☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Title of Each Class
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Trading Symbol
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Name of Each Exchange on Which Registered
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Common Stock, $0.01 Par Value Per Share
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VRTX
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The Nasdaq Global Select Market
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ITEM 1.
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BUSINESS
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Product
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Scientific Name
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Region/Initial Approval
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Indication
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Eligible Age Group
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elexacaftor/tezacaftor/ivacaftor and ivacaftor
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U.S. (2019)
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CF patients with at least one F508del mutation
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12 years of age and older
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tezacaftor/ivacaftor and ivacaftor
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U.S. (2018)
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CF patients (i) homozygous for the F508del mutation or (ii) with at least one mutation that is responsive to tezacaftor/ivacaftor
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6 years of age and older
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tezacaftor/ivacaftor
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European Union (2018)
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CF patients (i) homozygous for the F508del mutation or (ii) with one copy of the F508del mutation and one copy of certain mutations that result in residual CFTR activity
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12 years of age and older
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lumacaftor/ivacaftor
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U.S. (2015)
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CF patients homozygous for the F508del mutation
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2 years of age and older
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lumacaftor/ivacaftor
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European Union (2015)
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CF patients homozygous for the F508del mutation
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2 years of age and older
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ivacaftor
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U.S. (2012)
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CF patients with G551D and other specified mutations
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6 months of age and older
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ivacaftor
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European Union (2012)
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CF patients with G551D and other specified mutations
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6 months of age and older
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•
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In October 2019, we received approval from the FDA for TRIKAFTA for the treatment of patients with CF 12 years of age and older who have at least one copy of the F508del mutation.
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•
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In the fourth quarter of 2019, the MAA we submitted for the triple combination of elexacaftor, tezacaftor, and ivacaftor in patients 12 years of age and older was validated by the EMA.
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•
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A Phase 3 clinical trial evaluating the triple combination of elexacaftor, tezacaftor and ivacaftor in children six to 11 years of age who are F508del homozygous or who have one copy of the F508del mutation and one minimum function mutation is ongoing.
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•
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In June 2019, we obtained approval for SYMDEKO in the United States for children 6 to 11 years of age.
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•
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In the fourth quarter of 2019, we submitted an application to the EMA to extend the indication of tezacaftor in combination with ivacaftor to patients 6 to 11 years of age.
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•
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In January 2019, we obtained approval for ORKAMBI in the European Union for children 2 to 5 years of age.
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•
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In April 2019, we obtained approval for KALYDECO in the United States for infants 6 to <12 months of age.
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•
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In December 2019, we obtained approval for KALYDECO in the European Union for infants 6 to <12 months of age.
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•
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We are evaluating VX-121, an additional next-generation corrector, and VX-561, a potentiator, in Phase 2 clinical development.
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•
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our collaboration with CRISPR in hemoglobinopathies and other diseases;
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•
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our establishment of preclinical genetic therapy programs for DMD and DM1, through our acquisition of Exonics; and
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•
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our establishment of a preclinical program to develop cell-based therapies for type 1 diabetes through our acquisition of Semma.
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•
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transformative treatments for life-threatening diseases with a high unmet medical need;
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•
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targets validated as playing a causal role in the human biology of a disease;
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•
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innovative approaches to addressing those targets;
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•
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biological assays and clinical biomarkers that we believe will be predictive of clinical responses; and
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•
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efficient clinical and regulatory paths to bring new medicines to patients.
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•
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Arbor Biotechnologies, Inc. In 2018, we entered into a collaboration with Arbor Biotechnologies, pursuant to which we are focusing on the discovery of novel proteins, including DNA endonucleases, to advance the development of new gene-editing therapies.
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•
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CRISPR Therapeutics AG. In 2015, we entered into a collaboration with CRISPR for the discovery and development of potential new treatments aimed at the underlying genetic causes of human diseases using CRISPR-Cas9 gene-editing technology. We currently are co-developing CTX001 for the treatment of sickle cell disease and beta-thalassemia and, if successful, have agreed to co-commercialize CTX001. In addition, we have exercised options to exclusively license treatments for specific targets, including CF, that were subject to the research program. In 2019, we obtained exclusive worldwide rights to CRISPR’s intellectual property for DMD and DM1 gene-editing products through a new agreement with CRISPR.
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•
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Kymera Therapeutics, Inc. In 2019, we entered into a collaboration with Kymera Therapeutics for the research and development of small molecule protein degraders. Under the collaboration, Kymera conducts research activities in multiple targets, and upon designation of a clinical development candidate for a target, we have the option to exclusively license molecules against the target.
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•
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Moderna Therapeutics, Inc. In 2016, we entered into a collaboration with Moderna Therapeutics, pursuant to which we are seeking to identify and develop messenger ribonucleic acid, or mRNA, therapeutics for the treatment of CF.
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•
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Other Arrangements. In 2019, we entered into collaborations with Molecular Templates, Inc. and Ribometrix, Inc. In 2018, we entered into agreements with Genomics plc, Merck KGaA, Darmstadt, Germany, and X-Chem, Inc. in order to support our research and development efforts.
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•
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Janssen Pharmaceuticals, Inc. In 2014, we entered into an agreement with Janssen. Pursuant to this agreement, Janssen Inc. is developing pimodivir for the treatment of influenza. Janssen is evaluating pimodivir in Phase 3 clinical trials in patients with influenza A infection.
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•
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Merck KGaA, Darmstadt, Germany. In 2017, we entered into a Strategic Collaboration and License Agreement with Merck KGaA, Darmstadt, Germany, pursuant to which we granted an exclusive worldwide license to research, develop and commercialize four oncology research and development programs.
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Product/Drug Candidate
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Status of United States Patent
(Projected Expiration)
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Status of European Union Patent
(Projected Expiration)
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KALYDECO
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Granted (2027)
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Granted (2025) 1
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ORKAMBI
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Granted (2030)
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Granted (2026) 2
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SYMDEKO/SYMKEVI
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Granted (2027)
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Granted (2028) 3
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TRIKAFTA
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Pending (2037)
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Pending (2037)
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•
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CF potentiators and correctors and many other related compounds, and the use of those compounds to treat CF.
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•
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Other pre-clinical and clinical drug candidates and the use of such drug candidates to treat specified diseases.
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•
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The manufacture, pharmaceutical compositions, related solid forms, formulations, dosing regimens and methods of use of many of the above compounds.
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•
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completion of preclinical laboratory tests, animal studies and formulation studies conducted according to Good Laboratory Practices, or GLP, and other applicable regulations;
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•
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submission to the FDA of an IND application, which must become effective before clinical trials in the United States may begin;
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performance of adequate and well-controlled clinical trials according to Good Clinical Practices, or GCP, to establish the safety and efficacy of the proposed drug for its intended use;
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•
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submission to the FDA of a New Drug Application, or an NDA;
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•
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satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product will be produced to assess compliance with GMP; and
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•
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FDA review and approval of the NDA.
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•
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Phase 1. The drug initially is introduced into healthy human subjects and tested for safety, dosage tolerance, absorption, metabolism, distribution and elimination. In the case of some drug candidates for severe or life-threatening diseases, such as cancer, especially when the drug candidate may be inherently too toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.
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Phase 2. Clinical trials are initiated in a limited patient population intended to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the drug candidate for specific targeted diseases and to determine dosage tolerance and optimal dosage.
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Phase 3. Clinical trials are undertaken to further evaluate dosage, clinical efficacy and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical trials are intended to establish the overall risk-benefit ratio of the drug candidate and provide an adequate basis for regulatory approval and product labeling.
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•
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record-keeping requirements;
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reporting of adverse experiences with the product;
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providing the FDA with updated safety and efficacy information;
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•
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drug sampling and distribution requirements;
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notifying the FDA and gaining its approval of specified manufacturing or labeling changes;
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•
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complying with certain electronic records and signature requirements; and
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•
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complying with FDA promotion and advertising requirements.
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•
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refusal to approve or delay in review of pending applications;
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withdrawal of an approval or the implementation of limitations on a previously approved indication for use;
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imposition of a clinical hold, a risk mitigation and evaluation strategy or other safety-related limitations;
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warning letters or “untitled letters”;
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product seizures;
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total or partial suspension of production or distribution; or
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•
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injunctions, fines, disgorgement, refusals of government contracts, or civil or criminal penalties.
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Name
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Age
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Position
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Jeffrey M. Leiden, M.D., Ph.D.
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64
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Chairman of the Board, Chief Executive Officer and President
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Reshma Kewalramani, M.D.
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47
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Executive Vice President and Chief Medical Officer
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David Altshuler, M.D., Ph.D.
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55
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Executive Vice President, Global Research and Chief Scientific Officer
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Stuart A. Arbuckle
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54
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Executive Vice President and Chief Commercial Officer
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Carmen Bozic, M.D.
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57
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Executive Vice President, Global Medicines Development and Medical Affairs
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Michael Parini, J.D.
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45
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Executive Vice President and Chief Legal and Administrative Officer
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Amit K. Sachdev, J.D.
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52
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Executive Vice President and Chief Patient Officer
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Charles F. Wagner, Jr.
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51
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Executive Vice President and Chief Financial Officer
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Paul M. Silva
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53
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Senior Vice President and Corporate Controller
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Nia Tatsis, Ph.D.
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50
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Senior Vice President and Chief Regulatory Officer
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•
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that one or more competing therapies may successfully be developed as a treatment for patients with CF;
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•
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that reimbursement policies of payors and other third parties may make it difficult to obtain reimbursement or reduce the net price we receive for our products;
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•
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that we may experience manufacturing or supply disruptions for our CF medicines; and
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•
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that we may experience adverse developments with respect to development or commercialization of our CF medicines and/or CF drug candidates.
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•
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prevalence and severity of adverse side effects;
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•
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lack of reimbursement availability from third-party payors, including governmental entities;
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•
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lower demonstrated efficacy, safety and/or tolerability compared to alternative treatment methods;
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•
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lack of cost-effectiveness;
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•
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a decision to wait for the approval of other therapies in development that have significant perceived advantages over our drug;
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convenience and ease of administration;
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•
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other potential advantages of alternative treatment methods; and
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•
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ineffective sales, marketing and/or distribution support.
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•
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the manufacturing processes for genetic and cell-based therapies are typically more complex and challenging than the manufacturing processes required for small molecule drugs, require different systems, equipment and facilities and require different expertise to develop and maintain;
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•
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there have been a limited number of FDA approvals for genetic therapies to date, the regulatory requirements governing genetic therapies are continuing to evolve and current and future regulatory positions and interpretations could lead to delays with respect to our genetic therapy programs; and
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our cell-based therapies include approaches involving devices, which are subject to additional regulatory requirements.
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offer therapeutic or other improvement over existing competitive therapies;
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show the level of safety and efficacy, including the level of statistical significance, required by the FDA or other regulatory authorities for approval of a drug candidate;
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meet applicable regulatory standards;
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be capable of being produced in commercial quantities at acceptable costs; or
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if approved for commercial sale, be successfully marketed as pharmaceutical products.
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ongoing discussions with the FDA or comparable foreign authorities regarding the scope or design of our clinical trials and the number of clinical trials we must conduct;
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•
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delays in enrolling volunteers or patients into clinical trials, including as a result of low numbers of patients that meet the eligibility criteria for the trial;
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•
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a lower than anticipated retention rate of volunteers or patients in clinical trials;
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•
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the need to repeat clinical trials as a result of inconclusive results, unforeseen complications in testing or clinical investigator error;
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•
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inadequate supply or deficient quality of drug candidate materials or other materials necessary for the conduct of our clinical trials;
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•
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unfavorable FDA or foreign regulatory authority inspection and review of a manufacturing facility that supplied clinical trial materials or its relevant manufacturing records or a clinical trial site or records of any clinical or preclinical investigation;
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•
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unfavorable scientific results from clinical trials;
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•
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serious and unexpected drug-related side-effects experienced by participants in our clinical trials or by participants in clinical trials being conducted by our competitors to evaluate drug candidates with similar mechanisms of action or structures to drug candidates that we are developing;
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•
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favorable results in testing of our competitors’ drug candidates, or FDA or foreign regulatory authority approval of our competitors’ drug candidates; or
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•
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action by the FDA or a foreign regulatory authority to place a clinical hold or partial clinical hold on a trial or compound or deeming the clinical trial conduct as problematic.
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•
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failure to successfully develop and commercialize the acquired drugs, drug candidates or technologies or to achieve other strategic objectives;
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•
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delays or inability to progress preclinical programs into clinical development or unfavorable data from clinical trials evaluating the acquired or licensed drug or drug candidates;
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•
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difficulty in integrating the drugs, drug candidates, technologies, business operations and personnel of an acquired asset or company;
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•
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disruption of our ongoing business and distraction of our management and employees from daily operations or other opportunities and challenges;
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•
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the potential loss of key employees of an acquired company;
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•
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entry into markets in which we have no or limited direct prior experience or where competitors in such markets have stronger market positions;
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•
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potential failure of the due diligence processes to identify significant problems, liabilities or challenges of an acquired company, or acquired or licensed drug, drug candidate or technology, including but not limited to, problems, liabilities or challenges with respect to intellectual property, clinical or non-clinical data, safety, accounting practices, employee, or third party relations and other known and unknown liabilities;
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•
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liability for activities of the acquired company or licensor before the acquisition or license, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities, and other known and unknown liabilities;
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•
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exposure to litigation or other claims in connection with, or inheritance of claims or litigation risk as a result of an acquisition or license, including but not limited to, claims from terminated employees, customers, former equity holders or other third-parties; and
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•
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difficulties in the integration of the acquired company’s departments, systems, including accounting, human resource and other administrative systems, technologies, books and records, and procedures, as well as in maintaining uniform standards, controls, including internal control over financial reporting required by the Sarbanes-Oxley Act of 2002 and related procedures and policies.
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•
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Our collaborators may change the focus of their development and commercialization efforts or may have insufficient resources to effectively develop our drug candidates. The ability of some of our products and drug candidates to reach their potential could be limited if collaborators decrease or fail to increase development or commercialization efforts related to those products or drug candidates. Our collaboration agreements provide our collaborators with a level of discretion in determining the amount and timing of efforts and resources that they will apply to these collaborations.
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•
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Collaboration agreements may have the effect of limiting the areas of research and development that we may pursue, either alone or in collaboration with third parties.
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•
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Collaborators may develop and commercialize, either alone or with others, drugs that are similar to or competitive with the drugs or drug candidates that are the subject of their collaborations with us.
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•
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Disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or termination of the research, development or commercialization of drug candidates, might lead to additional responsibilities for us with respect to drug candidates, or might result in litigation or arbitration. Any such disagreements would divert management attention and resources and be time-consuming and expensive.
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•
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Collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation.
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•
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Collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability.
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•
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Investigations and/or compliance or enforcement actions against a collaborator, which may expose us to indirect liability as a result of our partnership with such collaborator.
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•
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Our collaboration agreements are subject to termination under various circumstances.
