|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018
|
|
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
|
|
|
|
|
Emerging growth company
o
|
|
Common Stock, par value $0.01 per share
|
255,558,035
|
Class
|
Outstanding at October 19, 2018
|
|
|
|
Page
|
|
||
|
||
|
Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 30, 2018 and 2017
|
|
|
Condensed Consolidated Statements of Comprehensive Income - Three and Nine Months Ended September 30, 2018 and 2017
|
|
|
Condensed Consolidated Balance Sheets - September 30, 2018 and December 31, 2017
|
|
|
Condensed Consolidated Statements of Shareholders' Equity and Noncontrolling Interest - Nine Months Ended September 30, 2018 and 2017
|
|
|
Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 30, 2018 and 2017
|
|
|
||
|
||
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Product revenues, net
|
$
|
782,511
|
|
|
$
|
549,642
|
|
|
$
|
2,170,152
|
|
|
$
|
1,544,252
|
|
Royalty revenues
|
1,238
|
|
|
2,231
|
|
|
3,679
|
|
|
6,643
|
|
||||
Collaborative revenues
|
786
|
|
|
26,292
|
|
|
3,660
|
|
|
286,123
|
|
||||
Total revenues
|
784,535
|
|
|
578,165
|
|
|
2,177,491
|
|
|
1,837,018
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
111,255
|
|
|
72,874
|
|
|
287,250
|
|
|
191,067
|
|
||||
Research and development expenses
|
330,510
|
|
|
454,947
|
|
|
978,595
|
|
|
1,017,961
|
|
||||
Sales, general and administrative expenses
|
137,295
|
|
|
120,710
|
|
|
404,406
|
|
|
361,285
|
|
||||
Restructuring (income) expenses
|
(174
|
)
|
|
337
|
|
|
(188
|
)
|
|
13,859
|
|
||||
Intangible asset impairment charge
|
—
|
|
|
255,340
|
|
|
—
|
|
|
255,340
|
|
||||
Total costs and expenses
|
578,886
|
|
|
904,208
|
|
|
1,670,063
|
|
|
1,839,512
|
|
||||
Income (loss) from operations
|
205,649
|
|
|
(326,043
|
)
|
|
507,428
|
|
|
(2,494
|
)
|
||||
Interest expense, net
|
(8,143
|
)
|
|
(13,574
|
)
|
|
(29,346
|
)
|
|
(45,003
|
)
|
||||
Other (expense) income, net
|
(60,995
|
)
|
|
(77,553
|
)
|
|
89,662
|
|
|
(80,634
|
)
|
||||
Income (loss) before provision for (benefit from) income taxes
|
136,511
|
|
|
(417,170
|
)
|
|
567,744
|
|
|
(128,131
|
)
|
||||
Provision for (benefit from) income taxes
|
8,055
|
|
|
(125,903
|
)
|
|
5,737
|
|
|
(117,581
|
)
|
||||
Net income (loss)
|
128,456
|
|
|
(291,267
|
)
|
|
562,007
|
|
|
(10,550
|
)
|
||||
Loss (income) attributable to noncontrolling interest
|
290
|
|
|
188,315
|
|
|
(15,638
|
)
|
|
173,350
|
|
||||
Net income (loss) attributable to Vertex
|
$
|
128,746
|
|
|
$
|
(102,952
|
)
|
|
$
|
546,369
|
|
|
$
|
162,800
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts per share attributable to Vertex common shareholders:
|
|
|
|
|
|
|
|
||||||||
Net income (loss):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.51
|
|
|
$
|
(0.41
|
)
|
|
$
|
2.15
|
|
|
$
|
0.66
|
|
Diluted
|
$
|
0.50
|
|
|
$
|
(0.41
|
)
|
|
$
|
2.11
|
|
|
$
|
0.64
|
|
Shares used in per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
254,905
|
|
|
250,268
|
|
|
254,096
|
|
|
247,963
|
|
||||
Diluted
|
259,788
|
|
|
250,268
|
|
|
258,972
|
|
|
252,095
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income (loss)
|
$
|
128,456
|
|
|
$
|
(291,267
|
)
|
|
$
|
562,007
|
|
|
$
|
(10,550
|
)
|
Changes in other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Unrealized holding gains (losses) on marketable securities, net
|
224
|
|
|
5,961
|
|
|
137
|
|
|
(7,786
|
)
|
||||
Unrealized gains (losses) on foreign currency forward contracts, net of tax of zero, $0.9 million, $0.5 million and $2.9 million, respectively
|
4,029
|
|
|
(5,453
|
)
|
|
29,062
|
|
|
(27,379
|
)
|
||||
Foreign currency translation adjustment
|
659
|
|
|
(3,884
|
)
|
|
6,800
|
|
|
(11,137
|
)
|
||||
Total changes in other comprehensive income (loss)
|
4,912
|
|
|
(3,376
|
)
|
|
35,999
|
|
|
(46,302
|
)
|
||||
Comprehensive income (loss)
|
133,368
|
|
|
(294,643
|
)
|
|
598,006
|
|
|
(56,852
|
)
|
||||
Comprehensive loss (income) attributable to noncontrolling interest
|
290
|
|
|
188,315
|
|
|
(15,638
|
)
|
|
173,350
|
|
||||
Comprehensive income (loss) attributable to Vertex
|
$
|
133,658
|
|
|
$
|
(106,328
|
)
|
|
$
|
582,368
|
|
|
$
|
116,498
|
|
|
September 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,478,302
|
|
|
$
|
1,665,412
|
|
Marketable securities
|
577,583
|
|
|
423,254
|
|
||
Restricted cash and cash equivalents (VIE)
|
8,143
|
|
|
1,489
|
|
||
Accounts receivable, net
|
379,755
|
|
|
281,343
|
|
||
Inventories
|
124,150
|
|
|
111,830
|
|
||
Prepaid expenses and other current assets
|
118,678
|
|
|
165,635
|
|
||
Total current assets
|
3,686,611
|
|
|
2,648,963
|
|
||
Property and equipment, net
|
808,352
|
|
|
789,437
|
|
||
Intangible assets
|
29,000
|
|
|
29,000
|
|
||
Goodwill
|
50,384
|
|
|
50,384
|
|
||
Other assets
|
46,493
|
|
|
28,230
|
|
||
Total assets
|
$
|
4,620,840
|
|
|
$
|
3,546,014
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
92,149
|
|
|
$
|
73,994
|
|
Accrued expenses
|
504,240
|
|
|
443,961
|
|
||
Capital lease obligations, current portion
|
11,511
|
|
|
22,531
|
|
||
Early access sales accrual
|
324,251
|
|
|
232,401
|
|
||
Other liabilities, current portion
|
60,357
|
|
|
34,373
|
|
||
Total current liabilities
|
992,508
|
|
|
807,260
|
|
||
Capital lease obligations, excluding current portion
|
15,141
|
|
|
20,496
|
|
||
Deferred tax liability
|
9,414
|
|
|
6,341
|
|
||
Construction financing lease obligation, excluding current portion
|
561,389
|
|
|
563,406
|
|
||
Advance from collaborator, excluding current portion
|
81,610
|
|
|
78,431
|
|
||
Other liabilities, excluding current portion
|
26,297
|
|
|
27,774
|
|
||
Total liabilities
|
1,686,359
|
|
|
1,503,708
|
|
||
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, 255,610,812 and 253,253,362 shares issued and outstanding, respectively
|
2,551
|
|
|
2,512
|
|
||
Additional paid-in capital
|
7,443,263
|
|
|
7,157,362
|
|
||
Accumulated other comprehensive income (loss)
|
307
|
|
|
(11,572
|
)
|
||
Accumulated deficit
|
(4,540,005
|
)
|
|
(5,119,723
|
)
|
||
Total Vertex shareholders’ equity
|
2,906,116
|
|
|
2,028,579
|
|
||
Noncontrolling interest
|
28,365
|
|
|
13,727
|
|
||
Total shareholders’ equity
|
2,934,481
|
|
|
2,042,306
|
|
||
Total liabilities and shareholders’ equity
|
$
|
4,620,840
|
|
|
$
|
3,546,014
|
|
|
