Vertex Pharmaceuticals (VRTX) 10-K risk factor changes: FY2021 vs FY2020

- We [removed: are investing] [added: invest] significant resources in the research and development of therapies for serious diseases other than CF, and if we are unable to successfully commercialize one or more of these therapies, our business could be materially harmed.

- If our competitors bring [removed: drugs] [added: products] with superior product profiles to market, our [removed: drugs] [added: products] may not be competitive and our revenues could decline.

- If physicians and patients do not accept our [removed: medicines,] [added: products,] or if patients do not remain on treatment or comply with their prescribed dosing regimen, our product revenues would be materially harmed in future periods.

- We have experienced challenges commercializing products outside of the [removed: U.S,] [added: U.S.,] and our future revenues will be dependent on our ability to obtain adequate reimbursement for our products.

- We have limited experience developing [added: and commercializing] cell and genetic therapies and could experience challenges with these programs, which could result in delays or prevent the development, manufacturing and commercialization of our cell and genetic therapies.

Risks Related to Development and Clinical Testing of Our Products and [removed: Drug] [added: Product] Candidates

[added: -] Our [added: product candidates remain subject to clinical testing and regulatory approval, and our] future success is dependent on our ability to successfully develop additional [removed: drug] [added: product] candidates for both CF and non-CF indications.

- If we are unable to obtain [added: or are delayed in obtaining] regulatory approval, we [removed: will] [added: may incur additional costs, experience delays in commercialization, or] be unable to commercialize our [removed: drug] [added: product] candidates.

- If clinical trials are prolonged or delayed, our development timelines for the affected development program could be extended, our costs to develop the [removed: drug] [added: product] candidate could increase and the competitive position of the [removed: drug] [added: product] candidate could be adversely affected.

- If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental pricing programs in the U.S., we could be subject to additional reimbursement requirements, penalties, sanctions and fines [removed: which] [added: that] could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

- If our processes and systems are not compliant with regulatory requirements, we could be subject to restrictions on marketing our products or could be delayed in submitting regulatory filings seeking approvals for our [removed: drug] [added: product] candidates.

- We face risks in connection with existing and future collaborations with respect to the development, manufacture and commercialization of our products and [removed: drug] [added: product] candidates.

- We may not be able to attract collaborators or external funding for the development and commercialization of certain of our [removed: drug] [added: product] candidates.

Risks Related to [removed: Third-Party] [added: Supply,] Manufacturing and Reliance on Third Parties

- We depend on third-party manufacturers [added: and our internal capabilities] to manufacture our products and the materials we require for our clinical trials.

We may not be able to maintain [removed: these] [added: our third-party] relationships and could experience supply disruptions outside of our control.

- If our patents do not protect our [removed: drugs] [added: products] or our [removed: drugs] [added: products] infringe third-party patents, we could be subject to litigation which could result in injunctions preventing us from selling our products or substantial liabilities.

- Uncertainty over intellectual property in the pharmaceutical and biotechnology industry has been the source of litigation and other disputes, [removed: which is] [added: that are] inherently costly and unpredictable.

- We are subject to risks associated with the [removed: global] COVID-19 pandemic.

[removed: - Our] [added: Our] business faces potential risks relating to the [removed: United Kingdom’s] [added: U.K.’s] withdrawal from the [removed: European Union.][added: E.U.]

- [removed: Changes] [added: Our effective tax rate fluctuates, and changes] in tax laws, regulations and [removed: treaties] [added: treaties, unfavorable resolution of tax contingencies or exposure to additional income tax liabilities] could [removed: affect] [added: have a material impact on] our future taxable income.

As a result, our future success is [added: largely] dependent upon our ability to increase revenues from sales of our CF medicines.

- that one or more competing therapies may [removed: successfully] be developed [added: successfully] as a treatment for people with CF;

- that we may experience adverse developments with respect to development or commercialization of our CF medicines and/or CF [removed: drug] [added: product] candidates.

We [removed: are investing] [added: invest] significant resources in the research and development of therapies for serious diseases other than CF, and if we are unable to successfully commercialize one or more of these therapies, our business could be materially harmed.