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•
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differing regulatory requirements for drug approvals and regulation of approved drugs in foreign countries;
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•
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varying reimbursement regimes and difficulties or the inability to obtain reimbursement for our products in foreign countries in a timely manner;
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•
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differing patient treatment infrastructures, particularly since our business is focused on the treatment of serious diseases that affect relatively smaller numbers of patients and are typically prescribed by specialist physicians;
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•
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collectibility of accounts receivable;
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•
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changes in tariffs, trade barriers and regulatory requirements, the risks of which appear to have increased in the current political environment;
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•
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economic weakness, including recession and inflation, or political instability in particular foreign economies and markets;
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•
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differing levels of enforcement and/or recognition of contractual and intellectual property rights;
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•
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complying with local laws and regulations, which are interpreted and enforced differently across jurisdictions and which can change significantly over time;
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•
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foreign taxes, including withholding of payroll taxes;
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•
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foreign currency fluctuations, which could result in reduced revenues or increased operating expenses, and other obligations incident to doing business or operating in another country;
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•
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workforce uncertainty in countries where labor unrest is more common than in the United States;
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•
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reliance on third-party vendors and suppliers;
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•
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import and export licensing requirements, tariffs, and other trade and travel restrictions;
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•
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global or regional public health emergencies that could affect our operations or business;
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•
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production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and
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•
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business interruptions resulting from geo-political actions, including war and terrorism.
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•
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implement and clearly communicate our corporate-wide strategies;
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•
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enhance our operational and financial infrastructure, including our controls over records and information;
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•
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enhance our operational, financial and management processes, including our cross-functional decision-making processes and our budget prioritization systems;
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•
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train and manage our global employee base; and
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•
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enhance our compliance and legal resources.
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•
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the information contained in our quarterly earnings releases, including our net product revenues and operating expenses for completed periods and guidance regarding future periods;
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•
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announcements of FDA actions with respect to our drugs or our competitors’ drugs, or regulatory filings for our drug candidates or those of our competitors, or announcements of interim or final results of clinical trials or nonclinical studies relating to our drugs, drug candidates or those of our competitors;
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•
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developments in domestic and international governmental policy or regulation, for example, relating to drug pricing or intellectual property rights;
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•
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technological innovations or the introduction of new drugs by our competitors;
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•
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government regulatory action;
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•
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public concern as to the safety of drugs developed by us or our competitors;
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•
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developments in patent or other intellectual property rights or announcements relating to these matters;
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•
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information disclosed by third parties regarding our business or products;
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•
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developments relating specifically to other companies and market conditions for pharmaceutical and biotechnology stocks or stocks in general;
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•
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business development, capital structuring or financing activities; and
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•
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general worldwide or national economic, political and capital market conditions.
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•
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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 our net product revenues;
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•
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our expectations regarding the timing and structure of clinical trials of our drugs and drug candidates, the expected timing of our receipt of data from our ongoing and planned clinical trials and regulatory authority filings and submissions for our drugs or drug candidates;
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•
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our ability to obtain reimbursement for our medicines in ex-U.S. markets and our ability to otherwise successfully market our medicines or any drug candidates for which we obtain regulatory approval;
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•
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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;
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•
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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;
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•
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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;
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•
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the establishment, development and maintenance of collaborative relationships;
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•
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potential business development activities;
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•
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potential fluctuations in foreign currency exchange rates;
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•
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our ability to use our research programs to identify and develop new drug candidates to address serious diseases and significant unmet medical needs; and
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•
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our liquidity and our expectations regarding the possibility of raising additional capital.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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ITEM 2.
|
PROPERTIES
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ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
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MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
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) |
Maximum Number (or approximate dollar value) of
Shares that May Yet be Purchased Under the Plans or Programs (2) |
||||||
Oct. 1, 2019 to Oct. 31, 2019
|
143,306
|
|
$
|
167.47
|
|
142,835
|
|
$
|
464,000
|
|
|
Nov. 1, 2019 to Nov. 30, 2019
|
815
|
|
$
|
0.01
|
|
—
|
|
$
|
464,000
|
|
|
Dec. 1, 2019 to Dec. 31, 2019
|
148
|
|
$
|
0.01
|
|
—
|
|
$
|
464,000
|
|
|
Total
|
144,269
|
|
$
|
166.35
|
|
142,835
|
|
$
|
464,000
|
|
(1)
|
Consists of 142,835 shares repurchased pursuant to our 2019 Share Repurchase Program (described in footnote 2 below) at an average price of $168.02 per share and 1,434 restricted shares repurchased for $0.01 per share from our employees pursuant to our equity plans. While we have restricted shares that are continuing to vest under our equity plans that are subject to repurchase rights upon termination of service, we have transitioned our equity program to granting restricted stock units. Unvested restricted stock units are forfeited upon termination of service and do not result in an issuer repurchase that would be reflected in this table.
|
(2)
|
Under our 2019 Share Repurchase Program, we are authorized to purchase shares from time to time through open market or privately negotiated transactions. Such purchases may be made pursuant to Rule 10b5-1 plans or other means as determined by our management and in accordance with the requirements of the Securities and Exchange Commission. The approximate dollar value of shares that may yet be repurchased is based solely on shares that may be repurchased under the share repurchase program and excludes any shares that may be repurchased under our employee equity programs.
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Consolidated Statements of Operations Data:
|
(in thousands, except per share amounts)
|
||||||||||||||||||
Product revenues, net
|
$
|
4,160,726
|
|
|
$
|
3,038,325
|
|
|
$
|
2,165,480
|
|
|
$
|
1,683,632
|
|
|
$
|
1,000,324
|
|
Collaborative and royalty revenues
|
2,095
|
|
|
9,272
|
|
|
323,172
|
|
|
18,545
|
|
|
32,012
|
|
|||||
Total revenues
|
4,162,821
|
|
|
3,047,597
|
|
|
2,488,652
|
|
|
1,702,177
|
|
|
1,032,336
|
|
|||||
Total costs and expenses (1)
|
2,965,255
|
|
|
2,412,447
|
|
|
2,365,409
|
|
|
1,692,241
|
|
|
1,499,215
|
|
|||||
Provision for (benefit from) income taxes (2)
|
218,109
|
|
|
(1,486,862
|
)
|
|
(107,324
|
)
|
|
16,665
|
|
|
30,381
|
|
|||||
Net income (loss) attributable to Vertex
|
$
|
1,176,810
|
|
|
$
|
2,096,896
|
|
|
$
|
263,484
|
|
|
$
|
(112,052
|
)
|
|
$
|
(556,334
|
)
|
Diluted income (loss) from continuing operations per share attributable to Vertex common shareholders
|
$
|
4.51
|
|
|
$
|
8.09
|
|
|
$
|
1.04
|
|
|
$
|
(0.46
|
)
|
|
$
|
(2.31
|
)
|
Shares used in per diluted share calculations
|
260,673
|
|
|
259,185
|
|
|
253,225
|
|
|
244,685
|
|
|
241,312
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
As of December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Consolidated Balance Sheet Data:
|
(in thousands)
|
||||||||||||||||||
Cash, cash equivalents and marketable securities
|
$
|
3,808,294
|
|
|
$
|
3,168,242
|
|
|
$
|
2,088,666
|
|
|
$
|
1,434,557
|
|
|
$
|
1,042,462
|
|
Deferred tax assets (2)
|
1,190,815
|
|
|
1,499,672
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total assets
|
8,318,465
|
|
|
6,245,898
|
|
|
3,546,014
|
|
|
2,896,787
|
|
|
2,498,587
|
|
|||||
Total current liabilities
|
1,334,827
|
|
|
1,120,290
|
|
|
807,260
|
|
|
792,537
|
|
|
506,167
|
|
|||||
Long-term debt obligations, excluding current portion
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
223,863
|
|
|||||
Long-term finance leases
|
538,576
|
|
|
581,550
|
|
|
583,902
|
|
|
521,335
|
|
|
515,534
|
|
|||||
Other long-term liabilities
|
359,818
|
|
|
108,853
|
|
|
112,546
|
|
|
244,724
|
|
|
159,395
|
|
|||||
Total shareholders’ equity
|
6,085,244
|
|
|
4,435,203
|
|
|
2,042,306
|
|
|
1,338,191
|
|
|
1,093,628
|
|
(1)
|
Total costs and expenses included (i) in 2017, an intangible asset impairment charges of $255.3 million, and (ii) in 2019, 2018 and 2017, collaborative license and asset acquisition expenses of $318.3 million, $111.9 million and $168.7 million, respectively. See Note B, “Collaborative Arrangements.”
|
(2)
|
In 2018, we released the valuation allowance on the majority of our net operating losses and other deferred tax assets resulting in a benefit from income taxes of $1.56 billion in the fourth quarter of 2018 and we recorded a $1.50 billion deferred tax asset on our consolidated balance sheet as of December 31, 2018. In 2019, we began recording a provision for income taxes on our pre-tax income approximating statutory rates. See Note P, “Income Taxes.” In 2017, we recorded a benefit from income taxes related to the impairment of intangible assets. See Note K, “Intangible Assets and Goodwill.”
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Obtained approval in October 2019 from the FDA for TRIKAFTA for treatment of patients with CF 12 years of age and older who have at least one F508del mutation.
|
•
|
TRIKAFTA was approved approximately three months after we submitted the NDA for the triple combination regimen and within four years of discovery of the final component of the triple combination regimen.
|
•
|
Submitted a MAA to the European Medicines Agency, or EMA, for the triple combination of elexacaftor, tezacaftor and ivacaftor in patients 12 years of age and older.
|
•
|
Conducting a Phase 3 clinical trial evaluating elexacaftor/tezacaftor/ivacaftor and ivacaftor in children 6 to 11 years of age who have two F508del mutations or one F508del mutation and one minimal function mutation.
|
•
|
Obtained a positive opinion from the EMA’s Committee for Medicinal Products for Human Use for KALYDECO for infants as young as six months old.
|
•
|
Obtained reimbursement of ORKAMBI and/or SYMDEKO/SYMKEVI for eligible patients in several important ex-U.S. markets, including England, France, Australia, Scotland and Spain.
|
•
|
AAT Deficiency: We initiated a Phase 2 proof-of-concept clinical trial for VX-814, our first investigational oral small molecule corrector for the treatment of alpha-1 antitrypsin, or AAT, deficiency, in order to evaluate VX-814 in patients with AAT deficiency who have two copies of the Z mutation. A Phase 1 clinical trial of VX-864, a second investigational small molecule corrector for the treatment of AAT deficiency, is ongoing in healthy volunteers.
|
•
|
APOL1-mediated Kidney Disease: In the fourth quarter of 2019, we completed a Phase 1 clinical trial evaluating VX-147, our first investigational oral small molecule for the treatment of APOL1-mediated focal segmental glomerulosclerosis, or FSGS, and other serious kidney diseases, in healthy volunteers. We plan to initiate a Phase 2 proof-of-concept clinical trial in 2020 to evaluate the reduction in protein levels with VX-147 in FSGS patients.
|
•
|
Sickle Cell Disease and Beta-Thalassemia: Enrollment is ongoing in Phase 1/2 clinical trials evaluating CTX001 for the treatment of severe
|
•
|
Pain: We plan to initiate clinical development of a novel NaV1.8 inhibitor for the treatment of pain in the first half of 2020.
|
•
|
Type 1 diabetes: Acquired cell-based therapy programs that we are advancing as potential treatments for T1D by acquiring Semma Therapeutics. We plan to advance this program into clinical development in T1D patients in late 2020 or early 2021.
|
•
|
DMD and DM1: Acquired Exonics and expanded our collaboration with CRISPR in July 2019, in order to support a pre-clinical program to develop treatments for DMD and DM1.
|
•
|
Arbor Biotechnologies, Inc., or Arbor, pursuant to which we are collaborating on the discovery of novel proteins, including DNA endonucleases, to advance the development of new gene-editing therapies.
|
•
|
CRISPR, pursuant to which we have been collaborating since 2015 on the discovery and development of potential new treatments aimed at the underlying genetic causes of human diseases using CRISPR-Cas9 gene-editing technology. In 2019, we obtained the exclusive worldwide rights to CRISPR’s intellectual property for DMD and DM1 gene-editing products through a new agreement with CRISPR.
|
•
|
Kymera Therapeutics, or Kymera, pursuant to which we are looking to advance small molecule protein degraders against multiple targets.
|
•
|
Molecular Templates, Inc., pursuant to which we are collaborating on the discovery and development of novel targeted conditioning regimens to enhance the hematopoietic stem cell transplant process.
|
•
|
Janssen Pharmaceuticals, Inc., or Janssen, which is evaluating pimodivir in Phase 3 clinical trials for the treatment of influenza; and
|
•
|
Merck KGaA, Darmstadt, Germany, which licensed oncology research and development programs from us in early 2017.