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, 2016
|
248,301
|
|
|
$
|
2,450
|
|
|
$
|
6,506,795
|
|
|
$
|
21,173
|
|
|
$
|
(5,373,836
|
)
|
|
$
|
1,156,582
|
|
|
$
|
181,609
|
|
|
$
|
1,338,191
|
|
Cumulative effect adjustment for adoption of new accounting guidance
|
—
|
|
|
—
|
|
|
9,371
|
|
|
—
|
|
|
(9,371
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(46,302
|
)
|
|
—
|
|
|
(46,302
|
)
|
|
—
|
|
|
(46,302
|
)
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
162,800
|
|
|
162,800
|
|
|
(173,350
|
)
|
|
(10,550
|
)
|
|||||||
Issuance of common stock under benefit plans
|
4,382
|
|
|
50
|
|
|
298,956
|
|
|
—
|
|
|
—
|
|
|
299,006
|
|
|
33
|
|
|
299,039
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
218,991
|
|
|
—
|
|
|
—
|
|
|
218,991
|
|
|
—
|
|
|
218,991
|
|
|||||||
VIE noncontrolling interest upon deconsolidation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,910
|
|
|
3,910
|
|
|||||||
Other VIE activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35
|
)
|
|
(35
|
)
|
|||||||
Balance at September 30, 2017
|
252,683
|
|
|
$
|
2,500
|
|
|
$
|
7,034,113
|
|
|
$
|
(25,129
|
)
|
|
$
|
(5,220,407
|
)
|
|
$
|
1,791,077
|
|
|
$
|
12,167
|
|
|
$
|
1,803,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2017
|
253,253
|
|
|
$
|
2,512
|
|
|
$
|
7,157,362
|
|
|
$
|
(11,572
|
)
|
|
$
|
(5,119,723
|
)
|
|
$
|
2,028,579
|
|
|
$
|
13,727
|
|
|
$
|
2,042,306
|
|
Cumulative effect adjustment for adoption of new accounting guidance
|
—
|
|
|
—
|
|
|
—
|
|
|
(24,120
|
)
|
|
33,349
|
|
|
9,229
|
|
|
—
|
|
|
9,229
|
|
|||||||
Other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
35,999
|
|
|
—
|
|
|
35,999
|
|
|
—
|
|
|
35,999
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
546,369
|
|
|
546,369
|
|
|
15,638
|
|
|
562,007
|
|
|||||||
Repurchases of common stock
|
(1,283
|
)
|
|
(13
|
)
|
|
(211,025
|
)
|
|
—
|
|
|
—
|
|
|
(211,038
|
)
|
|
—
|
|
|
(211,038
|
)
|
|||||||
Issuance of common stock under benefit plans
|
3,641
|
|
|
52
|
|
|
250,368
|
|
|
—
|
|
|
—
|
|
|
250,420
|
|
|
—
|
|
|
250,420
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
246,558
|
|
|
—
|
|
|
—
|
|
|
246,558
|
|
|
—
|
|
|
246,558
|
|
|||||||
Other VIE activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,000
|
)
|
|
(1,000
|
)
|
|||||||
Balance at September 30, 2018
|
255,611
|
|
|
$
|
2,551
|
|
|
$
|
7,443,263
|
|
|
$
|
307
|
|
|
$
|
(4,540,005
|
)
|
|
$
|
2,906,116
|
|
|
$
|
28,365
|
|
|
$
|
2,934,481
|
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
562,007
|
|
|
$
|
(10,550
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Stock-based compensation expense
|
246,104
|
|
|
216,990
|
|
||
Depreciation expense
|
53,594
|
|
|
44,965
|
|
||
Write-downs of inventories to net realizable value
|
13,089
|
|
|
11,138
|
|
||
Deferred income taxes
|
3,595
|
|
|
(113,969
|
)
|
||
Unrealized gain on equity securities
|
(88,217
|
)
|
|
—
|
|
||
Intangible asset impairment charge
|
—
|
|
|
255,340
|
|
||
Acquired in-process research and development
|
—
|
|
|
160,000
|
|
||
Deconsolidation of VIE
|
—
|
|
|
76,644
|
|
||
Other non-cash items, net
|
10,701
|
|
|
(2,841
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net
|
(75,167
|
)
|
|
(60,165
|
)
|
||
Inventories
|
(24,461
|
)
|
|
(30,226
|
)
|
||
Prepaid expenses and other assets
|
31,797
|
|
|
(84,296
|
)
|
||
Accounts payable
|
23,023
|
|
|
6,925
|
|
||
Accrued expenses and other liabilities
|
199,643
|
|
|
147,476
|
|
||
Net cash provided by operating activities
|
955,708
|
|
|
617,431
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of available-for-sale debt securities
|
(329,367
|
)
|
|
(431,653
|
)
|
||
Maturities of available-for-sale debt securities
|
308,406
|
|
|
247,149
|
|
||
Expenditures for property and equipment
|
(79,803
|
)
|
|
(56,437
|
)
|
||
Decrease in “Restricted cash and cash equivalents (VIE)” due to deconsolidation
|
—
|
|
|
(61,602
|
)
|
||
Investment in equity securities
|
(60,490
|
)
|
|
—
|
|
||
Purchase of in-process research and development
|
—
|
|
|
(160,000
|
)
|
||
Net cash used in investing activities
|
(161,254
|
)
|
|
(462,543
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Issuances of common stock under benefit plans
|
245,754
|
|
|
298,205
|
|
||
Repurchase of common stock
|
(207,038
|
)
|
|
—
|
|
||
Payments on revolving credit facility
|
—
|
|
|
(300,000
|
)
|
||
Advance from collaborator
|
7,500
|
|
|
10,000
|
|
||
Payments on capital lease obligations
|
(19,792
|
)
|
|
(14,188
|
)
|
||
Proceeds from capital lease financing
|
3,417
|
|
|
—
|
|
||
Proceeds related to construction financing lease obligation
|
9,566
|
|
|
4,700
|
|
||
Payments on construction financing lease obligation
|
(4,866
|
)
|
|
(412
|
)
|
||
Repayments of advanced funding
|
(3,714
|
)
|
|
(3,132
|
)
|
||
Other financing activities
|
(1,000
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
29,827
|
|
|
(4,827
|
)
|
||
Effect of changes in exchange rates on cash
|
(4,756
|
)
|
|
5,001
|
|
||
Net increase in cash and cash equivalents
|
819,525
|
|
|
155,062
|
|
||
Cash, cash equivalents and restricted cash—beginning of period
|
1,667,526
|
|
|
1,231,707
|
|
||
Cash, cash equivalents and restricted cash—end of period
|
$
|
2,487,051
|
|
|
$
|
1,386,769
|
|
|
|
|
|
||||
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
50,017
|
|
|
$
|
51,990
|
|
Cash paid for income taxes
|
$
|
10,316
|
|
|
$
|
4,154
|
|
Capitalization of costs related to construction financing lease obligation
|
$
|
3,389
|
|
|
$
|
33,827
|
|
Issuances of common stock from employee benefit plans receivable
|
$
|
5,509
|
|
|
$
|
868
|
|
Accrued share repurchase liability
|
$
|
4,000
|
|
|
$
|
—
|
|
|
Balance as of
|
|
|
|
Balance as of
|
||||||
|
December 31, 2017
|
|
Adjustments
|
|
January 1, 2018
|
||||||
Assets
|
(in thousands)
|
||||||||||
Accounts receivable, net
|
$
|
281,343
|
|
|
$
|
29,881
|
|
|
$
|
311,224
|
|
Inventories
|
111,830
|
|
|
(90
|
)
|
|
111,740
|
|
|||
Prepaid expenses and other current assets
|
165,635
|
|
|
(17,166
|
)
|
|
148,469
|
|
|||
Total assets
|
$
|
3,546,014
|
|
|
$
|
12,625
|
|
|
$
|
3,558,639
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|||||
Accrued expenses
|
$
|
443,961
|
|
|
$
|
8,586
|
|
|
$
|
452,547
|
|
Early access sales accrual
|
232,401
|
|
|
(7,273
|
)
|
|