We [removed: are investing] [added: invest] significant resources in the research and development of medicines for serious diseases including [removed: AAT deficiency, APOL1-mediated kidney diseases, pain,] [added: SCD,] beta thalassemia, [removed: SCD,] [added: APOL1-mediated kidney disease,] T1D, [added: pain, AATD,] DMD and DM1.

There can be no guarantee that we will effectively identify patients that are eligible for enrollment in our clinical trials or treatment with our [removed: drug] [added: product] candidates.

Even if we do successfully identify eligible patients, the number of patients that our [removed: drug] [added: product] candidates are able to treat may turn out to be lower than we expect or new patients may become increasingly difficult to identify, each of which may adversely affect our revenues and materially harm our business.

If our competitors bring [removed: drugs] [added: products] with superior product profiles to market, our [removed: drugs] [added: products] may not be competitive and our revenues could decline.

A number of companies are seeking to identify and develop [removed: drug] [added: product] candidates for the treatment of CF and other therapeutic areas we are targeting with our research and development activities.

Our success in rapidly developing and commercializing our CF medicines may increase the resources that our competitors allocate to the development of potential [removed: competitive treatments.]

If one or more competing therapies prove to be superior to our then existing products and/or [removed: drug] [added: product] candidates, our business could be materially adversely affected.

We also face competition from numerous smaller public and private companies, academic institutions, government agencies, public and private research [removed: organizations] [added: organizations,] and charitable venture philanthropy organizations that conduct research, seek patent [removed: protection] [added: protection,] and/or establish collaborative arrangements for research, development, [removed: manufacturing] [added: manufacturing,] and commercialization.

Our products and any [removed: drugs] [added: products] that we develop in the future may not be able to compete effectively with marketed drugs or new drugs that may be developed by competitors.

The risk of competition is particularly important to our company because substantially all of our revenues [removed: as well as our most advanced drug candidates] are related to the treatment of people with CF.

There are many other companies developing [removed: drugs] [added: products] for the same patient populations that we are pursuing.

In order to compete successfully in these areas, we must demonstrate improved safety, efficacy and/or tolerability, ease of manufacturing, and gain and maintain market acceptance over competing [removed: drugs.][added: products.]

[removed: Drugs] [added: Products] are more widely used by patients once approval has been obtained and therefore side effects and other problems may be observed after approval that were not seen or anticipated, or were not as prevalent or severe, during pre-approval clinical trials or nonclinical studies.

[removed: Three of our commercial products are combination products, and each] [added: Each] of our [added: CF] products shares at least one active pharmaceutical ingredient with another of our products.

In addition, our products are subject to ongoing regulatory requirements governing the testing, manufacturing, labeling, packaging, storage, advertising, promotion, sale, distribution, import, export, [removed: recordkeeping] [added: recordkeeping,] and submission of safety and other post-market information.

- We may experience incremental pricing pressure on our products, which could reduce our revenues and future profitability.

- Current health care laws and regulations in the U.S. and future legislative or regulatory reforms to the U.S. health care system may affect our ability to commercialize our marketed products profitably.

- Difficulty in enrolling patients could delay or prevent clinical trials of our product candidates, and ultimately delay or prevent regulatory approval.

For example, in June 2021, we decided not to progress VX-864, a drug candidate for the treatment of AATD, into late-stage development based on data obtained from a Phase 2 clinical trial.

competitive treatments.

medical community.

- limitations or warnings contained in the labeling;

- the timing of market introduction of our product as well as competitive products;

Although not mandated in the U.S., various organizations have started advocating for cost-effectiveness analyses in the U.S. as well as value-based contracting in which the amount of reimbursement for a product is based on patient outcomes and other clinical or economic metrics related to the performance of such product.

If U.S. payors were to adopt such assessments and make negative coverage determinations or utilize value-

based contracts that result in penalties to, or lower rates of, reimbursement, it could adversely affect our product revenues.

We may experience incremental pricing pressure on our products, which could reduce our revenues and future profitability.