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
TRIKAFTA
|
$
|
420,105
|
|
|
$
|
—
|
|
|
$
|
—
|
|
SYMDEKO/SYMKEVI
|
1,417,668
|
|
|
768,657
|
|
|
—
|
|
|||
ORKAMBI
|
1,331,891
|
|
|
1,262,166
|
|
|
1,320,850
|
|
|||
KALYDECO
|
991,062
|
|
|
1,007,502
|
|
|
844,630
|
|
|||
Product revenues, net
|
$
|
4,160,726
|
|
|
$
|
3,038,325
|
|
|
$
|
2,165,480
|
|
|
|
|
|
|
|
|
2019/2018
Comparison |
|
2018/2017
Comparison |
||||||||||||||||
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
Increase/(Decrease)
|
||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands)
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||
Research expenses
|
$
|
732,772
|
|
|
$
|
438,360
|
|
|
$
|
311,206
|
|
|
$
|
294,412
|
|
|
67
|
%
|
|
$
|
127,154
|
|
|
41
|
%
|
Development expenses
|
1,021,768
|
|
|
978,116
|
|
|
1,013,419
|
|
|
43,652
|
|
|
4
|
%
|
|
(35,303
|
)
|
|
(3
|
)%
|
|||||
Total research and development expenses
|
$
|
1,754,540
|
|
|
$
|
1,416,476
|
|
|
$
|
1,324,625
|
|
|
$
|
338,064
|
|
|
24
|
%
|
|
$
|
91,851
|
|
|
7
|
%
|
|
|
|
|
|
|
|
2019/2018
Comparison |
|
2018/2017
Comparison |
||||||||||||||||
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
Increase/(Decrease)
|
||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands)
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||
Research Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Salary and benefits
|
$
|
134,642
|
|
|
$
|
87,773
|
|
|
$
|
81,229
|
|
|
$
|
46,869
|
|
|
53
|
%
|
|
$
|
6,544
|
|
|
8
|
%
|
Stock-based compensation expense
|
69,417
|
|
|
62,925
|
|
|
60,122
|
|
|
6,492
|
|
|
10
|
%
|
|
2,803
|
|
|
5
|
%
|
|||||
Outsourced services and other direct expenses
|
116,575
|
|
|
89,355
|
|
|
85,319
|
|
|
27,220
|
|
|
30
|
%
|
|
4,036
|
|
|
5
|
%
|
|||||
Collaboration and asset acquisition expenses
|
307,828
|
|
|
111,600
|
|
|
8,425
|
|
|
196,228
|
|
|
**
|
|
|
103,175
|
|
|
**
|
|
|||||
Infrastructure costs
|
104,310
|
|
|
86,707
|
|
|
76,111
|
|
|
17,603
|
|
|
20
|
%
|
|
10,596
|
|
|
14
|
%
|
|||||
Total research expenses
|
$
|
732,772
|
|
|
$
|
438,360
|
|
|
$
|
311,206
|
|
|
$
|
294,412
|
|
|
67
|
%
|
|
$
|
127,154
|
|
|
41
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
** Not meaningful
|
|
|
|
|
|
|
|
2019/2018
Comparison |
|
2018/2017
Comparison |
||||||||||||||||
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
Increase/(Decrease)
|
||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands)
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||
Development Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Salary and benefits
|
$
|
249,860
|
|
|
$
|
220,128
|
|
|
$
|
208,769
|
|
|
$
|
29,732
|
|
|
14
|
%
|
|
$
|
11,359
|
|
|
5
|
%
|
Stock-based compensation expense
|
155,141
|
|
|
140,187
|
|
|
121,778
|
|
|
14,954
|
|
|
11
|
%
|
|
18,409
|
|
|
15
|
%
|
|||||
Outsourced services and other direct expenses
|
425,149
|
|
|
471,338
|
|
|
397,155
|
|
|
(46,189
|
)
|
|
(10
|
)%
|
|
74,183
|
|
|
19
|
%
|
|||||
Collaboration and asset acquisition expenses
|
10,440
|
|
|
250
|
|
|
160,250
|
|
|
10,190
|
|
|
**
|
|
|
(160,000
|
)
|
|
**
|
|
|||||
Infrastructure costs
|
181,178
|
|
|
146,213
|
|
|
125,467
|
|
|
34,965
|
|
|
24
|
%
|
|
20,746
|
|
|
17
|
%
|
|||||
Total development expenses
|
$
|
1,021,768
|
|
|
$
|
978,116
|
|
|
$
|
1,013,419
|
|
|
$
|
43,652
|
|
|
4
|
%
|
|
$
|
(35,303
|
)
|
|
(3
|
)%
|
|
|
|
|
|
|
|
|
|
** Not meaningful
|
|
|
|
|
|
|
|
2019/2018
Comparison |
|
2018/2017
Comparison |
||||||||||||||||
|
|
|
|
|
|
|
Increase/(Decrease)
|
|
Increase/(Decrease)
|
||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
|
(in thousands)
|
|
(in thousands, except percentages)
|
||||||||||||||||||||||
Sales, general and administrative expenses
|
$
|
658,498
|
|
|
$
|
557,616
|
|
|
$
|
496,079
|
|
|
$
|
100,882
|
|
|
18
|
%
|
|
$
|
61,537
|
|
|
12
|
%
|
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Loss attributable to noncontrolling interest before benefit from income taxes and changes in fair value of contingent payments
|
$
|
31,191
|
|
|
$
|
223,379
|
|
Benefit from income taxes
|
(3,668
|
)
|
|
(114,090
|
)
|
||
(Increase) decrease in fair value of contingent payments
|
(17,730
|
)
|
|
62,560
|
|
||
Net loss attributable to noncontrolling interest
|
$
|
9,793
|
|
|
$
|
171,849
|
|
•
|
significant expected operating expenses to conduct research and development activities and to operate our organization; and
|
•
|
substantial facility and capital lease obligations, including leases for two buildings in Boston, Massachusetts that continue through 2028.
|
•
|
We have entered into certain collaboration agreements with third parties that include the funding of certain research, development and commercialization efforts with the potential for future milestone and royalty payments by us upon the achievement of pre-established developmental and regulatory targets and/or commercial targets, and we may enter into additional business development transactions, including acquisitions, collaborations and equity investments, that require additional capital.
|
•
|
We have reached an agreement with the French government and will repay a portion of the amounts we have collected under the ORKAMBI early access programs in France to the French government in 2020 based on the difference between the invoiced amount and the final amount for ORKAMBI distributed through these programs as reflected in the structure of the agreement with the French government.
|
•
|
To the extent we borrow amounts under the credit agreement we entered into in 2019, we would be required to repay any outstanding principal amounts in 2024.
|
|
Payments Due by Period
|
||||||||||||||||||
|
2020
|
|
2021-2022
|
|
2023-2024
|
|
2025 and later
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Fan Pier Leases
|
$
|
66,540
|
|
|
$
|
145,177
|
|
|
$
|
150,560
|
|
|
$
|
311,884
|
|
|
$
|
674,161
|
|
Finance leases, excluding Fan Pier Leases
|
17,724
|
|
|
31,355
|
|
|
25,499
|
|
|
113,367
|
|
|
187,945
|
|
|||||
Operating leases
|
14,598
|
|
|
49,778
|
|
|
67,451
|
|
|
368,597
|
|
|
500,424
|
|
|||||
Research and development costs
|
51,934
|
|
|
565
|
|
|
18
|
|
|
—
|
|
|
52,517
|
|
|||||
Total contractual commitments and obligations
|
$
|
150,796
|
|
|
$
|
226,875
|
|
|
$
|
243,528
|
|
|
$
|
793,848
|
|
|
$
|
1,415,047
|
|
•
|
CFF: We pay royalties, which are included in cost of sales, to CFF on sales of our CF products.
|
•
|
Research and Development Milestones: The majority of our in-license agreements and our acquisitions have milestone and royalty payments payable by us upon the successful achievement of pre-established developmental, regulatory and/or commercial targets or net sales. Contingent payments under these agreements become due and payable only upon achievement of certain milestones and are not included in the contractual obligations table above.
|
•
|
revenue recognition;
|
•
|
acquisitions, including intangible assets, goodwill and contingent consideration; and
|
•
|
income taxes.
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
|
/s/ Ernst & Young LLP
|
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
|
Page Number in
this Form 10-K |
Report of Independent Registered Public Accounting Firm
|
|
Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Balance Sheets as of December 31, 2019 and 2018
|
|
Consolidated Statements of Shareholders’ Equity and Noncontrolling Interest for the years ended December 31, 2019, 2018 and 2017
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017
|
|
Notes to Consolidated Financial Statements
|
Exhibit Number
|
Exhibit Description
|
Filed with
this report |
Incorporated by
Reference herein from—Form or Schedule |
Filing Date/
Period Covered |
SEC File/
Reg. Number |
Plan of Acquisition
|
|
|
|
||
2.1
|
|
10-Q
(Exhibit 2.1)
|
October 31, 2019
|
000-19319
|
|
2.2
|
|
10-Q
(Exhibit 10.1)
|
August 1, 2019
|
000-19319
|
|
Governance Documents
|
|
|
|
||
3.1
|
|
10-Q
(Exhibit 3.1)
|
July 26, 2018
|
000-19319
|
|
3.2
|
|
10-Q
(Exhibit 3.2)
|
July 26, 2018
|
000-19319
|
|
Stock Certificate
|
|
|
|
||
4.1
|
|
10-K (Exhibit 4.1)
|
February 15, 2018
|
000-19319
|
|
4.2
|
X
|
|
|
|
|
Collaboration Agreement
|
|
|
|
||
10.1
|
|
10-Q/A
(Exhibit 10.2)
|
August 19, 2011
|
000-19319
|
|
10.2
|
|
10-K
(Exhibit 10.9)
|
March 16, 2006
|
000-19319
|
|
10.3
|
|
10-Q/A
(Exhibit 10.6)
|
August 19, 2011
|
000-19319
|
Exhibit Number
|
Exhibit Description
|
Filed with
this report |
Incorporated by
Reference herein from—Form or Schedule |
Filing Date/
Period Covered |
SEC File/
Reg. Number |
10.4
|
|
10-Q
(Exhibit 10.3)
|
August 9, 2011
|
000-19319
|
|
10.5
|
|
10-K
(Exhibit 10.05)
|
February 23, 2017
|
000-19319
|
|
Leases
|
|
|
|
||
10.6
|
|
10-Q
(Exhibit 10.4)
|
August 9, 2011
|
000-19319
|
|
10.7
|
|
10-Q
(Exhibit 10.5)
|
August 9, 2011
|
000-19319
|
|
Financing Agreements
|
|||||
10.8
|
|
|
10-Q
(Exhibit 10.1)
|
October 31, 2019
|
000-19319
|
Equity Plans
|
|
|
|
||
10.9
|
|
10-Q
(Exhibit 10.1)
|
October 25, 2018
|
000-19319
|
|
10.10
|
|
8-K
(Exhibit 10.2)
|
May 15, 2006
|
000-19319
|
|
10.11
|
|
10-K
(Exhibit 10.20)
|
February 13, 2015
|
000-19319
|
|
10.12
|
|
DEF 14A
(Appendix A)
|
April 26, 2019
|
000-19319
|
|
10.13
|
|
10-K
(Exhibit 10.17)
|
February 13, 2015
|
000-19319
|
|
10.14
|
|
10-K
(Exhibit 10.18)
|
February 13, 2015
|
000-19319
|
|
10.15
|
|
10-K
(Exhibit 10.25)
|
February 16, 2016
|
000-19319
|
|
10.16
|
|
10-K
(Exhibit 10.19)
|
February 13, 2015
|
000-19319
|
|
10.17
|
X
|
|
|
|
|
10.18
|
|
10-K
(Exhibit 10.27)
|
February 16, 2016
|
000-19319
|
|
10.19
|
|
DEF 14A
(Appendix B)
|
April 26, 2019
|
000-19319
|
|
Agreements with Executive Officers and Directors
|
|
|
|
||
10.20
|
|
8-K
(Exhibit 10.1)
|
December 2, 2016
|
000-19319
|
|
10.21
|
|
10-K
(Exhibit 10.35)
|
February 22, 2012
|
000-19319
|
|
10.22
|
|
8-K
(Exhibit 10.3)
|
July 25, 2019
|
000-19319
|
|
10.23
|
|
8-K
(Exhibit 10.1)
|
July 25, 2019
|
000-19319
|
|
10.24
|
|
8-K
(Exhibit 10.2)
|
July 25, 2019
|
000-19319
|
|
10.25
|
|
10-Q
(Exhibit 10.1)
|
November 6, 2012
|
000-19319
|
|
10.26
|
|
10-Q
(Exhibit 10.2)
|
November 6, 2012
|
000-19319
|
|
10.27
|
|
10-K
(Exhibit 10.34)
|
February 16, 2016
|
000-19319
|
|
10.28
|
|
10-K
(Exhibit 10.35)
|
February 16, 2016
|
000-19319
|
Exhibit Number
|
Exhibit Description
|
Filed with
this report |
Incorporated by
Reference herein from—Form or Schedule |
Filing Date/
Period Covered |
SEC File/
Reg. Number |
10.29
|
|
10-K
(Exhibit 10.40)
|
February 23, 2017
|
000-19319
|
|
10.30
|
|
10-K
(Exhibit 10.41)
|
February 23, 2017
|
000-19319
|
|
10.31
|
|
10-K
(Exhibit 10.42)
|
February 23, 2017
|
000-19319
|
|
10.32
|
|
10-K
(Exhibit 10.43)
|
February 23, 2017
|
000-19319
|
|
10.33
|
|
10-Q
(Exhibit 10.1)
|
May 1, 2019
|
000-19319
|
|
10.34
|
|
10-Q
(Exhibit 10.2)
|
May 1, 2019
|
000-19319
|
|
10.35
|
X
|
|
|
|
|
10.36
|
|
10-Q
(Exhibit 10.13)
|
November 9, 2004
|
000-19319
|
|
10.37
|
|
10-K
(Exhibit 10.66)
|
February 17, 2009
|
000-19319
|
|
10.38
|
|
10-K (Exhibit 10.46)
|
February 15, 2018
|
000-19319
|
|
10.39
|
|
10-K (Exhibit 10.39)
|
February 13, 2019
|
000-19319
|
|
Subsidiaries
|
|
|
|
|
|
21.1
|
X
|
|
|
|
|
Consent
|
|
|
|
|
|
23.1
|
X
|
|
|
|
|
Certifications
|
|
|
|
|
|
31.1
|
X
|
|
|
|
|
31.2
|
X
|
|
|
|
|
32.1
|
X
|
|
|
|
|
101.INS
|
XBRL Instance
|
X
|
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
X
|
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation
|
X
|
|
|
|
101.LAB
|
XBRL Taxonomy Extension Labels
|
X
|
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation
|
X
|
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition
|
X
|
|
|
|
†
|
Confidential portions of this document have been redacted according to the applicable rules.
|
|
Vertex Pharmaceuticals Incorporated
|
|
|
|
|
February 13, 2020
|
By:
|
/s/ Jeffrey M. Leiden
|
|
|
Jeffrey M. Leiden
Chief Executive Officer
|
|
|
Name
|
|
|
|
Title
|
|
|
|
|
Date
|
|
|
|
|
|
|||||||||||
/s/ Jeffrey M. Leiden
|
|
|
|||||||||||
Jeffrey M. Leiden
|
Chair of the Board, President and Chief Executive Officer (Principal Executive Officer)
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Charles F. Wagner, Jr.
|
|
|
|||||||||||
Charles F. Wagner, Jr.
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Paul M. Silva
|
|
|
|||||||||||
Paul M. Silva
|
Senior Vice President and Corporate Controller (Principal Accounting Officer)
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Reshma Kewalramani
|
|
|
|||||||||||
Reshma Kewalramani
|
Executive Vice President, Chief Medical Officer and Director
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Sangeeta N. Bhatia
|
|
|
|||||||||||
Sangeeta N. Bhatia
|
Director
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Lloyd Carney
|
|
|
|||||||||||
Lloyd Carney
|
Director
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Alan Garber
|
|
|
|||||||||||
Alan Garber
|
Director
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Terrence C. Kearney
|
|
|
|||||||||||
Terrence C. Kearney
|
Director
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Yuchun Lee
|
|
|
|||||||||||
Yuchun Lee
|
Director
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Margaret G. McGlynn
|
|
|
|||||||||||
Margaret G. McGlynn
|
Director
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ Bruce I. Sachs
|
|
|
|||||||||||
Bruce I. Sachs
|
Director
|
February 13, 2020
|
|||||||||||
|
|
|
|||||||||||
/s/ William D. Young
|
|
|
|||||||||||
William D. Young
|
Director
|
February 13, 2020
|
|
|
Revenue Recognition - Payor Mix Impact on Measuring Variable Consideration
|
Description of the Matter
|
|
As discussed in Note A to the Company’s consolidated financial statements, the Company records product sales at the net sales price, or “transaction price,” which requires the Company to make several significant estimates regarding the net sales price. The most significant estimates relate to government rebates, chargebacks, discounts and fees, collectively rebates. Due to the delay in receipt of claims by third-party payors, the Company estimates the percentage of prescriptions that will be covered by each third-party payor, which is referred to as the payor mix. Rebate accruals inclusive of estimated amounts due for claims not yet received or processed are recorded within accrued expenses on the Company’s consolidated balance sheet.