225,128
|
|
|||
Other liabilities, current portion
|
34,373
|
|
|
2,083
|
|
|
36,456
|
|
|||
Accumulated other comprehensive loss
|
(11,572
|
)
|
|
949
|
|
|
(10,623
|
)
|
|||
Accumulated deficit
|
(5,119,723
|
)
|
|
8,280
|
|
|
(5,111,443
|
)
|
|||
Total liabilities and shareholders’ equity
|
$
|
3,546,014
|
|
|
$
|
12,625
|
|
|
$
|
3,558,639
|
|
|
As of September 30, 2018
|
||||||||||
|
As Reported
under ASC 606 |
|
Balances
without Adoption of ASC 606 |
|
Effect of Change
Higher/(Lower) |
||||||
Assets
|
(in thousands)
|
||||||||||
Accounts receivable, net
|
$
|
379,755
|
|
|
$
|
345,180
|
|
|
$
|
34,575
|
|
Inventories
|
124,150
|
|
|
124,245
|
|
|
(95
|
)
|
|||
Prepaid expenses and other current assets
|
118,678
|
|
|
143,826
|
|
|
(25,148
|
)
|
|||
Total assets
|
$
|
4,620,840
|
|
|
$
|
4,611,508
|
|
|
$
|
9,332
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
|
|
||||
Accrued expenses
|
$
|
504,240
|
|
|
$
|
515,880
|
|
|
$
|
(11,640
|
)
|
Early access sales accrual
|
324,251
|
|
|
342,136
|
|
|
(17,885
|
)
|
|||
Other liabilities, current portion
|
60,357
|
|
|
38,950
|
|
|
21,407
|
|
|||
Accumulated other comprehensive income
|
307
|
|
|
186
|
|
|
121
|
|
|||
Accumulated deficit
|
(4,540,005
|
)
|
|
(4,557,334
|
)
|
|
17,329
|
|
|||
Total liabilities and shareholders’ equity
|
$
|
4,620,840
|
|
|
$
|
4,611,508
|
|
|
$
|
9,332
|
|
|
Three Months Ended September 30, 2018
|
||||||||||
|
As Reported
under ASC 606 |
|
Balances
without Adoption of ASC 606 |
|
Effect of Change
Higher/(Lower) |
||||||
|
(in thousands)
|
||||||||||
Product revenues, net
|
$
|
782,511
|
|
|
$
|
777,117
|
|
|
$
|
5,394
|
|
Cost of sales
|
111,255
|
|
|
109,533
|
|
|
1,722
|
|
|||
Income from operations
|
205,649
|
|
|
201,977
|
|
|
3,672
|
|
|||
Net income attributable to Vertex
|
$
|
128,746
|
|
|
$
|
125,074
|
|
|
$
|
3,672
|
|
|
|
|
|
|
|
||||||
Amounts per share attributable to Vertex common shareholders:
|
|
|
|
|
|
||||||
Net income:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.51
|
|
|
$
|
0.49
|
|
|
$
|
0.02
|
|
Diluted
|
$
|
0.50
|
|
|
$
|
0.48
|
|
|
$
|
0.02
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||
|
As Reported
under ASC 606
|
|
Balances
without Adoption of ASC 606
|
|
Effect of Change
Higher/(Lower) |
||||||
|
(in thousands)
|
||||||||||
Product revenues, net
|
$
|
2,170,152
|
|
|
$
|
2,156,156
|
|
|
$
|
13,996
|
|
Cost of sales
|
287,250
|
|
|
282,303
|
|
|
4,947
|
|
|||
Income from operations
|
507,428
|
|
|
498,379
|
|
|
9,049
|
|
|||
Net income attributable to Vertex
|
$
|
546,369
|
|
|
$
|
537,320
|
|
|
$
|
9,049
|
|
|
|
|
|
|
|
||||||
Amounts per share attributable to Vertex common shareholders:
|
|
|
|
|
|
||||||
Net income:
|
|
|
|
|
|
||||||
Basic
|
$
|
2.15
|
|
|
$
|
2.11
|
|
|
$
|
0.04
|
|
Diluted
|
$
|
2.11
|
|
|
$
|
2.07
|
|
|
$
|
0.04
|
|
|
Nine Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2017
|
||||||||||||
|
Beginning of period
|
|
End of period
|
|
Beginning of period
|
|
End of period
|
||||||||
|
(in thousands)
|
||||||||||||||
Cash and cash equivalents
|
$
|
1,665,412
|
|
|
$
|
2,478,302
|
|
|
$
|
1,183,945
|
|
|
$
|
1,384,966
|
|
Restricted cash and cash equivalents (VIE)
|
1,489
|
|
|
8,143
|
|
|
47,762
|
|
|
1,803
|
|
||||
Prepaid expenses and other current assets
|
625
|
|
|
606
|
|
|
—
|
|
|
—
|
|
||||
Cash, cash equivalents and restricted cash per statement of cash flows
|
$
|
1,667,526
|
|
|
$
|
2,487,051
|
|
|
$
|
1,231,707
|
|
|
$
|
1,386,769
|
|
B.
|
Revenue Recognition
|
|
Balance at January 1, 2018
(ASC 606 adoption)
|
|
Additions
|
|
Deductions
|
|
Balance at September 30, 2018
|
||||||||
|
(in thousands)
|
||||||||||||||
Three Months Ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Contract liabilities:
|
|
|
|
|
|
|
|
||||||||
Other liabilities, current portion
|
$
|
1,654
|
|
|
$
|
54,724
|
|
|
$
|
(16,608
|
)
|
|
$
|
39,770
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018 (as reported under ASC 606)
|
|
2017 (as reported under ASC 605)
|
|
2018 (as reported under ASC 606)
|
|
2017 (as reported under ASC 605)
|
||||||||
|
(in thousands)
|
||||||||||||||
KALYDECO
|
$
|
245,733
|
|
|
$
|
213,461
|
|
|
$
|
748,365
|
|
|
$
|
588,809
|
|
ORKAMBI
|
281,859
|
|
|
336,183
|
|
|
947,186
|
|
|
955,451
|
|
||||
SYMDEKO
|
254,919
|
|
|
—
|
|
|
474,601
|
|
|
—
|
|
||||
Other
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(8
|
)
|
||||
Total product revenues, net
|
$
|
782,511
|
|
|
$
|
549,642
|
|
|
$
|
2,170,152
|
|
|
$
|
1,544,252
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018 (as reported under ASC 606)
|
|
2017 (as reported under ASC 605)
|
|
2018 (as reported under ASC 606)
|
|
2017 (as reported under ASC 605)
|
||||||||
|
(in thousands)
|
||||||||||||||
United States
|
$
|
620,485
|
|
|
$
|
454,736
|
|
|
$
|
1,687,963
|
|
|
$
|
1,483,666
|
|
Outside of the United States
|
|
|
|
|
|
|
|
||||||||
Europe
|
132,876
|
|
|
94,057
|
|
|
400,685
|
|
|
278,407
|
|
||||
Other
|
31,174
|
|
|
29,372
|
|
|
88,843
|
|
|
74,945
|
|
||||
Total revenues outside of the United States
|
164,050
|
|
|
123,429
|
|
|
489,528
|
|
|
353,352
|
|
||||
Total revenues
|
$
|
784,535
|
|
|
$
|
578,165
|
|
|
$
|
2,177,491
|
|
|
$
|
1,837,018
|
|
C.
|
Collaborative Arrangements and Acquisitions
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Loss attributable to noncontrolling interest before provision for (benefit from) income taxes and changes in fair value of contingent payments
|
$
|
411
|
|
|
$
|
238,946
|
|
|
$
|
1,394
|
|
|
$
|
222,448
|
|
Provision for (benefit from) income taxes
|
79
|
|
|
(120,181
|
)
|
|
6,068
|
|
|
(111,658
|
)
|
||||
(Increase) decrease in fair value of contingent payments
|
(200
|
)
|
|
69,550
|
|
|
(23,100
|
)
|
|
62,560
|
|
||||
Net loss (income) attributable to noncontrolling interest
|
$
|
290
|
|
|
$
|
188,315
|
|
|
$
|
(15,638
|
)
|
|
$
|
173,350
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Parion
|
$
|
—
|
|
|
$
|
69,550
|
|
|
$
|
—
|
|
|
$
|
63,460
|
|
BioAxone
|
(200
|
)
|
|
—
|
|
|
(23,100
|
)
|
|
(900
|
)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Restricted cash and cash equivalents (VIE)
|
$
|
8,143
|
|
|
$
|
1,489
|
|
Intangible assets
|
29,000
|
|
|
29,000
|
|
||
Deferred tax liability
|
9,414
|
|
|
4,756
|
|
||
Noncontrolling interest
|
28,365
|
|
|
13,727
|
|
D.