Other federal activities seeking to specifically address drug pricing and reimbursement include:

- changes to the federal anti-kickback statute safe harbors that eliminate anti-kickback statute discount safe harbor protection for certain manufacturer rebate arrangements;

- support for legislation allowing direct negotiation in Medicare Part D; and

- legislation relating to drug pricing, including bills that would impose rebate obligations for Medicare (and potentially other utilization) for price increases greater than the rate of inflation, require drug pricing negotiations in Medicare, redesign the Part D benefit to lower patient costs and overall spending, and introduce enhanced transparency measures into drug pricing.

Current health care laws and regulations in the U.S. and future legislative or regulatory reforms to the U.S. health care system may affect our ability to commercialize our marketed products profitably.

and regulatory reforms that could affect our ability to sell products.

The federal government additionally has proposed and enacted legislation leading to aggregate reductions of Medicare payments to providers, which ultimately could affect utilization of medicines.

These new laws or any other similar laws introduced in the future may result in additional reductions in Medicare and other health care funding, which could negatively affect our customers and accordingly, our financial operations.

Moreover, payment methodologies may be subject to changes in health care legislation and regulatory initiatives.

For example, CMS may develop new payment and delivery models, such as bundled payment models.

Those activities seek to reduce or limit the prices of drugs, make them more affordable for patients, reform Medicare Part D pharmaceutical benefits, bring more transparency to drug prices, require data collection and reporting of information such as rebates, fees, and other remuneration provided by drug manufacturers, and enable the government to negotiate prices.

Moreover, adverse developments in clinical trials conducted by others of cell and genetic therapy products or products created using similar technology, or adverse public perception of the field of cell and genetic therapies, may cause the FDA and other regulatory bodies to revise the requirements for approval of any cell or genetic therapy product candidates we may develop or limit the use of products utilizing technologies such as ours, either of which could materially harm our business.

As we advance our cell and genetic therapy product candidates, we will be required to consult with various regulatory authorities, and we must comply with applicable laws, rules, and regulations, which may change from time to time, including during the course of development of our cell and genetic therapy product candidates.

If we fail to do so, we may be required to delay or discontinue the clinical development of certain of our cell and genetic therapy product candidates.

These additional processes may result in a review and approval process that is longer than we otherwise would have expected.

Even if we comply with applicable laws, rules, and regulations, and even if we maintain close coordination with the applicable regulatory authorities with oversight over our cell and genetic therapy product candidates, our development programs may fail to succeed.

Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential cell or genetic therapy product to market would materially adversely affect our business, financial condition, results of operations and prospects.

The regulatory approval process and clinical trial requirements for cell and genetic therapies can be more expensive and take longer than for other, better known or more extensively studied product candidates, and regulatory requirements governing cell and genetic therapy products have changed frequently and may continue to change in the future.

For example, the FDA established the Office of Tissues and Advanced Therapies within its Center for Biologics Evaluation and Research, or CBER, to consolidate the review of cell therapies and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review.

These and other regulatory review agencies, committees and advisory groups and the requirements and guidelines they promulgate, may lengthen the regulatory review process, require us to perform additional preclinical studies or clinical trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of these treatment candidates or lead to significant post-approval limitations or restrictions.

We cannot make any assurances that these

In addition, the third parties on which we rely to manufacture our cell or genetic therapies may experience their own compliance challenges or delays.

We also face uncertainty as to whether cell and gene therapy treatments will gain the acceptance of the public or the medical community.

If we obtain regulatory approval, the commercial success of cell and gene therapy treatments will depend, in part, on the acceptance of physicians, patients, and third-party payers of gene therapy products in general, and our product candidates in particular, as medically necessary, cost-effective, and safe.

In particular, our success will depend upon physicians prescribing our product candidates in lieu of existing treatments they are already familiar with and for which greater clinical data may be available.

Moreover, physicians and patients may delay acceptance of cell and gene therapy product candidates until the product candidates have been on the market for a certain amount of time.

In addition, medical centers that administer procedures accompanying treatment could experience capacity constraints, and these centers are subject to competing priorities that could delay patient access to procedures associated with cell and gene therapy products.

Negative public opinion or more restrictive government regulations may delay or impair the successful commercialization of, and demand for, cell and gene therapies.

- Our drug candidates remain subject to clinical testing and regulatory approval.