Auditing the measurement of the Company’s net product revenues was especially complex and judgmental due to the significant estimation required in determining the amount of consideration that will be collected net of estimates for payor rebates. In particular, the net sales price is affected by assumptions in payor behavior such as changes in payor mix, payor collections, current customer contractual requirements, and experience with ultimate collection from third-party payors.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s revenue recognition process, including controls over the underlying assumptions and inputs used by management to estimate amounts due to third-party payors and the completeness and accuracy of the data used in the estimates. We also tested the Company’s controls to assess the completeness and accuracy of the current and historical data that supports the estimate.
Our audit procedures to test the Company’s recognition of net product revenues included, among others, assessing the methodology used to determine the estimate and testing the significant assumptions and the underlying data used by the Company in its analysis, which included historical claims data. To assess the payor mix assumptions we tested contracted rates, historical claims and payment data and related trends, and other relevant factors. We also assessed the historical accuracy of the Company’s estimates of third-party payor rebates.
|
|
|
Accounting for the Impacts of Business Combinations
|
Description of the Matter
|
|
As described in Note C and Note E to the Company’s consolidated financial statements, the Company closed two business combinations during 2019; the acquisition of all outstanding shares of Exonics Therapeutics, Inc. (“Exonics”) for upfront consideration of $266.3 million and contingent milestones of up to $728.0 million and the acquisition of all outstanding shares of Semma Therapeutics, Inc. (“Semma”) for total upfront consideration of $936.8 million. Assets and liabilities recognized as part of the business combinations are recorded at fair value with $13.0 million and $387.0 million of in-process-research development intangible assets recognized for Exonics at July 16, 2019 and Semma at October 10, 2019, respectively, and $172.0 million recognized at July 16, 2019 for the contingent consideration liability for Exonics. The contingent liability for Exonics is remeasured to fair value at each reporting period and the amount recorded at December 31, 2019 was $176.5 million.
Auditing the Company's accounting for its acquisitions of Exonics and Semma was especially complex due to the significant estimation and judgment required by management in determining the fair value of in-process-research and development intangible assets acquired for Exonics and Semma and the contingent consideration liability for Exonics. The significant estimation was primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of the in-process research and development intangible assets and contingent consideration, as well as the sensitivity of the respective fair values to the underlying significant assumptions. The Company used the multi-period excess earnings method of the income approach to measure the fair value of the in-process-research and development intangible assets acquired and a probability weighted discounted cash flow method of the income approach to measure the fair value of contingent consideration. The significant assumptions used to estimate the fair value of the in-process-research and development intangible assets acquired included the estimated probability of technical and regulatory success rates, development cost assumptions, revenue projections and growth rates, commercial cost estimates and discount rates. The significant assumptions used to estimate the fair value of contingent consideration included the estimated timing of regulatory and commercial milestone achievement and the corresponding estimated probability of technical and regulatory success rates applied by management. Given the pre-clinical nature of the assets acquired, these significant assumptions are forward-looking and could be affected by future economic and market conditions.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s accounting for acquisitions. Our testing of controls included controls over the valuation of the intangible assets acquired and contingent consideration, including the valuation models used and the underlying assumptions used to develop such estimates, and controls over the completeness and accuracy of the data used to develop the estimates.
To test the estimated fair value of the intangible assets and contingent consideration, we performed audit procedures that included, among others, evaluating the Company's use of the income approach (the multi-period excess earnings method and probability weighted discounted cash flow method), testing the significant assumptions used in the model, as described above, and assessing the completeness and accuracy of the underlying data. We compared the significant assumptions to current industry, and market data, to the assumptions used to value similar assets in other acquisitions and to other guideline companies within the same industry. We involved our valuation professionals to assist with our evaluation of the methodology used by the Company and significant assumptions included in the fair value estimates.
|
/s/ Ernst & Young LLP
|
|
VERTEX PHARMACEUTICALS INCORPORATED
Consolidated Statements of Operations
(in thousands, except per share amounts)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Product revenues, net
|
$
|
4,160,726
|
|
|
$
|
3,038,325
|
|
|
$
|
2,165,480
|
|
Collaborative and royalty revenues
|
2,095
|
|
|
9,272
|
|
|
323,172
|
|
|||
Total revenues
|
4,162,821
|
|
|
3,047,597
|
|
|
2,488,652
|
|
|||
Costs and expenses:
|
|
|
|
|
|
||||||
Cost of sales
|
547,758
|
|
|
409,539
|
|
|
275,119
|
|
|||
Research and development expenses
|
1,754,540
|
|
|
1,416,476
|
|
|
1,324,625
|
|
|||
Sales, general and administrative expenses
|
658,498
|
|
|
557,616
|
|
|
496,079
|
|
|||
Change in fair value of contingent consideration
|
4,459
|
|
|
—
|
|
|
—
|
|
|||
Restructuring (income) expenses
|
—
|
|
|
(184
|
)
|
|
14,246
|
|
|||
Intangible asset impairment charges
|
—
|
|
|
29,000
|
|
|
255,340
|
|
|||
Total costs and expenses
|
2,965,255
|
|
|
2,412,447
|
|
|
2,365,409
|
|
|||
Income from operations
|
1,197,566
|
|
|
635,150
|
|
|
123,243
|
|
|||
Interest income
|
63,678
|
|
|
38,352
|
|
|
11,748
|
|
|||
Interest expense
|
(58,502
|
)
|
|
(72,471
|
)
|
|
(69,298
|
)
|
|||
Other income (expense), net
|
192,177
|
|
|
(790
|
)
|
|
(81,382
|
)
|
|||
Income (loss) before provision for (benefit from) income taxes
|
1,394,919
|
|
|
600,241
|
|
|
(15,689
|
)
|
|||
Provision for (benefit from) income taxes
|
218,109
|
|
|
(1,486,862
|
)
|
|
(107,324
|
)
|
|||
Net income
|
1,176,810
|
|
|
2,087,103
|
|
|
91,635
|
|
|||
Loss attributable to noncontrolling interest
|
—
|
|
|
9,793
|
|
|
171,849
|
|
|||
Net income attributable to Vertex
|
$
|
1,176,810
|
|
|
$
|
2,096,896
|
|
|
$
|
263,484
|
|
|
|
|
|
|
|
||||||
Amounts per share attributable to Vertex common shareholders:
|
|
|
|
|
|
||||||
Net income:
|
|
|
|
|
|
||||||
Basic
|
$
|
4.58
|
|
|
$
|
8.24
|
|
|
$
|
1.06
|
|
Diluted
|
$
|
4.51
|
|
|
$
|
8.09
|
|
|
$
|
1.04
|
|
Shares used in per share calculations:
|
|
|
|
|
|
||||||
Basic
|
256,728
|
|
|
254,292
|
|
|
248,858
|
|
|||
Diluted
|
260,673
|
|
|
259,185
|
|
|
253,225
|
|
VERTEX PHARMACEUTICALS INCORPORATED
Consolidated Statements of Comprehensive Income (Loss)
(in thousands)
|
|||||||||||
|
Year ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
1,176,810
|
|
|
$
|
2,087,103
|
|
|
$
|
91,635
|
|
Changes in other comprehensive (loss) income:
|
|
|
|
|
|
||||||
Unrealized holding gains on marketable securities, net of tax of zero, zero and $(2.7) million, respectively
|
1,039
|
|
|
58
|
|
|
6,954
|
|
|||
Unrealized (losses) gains on foreign currency forward contracts, net of tax of $7.0 million, $(7.1) million and $3.4 million, respectively
|
(14,003
|
)
|
|
27,438
|
|
|
(26,530
|
)
|
|||
Foreign currency translation adjustment
|
10,332
|
|
|
8,855
|
|
|
(13,169
|
)
|
|||
Total changes in other comprehensive (loss) income
|
(2,632
|
)
|
|
36,351
|
|
|
(32,745
|
)
|
|||
Comprehensive income
|
1,174,178
|
|
|
2,123,454
|
|
|
58,890
|
|
|||
Comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
9,793
|
|
|
171,849
|
|
|||
Comprehensive income attributable to Vertex
|
$
|
1,174,178
|
|
|
$
|
2,133,247
|
|
|
$
|
230,739
|
|
VERTEX PHARMACEUTICALS INCORPORATED
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
|
|||||||
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,109,322
|
|
|
$
|
2,650,134
|
|
Marketable securities
|
698,972
|
|
|
518,108
|
|
||
Accounts receivable, net
|
633,518
|
|
|
409,688
|
|
||
Inventories
|
167,502
|
|
|
124,360
|
|
||
Prepaid expenses and other current assets
|
213,515
|
|
|
140,819
|
|
||
Total current assets
|
4,822,829
|
|
|
3,843,109
|
|
||
Property and equipment, net
|
745,080
|
|
|
812,005
|
|
||
Goodwill
|
1,002,158
|
|
|
50,384
|
|
||
Intangible assets
|
400,000
|
|
|
—
|
|
||
Deferred tax assets
|
1,190,815
|
|
|
1,499,672
|
|
||
Other assets
|
157,583
|
|
|
40,728
|
|
||
Total assets
|
$
|
8,318,465
|
|
|
$
|
6,245,898
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
87,610
|
|
|
$
|
110,987
|
|
Accrued expenses
|
1,116,912
|
|
|
958,899
|
|
||
Other current liabilities
|
130,305
|
|
|
50,406
|
|
||
Total current liabilities
|
1,334,827
|
|
|
1,120,292
|
|
||
Long-term finance lease liabilities
|
538,576
|
|
|
581,550
|
|
||
Long-term contingent consideration
|
176,500
|
|
|
—
|
|
||
Other long-term liabilities
|
183,318
|
|
|
108,853
|
|
||
Total liabilities
|
2,233,221
|
|
|
1,810,695
|
|
||
Commitments and contingencies
|
—
|
|
|
—
|
|
||
Shareholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value; 1,000 shares authorized; none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 500,000 shares authorized, 258,993 and 255,172 shares issued and outstanding, respectively
|
2,589
|
|
|
2,546
|
|
||
Additional paid-in capital
|
7,937,606
|
|
|
7,421,476
|
|
||
Accumulated other comprehensive (loss) income
|
(1,973
|
)
|
|
659
|
|
||
Accumulated deficit
|
(1,852,978
|
)
|
|
(2,989,478
|
)
|
||
Total shareholders’ equity
|
6,085,244
|
|
|
4,435,203
|
|
||
Total liabilities and shareholders’ equity
|
$
|
8,318,465
|
|
|
$
|
6,245,898
|
|
VERTEX PHARMACEUTICALS INCORPORATED
Consolidated Statements of Shareholders’ Equity and Noncontrolling Interest
(in thousands)
|
||||||||||||||||||||||||||||||
|
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, 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
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,745
|
)
|
|
—
|
|
|
(32,745
|
)
|
|
—
|
|
|
(32,745
|
)
|
|||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
263,484
|
|
|
263,484
|
|
|
(171,849
|
)
|
|
91,635
|
|
|||||||
Issuance of common stock under benefit plans
|
4,952
|
|
|
62
|
|
|
345,554
|
|
|
—
|
|
|
—
|
|
|
345,616
|
|
|
57
|
|
|
345,673
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
295,642
|
|
|
—
|
|
|
—
|
|
|
295,642
|
|
|
—
|
|
|
295,642
|
|
|||||||
VIE noncontrolling interest upon deconsolidation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,910
|
|
|
3,910
|
|
|||||||
Balance, 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
|
—
|
|
|
—
|
|
|
—
|
|
|
36,351
|
|
|
—
|
|
|
36,351
|
|
|
—
|
|
|
36,351
|
|
|||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,096,896
|
|
|
2,096,896
|
|
|
(9,793
|
)
|
|
2,087,103
|
|
|||||||
Repurchases of common stock
|
(2,094
|
)
|
|
(21
|
)
|
|
(350,022
|
)
|
|
—
|
|
|
—
|
|
|
(350,043
|
)
|
|
—
|
|
|
(350,043
|
)
|
|||||||
Issuance of common stock under benefit plans
|
4,013
|
|
|
55
|
|
|
288,480
|
|
|
—
|
|
|
—
|
|
|
288,535
|
|
|
—
|
|
|
288,535
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
325,656
|
|
|
—
|
|
|
—
|
|
|
325,656
|
|
|
—
|
|
|
325,656
|
|
|||||||
VIE noncontrolling interest upon deconsolidation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,540
|
)
|
|
(3,540
|
)
|
|||||||
Other VIE activity
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(394
|
)
|
|
(394
|
)
|
|||||||
Balance, December 31, 2018
|
255,172
|
|
|
$
|
2,546
|
|
|
$
|
7,421,476
|
|
|
$
|
659
|
|
|
$
|
(2,989,478
|
)
|
|
$
|
4,435,203
|
|
|
$
|
—
|
|
|
$
|
4,435,203
|
|
Cumulative effect adjustment for adoption of new accounting guidance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,310
|
)
|
|
(40,310
|
)
|
|
—
|
|
|
(40,310
|
)
|
|||||||
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,632
|
)
|
|
—
|
|
|
(2,632
|
)
|
|
—
|
|
|
(2,632
|
)
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,176,810
|
|
|
1,176,810
|
|
|
—
|
|
|
1,176,810
|
|
|||||||
Repurchases of common stock
|
(1,074
|
)
|
|
(10
|
)
|
|
(192,005
|
)
|
|
—
|
|
|
—
|
|
|
(192,015
|
)
|
|
—
|
|
|
(192,015
|
)
|
|||||||
Issuance of common stock under benefit plans
|
4,895
|
|
|
53
|
|
|
345,926
|
|
|
—
|
|
|
—
|
|
|
345,979
|
|
|
—
|
|
|
345,979
|
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
362,209
|
|
|
—
|
|
|
—
|
|
|
362,209
|
|
|
—
|
|
|
362,209
|
|
|||||||
Balance, December 31, 2019
|
258,993
|
|
|
$
|
2,589
|
|
|
$
|
7,937,606
|
|
|
$
|
(1,973
|
)
|
|
$
|
(1,852,978
|
)
|
|
$
|
6,085,244
|
|