|
Earnings Per Share
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Basic net income (loss) attributable to Vertex per common share calculation:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Vertex common shareholders
|
$
|
128,746
|
|
|
$
|
(102,952
|
)
|
|
$
|
546,369
|
|
|
$
|
162,800
|
|
Less: Undistributed earnings allocated to participating securities
|
(14
|
)
|
|
—
|
|
|
(161
|
)
|
|
(203
|
)
|
||||
Net income (loss) attributable to Vertex common shareholders—basic
|
$
|
128,732
|
|
|
$
|
(102,952
|
)
|
|
$
|
546,208
|
|
|
$
|
162,597
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average common shares outstanding
|
254,905
|
|
|
250,268
|
|
|
254,096
|
|
|
247,963
|
|
||||
Basic net income (loss) attributable to Vertex per common share
|
$
|
0.51
|
|
|
$
|
(0.41
|
)
|
|
$
|
2.15
|
|
|
$
|
0.66
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted net income (loss) attributable to Vertex per common share calculation:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to Vertex common shareholders
|
$
|
128,746
|
|
|
$
|
(102,952
|
)
|
|
$
|
546,369
|
|
|
$
|
162,800
|
|
Less: Undistributed earnings allocated to participating securities
|
(13
|
)
|
|
—
|
|
|
(158
|
)
|
|
(200
|
)
|
||||
Net income (loss) attributable to Vertex common shareholders—diluted
|
$
|
128,733
|
|
|
$
|
(102,952
|
)
|
|
$
|
546,211
|
|
|
$
|
162,600
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares used to compute basic net income (loss) per common share
|
254,905
|
|
|
250,268
|
|
|
254,096
|
|
|
247,963
|
|
||||
Effect of potentially dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Stock options
|
2,962
|
|
|
—
|
|
|
2,990
|
|
|
2,700
|
|
||||
Restricted stock and restricted stock units (including PSUs)
|
1,896
|
|
|
—
|
|
|
1,866
|
|
|
1,204
|
|
||||
Employee stock purchase program
|
25
|
|
|
—
|
|
|
20
|
|
|
228
|
|
||||
Weighted-average shares used to compute diluted net income (loss) per common share
|
259,788
|
|
|
250,268
|
|
|
258,972
|
|
|
252,095
|
|
||||
Diluted net income (loss) attributable to Vertex per common share
|
$
|
0.50
|
|
|
$
|
(0.41
|
)
|
|
$
|
2.11
|
|
|
$
|
0.64
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||||||
Stock options
|
2,572
|
|
|
10,278
|
|
|
2,152
|
|
|
3,904
|
|
Unvested restricted stock and restricted stock units (including PSUs)
|
1
|
|
|
4,241
|
|
|
4
|
|
|
281
|
|
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 September 30, 2018
|
||||||||||||||
|
|
|
Fair Value Hierarchy
|
||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial instruments carried at fair value (asset position):
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
1,070,166
|
|
|
$
|
1,070,166
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. Treasury securities
|
5,979
|
|
|
5,979
|
|
|
—
|
|
|
—
|
|
||||
Government-sponsored enterprise securities
|
2,498
|
|
|
2,498
|
|
|
—
|
|
|
—
|
|
||||
Corporate debt securities
|
7,572
|
|
|
—
|
|
|
7,572
|
|
|
—
|
|
||||
Commercial paper
|
33,352
|
|
|
—
|
|
|
33,352
|
|
|
—
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate equity securities
|
207,036
|
|
|
207,036
|
|
|
—
|
|
|
—
|
|
||||
U.S. Treasury securities
|
6,043
|
|
|
6,043
|
|
|
—
|
|
|
—
|
|
||||
Government-sponsored enterprise securities
|
6,462
|
|
|
6,462
|
|
|
—
|
|
|
—
|
|
||||
Corporate debt securities
|
218,082
|
|
|
—
|
|
|
218,082
|
|
|
—
|
|
||||
Commercial paper
|
139,960
|
|
|
—
|
|
|
139,960
|
|
|
—
|
|
||||
Prepaid and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
13,903
|
|
|
—
|
|
|
13,903
|
|
|
—
|
|
||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
713
|
|
|
—
|
|
|
713
|
|
|
—
|
|
||||
Total financial assets
|
$
|
1,711,766
|
|
|
$
|
1,298,184
|
|
|
$
|
413,582
|
|
|
$
|
—
|
|
Financial instruments carried at fair value (liability position):
|
|
|
|
|
|
|
|
||||||||
Other liabilities, current portion:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
(505
|
)
|
|
$
|
—
|
|
|
$
|
(505
|
)
|
|
$
|
—
|
|
Other liabilities, excluding current portion:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
(66
|
)
|
|
—
|
|
|
(66
|
)
|
|
—
|
|
||||
Total financial liabilities
|
$
|
(571
|
)
|
|
$
|
—
|
|
|
$
|
(571
|
)
|
|
$
|
—
|
|
|
Fair Value Measurements as of December 31, 2017
|
||||||||||||||
|
|
|
Fair Value Hierarchy
|
||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial instruments carried at fair value (asset position):
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
614,951
|
|
|
$
|
614,951
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Government-sponsored enterprise securities
|
12,678
|
|
|
12,678
|
|
|
—
|
|
|
—
|
|
||||
Commercial paper
|
57,357
|
|
|
—
|
|
|
57,357
|
|
|
—
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate equity securities
|
74,821
|
|
|
74,821
|
|
|
—
|
|
|
—
|
|
||||
Government-sponsored enterprise securities
|
2,303
|
|
|
2,303
|
|
|
—
|
|
|
—
|
|
||||
Corporate debt securities
|
265,867
|
|
|
—
|
|
|
265,867
|
|
|
—
|
|
||||
Commercial paper
|
80,263
|
|
|
—
|
|
|
80,263
|
|
|
—
|
|
||||
Prepaid and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
13
|
|
|
—
|
|
|
13
|
|
|
—
|
|
||||
Total financial assets
|
$
|
1,108,253
|
|
|
$
|
704,753
|
|
|
$
|
403,500
|
|
|
$
|
—
|
|
Financial instruments carried at fair value (liability position):
|
|
|
|
|
|
|
|
||||||||
Other liabilities, current portion:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
(13,642
|
)
|
|
$
|
—
|
|
|
$
|
(13,642
|
)
|
|
$
|
—
|
|
Other liabilities, excluding current portion:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
(866
|
)
|
|
—
|
|
|
(866
|
)
|
|
—
|
|
||||
Total financial liabilities
|
$
|
(14,508
|
)
|
|
$
|
—
|
|
|
$
|
(14,508
|
)
|
|
$
|
—
|
|
F.
|
Marketable Securities and Equity Investments
|
|
Amortized Cost
|
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
As of September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
1,070,166
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,070,166
|
|
U.S. Treasury securities
|
5,980
|
|
|
—
|
|
|
(1
|
)
|
|
5,979
|
|
||||
Government-sponsored enterprise securities
|
2,498
|
|
|
—
|
|
|
—
|
|
|
2,498
|
|
||||
Corporate debt securities
|
7,573
|
|
|
—
|
|
|
(1
|
)
|
|
7,572
|
|
||||
Commercial paper
|
33,361
|
|
|
—
|
|
|
(9
|
)
|
|
33,352
|
|
||||
Total cash equivalents
|
1,119,578
|
|
|
—
|
|
|
(11
|
)
|
|
1,119,567
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities (matures within 1 year)
|
6,044
|
|
|
—
|
|
|
(1
|
)
|
|
6,043
|
|
||||
Government-sponsored enterprise securities (matures within 1 year)
|
4,982
|
|
|
—
|
|
|
—
|
|
|
4,982
|
|
||||
Government-sponsored enterprise securities (matures after 1 year through 5 years)
|
1,481
|
|
|
—
|
|
|
(1
|
)
|
|
1,480
|
|
||||
Corporate debt securities (matures within 1 year)
|
179,738
|
|
|
5
|
|
|
(319
|
)
|
|
179,424
|
|
||||
Corporate debt securities (matures after 1 year through 5 years)
|
38,702
|
|
|
—
|
|
|
(44
|
)
|
|
38,658
|
|
||||
Commercial paper (matures within 1 year)
|
140,046
|
|
|
—
|
|
|
(86
|
)
|
|
139,960
|
|
||||
Total marketable debt securities
|
370,993
|
|
|
5
|
|
|
(451
|
)
|
|
370,547
|
|
||||
Corporate equity securities
|
90,133
|
|
|
116,903
|
|
|
—
|
|
|
207,036
|
|
||||
Total marketable securities
|
$
|
461,126
|
|
|
$
|
116,908
|
|
|
$
|
(451
|
)
|
|
$
|
577,583
|
|
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2017
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
614,951
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
614,951
|
|
Government-sponsored enterprise securities
|
12,679
|
|
|
—
|
|
|
(1
|
)
|
|
12,678
|
|
||||
Commercial paper
|
57,371
|
|
|
—
|
|
|
(14
|
)
|
|
57,357
|
|
||||
Total cash equivalents
|
685,001
|
|
|
—
|
|
|
(15
|
)
|
|
684,986
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Government-sponsored enterprise securities (matures within 1 year)
|
2,304
|
|
|
—
|
|
|
(1
|
)
|
|
2,303
|
|
||||
Corporate debt securities (matures within 1 year)
|
215,639
|
|
|
—
|
|
|
(363
|
)
|
|
215,276
|
|
||||
Corporate debt securities (matures after 1 year through 5 years)
|
50,697
|
|
|
—
|
|
|
(106
|
)
|
|
50,591
|
|
||||
Commercial paper (matures within 1 year)
|
80,372
|
|
|
—
|
|
|
(109
|
)
|
|
80,263
|
|
||||
Total marketable debt securities
|
349,012
|
|
|
—
|
|
|
(579
|
)
|
|
348,433
|
|
||||
Available-for-sale corporate equity securities
|
43,213
|
|
|
31,608
|
|
|
—
|
|
|
74,821
|
|
||||
Total marketable securities
|
$
|
392,225
|
|
|
$
|
31,608
|
|
|
$
|
(579
|
)
|
|
$
|
423,254
|
|
|
As of September 30, 2018
|
|
As of December 31, 2017
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
1,119,567
|
|
|
$
|
684,986
|
|
Marketable securities
|
370,547
|
|
|
348,433
|
|
||
Total
|
$
|
1,490,114
|
|
|
$
|
1,033,419
|
|
•
|
During
the three and nine months ended September 30, 2018
, an unrealized loss of
$61.2 million
and an unrealized gain of
$85.3 million
, respectively, related to its equity investment in CRISPR, a publicly traded company. The CRISPR common stock held by the Company has a readily determinable fair value that is recorded in “
Marketable securities
” on the Company’s condensed consolidated balance sheets. In 2018, the Company has purchased an additional
$46.9 million
of CRISPR’s common shares.
