hereof;
|
(b)
|
your annual base salary is decreased;
|
(c)
|
the office to which you are assigned is relocated to a place 35 or more miles away; or
|
(d)
|
following a Change of Control, the Company’s successor fails to assume the Company’s rights and obligations under this Agreement;
|
6.
|
“
Termination Date
” shall mean the last day of your employment with the Company.
|
II.
|
Severance Benefits upon Change of Control
. If:
|
(A)
|
your employment is terminated by the Company (except for termination for Cause or due to a Disability) and the Termination Date is within 90 days prior to a Change of Control or within 12 months after a Change of Control; or
|
(B)
|
you, of your own initiative, (i) terminate your employment for Good Reason (in accordance with the notice and cure provisions set forth in Section I.5 above) and (ii) the event giving rise to Good Reason occurs within 90 days prior to a Change of Control or within 12 months after a Change of Control;
|
1.
|
Severance Payment
. In exchange for your execution within 60 days of the Termination Date of a general release, in a form satisfactory to the Company, of all claims against the Company, its subsidiaries, and its and their officers, directors and representatives, that becomes enforceable and irrevocable within such 60-day period, the Company shall make a cash payment (the “
Severance Payment
”) to you in an amount equal to:
|
(a)
|
your annual base salary (provided, however, that if you terminate your employment for Good Reason based on a reduction in your annual base salary, then the annual base salary to be used in calculating the Severance Payment shall be your annual base salary in effect immediately prior to such reduction in annual base salary) plus your target bonus under any bonus program applicable to you for the year in which the Termination Date occurs; plus
|
(b)
|
A prorata portion of your target bonus for the portion of the year in which the Termination Date occurs under any bonus program applicable to you; plus
|
(c)
|
all cash incentive compensation awards earned by you but not paid prior to the Termination Date; provided that, if a fiscal year has been completed and the incentive award for such fiscal year has not been determined, the incentive compensation for such completed fiscal year shall equal the target bonus for such fiscal year.
|
2.
|
Accelerated Vesting.
|
(a)
|
On the Termination Date, stock options for the purchase of the Company’s securities held by you as of the Termination Date and not then exercisable shall immediately become exercisable in full. The options to which this accelerated vesting applies shall remain exercisable until the earlier of (a) the end of the 90-day period immediately following the later of (i) the Termination Date or (ii) the date of the Change of Control and (b) the date the stock option(s) would otherwise expire; and
|
(b)
|
On the Termination Date, the Company’s lapsing repurchase right with respect to shares of restricted stock held by you shall lapse in full (subject to your making satisfactory arrangements with the Company providing for the payment to the Company of all required withholding taxes).
|
3.
|
Continued Insurance Coverage
. If COBRA coverage is elected by you, the Company shall pay the cost of insurance continuation premiums on your behalf (whether or not covered by COBRA) to continue standard medical, dental and life insurance coverage for you (or the cash equivalent of same if you are ineligible for continued coverage) until the earlier of (i) the date 12 months after the Termination Date or (ii) the date you begin receiving substantially equivalent coverage and benefits through a subsequent employer.
|
4.
|
No Mitigation.
You shall not be required to mitigate the amount of the Severance Payment or any other benefit provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced (except as provided in Article II Section 3(ii)) by any compensation earned by you as the result of other employment, by retirement benefits, or be offset against any amount claimed to be owed by you to the Company or otherwise (except for any required withholding taxes); provided, that if the Company makes any other severance payments to you under any other program or agreement, such amounts shall be offset against the payments the Company is obligated to make pursuant to this Agreement.
|
III.
|
Miscellaneous
.
|
1.
|
Employee’s Obligations
. Upon the termination of employment, you shall promptly deliver to the Company all property of the Company and all material documents, statistics, account records, programs and other similar tangible items which may by in your possession or under your control and which relate in a material way to the business or affairs of the Company or its subsidiaries, and no copies of any such documents or any part thereof shall be retained by you.
|
2.
|
Entire Agreement
. This Agreement and the “
Employee Non-Disclosure, Non-Competition & Inventions Agreement
” previously executed by you covers the entire understanding of the parties as to the subject matter hereof, superseding all prior understandings and agreements related hereto. No modification or amendment of the terms and conditions of this Agreement shall be effective unless in writing and signed by the parties or their respective duly authorized agents, provided, however, that the Company may, without your consent, unilaterally adopt amendments that may be required so that this Agreement continues to comply with applicable law or regulation, including without limitation Section 409A of the Code, provided such amendments do not adversely affect the benefits to be provided to you under Section II of this Agreement.
|
3.
|
Governing Law
. This Agreement shall be governed by the laws of The Commonwealth of Massachusetts, as applied to contracts entered into and performed entirely in Massachusetts by Massachusetts residents.
|
4.
|
Successors and Assigns
. This Agreement may be assigned by the Company upon a sale, transfer or reorganization of the Company. Upon a Change of Control, the Company shall require the successor to assume the Company’s rights and obligations under this Agreement. The Company’s failure to do so shall constitute a material breach of this Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors, permitted assigns, legal representatives and heirs.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Vertex Pharmaceuticals Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
Date:
|
May 4, 2015
|
/s/ Jeffrey M. Leiden
|
|
|
|
|
|
Jeffrey M. Leiden
|
|
|
Chief Executive Officer and President
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Vertex Pharmaceuticals Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date:
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May 4, 2015
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/s/ Ian F. Smith
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Ian F. Smith
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Executive Vice President and Chief Financial Officer
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Date:
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May 4, 2015
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/s/ Jeffrey M. Leiden
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Jeffrey M. Leiden
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Chief Executive Officer and President
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Date:
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May 4, 2015
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/s/ Ian F. Smith
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Ian F. Smith
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Executive Vice President and Chief Financial Officer
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