|
$
|
—
|
|
|
$
|
6,085,244
|
|
VERTEX PHARMACEUTICALS INCORPORATED
Consolidated Statements of Cash Flows
(in thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
1,176,810
|
|
|
$
|
2,087,103
|
|
|
$
|
91,635
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Stock-based compensation expense
|
360,489
|
|
|
325,047
|
|
|
293,236
|
|
|||
Depreciation expense
|
106,941
|
|
|
72,420
|
|
|
61,397
|
|
|||
Deferred income taxes (including benefit from valuation allowance release in 2018)
|
167,387
|
|
|
(1,512,325
|
)
|
|
(120,513
|
)
|
|||
Gains on equity securities
|
(197,597
|
)
|
|
(2,558
|
)
|
|
—
|
|
|||
Increase in fair value of contingent consideration
|
4,459
|
|
|
—
|
|
|
—
|
|
|||
Intangible asset impairment charges
|
—
|
|
|
29,000
|
|
|
255,340
|
|
|||
Acquired in-process research and development
|
—
|
|
|
—
|
|
|
160,000
|
|
|||
Deconsolidation of VIE
|
—
|
|
|
1,077
|
|
|
76,644
|
|
|||
Other non-cash items, net
|
16,942
|
|
|
32,502
|
|
|
14,439
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable, net
|
(225,587
|
)
|
|
(108,152
|
)
|
|
(71,759
|
)
|
|||
Inventories
|
(64,047
|
)
|
|
(31,965
|
)
|
|
(47,484
|
)
|
|||
Prepaid expenses and other assets
|
35,440
|
|
|
16,684
|
|
|
(111,063
|
)
|
|||
Accounts payable
|
(22,785
|
)
|
|
36,554
|
|
|
8,753
|
|
|||
Accrued expenses
|
172,881
|
|
|
302,755
|
|
|
255,178
|
|
|||
Other liabilities
|
37,997
|
|
|
22,144
|
|
|
(20,861
|
)
|
|||
Net cash provided by operating activities
|
1,569,330
|
|
|
1,270,286
|
|
|
844,942
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Payments to acquire businesses, net of cash acquired
|
(1,154,212
|
)
|
|
—
|
|
|
—
|
|
|||
Purchases of available-for-sale debt securities
|
(537,196
|
)
|
|
(431,918
|
)
|
|
(532,581
|
)
|
|||
Maturities of available-for-sale debt securities
|
475,924
|
|
|
431,576
|
|
|
369,214
|
|
|||
Sale of equity securities
|
94,936
|
|
|
—
|
|
|
—
|
|
|||
Expenditures for property and equipment
|
(75,451
|
)
|
|
(95,524
|
)
|
|
(99,421
|
)
|
|||
Investment in equity securities
|
(39,319
|
)
|
|
(83,471
|
)
|
|
—
|
|
|||
Investment in note receivable
|
—
|
|
|
(15,000
|
)
|
|
—
|
|
|||
Decrease in restricted cash due to deconsolidation of VIE
|
—
|
|
|
(7,896
|
)
|
|
(61,602
|
)
|
|||
Purchase of in-process research and development
|
—
|
|
|
—
|
|
|
(160,000
|
)
|
|||
Other investing activities
|
—
|
|
|
75
|
|
|
1,061
|
|
|||
Net cash used in investing activities
|
(1,235,318
|
)
|
|
(202,158
|
)
|
|
(483,329
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Issuances of common stock under benefit plans
|
343,244
|
|
|
289,293
|
|
|
344,840
|
|
|||
Repurchases of common stock
|
(192,015
|
)
|
|
(350,043
|
)
|
|
—
|
|
|||
Payments on finance leases
|
(39,185
|
)
|
|
—
|
|
|
—
|
|
|||
Advance from collaborator
|
12,500
|
|
|
7,500
|
|
|
12,500
|
|
|||
Proceeds related to capital lease and construction financing lease obligations
|
10,046
|
|
|
20,840
|
|
|
34,666
|
|
|||
Repayments of advanced funding
|
(5,866
|
)
|
|
(5,027
|
)
|
|
(4,266
|
)
|
|||
Payments on capital lease and construction financing lease obligations
|
—
|
|
|
(33,388
|
)
|
|
(19,336
|
)
|
|||
Payments on revolving credit facility
|
—
|
|
|
—
|
|
|
(300,000
|
)
|
|||
Other financing activities
|
(1,951
|
)
|
|
(394
|
)
|
|
—
|
|
|||
Net cash provided by (used in) financing activities
|
126,773
|
|
|
(71,219
|
)
|
|
68,404
|
|
|||
Effect of changes in exchange rates on cash
|
1,643
|
|
|
(6,182
|
)
|
|
5,802
|
|
|||
Net increase in cash, cash equivalents and restricted cash
|
462,428
|
|
|
990,727
|
|
|
435,819
|
|
|||
Cash, cash equivalents and restricted cash—beginning of period
|
2,658,253
|
|
|
1,667,526
|
|
|
1,231,707
|
|
|||
Cash, cash equivalents and restricted cash—end of period
|
$
|
3,120,681
|
|
|
$
|
2,658,253
|
|
|
$
|
1,667,526
|
|
|
|
|
|
|
|
||||||
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
55,554
|
|
|
$
|
66,458
|
|
|
$
|
68,696
|
|
Cash paid for income taxes
|
$
|
24,730
|
|
|
$
|
12,402
|
|
|
$
|
6,414
|
|
Capitalization of costs related to construction financing lease obligation
|
$
|
—
|
|
|
$
|
3,389
|
|
|
$
|
40,855
|
|
Issuances of common stock from employee benefit plans receivable
|
$
|
2,820
|
|
|
$
|
86
|
|
|
$
|
844
|
|
A.
|
Nature of Business and Accounting Policies
|
|
Balance as of
|
|
|
|
Balance as of
|
||||||
|
December 31, 2018 ^
|
|
Adjustments
|
|
January 1, 2019
|
||||||
Assets
|
(in thousands)
|
||||||||||
Prepaid expenses and other current assets
|
$
|
140,819
|
|
|
$
|
(2,930
|
)
|
|
$
|
137,889
|
|
Property and equipment, net
|
812,005
|
|
|
(53,920
|
)
|
|
758,085
|
|
|||
Deferred tax assets
|
1,499,672
|
|
|
11,236
|
|
|
1,510,908
|
|
|||
Other assets
|
—
|
|
|
61,674
|
|
|
61,674
|
|
|||
Total assets
|
$
|
6,245,898
|
|
|
$
|
16,060
|
|
|
$
|
6,261,958
|
|
Liabilities and Shareholders’ Equity
|
|
|
|
|
|
||||||
Capital lease obligations, current portion
|
$
|
9,817
|
|
|
$
|
(9,817
|
)
|
|
$
|
—
|
|
Other current liabilities
|
40,589
|
|
|
34,304
|
|
|
74,893
|
|
|||
Capital lease obligations, excluding current portion
|
19,658
|
|
|
(19,658
|
)
|
|
—
|
|
|||
Construction financing lease obligation, excluding current portion
|
561,892
|
|
|
(561,892
|
)
|
|
—
|
|
|||
Long-term finance lease liabilities
|
—
|
|
|
569,487
|
|
|
569,487
|
|
|||
Other long-term liabilities
|
26,280
|
|
|
43,946
|
|
|
70,226
|
|
|||
Accumulated deficit
|
(2,989,478
|
)
|
|
(40,310
|
)
|
|
(3,029,788
|
)
|
|||
Total liabilities and shareholders’ equity
|
$
|
6,245,898
|
|
|
$
|
16,060
|
|
|
$
|
6,261,958
|
|
^ As reported in the Company’s 2018 Annual Report on Form 10-K.
|
|
Year Ended December 31, 2018
|
||||||||||
|
As Reported
under ASC 606 |
|
Balances
without Adoption of ASC 606 |
|
Effect of Change
Higher/(Lower) |
||||||
|
(in thousands)
|
||||||||||
Product revenues, net
|
$
|
3,038,325
|
|
|
$
|
3,019,484
|
|
|
$
|
18,841
|
|
Cost of sales
|
409,539
|
|
|
402,925
|
|
|
6,614
|
|
|||
Income from operations
|
635,150
|
|
|
622,923
|
|
|
12,227
|
|
|||
Net income attributable to Vertex
|
$
|
2,096,896
|
|
|
$
|
2,084,669
|
|
|
$
|
12,227
|
|
|
|
|
|
|
|
||||||
Amounts per share attributable to Vertex common shareholders:
|
|
|
|
|
|
||||||
Net income:
|
|
|
|
|
|
||||||
Basic
|
$
|
8.24
|
|
|
$
|
8.20
|
|
|
$
|
0.04
|
|
Diluted
|
$
|
8.09
|
|
|
$
|
8.04
|
|
|
$
|
0.05
|
|
|
As of December 31,
|
||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Cash and cash equivalents
|
$
|
3,109,322
|
|
|
$
|
2,650,134
|
|
|
$
|
1,665,412
|
|
|
$
|
1,183,945
|
|
Prepaid expenses and other current assets
|
8,004
|
|
|
4,910
|
|
|
2,114
|
|
|
47,762
|
|
||||
Other assets
|
3,355
|
|
|
3,209
|
|
|
—
|
|
|
—
|
|
||||
Cash, cash equivalents and restricted cash per statement of cash flows
|
$
|
3,120,681
|
|
|
$
|
2,658,253
|
|
|
$
|
1,667,526
|
|
|
$
|
1,231,707
|
|
B.
|
Collaborative Arrangements
|
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Loss attributable to noncontrolling interest before benefit from income taxes and changes in fair value of contingent payments
|
$
|
31,191
|
|
|
$
|
223,379
|
|
Benefit from income taxes
|
(3,668
|
)
|
|
(114,090
|
)
|
||
(Increase) decrease in fair value of contingent payments
|
(17,730
|
)
|
|
62,560
|
|
||
Net loss attributable to noncontrolling interest
|
$
|
9,793
|
|
|
$
|
171,849
|
|
C.
|
Acquisitions
|
|
(in thousands)
|
||
Upfront payment (adjusted for customary working capital adjustments)
|
$
|
266,315
|
|
Fair value of contingent development and regulatory payments
|
172,041
|
|
|
Total purchase price
|
$
|
438,356
|
|
|
July 16, 2019
|
||
|
(in thousands)
|
||
Cash and cash equivalents
|
$
|
19,535
|
|
Goodwill
|
397,141
|
|
|
Intangible asset
|
13,000
|
|
|
Net other assets
|
8,680
|
|
|
Total purchase price
|
$
|
438,356
|
|
|
October 10, 2019
|
||
|
(in thousands)
|
||
Cash and cash equivalents
|
$
|
29,331
|
|
Property and equipment, net
|
17,111
|
|
|
Goodwill
|
554,633
|
|
|
Intangible assets
|
387,000
|
|
|
Deferred tax liability
|
(54,160
|
)
|
|
Net other assets
|
2,849
|
|
|
Total purchase price
|
$
|
936,764
|
|
D.
|
Earnings Per Share
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands, except per share amounts)
|
||||||||||
Basic net income attributable to Vertex per common share calculation:
|
|
|
|
|
|
||||||
Net income attributable to Vertex common shareholders
|
$
|
1,176,810
|
|
|
$
|
2,096,896
|
|
|
$
|
263,484
|
|
Less: Undistributed earnings allocated to participating securities
|
—
|
|
|
(501
|
)
|
|
(293
|
)
|
|||
Net income attributable to Vertex common shareholders—basic
|
$
|
1,176,810
|
|
|
$
|
2,096,395
|
|
|
$
|
263,191
|
|
|
|
|
|
|
|
||||||
Basic weighted-average common shares outstanding
|
256,728
|
|
|
254,292
|
|
|
248,858
|
|
|||
Basic net income attributable to Vertex per common share
|
$
|
4.58
|
|
|
$
|
8.24
|
|
|
$
|
1.06
|
|
|
|
|
|
|
|
||||||
Diluted net income attributable to Vertex per common share calculation:
|
|
|
|
|
|
||||||
Net income attributable to Vertex common shareholders
|
$
|
1,176,810
|
|
|
$
|
2,096,896
|
|
|
$
|
263,484
|
|
Less: Undistributed earnings allocated to participating securities
|
—
|
|
|
(492
|
)
|
|
(288
|
)
|
|||
Net income attributable to Vertex common shareholders—diluted
|
$
|
1,176,810
|
|
|
$
|
2,096,404
|
|
|
$
|
263,196
|
|
|
|
|
|
|
|
||||||
Weighted-average shares used to compute basic net income per common share
|
256,728
|
|
|
254,292
|
|
|
248,858
|
|
|||
Effect of potentially dilutive securities:
|
|
|
|
|
|
||||||
Stock options
|
2,231
|
|
|
2,913
|
|
|
2,797
|
|
|||
Restricted stock and restricted stock units (including PSUs)
|
1,700
|
|
|
1,963
|
|
|
1,542
|
|
|||
Employee stock purchase program
|
14
|
|
|
17
|
|
|
28
|
|
|||
Weighted-average shares used to compute diluted net income per common share
|
260,673
|
|
|
259,185
|
|
|
253,225
|
|
|||
Diluted net income attributable to Vertex per common share
|
$
|
4.51
|
|
|
$
|
8.09
|
|
|
$
|
1.04
|
|
|
2019
|
|
2018
|
|
2017
|
|||
|
(in thousands)
|
|||||||
Stock options
|
2,833
|
|
|
2,217
|
|
|
3,554
|
|
Unvested restricted stock and restricted stock units (including PSUs)
|
6
|
|
|
5
|
|
|
411
|
|
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 December 31, 2019
|
||||||||||||||
|
|
|
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
|
$
|
791,039
|
|
|
$
|
791,039
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate debt securities
|
6,070
|
|
|
—
|
|
|
6,070
|
|
|
—
|
|
||||
Commercial paper
|
29,472
|
|
|
—
|
|
|
29,472
|
|
|
—
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate equity securities
|
282,084
|
|
|
261,797
|
|
|
20,287
|
|
|
—
|
|
||||
Government-sponsored enterprise securities
|
12,733
|
|
|
12,733
|
|
|
—
|
|
|
—
|
|
||||
Corporate debt securities
|
301,799
|
|
|
—
|
|
|
301,799
|
|
|
—
|
|
||||
Commercial paper
|
102,356
|
|
|
—
|
|
|
102,356
|
|
|
—
|
|
||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
9,725
|
|
|
—
|
|
|
9,725
|
|
|
—
|
|
||||
Total financial assets
|
$
|
1,535,278
|
|
|
$
|
1,065,569
|
|
|
$
|
469,709
|
|
|
$
|
—
|
|
Financial instruments carried at fair value (liability position):
|
|
|
|
|
|
|
|
||||||||
Other current liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
(5,533
|
)
|
|
$
|
—
|
|
|
$
|
(5,533
|
)
|
|
$
|
—
|
|
Long-term contingent consideration
|
(176,500
|
)
|
|
—
|
|
|
—
|
|
|
(176,500
|
)
|
||||
Other long-term liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
(1,821
|
)
|
|
—
|
|
|
(1,821
|
)
|
|
—
|
|
||||
Total financial liabilities
|
$
|
(183,854
|
)
|
|
$
|
—
|
|
|
$
|
(7,354
|
)
|
|
$
|
(176,500
|
)
|
|
Fair Value Measurements as of December 31, 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
|
$
|
1,226,603
|
|
|
$
|
1,226,603
|
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. Treasury securities
|
5,966
|
|
|
5,966
|
|
|
—
|
|
|
—
|
|
||||
Government-sponsored enterprise securities
|
7,123
|
|
|
7,123
|
|
|
—
|
|
|
—
|
|
||||
Commercial paper
|
58,268
|
|
|
—
|
|
|
58,268
|
|
|
—
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Corporate equity securities
|
167,323
|
|
|
153,733
|
|
|
13,590
|
|
|
—
|
|
||||
U.S. Treasury securities
|
6,026
|
|
|
6,026
|
|
|
—
|
|
|
—
|
|
||||
Government-sponsored enterprise securities
|
10,704
|
|
|
10,704
|
|
|
—
|
|
|
—
|
|
||||
Corporate debt securities
|
233,665
|
|
|
—
|
|
|
233,665
|
|
|
—
|
|
||||
Commercial paper
|
100,390
|
|
|
—
|
|
|
100,390
|
|
|
—
|
|
||||
Prepaid expenses and other current assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
19,023
|
|
|
—
|
|
|
19,023
|
|
|
—
|
|
||||
Other assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
1,514
|
|
|
—
|
|
|
1,514
|
|
|
—
|
|
||||
Total financial assets
|
$
|
1,836,605
|
|
|
$
|
1,410,155
|
|
|
$
|
426,450
|
|
|
$
|
—
|
|
Financial instruments carried at fair value (liability position):
|
|
|
|
|
|
|
|
||||||||
Other current liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
$
|
(340
|
)
|
|
$
|
—
|
|
|
$
|
(340
|
)
|
|
$
|
—
|
|
Other long-term liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
(108
|
)
|
|
—
|
|
|
(108
|
)
|
|
—
|
|
||||
Total financial liabilities
|
$
|
(448
|
)
|
|
$
|
—
|
|
|
$
|
(448
|
)
|
|
$
|
—
|
|
|
Year Ended December 31, 2019
|
||
|
(in thousands)
|
||
Balance at December 31, 2018
|
$
|
—
|
|
Contingent consideration related to acquisition of Exonics
|
172,041
|
|
|
Increase in fair value of contingent payments
|
4,459
|
|
|
Balance at December 31, 2019
|
$
|
176,500
|
|
F.