|
•
|
During
the three and nine months ended September 30, 2018
, unrealized gains of
zero
and
$2.9 million
, respectively, related to its equity investments in privately held companies without readily determinable fair values for their stocks. As of
September 30, 2018
, the carrying value of the Company’s equity investments without readily determinable fair values, which are recorded in “
Other assets
” on its condensed consolidated balance sheets, was
$36.7 million
.
|
G.
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
|
Unrealized Holding Gains (Losses), Net of Tax
|
|
|
||||||||||||||
|
Foreign Currency Translation Adjustment
|
|
On Available-For-Sale Debt Securities
|
|
On Equity Securities
|
|
On Foreign Currency Forward Contracts
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Balance at December 31, 2017
|
$
|
(21,031
|
)
|
|
$
|
(594
|
)
|
|
$
|
25,069
|
|
|
$
|
(15,016
|
)
|
|
$
|
(11,572
|
)
|
Other comprehensive income before reclassifications
|
6,800
|
|
|
137
|
|
|
—
|
|
|
21,102
|
|
|
28,039
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
7,960
|
|
|
7,960
|
|
|||||
Net current period other comprehensive income
|
$
|
6,800
|
|
|
$
|
137
|
|
|
$
|
—
|
|
|
$
|
29,062
|
|
|
$
|
35,999
|
|
Amounts reclassified to accumulated deficit pursuant to adoption of new accounting standard
|
949
|
|
|
—
|
|
|
(25,069
|
)
|
|
—
|
|
|
(24,120
|
)
|
|||||
Balance at September 30, 2018
|
$
|
(13,282
|
)
|
|
$
|
(457
|
)
|
|
$
|
—
|
|
|
$
|
14,046
|
|
|
$
|
307
|
|
|
|
|
Unrealized Holding Gains (Losses), Net of Tax
|
|
|
||||||||||||||
|
Foreign Currency Translation Adjustment
|
|
On Available-For-Sale Debt Securities
|
|
On Equity Securities
|
|
On Foreign Currency Forward Contracts
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Balance at December 31, 2016
|
$
|
(7,862
|
)
|
|
$
|
(10
|
)
|
|
$
|
17,531
|
|
|
$
|
11,514
|
|
|
$
|
21,173
|
|
Other comprehensive loss before reclassifications
|
(11,137
|
)
|
|
(170
|
)
|
|
(7,616
|
)
|
|
(25,981
|
)
|
|
(44,904
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,398
|
)
|
|
(1,398
|
)
|
|||||
Net current period other comprehensive loss
|
$
|
(11,137
|
)
|
|
$
|
(170
|
)
|
|
$
|
(7,616
|
)
|
|
$
|
(27,379
|
)
|
|
$
|
(46,302
|
)
|
Balance at September 30, 2017
|
$
|
(18,999
|
)
|
|
$
|
(180
|
)
|
|
$
|
9,915
|
|
|
$
|
(15,865
|
)
|
|
$
|
(25,129
|
)
|
H.
|
Hedging
|
|
As of September 30, 2018
|
|
As of December 31, 2017
|
||||
Foreign Currency
|
(in thousands)
|
||||||
Euro
|
$
|
324,753
|
|
|
$
|
257,230
|
|
British pound sterling
|
74,494
|
|
|
77,481
|
|
||
Canadian dollar
|
37,098
|
|
|
—
|
|
||
Australian dollar
|
31,279
|
|
|
30,501
|
|
||
Total foreign currency forward contracts
|
$
|
467,624
|
|
|
$
|
365,212
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Designated as hedging instruments - Reclassified from AOCI
|
|
|
|
|
|
|
|
||||||||
Product revenues, net
|
$
|
1,721
|
|
|
$
|
(2,461
|
)
|
|
$
|
(7,438
|
)
|
|
$
|
4,291
|
|
Not designated as hedging instruments
|
|
|
|
|
|
|
|
||||||||
Other (expense) income, net
|
$
|
782
|
|
|
$
|
4,135
|
|
|
$
|
(1,832
|
)
|
|
$
|
12,958
|
|
As of September 30, 2018
|
||||||||||
Assets
|
|
Liabilities
|
||||||||
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
||||
(in thousands)
|
||||||||||
Designated as hedging instruments
|
|
|
|
|
|
|
||||
Prepaid expenses and other current assets
|
|
$
|
13,903
|
|
|
Other liabilities, current portion
|
|
$
|
(505
|
)
|
Other assets
|
|
713
|
|
|
Other liabilities, excluding current portion
|
|
(66
|
)
|
||
Total assets
|
|
$
|
14,616
|
|
|
Total liabilities
|
|
$
|
(571
|
)
|
As of December 31, 2017
|
||||||||||
Assets
|
|
Liabilities
|
||||||||
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
||||
(in thousands)
|
||||||||||
Designated as hedging instruments
|
|
|
|
|
|
|
||||
Prepaid expenses and other current assets
|
|
$
|
13
|
|
|
Other liabilities, current portion
|
|
$
|
(13,642
|
)
|
Other assets
|
|
—
|
|
|
Other liabilities, excluding current portion
|
|
(866
|
)
|
||
Total assets
|
|
$
|
13
|
|
|
Total liabilities
|
|
$
|
(14,508
|
)
|
|
As of September 30, 2018
|
||||||||||||||||||
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Gross Amounts Presented
|
|
Gross Amounts Not Offset
|
|
Legal Offset
|
||||||||||
Foreign currency forward contracts
|
(in thousands)
|
||||||||||||||||||
Total assets
|
$
|
14,616
|
|
|
$
|
—
|
|
|
$
|
14,616
|
|
|
$
|
(571
|
)
|
|
$
|
14,045
|
|
Total liabilities
|
$
|
(571
|
)
|
|
$
|
—
|
|
|
$
|
(571
|
)
|
|
$
|
571
|
|
|
$
|
—
|
|
|
As of December 31, 2017
|
||||||||||||||||||
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Gross Amounts Presented
|
|
Gross Amounts Not Offset
|
|
Legal Offset
|
||||||||||
Foreign currency forward contracts
|
(in thousands)
|
||||||||||||||||||
Total assets
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
13
|
|
|
$
|
(13
|
)
|
|
$
|
—
|
|
Total liabilities
|
$
|
(14,508
|
)
|
|
$
|
—
|
|
|
$
|
(14,508
|
)
|
|
$
|
13
|
|
|
$
|
(14,495
|
)
|
|
As of September 30, 2018
|
|
As of December 31, 2017
|
||||
|
(in thousands)
|
||||||
Raw materials
|
$
|
13,726
|
|
|
$
|
20,924
|
|
Work-in-process
|
77,408
|
|
|
74,237
|
|
||
Finished goods
|
33,016
|
|
|
16,669
|
|
||
Total
|
$
|
124,150
|
|
|
$
|
111,830
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Property and equipment, net
|
|
|
|
||||
Fan Pier Buildings
|
$
|
466,185
|
|
|
$
|
475,725
|
|
San Diego Building
|
$
|
114,301
|
|
|
$
|
94,602
|
|
|
|
|
|
||||
Construction financing lease obligation
|
|
|
|
||||
Fan Pier Buildings
|
$
|
471,654
|
|
|
$
|
472,070
|
|
San Diego Building
|
$
|
94,088
|
|
|
$
|
87,392
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
||||||||||||||
Stock-based compensation expense by type of award:
|
|
|
|
|
|
|
|
||||||||
Stock options
|
$
|
27,234
|
|
|
$
|
25,969
|
|
|
$
|
81,880
|
|
|
$
|
80,865
|
|
Restricted stock and restricted stock units (including PSUs)
|
55,482
|
|
|
46,737
|
|
|
157,397
|
|
|
131,388
|
|
||||
ESPP share issuances
|
2,725
|
|
|
2,428
|
|
|
7,281
|
|
|
6,738
|
|
||||
Stock-based compensation expense related to inventories
|
91
|
|
|
(678
|
)
|
|
(454
|
)
|
|
(2,001
|
)
|
||||
Total stock-based compensation included in costs and expenses
|
$
|
85,532
|
|
|
$
|
74,456
|
|
|
$
|
246,104
|
|
|
$
|
216,990
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock-based compensation expense by line item:
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales
|
$
|
1,259
|
|
|
$
|
686
|
|
|
$
|
3,263
|
|
|
$
|
1,656
|
|
Research and development expenses
|
52,918
|
|
|
46,186
|
|
|
153,018
|
|
|
134,855
|
|
||||
Sales, general and administrative expenses
|
31,355
|
|
|
27,584
|
|
|
89,823
|
|
|
80,479
|
|
||||
Total stock-based compensation included in costs and expenses
|
$
|
85,532
|
|
|
$
|
74,456
|
|
|
$
|
246,104
|
|
|
$
|
216,990
|
|
|
As of September 30, 2018
|
||||
|
Unrecognized Expense
|
|
Weighted-average
Recognition Period |
||
|
(in thousands)
|
|
(in years)
|
||
Type of award:
|
|
|
|
||
Stock options
|
$
|
189,045
|
|
|
2.77
|
Restricted stock and restricted stock units (including PSUs)
|
$
|
388,909
|
|
|
2.71
|
ESPP share issuances
|
$
|
3,051
|
|
|
0.47
|
|
|
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)
|
||||||
$29.07–$40.00
|
|
550
|
|
|
1.36
|
|
$
|
34.89
|
|
|
550
|
|
|
$
|
34.89
|
|
$40.01–$60.00
|
|
495
|
|
|
3.71
|
|
$
|
49.82
|
|
|
495
|
|
|
$
|
49.82
|
|
$60.01–$80.00
|
|
556
|
|
|
5.51
|
|
$
|
74.96
|
|
|
545
|
|
|
$
|
74.94
|
|
$80.01–$100.00
|
|
3,017
|
|
|
7.46
|
|
$
|
89.18
|
|
|
1,228
|
|
|
$
|
89.88
|
|
$100.01–$120.00
|
|
725
|
|
|
6.36
|
|
$
|
109.30
|
|
|
550
|
|
|
$
|
109.19
|
|
$120.01–$140.00
|
|
880
|
|
|
6.89
|
|
$
|
130.25
|
|
|
615
|
|
|
$
|
130.15
|
|
$140.01–$160.00
|
|
1,445
|
|
|
9.33
|
|
$
|
155.52
|
|
|
198
|
|
|
$
|
155.20
|
|
$160.01–$180.00
|
|
545
|
|
|
8.77
|
|
$
|
162.94
|
|
|
128
|
|
|
$
|
162.94
|
|
$180.01–$181.60
|
|
732
|
|
|
9.80
|
|
$
|
181.60
|
|
|
4
|
|
|
$
|
181.60
|
|
Total
|
|
8,945
|
|
|
7.18
|
|
$
|
111.22
|
|
|
4,313
|
|
|
$
|
89.83
|
|
•
|
In October 2018, we announced positive data from a Phase 3 clinical trial evaluating tezacaftor in combination with ivacaftor in patients with CF six to eleven years of age who are F508del homozygous or who have one copy of the F508del mutation and one residual function mutation. The clinical trial met its primary safety endpoint, and safety data showed that the combination was generally well tolerated. We plan to submit a supplemental new drug application, or sNDA, to the FDA in late 2018. To support potential approval in the European Union, an eight-week Phase 3 clinical trial is ongoing to evaluate tezacaftor in combination with ivacaftor in approximately 65 children six to eleven years of age. The primary endpoint of the clinical trial is the absolute change in the lung clearance index.
|
•
|
In October 2018, we announced positive data from a Phase 3 clinical trial of ivacaftor in patients with CF six to twelve months of age. We expect to submit an sNDA to the FDA and a line extension to the EMA in late 2018.
|
•
|
In October 2018, the FDA lifted a clinical hold on the investigational new drug application, or IND, for CTX001 for the treatment of sickle cell disease that was submitted earlier this year. We and CRISPR expect to initiate the clinical trial in sickle cell disease by the end of 2018. The first two patients in the clinical trial will be dosed sequentially and, pending data from these initial two patients, subsequent patients can be dosed concurrently.
|
•
|
Enrollment of a Phase 1/2 clinical trial evaluating CTX001 in patients with beta-thalassemia is open at multiple clinical trial sites in Europe. The first patient in this Phase 1/2 clinical trial of CTX001 has been enrolled. This Phase 1/2 clinical trial is designed to assess the safety and efficacy of CTX001 in adult transfusion-dependent non beta zero/beta zero patients with beta-thalassemia. Similar to the clinical trial in sickle cell patients, the first two patients in the clinical trial will be dosed sequentially and, pending data from these initial two patients, subsequent patients can be dosed concurrently.
|
•
|
CRISPR, pursuant to which we are collaborating on the discovery and development of potential new treatments aimed at the underlying genetic causes of human diseases using CRISPR-Cas9 gene editing technology;
|
•
|
Moderna Therapeutics, Inc., or Moderna, pursuant to which we are seeking to identify and develop messenger ribonucleic acid, or mRNA therapeutics for the treatment of CF;
|
•
|
BioAxone, pursuant to which we have been evaluating VX-210 as a potential treatment for patients who have spinal cord injuries; and
|
•
|
Parion Sciences, Inc., or Parion, pursuant to which we are developing epithelial sodium channel, or ENaC, inhibitors for the treatment of pulmonary diseases.
|
•
|
Janssen Pharmaceuticals, Inc., or Janssen, Inc., which is developing pimodivir (formerly VX-787) for the treatment of influenza; and
|
•
|
Merck KGaA, which licensed four oncology research and development programs from us in early 2017.
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||||||||||||||||||
Revenues
|
$
|
784,535
|
|
|
$
|
578,165
|
|
|
$
|
206,370
|
|
|
36
|
%
|
|
$
|
2,177,491
|
|
|
$
|
1,837,018
|
|
|
$
|
340,473
|
|
|
19
|
%
|
Operating costs and expenses
|
578,886
|
|
|
904,208
|
|
|
(325,322
|
)
|
|
(36
|
)%
|
|
1,670,063
|
|
|
1,839,512
|
|
|
(169,449
|
)
|
|
(9
|
)%
|
||||||
Other items, net
|
(76,903
|
)
|
|
223,091
|
|
|
(299,994
|
)
|
|
n/a
|
|
|
38,941
|
|
|
165,294
|
|
|
(126,353
|
)
|
|
(76
|
)%
|
||||||
Net income (loss) attributable to Vertex
|
$
|
128,746
|
|
|
$
|
(102,952
|
)
|
|
$
|
231,698
|
|
|
n/a
|
|
|
$
|
546,369
|
|
|
$
|
162,800
|
|
|
$
|
383,569
|
|
|
236
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income (loss) per diluted share attributable to Vertex common shareholders
|
$
|
0.50
|
|
|
$
|
(0.41
|
)
|
|
|
|
|
|
$
|
2.11
|
|
|
$
|
0.64
|
|
|
|
|
|
||||||
Diluted shares used in per share calculations
|
259,788
|
|
|
250,268
|
|
|
|
|
|
|
258,972
|
|
|
252,095
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||||||||||||||||||
Product revenues, net
|
$
|
782,511
|
|
|
$
|
549,642
|
|
|
$
|
232,869
|
|
|
42
|
%
|
|
$
|
2,170,152
|
|
|
$
|
1,544,252
|
|
|
$
|
625,900
|
|
|
41
|
%
|
Royalty revenues
|
1,238
|
|
|
2,231
|
|
|
(993
|
)
|
|
(45
|
)%
|
|
3,679
|
|
|
6,643
|
|
|
(2,964
|
)
|
|
(45
|
)%
|
||||||
Collaborative revenues
|
786
|
|
|
26,292
|
|
|
(25,506
|
)
|
|
(97
|
)%
|
|
3,660
|
|
|
286,123
|
|
|
(282,463
|
)
|
|
(99
|
)%
|
||||||
Total revenues
|
$
|
784,535
|
|
|
$
|
578,165
|
|
|
$
|
206,370
|
|
|
36
|
%
|
|
$
|
2,177,491
|
|
|
$
|
1,837,018
|
|
|
$
|
340,473
|
|
|
19
|
%
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||||||||||||||||||
KALYDECO
|
$
|
245,733
|
|
|
$
|
213,461
|
|
|
$
|
32,272
|
|
|
15
|
%
|
|
$
|
748,365
|
|
|
$
|
588,809
|
|
|
$
|
159,556
|
|
|
27
|
%
|
ORKAMBI
|
281,859
|
|
|
336,183
|
|
|
(54,324
|
)
|
|
(16
|
)%
|
|
947,186
|
|
|
955,451
|
|
|
(8,265
|
)
|
|
(1
|
)%
|
||||||
SYMDEKO
|
254,919
|
|
|
—
|
|
|
254,919
|
|
|
n/a
|
|
|
474,601
|
|
|
—
|
|
|
474,601
|
|
|
n/a
|
|
||||||
Total CF product revenues, net
|
$
|
782,511
|
|
|
$
|
549,644
|
|
|
$
|
232,867
|
|
|
42
|
%
|
|
$
|
2,170,152
|
|
|
$
|
1,544,260
|
|
|
$
|
625,892
|
|
|
41
|
%
|
`
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||||||||||||||||||
Cost of sales
|
$
|
111,255
|
|
|
$
|
72,874
|
|
|
$
|
38,381
|
|
|
53
|
%
|
|
$
|
287,250
|
|
|
$
|
191,067
|
|
|
$
|
96,183
|
|
|
50
|
%
|
Research and development expenses
|
330,510
|
|
|
454,947
|
|
|
(124,437
|
)
|
|
(27
|
)%
|
|
978,595
|
|
|
1,017,961
|
|
|
(39,366
|
)
|
|
(4
|
)%
|
||||||
Sales, general and administrative expenses
|
137,295
|
|
|
120,710
|
|
|
16,585
|
|
|
14
|
%
|
|