|
Marketable Securities and Equity Investments
|
|
Amortized Cost
|
|
Gross
Unrealized Gains |
|
Gross
Unrealized Losses |
|
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
As of December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
791,039
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
791,039
|
|
Corporate debt securities
|
6,070
|
|
|
—
|
|
|
—
|
|
|
6,070
|
|
||||
Commercial paper
|
29,470
|
|
|
3
|
|
|
(1
|
)
|
|
29,472
|
|
||||
Total cash equivalents
|
826,579
|
|
|
3
|
|
|
(1
|
)
|
|
826,581
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
Government-sponsored enterprise securities
|
12,689
|
|
|
44
|
|
|
—
|
|
|
12,733
|
|
||||
Corporate debt securities
|
301,458
|
|
|
391
|
|
|
(50
|
)
|
|
301,799
|
|
||||
Commercial paper
|
102,240
|
|
|
121
|
|
|
(5
|
)
|
|
102,356
|
|
||||
Total marketable debt securities
|
416,387
|
|
|
556
|
|
|
(55
|
)
|
|
416,888
|
|
||||
Corporate equity securities
|
113,829
|
|
|
168,255
|
|
|
—
|
|
|
282,084
|
|
||||
Total marketable securities
|
$
|
530,216
|
|
|
$
|
168,811
|
|
|
$
|
(55
|
)
|
|
$
|
698,972
|
|
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
1,226,603
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,226,603
|
|
U.S. Treasury securities
|
5,967
|
|
|
—
|
|
|
(1
|
)
|
|
5,966
|
|
||||
Government-sponsored enterprise securities
|
7,124
|
|
|
—
|
|
|
(1
|
)
|
|
7,123
|
|
||||
Commercial paper
|
58,271
|
|
|
—
|
|
|
(3
|
)
|
|
58,268
|
|
||||
Total cash equivalents
|
1,297,965
|
|
|
—
|
|
|
(5
|
)
|
|
1,297,960
|
|
||||
Marketable securities:
|
|
|
|
|
|
|
|
||||||||
U.S Treasury securities
|
6,026
|
|
|
—
|
|
|
—
|
|
|
6,026
|
|
||||
Government-sponsored enterprise securities
|
10,704
|
|
|
—
|
|
|
—
|
|
|
10,704
|
|
||||
Corporate debt securities
|
234,088
|
|
|
27
|
|
|
(450
|
)
|
|
233,665
|
|
||||
Commercial paper
|
100,498
|
|
|
—
|
|
|
(108
|
)
|
|
100,390
|
|
||||
Total marketable debt securities
|
351,316
|
|
|
27
|
|
|
(558
|
)
|
|
350,785
|
|
||||
Corporate equity securities
|
133,157
|
|
|
40,619
|
|
|
(6,453
|
)
|
|
167,323
|
|
||||
Total marketable securities
|
$
|
484,473
|
|
|
$
|
40,646
|
|
|
$
|
(7,011
|
)
|
|
$
|
518,108
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Cash and cash equivalents
|
$
|
826,581
|
|
|
$
|
1,297,960
|
|
Marketable securities
|
416,888
|
|
|
350,785
|
|
||
Total
|
$
|
1,243,469
|
|
|
$
|
1,648,745
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Matures within one year
|
$
|
1,137,942
|
|
|
$
|
1,647,500
|
|
Matures after one year through five years
|
105,527
|
|
|
1,245
|
|
||
Total
|
$
|
1,243,469
|
|
|
$
|
1,648,745
|
|
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, 2016
|
$
|
(7,862
|
)
|
|
$
|
(10
|
)
|
|
$
|
17,531
|
|
|
$
|
11,514
|
|
|
$
|
21,173
|
|
Other comprehensive (loss) income before reclassifications
|
(13,169
|
)
|
|
(584
|
)
|
|
7,538
|
|
|
(29,175
|
)
|
|
(35,390
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,645
|
|
|
2,645
|
|
|||||
Net current period other comprehensive (loss) income
|
(13,169
|
)
|
|
(584
|
)
|
|
7,538
|
|
|
(26,530
|
)
|
|
(32,745
|
)
|
|||||
Balance at December 31, 2017
|
$
|
(21,031
|
)
|
|
$
|
(594
|
)
|
|
$
|
25,069
|
|
|
$
|
(15,016
|
)
|
|
$
|
(11,572
|
)
|
Other comprehensive income before reclassifications
|
8,855
|
|
|
58
|
|
|
—
|
|
|
25,664
|
|
|
34,577
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
1,774
|
|
|
1,774
|
|
|||||
Net current period other comprehensive income
|
8,855
|
|
|
58
|
|
|
—
|
|
|
27,438
|
|
|
36,351
|
|
|||||
Amounts reclassified to accumulated deficit pursuant to adoption of new accounting standard
|
949
|
|
|
—
|
|
|
(25,069
|
)
|
|
—
|
|
|
(24,120
|
)
|
|||||
Balance as of December 31, 2018
|
$
|
(11,227
|
)
|
|
$
|
(536
|
)
|
|
$
|
—
|
|
|
$
|
12,422
|
|
|
$
|
659
|
|
Other comprehensive income before reclassifications
|
10,332
|
|
|
1,039
|
|
|
—
|
|
|
11,513
|
|
|
22,884
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(25,516
|
)
|
|
(25,516
|
)
|
|||||
Net current period other comprehensive income (loss)
|
10,332
|
|
|
1,039
|
|
|
—
|
|
|
(14,003
|
)
|
|
(2,632
|
)
|
|||||
Balance as of December 31, 2019
|
$
|
(895
|
)
|
|
$
|
503
|
|
|
$
|
—
|
|
|
$
|
(1,581
|
)
|
|
$
|
(1,973
|
)
|
H.
|
Hedging
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Foreign Currency
|
(in thousands)
|
||||||
Euro
|
$
|
501,197
|
|
|
$
|
335,179
|
|
Australian dollar
|
89,705
|
|
|
52,820
|
|
||
British pound sterling
|
87,032
|
|
|
73,460
|
|
||
Canadian dollar
|
50,452
|
|
|
43,759
|
|
||
Total foreign currency forward contracts
|
$
|
728,386
|
|
|
$
|
505,218
|
|
|
December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Designated as hedging instruments - Reclassified from AOCI
|
|
|
|
|
|
||||||
Product revenues, net
|
$
|
32,546
|
|
|
$
|
(1,252
|
)
|
|
$
|
768
|
|
Not designated as hedging instruments
|
|
|
|
|
|
||||||
Other income (expense), net
|
$
|
4,838
|
|
|
$
|
623
|
|
|
$
|
14,129
|
|
|
|
|
|
|
|
||||||
Total reported in the Consolidated Statement of Operations
|
|
|
|
|
|
||||||
Product revenues, net
|
$
|
4,160,726
|
|
|
$
|
3,038,325
|
|
|
$
|
2,165,480
|
|
Other income (expense), net
|
$
|
192,177
|
|
|
$
|
(790
|
)
|
|
$
|
(81,382
|
)
|
As of December 31, 2019
|
||||||||||
Assets
|
|
Liabilities
|
||||||||
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
||||
(in thousands)
|
||||||||||
Prepaid expenses and other current assets
|
|
$
|
9,725
|
|
|
Other current liabilities
|
|
$
|
(5,533
|
)
|
Other assets
|
|
—
|
|
|
Other long-term liabilities
|
|
(1,821
|
)
|
||
Total assets
|
|
$
|
9,725
|
|
|
Total liabilities
|
|
$
|
(7,354
|
)
|
As of December 31, 2018
|
||||||||||
Assets
|
|
Liabilities
|
||||||||
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
||||
(in thousands)
|
||||||||||
Prepaid expenses and other current assets
|
|
$
|
19,023
|
|
|
Other current liabilities
|
|
$
|
(340
|
)
|
Other assets
|
|
1,514
|
|
|
Other long-term liabilities
|
|
(108
|
)
|
||
Total assets
|
|
$
|
20,537
|
|
|
Total liabilities
|
|
$
|
(448
|
)
|
|
As of December 31, 2019
|
||||||||||||||||||
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Gross Amounts Presented
|
|
Gross Amounts Not Offset
|
|
Legal Offset
|
||||||||||
Foreign currency forward contracts
|
(in thousands)
|
||||||||||||||||||
Total assets
|
$
|
9,725
|
|
|
$
|
—
|
|
|
$
|
9,725
|
|
|
$
|
(7,354
|
)
|
|
$
|
2,371
|
|
Total liabilities
|
(7,354
|
)
|
|
—
|
|
|
(7,354
|
)
|
|
7,354
|
|
|
—
|
|
|
As of December 31, 2018
|
||||||||||||||||||
|
Gross Amounts Recognized
|
|
Gross Amounts Offset
|
|
Gross Amounts Presented
|
|
Gross Amounts Not Offset
|
|
Legal Offset
|
||||||||||
Foreign currency forward contracts
|
(in thousands)
|
||||||||||||||||||
Total assets
|
$
|
20,537
|
|
|
$
|
—
|
|
|
$
|
20,537
|
|
|
$
|
(448
|
)
|
|
$
|
20,089
|
|
Total liabilities
|
(448
|
)
|
|
—
|
|
|
(448
|
)
|
|
448
|
|
|
—
|
|
I.
|
Inventories
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Raw materials
|
$
|
26,247
|
|
|
$
|
9,677
|
|
Work-in-process
|
107,021
|
|
|
87,944
|
|
||
Finished goods
|
34,234
|
|
|
26,739
|
|
||
Total
|
$
|
167,502
|
|
|
$
|
124,360
|
|
J.
|
Property and Equipment
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Buildings
|
$
|
648,003
|
|
|
$
|
657,438
|
|
Furniture and equipment
|
317,567
|
|
|
280,908
|
|
||
Software
|
167,547
|
|
|
162,601
|
|
||
Leasehold improvements
|
241,178
|
|
|
103,428
|
|
||
Computers
|
63,325
|
|
|
59,073
|
|
||
Total property and equipment, gross
|
1,437,620
|
|
|
1,263,448
|
|
||
Less: accumulated depreciation
|
(692,540
|
)
|
|
(451,443
|
)
|
||
Total property and equipment, net
|
$
|
745,080
|
|
|
$
|
812,005
|
|
K.
|
Intangible Assets and Goodwill
|
L.
|
Additional Balance Sheet Detail
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Payroll and benefits
|
$
|
159,464
|
|
|
$
|
124,753
|
|
Research, development and commercial contract costs
|
105,663
|
|
|
115,300
|
|
||
Product revenue allowances
|
641,368
|
|
|
550,002
|
|
||
Royalty payable
|
98,578
|
|
|
101,108
|
|
||
Tax related accruals
|
72,293
|
|
|
43,281
|
|
||
Other
|
39,546
|
|
|
24,455
|
|
||
Total
|
$
|
1,116,912
|
|
|
$
|
958,899
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Contract liabilities
|
$
|
62,332
|
|
|
$
|
24,870
|
|
Finance lease liabilities
|
30,293
|
|
|
5,271
|
|
||
Other
|
37,680
|
|
|
20,265
|
|
||
Total
|
$
|
130,305
|
|
|
$
|
50,406
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Advance from collaborator
|
$
|
88,762
|
|
|
$
|
82,573
|
|
Operating lease liabilities
|
84,292
|
|
|
—
|
|
||
Other
|
10,264
|
|
|
26,280
|
|
||
Total
|
$
|
183,318
|
|
|
$
|
108,853
|
|
M.
|
Leases
|
|
2019
|
||
|
|
||
Operating lease cost
|
$
|
11,972
|
|
Finance lease cost
|
|
||
Amortization of leased assets
|
49,778
|
|
|
Interest on lease liabilities
|
52,839
|
|
|
Variable lease cost
|
27,997
|
|
|
Sublease income
|
(6,391
|
)
|
|
Net lease cost
|
$
|
136,195
|
|
|
As of December 31, 2019
|
|
As of December 31, 2018 ^
|
||||
|
(in thousands)
|
||||||
Finance leases
|
|
|
|
||||
Property and equipment, net
|
$
|
445,336
|
|
|
$
|
640,952
|
|
Total finance lease assets
|
$
|
445,336
|
|
|
$
|
640,952
|
|
|
|
|
|
||||
Capital lease obligations, current portion
|
$
|
—
|
|
|
$
|
9,817
|
|
Other current liabilities
|
38,795
|
|
|
5,271
|
|
||
Capital lease obligations, excluding current portion
|
—
|
|
|
19,658
|
|
||
Construction financing lease obligation, excluding current portion
|
—
|
|
|
561,892
|
|
||
Long-term finance lease liabilities
|
538,576
|
|
|
—
|
|
||
Total finance lease liabilities
|
$
|
577,371
|
|
|
$
|
596,638
|
|
|
|
|
|
||||
Operating leases
|
|
|
|
||||
Other assets
|
$
|
88,202
|
|
|
$
|
—
|
|
Total operating lease assets
|
$
|
88,202
|
|
|
$
|
—
|
|
|
|
|
|
||||
Other current liabilities
|
$
|
11,504
|
|
|
$
|
—
|
|
Other long-term liabilities
|
84,292
|
|
|
—
|
|
||
Total operating lease liabilities
|
$
|
95,796
|
|
|
$
|
—
|
|
^ As reported in the Company’s 2018 Annual Report on Form 10-K.