404,406
|
|
|
361,285
|
|
|
43,121
|
|
|
12
|
%
|
||||||
Restructuring (income) expenses
|
(174
|
)
|
|
337
|
|
|
(511
|
)
|
|
n/a
|
|
|
(188
|
)
|
|
13,859
|
|
|
(14,047
|
)
|
|
n/a
|
|
||||||
Intangible asset impairment charge
|
—
|
|
|
255,340
|
|
|
(255,340
|
)
|
|
(100
|
)%
|
|
—
|
|
|
255,340
|
|
|
(255,340
|
)
|
|
(100
|
)%
|
||||||
Total costs and expenses
|
$
|
578,886
|
|
|
$
|
904,208
|
|
|
$
|
(325,322
|
)
|
|
(36
|
)%
|
|
$
|
1,670,063
|
|
|
$
|
1,839,512
|
|
|
$
|
(169,449
|
)
|
|
(9
|
)%
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||||||||||||||||||
Research expenses
|
$
|
83,701
|
|
|
$
|
76,131
|
|
|
$
|
7,570
|
|
|
10
|
%
|
|
$
|
247,656
|
|
|
$
|
226,409
|
|
|
$
|
21,247
|
|
|
9
|
%
|
Development expenses
|
246,809
|
|
|
378,816
|
|
|
(132,007
|
)
|
|
(35
|
)%
|
|
730,939
|
|
|
791,552
|
|
|
(60,613
|
)
|
|
(8
|
)%
|
||||||
Total research and development expenses
|
$
|
330,510
|
|
|
$
|
454,947
|
|
|
$
|
(124,437
|
)
|
|
(27
|
)%
|
|
$
|
978,595
|
|
|
$
|
1,017,961
|
|
|
$
|
(39,366
|
)
|
|
(4
|
)%
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||||||||||||||||||
Research Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Salary and benefits
|
$
|
21,745
|
|
|
$
|
20,445
|
|
|
$
|
1,300
|
|
|
6
|
%
|
|
$
|
67,078
|
|
|
$
|
61,486
|
|
|
$
|
5,592
|
|
|
9
|
%
|
Stock-based compensation expense
|
16,462
|
|
|
15,641
|
|
|
821
|
|
|
5
|
%
|
|
47,503
|
|
|
44,366
|
|
|
3,137
|
|
|
7
|
%
|
||||||
Laboratory supplies and other direct expenses
|
12,312
|
|
|
10,791
|
|
|
1,521
|
|
|
14
|
%
|
|
37,327
|
|
|
33,980
|
|
|
3,347
|
|
|
10
|
%
|
||||||
Outsourced services
|
9,236
|
|
|
10,230
|
|
|
(994
|
)
|
|
(10
|
)%
|
|
28,082
|
|
|
29,644
|
|
|
(1,562
|
)
|
|
(5
|
)%
|
||||||
Collaboration and asset acquisition payments
|
1,791
|
|
|
425
|
|
|
1,366
|
|
|
321
|
%
|
|
4,350
|
|
|
425
|
|
|
3,925
|
|
|
924
|
%
|
||||||
Infrastructure costs
|
22,155
|
|
|
18,599
|
|
|
3,556
|
|
|
19
|
%
|
|
63,316
|
|
|
56,508
|
|
|
6,808
|
|
|
12
|
%
|
||||||
Total research expenses
|
$
|
83,701
|
|
|
$
|
76,131
|
|
|
$
|
7,570
|
|
|
10
|
%
|
|
$
|
247,656
|
|
|
$
|
226,409
|
|
|
$
|
21,247
|
|
|
9
|
%
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||||||||||||||||||
Development Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Salary and benefits
|
$
|
56,417
|
|
|
$
|
54,125
|
|
|
$
|
2,292
|
|
|
4
|
%
|
|
$
|
167,208
|
|
|
$
|
156,759
|
|
|
$
|
10,449
|
|
|
7
|
%
|
Stock-based compensation expense
|
36,456
|
|
|
30,545
|
|
|
5,911
|
|
|
19
|
%
|
|
105,515
|
|
|
90,489
|
|
|
15,026
|
|
|
17
|
%
|
||||||
Laboratory supplies and other direct expenses
|
23,571
|
|
|
10,828
|
|
|
12,743
|
|
|
118
|
%
|
|
60,083
|
|
|
34,171
|
|
|
25,912
|
|
|
76
|
%
|
||||||
Outsourced services
|
81,321
|
|
|
89,637
|
|
|
(8,316
|
)
|
|
(9
|
)%
|
|
259,499
|
|
|
251,677
|
|
|
7,822
|
|
|
3
|
%
|
||||||
Collaboration and asset acquisition payments
|
—
|
|
|
160,000
|
|
|
(160,000
|
)
|
|
(100
|
)%
|
|
250
|
|
|
160,250
|
|
|
(160,000
|
)
|
|
(100
|
)%
|
||||||
Drug supply costs
|
12,301
|
|
|
3,151
|
|
|
9,150
|
|
|
290
|
%
|
|
32,014
|
|
|
6,143
|
|
|
25,871
|
|
|
421
|
%
|
||||||
Infrastructure costs
|
36,743
|
|
|
30,530
|
|
|
6,213
|
|
|
20
|
%
|
|
106,370
|
|
|
92,063
|
|
|
14,307
|
|
|
16
|
%
|
||||||
Total development expenses
|
$
|
246,809
|
|
|
$
|
378,816
|
|
|
$
|
(132,007
|
)
|
|
(35
|
)%
|
|
$
|
730,939
|
|
|
$
|
791,552
|
|
|
$
|
(60,613
|
)
|
|
(8
|
)%
|
|
Three Months Ended September 30,
|
|
Increase/(Decrease)
|
|
Nine Months Ended September 30,
|
|
Increase/(Decrease)
|
||||||||||||||||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
||||||||||||||
|
(in thousands)
|
|
|
|
(in thousands)
|
|
|
||||||||||||||||||||||
Sales, general and administrative expenses
|
$
|
137,295
|
|
|
$
|
120,710
|
|
|
$
|
16,585
|
|
|
14
|
%
|
|
$
|
404,406
|
|
|
$
|
361,285
|
|
|
$
|
43,121
|
|
|
12
|
%
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in thousands)
|
|
|
|
|
||||||||||
Loss attributable to noncontrolling interest before provision for (benefit from) income taxes and changes in fair value of contingent payments
|
$
|
411
|
|
|
$
|
238,946
|
|
|
$
|
1,394
|
|
|
$
|
222,448
|
|
Provision for (benefit from) income taxes
|
79
|
|
|
(120,181
|
)
|
|
6,068
|
|
|
(111,658
|
)
|
||||
(Increase) decrease in fair value of contingent payments
|
(200
|
)
|
|
69,550
|
|
|
(23,100
|
)
|
|
62,560
|
|
||||
Net loss (income) attributable to noncontrolling interest
|
$
|
290
|
|
|
$
|
188,315
|
|
|
$
|
(15,638
|
)
|
|
$
|
173,350
|
|
|
September 30,
|
|
December 31,
|
|
Increase/(Decrease)
|
|||||||||
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Cash, cash equivalents and marketable securities
|
$
|
3,055,885
|
|
|
$
|
2,088,666
|
|
|
$
|
967,219
|
|
|
46
|
%
|
Working Capital
|
|
|
|
|
|
|
|
|||||||
Total current assets
|
3,686,611
|
|
|
2,648,963
|
|
|
1,037,648
|
|
|
39
|
%
|
|||
Total current liabilities
|
992,508
|
|
|
807,260
|
|
|
185,248
|
|
|
23
|
%
|
|||
Total working capital
|
$
|
2,694,103
|
|
|
$
|
1,841,703
|
|
|
$
|
852,400
|
|
|
46
|
%
|
•
|
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 CF net product revenues, the potential release of the valuation allowance on our deferred income tax assets and the anticipated effect of lease accounting changes that will become effective in 2019;
|
•
|
our expectations regarding clinical trials, development timelines, timing of our receipt of data from our ongoing and planned clinical trials and regulatory authority filings and submissions for ivacaftor, lumacaftor, tezacaftor, VX-659, VX-445, VX-561, VX-150 and CTX001 and the potential approval of SYMKEVI in the European Union;
|
•
|
our ability to obtain reimbursement for ORKAMBI in ex-U.S. markets and our ability to otherwise successfully market KALYDECO, ORKAMBI and SYMDEKO/SYMKEVI 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, tezacaftor, VX-659, VX-445, VX-561, VX-150 and CTX001, 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;
|
•
|
potential fluctuations in foreign currency exchange rates;
|
•
|
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 (1) |
Average Price
Paid per Share |
Total Number of Shares
Purchased as Part of Publicly Announced Plans or Programs (2) |
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (2)
|
July 1, 2018 to July 31, 2018
|
49,836
|
$160.51
|
46,009
|
372,982,925
|
|
August 1, 2018 to August 31, 2018
|
263,154
|
$174.79
|
259,459
|
326,985,627
|
|
September 1, 2018 to September 30, 2018
|
213,961
|
$177.59
|
209,664
|
288,988,241
|
|
Total
|
526,951
|
$174.58
|
515,132
|
288,988,241
|
Exhibit Number
|
Exhibit Description
|
10.1
|
|
10.2
|
|
31.1
|
|
31.2
|
|
32.1
|
|
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
|
|
|
|
|
October 25, 2018
|
By:
|
/s/ Thomas Graney
|
|
|
Thomas Graney
|
|
|
Senior Vice President and Chief Financial Officer
(principal financial officer and duly authorized officer) |
1.
|
DEFINITIONS
|
2.
|
PURPOSES OF THE PLAN
|
3.
|
SHARES SUBJECT TO THE PLAN
|
4.
|
ADMINISTRATION OF THE PLAN
|
a.
|
Interpret the provisions of the Plan and of any Stock Right or Stock Agreement and to make all rules and determinations that it deems necessary or advisable for the administration of the Plan;
|
b.
|
Determine which Employees, Non-Employee Directors, consultants and advisors of the Company and its Affiliates shall be granted Stock Rights;
|
c.
|
Determine the number of Shares and exercise price for which a Stock Right shall be granted;
|
d.
|
Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted;
|
e.
|
In its discretion, accelerate:
|
f.
|
In its discretion, extend the exercise date for any Option;
|
5.
|
ELIGIBILITY FOR PARTICIPATION
|
6.
|
TERMS AND CONDITIONS OF OPTIONS
|
7.
|
TERMS AND CONDITIONS OF STOCK GRANTS
|
8.
|
TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS
|
9.
|
EXERCISE OF OPTIONS AND ISSUANCE OF SHARES
|
10.
|
ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS
|
11.
|
EFFECT ON STOCK RIGHTS OF TERMINATION OF SERVICE
|
12.
|
EFFECT ON STOCK RIGHTS OF TERMINATION OF SERVICE FOR “CAUSE”
|
13.
|
EFFECT ON STOCK RIGHTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR, CONSULTANT OR ADVISOR
|
14.
|
RIGHTS AS A STOCKHOLDER
|
15.
|
EMPLOYMENT OR OTHER RELATIONSHIP
|
16.
|
DISSOLUTION OR LIQUIDATION OF THE COMPANY
|
17.
|
ADJUSTMENTS
|
18.
|
ISSUANCES OF SECURITIES
|
19.
|
FRACTIONAL SHARES
|
20.
|
CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS: TERMINATION OF ISOs
|
21.
|
WITHHOLDING
|
22.
|
NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION
|
23.
|
EFFECTIVE DATE; TERMINATION OF THE PLAN
|
24.
|
AMENDMENT OF THE PLAN; AMENDMENT OF STOCK RIGHTS
|
25.
|
GOVERNING LAW
|
1.
|
Section 1 of the Plan is hereby amended to add the following new definitions:
|
2.
|
Section 9 of the Plan is hereby amended to add the following paragraph to the end of Section 9:
|
3.
|
Section 13 of the Plan is hereby amended to add the following paragraph to the end of Section 13:
|
4.
|
A new Section 26 is hereby added to the Plan to read as follows:
|
1.
|
DEFINITIONS
|
2.
|
PURPOSES OF THE PLAN
|
3.
|
SHARES SUBJECT TO THE PLAN
|
a.
|
35,875,861 shares of Common Stock; and
|
b.
|
the number of shares subject to awards granted under the Company’s Amended and Restated 2006 Stock and Option Plan (the “
2006 Plan
”) which expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right (subject, however, in the case of ISOs, to any limitations under the Code),
|
4.
|
ADMINISTRATION OF THE PLAN
|
a.
|
Interpret the provisions of the Plan and of any Stock Right or Stock Agreement and to make all rules and determinations that it deems necessary or desirable for the administration of the Plan;
|
b.
|
Determine which Employees, Non-Employee Directors, consultants and advisors of the Company and its Affiliates shall be granted Stock Rights;
|
c.
|
Determine the number of Shares and exercise price for which a Stock Right shall be granted;
|
d.
|
Specify the terms and conditions upon which a Stock Right or Stock Rights may be granted;
|
e.
|
In its discretion, accelerate:
|
(i)
|
the date of exercise of any installment of any Option; or
|
(ii)
|
the date or dates of vesting of Shares, or lapsing of Company repurchase rights with respect to any Shares, under any Stock Rights; and
|
f.
|
In its discretion, extend the period during which an Option may be exercised (but not beyond the earlier of the expiration date of the Option and the 10
th
anniversary of the date the Option was granted);
|
5.
|
ELIGIBILITY FOR PARTICIPATION
|
6.
|
TERMS AND CONDITIONS OF OPTIONS
|
7.
|
TERMS AND CONDITIONS OF STOCK GRANTS
|
8.
|
TERMS AND CONDITIONS OF STOCK-BASED AWARDS
|
9.
|
EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS AND ISSUANCE OF SHARES
|
10.
|
ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS
|
11.
|
EFFECT ON STOCK RIGHTS OF TERMINATION OF SERVICE
|
12.
|
EFFECT ON STOCK RIGHTS OF DEATH OR DISABILITY WHILE AN EMPLOYEE, DIRECTOR, CONSULTANT OR ADVISOR
|
13.
|
ANNUAL LIMITS ON STOCK RIGHTS; PERFORMANCE AWARDS
|
14.
|
RIGHTS AS A SHAREHOLDER
|
15.
|
EMPLOYMENT OR OTHER RELATIONSHIP
|
16.
|
DISSOLUTION OR LIQUIDATION OF THE COMPANY
|
17.
|
ADJUSTMENTS
|
18.
|
ISSUANCES OF SECURITIES
|
19.
|
FRACTIONAL SHARES
|
20.
|
DIVIDEND EQUIVALENTS
|
21.
|
WITHHOLDING
|
22.
|
NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION
|
23.
|
EFFECTIVE DATE; TERMINATION OF THE PLAN
|
24.
|
AMENDMENT OF THE PLAN; AMENDMENT OF STOCK RIGHTS
|
25.
|
RECOVERY OF COMPENSATION
|
26.
|
COMPLIANCE WITH SECTION 409A OF THE CODE
|
27.
|
AUTHORIZATION OF SUB-PLANS
|
28.
|
GOVERNING LAW
|
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;
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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)
|
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.
|
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:
|
October 25, 2018
|
/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;
|
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:
|
October 25, 2018
|
/s/ Thomas Graney
|
|
|
|
|
|
Thomas Graney
|
|
|
Senior Vice President and Chief Financial Officer
|
Date:
|
October 25, 2018
|
|
|
|
/s/ Jeffrey M. Leiden
|
|
|
|
|
|
Jeffrey M. Leiden
|
|
|
Chief Executive Officer and President
|
|
|
|
Date:
|
October 25, 2018
|
|
|
|
/s/ Thomas Graney
|
|
|
|
|
|
Thomas Graney
|
|
|
Senior Vice President and Chief Financial Officer
|
|