|
Year
|
|
Finance Leases
|
|
Operating Leases
|
|
Total
|
||||||
|
|
(in thousands)
|
||||||||||
2020
|
|
$
|
84,264
|
|
|
$
|
14,598
|
|
|
$
|
98,862
|
|
2021
|
|
89,440
|
|
|
12,907
|
|
|
102,347
|
|
|||
2022
|
|
87,092
|
|
|
12,610
|
|
|
99,702
|
|
|||
2023
|
|
85,257
|
|
|
12,451
|
|
|
97,708
|
|
|||
2024
|
|
90,802
|
|
|
11,488
|
|
|
102,290
|
|
|||
Thereafter
|
|
425,251
|
|
|
51,251
|
|
|
476,502
|
|
|||
Total lease payments
|
|
862,106
|
|
|
115,305
|
|
|
977,411
|
|
|||
Less: amount representing interest
|
|
(284,735
|
)
|
|
(19,509
|
)
|
|
(304,244
|
)
|
|||
Present value of lease liabilities
|
|
$
|
577,371
|
|
|
$
|
95,796
|
|
|
$
|
673,167
|
|
|
As of December 31, 2019
|
|
Weighted-average remaining lease term (in years)
|
|
|
Finance leases
|
9.74
|
|
Operating leases
|
9.70
|
|
|
|
|
Weighted-average discount rate
|
|
|
Finance leases
|
9.04
|
%
|
Operating leases
|
3.75
|
%
|
|
December 31, 2019
|
||
|
(in thousands)
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows from operating leases
|
$
|
10,650
|
|
Operating cash flows from finance leases
|
$
|
50,527
|
|
Financing cash flows from finance leases
|
$
|
39,185
|
|
|
|
||
Right-of-use assets obtained in exchange for lease obligations
|
|
||
Operating leases *
|
$
|
34,605
|
|
Finance leases
|
$
|
—
|
|
* Includes $33.7 million acquired in 2019 pursuant to the Company’s acquisitions of Semma and Exonics.
|
Year
|
|
(in thousands)
|
||
2019
|
|
$
|
10,770
|
|
2020
|
|
7,282
|
|
|
2021
|
|
5,649
|
|
|
2022
|
|
3,300
|
|
|
2023
|
|
1,974
|
|
|
Thereafter
|
|
3,085
|
|
|
Total payments
|
|
32,060
|
|
|
Less: amount representing interest
|
|
(2,585
|
)
|
|
Present value of payments
|
|
$
|
29,475
|
|
N.
|
Common Stock, Preferred Stock and Equity Plans
|
|
|
|
|
|
|
As of December 31, 2019
|
||||
Title of Plan
|
|
Group Eligible
|
|
Type of Award
Granted |
|
Awards
Outstanding |
|
Additional Awards
Authorized for Grant |
||
2013 Stock and Option Plan
|
|
Employees, Non-employee Directors and Consultants
|
|
NSO,
RS, RSU and PSU |
|
9,577,268
|
|
|
15,778,703
|
|
2006 Stock and Option Plan
|
|
Employees, Non-employee Directors and Consultants
|
|
NSO,
RS and RSU |
|
651,842
|
|
|
—
|
|
|
|
|
|
Total
|
|
10,229,110
|
|
|
15,778,703
|
|
|
Stock Options
|
|
Weighted-average
Exercise Price |
|
Weighted-average
Remaining Contractual Life |
|
Aggregate Intrinsic
Value |
|||||
|
(in thousands)
|
|
(per share)
|
|
(in years)
|
|
(in thousands)
|
|||||
Outstanding at December 31, 2018
|
8,551
|
|
|
$
|
111.46
|
|
|
|
|
|
||
Granted
|
1,521
|
|
|
$
|
184.50
|
|
|
|
|
|
||
Exercised
|
(3,327
|
)
|
|
$
|
95.57
|
|
|
|
|
|
||
Forfeited
|
(467
|
)
|
|
$
|
146.59
|
|
|
|
|
|
||
Expired
|
(6
|
)
|
|
$
|
182.96
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
6,272
|
|
|
$
|
134.92
|
|
|
7.12
|
|
$
|
522,740
|
|
Exercisable at December 31, 2019
|
3,333
|
|
|
$
|
114.15
|
|
|
6.06
|
|
$
|
346,943
|
|
|
|
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
|
|
108
|
|
|
1.58
|
|
$
|
37.62
|
|
|
108
|
|
|
$
|
37.62
|
|
$40.01–$60.00
|
|
277
|
|
|
2.55
|
|
$
|
49.69
|
|
|
277
|
|
|
$
|
49.69
|
|
$60.01–$80.00
|
|
140
|
|
|
4.31
|
|
$
|
74.55
|
|
|
136
|
|
|
$
|
74.53
|
|
$80.01–$100.00
|
|
1,670
|
|
|
6.25
|
|
$
|
89.42
|
|
|
1144
|
|
|
$
|
90.10
|
|
$100.01–$120.00
|
|
243
|
|
|
5.11
|
|
$
|
109.23
|
|
|
241
|
|
|
$
|
109.17
|
|
$120.01–$140.00
|
|
454
|
|
|
5.67
|
|
$
|
129.77
|
|
|
447
|
|
|
$
|
129.85
|
|
$140.01–$160.00
|
|
1,036
|
|
|
8.10
|
|
$
|
155.50
|
|
|
383
|
|
|
$
|
155.39
|
|
$160.01–$180.00
|
|
720
|
|
|
8.46
|
|
$
|
168.04
|
|
|
233
|
|
|
$
|
164.48
|
|
$180.01–$189.38
|
|
1,624
|
|
|
8.90
|
|
$
|
185.41
|
|
|
364
|
|
|
$
|
184.85
|
|
Total
|
|
6,272
|
|
|
7.12
|
|
$
|
134.92
|
|
|
3,333
|
|
|
$
|
114.15
|
|
|
Restricted Stock Units (excluding PSUs)
|
|
Restricted Stock
|
||||||||||
|
Number of Shares
|
|
Weighted-average
Grant-date Fair Value |
|
Number of Units
|
|
Weighted-average
Grant-date Fair Value |
||||||
|
(in thousands)
|
|
(per share)
|
|
(in thousands)
|
|
(per share)
|
||||||
Unvested at December 31, 2018
|
2,717
|
|
|
$
|
140.10
|
|
|
480
|
|
|
$
|
104.91
|
|
Granted
|
1,717
|
|
|
$
|
181.87
|
|
|
—
|
|
|
$
|
—
|
|
Vested
|
(974
|
)
|
|
$
|
133.15
|
|
|
(375
|
)
|
|
$
|
108.23
|
|
Cancelled
|
(329
|
)
|
|
$
|
149.83
|
|
|
(13
|
)
|
|
$
|
100.79
|
|
Unvested at December 31, 2019
|
3,131
|
|
|
$
|
163.61
|
|
|
92
|
|
|
$
|
91.97
|
|
|
Performance-Based RSU
|
|||||
|
Number of Units
|
|
Weighted-average
Grant-date Fair Value |
|||
|
(in thousands)
|
|
(per share)
|
|||
Unvested at December 31, 2018 (1)
|
759
|
|
|
$
|
110.50
|
|
Granted (2)
|
449
|
|
|
$
|
183.48
|
|
Vested
|
(403
|
)
|
|
$
|
109.23
|
|
Cancelled
|
(71
|
)
|
|
$
|
104.61
|
|
Unvested at December 31, 2019
|
734
|
|
|
$
|
143.21
|
|
|
|
|
|
|||
(1) “Unvested” represents the Company’s PSUs at target to the extent performance has not been certified plus the actual number of shares that continue to be subject to service conditions for which the performance has been achieved and certified.
|
||||||
(2) “Granted” represents (i) the target number of shares issuable for grants during 2019 and (ii) any change in the number of shares issuable pursuant to outstanding PSUs based on performance certification during 2019.
|
|
Year Ended December 31, 2019
|
||
|
(in thousands,
except per share amount) |
||
Number of shares
|
202,693
|
|
|
Average price paid per share
|
$
|
138.18
|
|
O.
|
Stock-based Compensation Expense
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Stock-based compensation expense by line item:
|
|
|
|
|
|
||||||
Cost of sales
|
$
|
5,575
|
|
|
$
|
4,543
|
|
|
$
|
2,500
|
|
Research and development expenses
|
224,558
|
|
|
203,112
|
|
|
181,900
|
|
|||
Sales, general and administrative expenses
|
130,356
|
|
|
117,392
|
|
|
108,836
|
|
|||
Total stock-based compensation expense included in costs and expenses
|
360,489
|
|
|
325,047
|
|
|
293,236
|
|
|||
Income tax effect
|
(124,225
|
)
|
|
—
|
|
|
—
|
|
|||
Total stock-based compensation included in costs and expenses, net of tax
|
$
|
236,264
|
|
|
$
|
325,047
|
|
|
$
|
293,236
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Stock-based compensation expense by type of award:
|
|
|
|
|
|
||||||
Restricted stock and restricted stock units (including PSUs)
|
$
|
254,276
|
|
|
$
|
207,845
|
|
|
$
|
181,258
|
|
Stock options
|
96,737
|
|
|
107,854
|
|
|
105,367
|
|
|||
ESPP share issuances
|
11,196
|
|
|
9,933
|
|
|
9,017
|
|
|||
Stock-based compensation expense related to inventories
|
(1,720
|
)
|
|
(585
|
)
|
|
(2,406
|
)
|
|||
Total stock-based compensation expense included in costs and expenses
|
$
|
360,489
|
|
|
$
|
325,047
|
|
|
$
|
293,236
|
|
|
As of December 31, 2019
|
||||
|
Unrecognized Expense
|
|
Weighted-average Recognition Period
|
||
|
(in thousands)
|
|
(in years)
|
||
Type of award:
|
|
|
|
||
Restricted stock and restricted stock units (including PSUs)
|
$
|
374,185
|
|
|
2.05
|
Stock options
|
$
|
130,153
|
|
|
2.50
|
ESPP share issuances
|
$
|
4,724
|
|
|
0.55
|
|
2019
|
|
2018
|
|
2017
|
|||
Expected stock price volatility
|
36.99
|
%
|
|
40.50
|
%
|
|
45.31
|
%
|
Risk-free interest rate
|
2.32
|
%
|
|
2.61
|
%
|
|
1.94
|
%
|
Expected term of options (in years)
|
4.27
|
|
|
4.55
|
|
|
4.68
|
|
Expected annual dividends
|
—
|
|
|
—
|
|
|
—
|
|
•
|
Expected stock price volatility: Expected stock price volatility is calculated using the trailing one month average of daily implied volatilities prior to the grant date. Implied volatility is based on options to purchase the Company’s stock with remaining terms of greater than one year that are regularly traded in the market.
|
•
|
Risk-free interest rate: The Company bases the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected option term.
|
•
|
Expected term of options: The expected term of options represents the period of time options are expected to be outstanding. The Company uses historical data to estimate employee exercise and post-vest termination behavior. The Company believes that all groups of employees exhibit similar exercise and post-vest termination behavior and therefore does not stratify employees into multiple groups in determining the expected term of options.
|
•
|
Expected annual dividends: The estimate for annual dividends is $0.00 because the Company has not historically paid, and does not intend for the foreseeable future to pay, a dividend.
|
|
2019
|
|
2018
|
|
2017
|
|||
Expected stock price volatility
|
33.43
|
%
|
|
36.51
|
%
|
|
39.09
|
%
|
Risk-free interest rate
|
2.08
|
%
|
|
2.36
|
%
|
|
1.24
|
%
|
Expected term (in years)
|
0.74
|
|
|
0.75
|
|
|
0.75
|
|
Expected annual dividends
|
—
|
|
|
—
|
|
|
—
|
|
P.
|
Income Taxes
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
United States
|
$
|
1,263,379
|
|
|
$
|
812,086
|
|
|
$
|
330,340
|
|
Foreign
|
131,540
|
|
|
(211,845
|
)
|
|
(346,029
|
)
|
|||
Income (loss) before provision for (benefit from) income taxes
|
$
|
1,394,919
|
|
|
$
|
600,241
|
|
|
$
|
(15,689
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Current taxes:
|
|
|
|
|
|
||||||
Federal
|
$
|
—
|
|
|
$
|
772
|
|
|
$
|
11,559
|
|
Foreign
|
37,194
|
|
|
15,600
|
|
|
3,576
|
|
|||
State
|
13,528
|
|
|
9,018
|
|
|
5,025
|
|
|||
Total current taxes
|
50,722
|
|
|
25,390
|
|
|
20,160
|
|
|||
Deferred taxes:
|
|
|
|
|
|
||||||
Federal
|
184,312
|
|
|
(1,105,053
|
)
|
|
(113,805
|
)
|
|||
Foreign
|
(24,797
|
)
|
|
(364,919
|
)
|
|
(3,222
|
)
|
|||
State
|
7,872
|
|
|
(42,280
|
)
|
|
(10,457
|
)
|
|||
Total deferred taxes
|
167,387
|
|
|
(1,512,252
|
)
|
|
(127,484
|
)
|
|||
Provision for (benefit from) income taxes
|
$
|
218,109
|
|
|
$
|
(1,486,862
|
)
|
|
$
|
(107,324
|
)
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Income (loss) before provision for (benefit from) income taxes
|
$
|
1,394,919
|
|
|
$
|
600,241
|
|
|
$
|
(15,689
|
)
|
|
|
|
|
|
|
||||||
Expected provision for (benefit from) income taxes
|
292,933
|
|
|
126,051
|
|
|
(5,491
|
)
|
|||
State taxes, net of federal benefit
|
8,478
|
|
|
8,680
|
|
|
4,742
|
|
|||
Foreign income tax rate differential
|
6,178
|
|
|
23,427
|
|
|
77,801
|
|
|||
Tax credits
|
(59,459
|
)
|
|
(52,629
|
)
|
|
(58,204
|
)
|
|||
Benefit from income taxes attributable to valuation allowances
|
(2,672
|
)
|
|
(1,563,169
|
)
|
|
(575,801
|
)
|
|||
Permanent items
|
4,822
|
|
|
1,421
|
|
|
15,324
|
|
|||
Tax rate change
|
—
|
|
|
—
|
|
|
575,192
|
|
|||
Stock compensation (benefit) shortfalls and cancellations
|
(56,324
|
)
|
|
(49,044
|
)
|
|
(21,453
|
)
|
|||
Officer’s compensation
|
10,666
|
|
|
8,310
|
|
|
6,501
|
|
|||
Deconsolidation of VIE
|
—
|
|
|
(9,390
|
)
|
|
(126,183
|
)
|
|||
Uncertain tax positions
|
14,070
|
|
|
15,431
|
|
|
—
|
|
|||
Other
|
(583
|
)
|
|
4,050
|
|
|
248
|
|
|||
Provision for (benefit from) income taxes
|
$
|
218,109
|
|
|
$
|
(1,486,862
|
)
|
|
$
|
(107,324
|
)
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss
|
$
|
512,256
|
|
|
$
|
882,014
|
|
Tax credit carryforwards
|
549,543
|
|
|
487,635
|
|
||
Intangible assets
|
275,290
|
|
|
241,775
|
|
||
Deferred revenues
|
18,833
|
|
|
19,311
|
|
||
Stock-based compensation
|
85,199
|
|
|
93,915
|
|
||
Accrued expenses
|
44,367
|
|
|
17,795
|
|
||
Finance lease liabilities
|
119,160
|
|
|
130,849
|
|
||
Operating lease assets
|
13,114
|
|
|
—
|
|
||
Other
|
8,596
|
|
|
6,831
|
|
||
Gross deferred tax assets
|
1,626,358
|
|
|
1,880,125
|
|
||
Valuation allowance
|
(205,192
|
)
|
|
(168,491
|
)
|
||
Total deferred tax assets
|
1,421,166
|
|
|
1,711,634
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property and equipment
|
(101,235
|
)
|
|
(128,407
|
)
|
||
Acquired intangibles
|
(87,160
|
)
|
|
—
|
|
||
Deferred revenue
|
—
|
|
|
(73,357
|
)
|
||
Unrealized gain
|
(28,838
|
)
|
|
(10,198
|
)
|
||
Operating lease liabilities
|
(13,118
|
)
|
|
—
|
|
||
Net deferred tax assets
|
$
|
1,190,815
|
|
|
$
|
1,499,672
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Balance at beginning of the period
|
$
|
19,549
|
|
|
$
|
3,814
|
|
|
$
|
—
|
|
Increases related to current period tax positions
|
14,407
|
|
|
9,704
|
|
|
3,814
|
|
|||
Increases related to prior period tax positions
|
598
|
|
|
6,031
|
|
|
—
|
|
|||
Decreases related to prior period tax positions
|
(156
|
)
|
|
—
|
|
|
—
|
|
|||
Settlement with Tax Authorities
|
(478
|
)
|
|
—
|
|
|
—
|
|
|||
Balance at end of period
|
$
|
33,920
|
|
|
$
|
19,549
|
|
|
$
|
3,814
|
|
Q.
|
Commitments and Contingencies
|
R.
|
Segment Information
|
|
2019
(as reported under ASC 606) |
|
2018
(as reported under ASC 606) |
|
2017
(as reported under ASC 605) |
||||||
|
(in thousands)
|
||||||||||
TRIKAFTA
|
$
|
420,105
|
|
|
$
|
—
|
|
|
$
|
—
|
|
SYMDEKO/SYMKEVI
|
1,417,668
|
|
|
768,657
|
|
|
—
|
|
|||
ORKAMBI
|
1,331,891
|
|
|
1,262,166
|
|
|
1,320,850
|
|
|||
KALYDECO
|
991,062
|
|
|
1,007,502
|
|
|
844,630
|
|
|||
Total product revenues, net
|
$
|
4,160,726
|
|
|
$
|
3,038,325
|
|
|
$
|
2,165,480
|
|
|
2019
(as reported under ASC 606) |
|
2018
(as reported under ASC 606) |
|
2017
(as reported under ASC 605) |
||||||
|
(in thousands)
|
||||||||||
United States
|
$
|
3,062,555
|
|
|
$
|
2,365,079
|
|
|
$
|
1,986,786
|
|
Outside of the United States
|
|
|
|
|
|
||||||
Europe
|
885,762
|
|
|
543,179
|
|
|
420,317
|
|
|||
Other
|
214,504
|
|
|
139,339
|
|
|
81,549
|
|
|||
Total revenues outside of the United States
|
1,100,266
|
|
|
682,518
|
|
|
501,866
|
|
|||
Total revenues
|
$
|
4,162,821
|
|
|
$
|
3,047,597
|
|
|
$
|
2,488,652
|
|
|
Percent of Total Gross
Revenues
|
|
Percent of Gross Accounts Receivable
|
|||||||||||
|
Year Ended December 31,
|
|
As of December 31,
|
|||||||||||
|
2019
(as reported under ASC 606) |
|
2018
(as reported under ASC 606) |
|
2017
(as reported under ASC 605) |
|
2019
|
|
2018
|
|||||
McKesson Corporation
|
17
|
%
|
|
14
|
%
|
|
<10
|
%
|
|
22
|
%
|
|
16
|
%
|
Walgreen Co.
|
15
|
%
|
|
20
|
%
|
|
17
|
%
|
|
14
|
%
|
|
16
|
%
|
Accredo/Curascript
|
14
|
%
|
|
14
|
%
|
|
14
|
%
|
|
15
|
%
|
|
10
|
%
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
United States
|
$
|
768,572
|
|
|
$
|
778,157
|
|
Outside of the United States
|
|
|
|
||||
United Kingdom
|
57,383
|
|
|
30,496
|
|
||
Other
|
7,327
|
|
|
3,352
|
|
||
Total long-lived assets outside of the United States
|
64,710
|
|
|
33,848
|
|
||
Total long-lived assets
|
$
|
833,282
|
|
|
$
|
812,005
|
|
S.
|
Quarterly Financial Data (unaudited)
|
|
Three Months Ended
|
||||||||||||||
|
March 31,
2019 |
|
June 30,
2019 |
|
September 30,
2019 |
|
December 31,
2019 |
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Product revenues, net (1)
|
$
|
857,253
|
|
|
$
|
940,380
|
|
|
$
|
949,828
|
|
|
$
|
1,413,265
|
|
Collaborative and royalty revenues
|
1,182
|
|
|
913
|
|
|
—
|
|
|
—
|
|
||||
Total revenues
|
858,435
|
|
|
941,293
|
|
|
949,828
|
|
|
1,413,265
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
95,092
|
|
|
135,740
|
|
|
131,914
|
|
|
185,012
|
|
||||
Research and development expenses (2)
|
339,490
|
|
|
379,091
|
|
|
555,948
|
|
|
480,011
|
|
||||
Sales, general and administrative expenses
|
147,045
|
|
|
156,502
|
|
|
159,674
|
|
|
195,277
|
|
||||
Change in fair value of contingent consideration
|
—
|
|
|
—
|
|
|
2,959
|
|
|
1,500
|
|
||||
Total costs and expenses
|
581,627
|
|
|
671,333
|
|
|
850,495
|
|
|
861,800
|
|
||||
Income from operations
|
276,808
|
|
|
269,960
|
|
|
99,333
|
|
|
551,465
|
|
||||
Interest income
|
15,615
|
|
|
18,076
|
|
|
17,628
|
|
|
12,359
|
|
||||
Interest expense
|
(14,868
|
)
|
|
(14,837
|
)
|
|
(14,548
|
)
|
|
(14,249
|
)
|
||||
Other income (expense), net (3)
|
42,610
|
|
|
53,939
|
|
|
(31,747
|
)
|
|
127,375
|
|
||||
Income before provision for income taxes
|
320,165
|
|
|
327,138
|
|
|
70,666
|
|
|
676,950
|
|
||||
Provision for income taxes (4)
|
51,534
|
|
|
59,711
|
|
|
13,148
|
|
|
93,716
|
|
||||
Net income attributable to Vertex
|
$
|
268,631
|
|
|
$
|
267,427
|
|
|
$
|
57,518
|
|
|
$
|
583,234
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts per share attributable to Vertex common shareholders:
|
|
|
|
|
|
|
|
||||||||
Net income:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.05
|
|
|
$
|
1.04
|
|
|
$
|
0.22
|
|
|
$
|
2.26
|
|
Diluted
|
$
|
1.03
|
|
|
$
|
1.03
|
|
|
$
|
0.22
|
|
|
$
|
2.23
|
|
Shares used in per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
255,695
|
|
|
256,154
|
|
|
256,946
|
|
|
258,003
|
|
||||
Diluted
|
260,175
|
|
|
259,822
|
|
|
260,473
|
|
|
262,108
|
|
|
Three Months Ended
|
||||||||||||||
|
March 31,
2018 |
|
June 30,
2018 |
|
September 30,
2018 |
|
December 31,
2018 |
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Product revenues, net
|
$
|
637,729
|
|
|
$
|
749,912
|
|
|
$
|
782,511
|
|
|
$
|
868,173
|
|
Collaborative and royalty revenues
|
3,070
|
|
|
2,245
|
|
|
2,024
|
|
|
1,933
|
|
||||
Total revenues
|
640,799
|
|
|
752,157
|
|
|
784,535
|
|
|
870,106
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of sales
|
71,613
|
|
|
104,382
|
|
|
111,255
|
|
|
122,289
|
|
||||
Research and development expenses (2)
|
310,553
|
|
|
337,532
|
|
|
330,510
|
|
|
437,881
|
|
||||
Sales, general and administrative expenses
|
129,808
|
|
|
137,303
|
|
|
137,295
|
|
|
153,210
|
|
||||
Restructuring (income) expenses
|
(76
|
)
|
|
62
|
|
|
(174
|
)
|
|
4
|
|
||||
Intangible asset impairment charge
|
—
|
|
|
—
|
|
|
—
|
|
|
29,000
|
|
||||
Total costs and expenses
|
511,898
|
|
|
579,279
|
|
|
578,886
|
|
|
742,384
|
|
||||
Income from operations
|
128,901
|
|
|
172,878
|
|
|
205,649
|
|
|
127,722
|
|
||||
Interest income
|
5,789
|
|
|
8,049
|
|
|
10,543
|
|
|
13,971
|
|
||||
Interest expense
|
(16,886
|
)
|
|
(18,155
|
)
|
|
(18,686
|
)
|
|
(18,744
|
)
|
||||
Other income (expense), net (3)
|
96,838
|
|
|
53,819
|
|
|
(60,995
|
)
|
|
(90,452
|
)
|
||||
Income before (benefit from) provision for income taxes
|
214,642
|
|
|
216,591
|
|
|
136,511
|
|
|
32,497
|
|
||||
(Benefit from) provision for income taxes (4)
|
(12,659
|
)
|
|
10,341
|
|
|
8,055
|
|
|
(1,492,599
|
)
|
||||
Net income
|
227,301
|
|
|
206,250
|
|
|
128,456
|
|
|
1,525,096
|
|
||||
(Income) loss attributable to noncontrolling interest (5)
|
(17,038
|
)
|
|
1,110
|
|
|
290
|
|
|
25,431
|
|
||||
Net income attributable to Vertex
|
$
|
210,263
|
|
|
$
|
207,360
|
|
|
$
|
128,746
|
|
|
$
|
1,550,527
|
|
|
|
|
|
|
|
|
|
||||||||
Amounts per share attributable to Vertex common shareholders:
|
|
|
|
|
|
|
|
||||||||
Net income:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.83
|
|
|
$
|
0.82
|
|
|
$
|
0.51
|
|
|
$
|
6.08
|
|
Diluted
|
$
|
0.81
|
|
|
$
|
0.80
|
|
|
$
|
0.50
|
|
|
$
|
5.97
|
|
Shares used in per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
253,231
|
|
|
254,135
|
|
|
254,905
|
|
|
254,868
|
|
||||
Diluted
|
258,526
|
|
|
258,584
|
|
|
259,788
|
|
|
259,812
|
|
1.
|
In the fourth quarter of 2019, the Company updated its transaction price and recognized net product revenues of $155.8 million related to prior period ORKAMBI sales upon reaching a reimbursement agreement with the French government for ORKAMBI, including ORKAMBI distributed through early access programs. See Note A, “Nature of Business and Accounting Policies.”
|
2.
|
In the third quarter of 2019, the Company incurred research and development expenses of $175.0 million related to its CRISPR DMD/DM1 Agreement. In the fourth quarter of 2018, the Company incurred research and development expenses of $95.0 million to related license agreements with Merck KGaA, Darmstadt, Germany, and Arbor. See Note B, “Collaborative Arrangements.”
|
3.
|
In 2019 and 2018, “Other income (expense), net” was primarily related to changes in the fair value of the Company’s equity investment in CRISPR. See Note F, “Marketable Securities and Equity Investments.”
|
4.
|
In the fourth quarter of 2018, the Company released the valuation allowance on the majority of its NOLs and other deferred tax assets as of December 31, 2018 resulting in a benefit from income taxes of $1.56 billion. Starting in 2019, the Company began recording a provision for income taxes approximating statutory rates on its pre-tax income. See Note P, “Income Taxes.”
|
5.
|
In 2018, the Company had a noncontrolling interest in BioAxone, which it consolidated as a VIE until December 31, 2018. Following the deconsolidation of BioAxone as of December 31, 2018, the Company did not have a noncontrolling interest in any entities in 2019. See Note B, “Collaborative Arrangements.”
|
I.
|
Definitions. For the purposes of this Amended and Restated 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
|
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)
|
your annual base salary is decreased;
|
(b)
|
the office to which you are assigned is relocated to a place 35 or more miles away; or
|
(c)
|
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)
|
(i) 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, multiplied
|
(b)
|
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.
|
(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
|
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, including the previous Change of Control Agreement between you and the Company. 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)
|
Registration Statement (Form S-3 No. 333-229656) of Vertex Pharmaceuticals Incorporated,
|
(2)
|
Registration Statements (Form S-8 Nos. 333-134482, 333-150946, 333-160442, 333-166803 and 333-184787) pertaining to the Vertex Pharmaceuticals Incorporated Amended and Restated 2006 Stock and Option Plan (formerly known as the Vertex Pharmaceuticals Incorporated 2006 Stock and Option Plan),
|
(3)
|
Registration Statement (Form S-8 Nos. 333-184784 and 333-232945) pertaining to the Vertex Pharmaceuticals Incorporated Employee Stock Purchase Plan, and
|
(4)
|
Registration Statements (Form S-8 Nos. 333-226363, 333-219559, 333-188737, 333-197466, 333-206075 and 333-232948) pertaining to the Amended and Restated Vertex Pharmaceuticals Incorporated 2013 Stock and Option Plan (formerly known as the Vertex Pharmaceuticals Incorporated 2013 Stock and Option Plan);
|
1.
|
I have reviewed this Annual Report on Form 10-K 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:
|
February 13, 2020
|
/s/ Jeffrey M. Leiden
|
|
|
|
|
|
Jeffrey M. Leiden
|
|
|
Chief Executive Officer and President
|
1.
|
I have reviewed this Annual Report on Form 10-K 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:
|
February 13, 2020
|
/s/ Charles F. Wagner, Jr.
|
|
|
|
|
|
Charles F. Wagner, Jr.
|
|
|
Executive Vice President and Chief Financial Officer
|
Date:
|
February 13, 2020
|
|
|
|
/s/ Jeffrey M. Leiden
|
|
|
|
|
|
Jeffrey M. Leiden
|
|
|
Chief Executive Officer and President
|
|
|
|
Date:
|
February 13, 2020
|
|
|
|
/s/ Charles F. Wagner, Jr.
|
|
|
|
|
|
Charles F. Wagner, Jr.
|
|
|
Executive Vice President and Chief Financial Officer
|
|