For example, in October 2020, we discontinued development of VX-814, a drug candidate for the treatment of AAT, based on the safety and pharmacokinetic profile observed in a Phase 2 clinical trial.

products, product recalls and seizures, operating restrictions and/or criminal prosecutions, any of which could have a material adverse effect on our business, reputation, financial condition and results of operations.

While the recent regulation does not apply to our current medicines, it could affect future medicines.

Likewise, HHS recently issued a final regulation adopting changes to anti-kickback laws for rebates offered to pharmacy benefit managers.

Although not mandated in the U.S., various organizations have started advocating for cost-effectiveness analyses in the U.S. If U.S. payors were to adopt such assessments and make negative coverage determinations, it could adversely affect our product revenues.

Various portions of the ACA are subject to legal challenges in various jurisdictions, including the U.S. Supreme Court, which could affect coverage and payment for medicines.

Additional healthcare reform efforts have sought to address issues related to the COVID-19 pandemic, including an expansion of telehealth coverage under Medicare and accelerated or advanced Medicare payments to healthcare providers.

Additionally, any legislation or regulatory changes or relaxation of laws that restrict imports of drugs from other countries, revisions to reimbursement or pharmaceuticals under government programs or general budget control actions also could reduce the net price we receive for our products.

For example, we obtained reimbursement for ORKAMBI and SYMKEVI in England in the fourth quarter of 2019, four years after ORKAMBI’s initial approval in 2015.

Our drug candidates remain subject to clinical testing and regulatory approval.

For example, in October 2020, we discontinued development of VX-814, a drug candidate for the treatment of AAT, based on the safety and pharmacokinetic profile observed in the clinical trial.

In addition, from time to time, we report interim data from our clinical trials.

Interim data from a clinical trial may not be predictive of final results from the clinical trial.

Non-U.S. jurisdictions have different approval

Our ability to enroll patients in our clinical trials in sufficient numbers and on a timely basis is subject to a number of factors, including the size of the patient population, the nature of the protocol, the proximity of patients to clinical sites, the availability of effective treatments for the relevant disease, the number of other clinical trials ongoing and competing for patients in the same indication, the eligibility criteria for the clinical trial, and the ongoing COVID-19 pandemic.

In addition, patients may drop out of our clinical trials or may be lost to follow-up medical evaluation after treatment ends, and this could impair the validity or statistical significance of the trials.

resources.

maintain and enhance, systems and processes in order to comply with these regulations.

CMS recently proposed changes to the Medicaid Drug Rebate calculations to address treatment of value-based arrangements, accumulator adjustment programs implemented by payers, and new formulations of existing products.

This provision of the Clinical Trial Regulation is expected to be effective by the end of 2021.

For example, we entered into a strategic collaboration and license agreement with Parion Sciences, Inc. to develop ENaC inhibitors in 2015 and incurred an impairment charge related to this collaboration in 2017.

For example, CRISPR, which is responsible for leading commercialization of CTX001 in the U.S., has no prior experience commercializing a therapy and is in the process of establishing the capabilities that would be required to commercialize CTX001 in the U.S.

For example, we are co-developing CTX001, an investigational CRISPR/Cas9-based gene-editing therapy for SCD and TDT with our collaborator, CRISPR.

For example, we are collaborating with CRISPR on establishing the supply chain to support clinical trials and commercial supply for CTX001, if approved.

As a result, we do not have independent control over the related supply operations and are reliant on CRISPR to adequately establish the corresponding supply chains.

We require a supply for our medicines for commercial sale and a supply of our drug candidates for use in our clinical trials.

To ensure the stability of our supply chains, we aim to develop additional sources of manufacture for all steps of our manufacturing processes at the time of, or shortly after, marketing approval.

Moreover, the FDA requires us to comply with standards, commonly referred to as good laboratory practices

The U.S. Patent Office developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, became effective in March 2013.

The patents and patent

We have re-initiated enrollment and dosing in all of our ongoing clinical trials and initiated new clinical trials despite some temporary pauses to enrollment and dosing early in the pandemic.

Currently, all of our research and manufacturing sites are open to essential employees.

research and development objectives depends on our ability to respond effectively to these demands.

Our business faces potential risks relating to the United Kingdom’s withdrawal from the European Union.

The size and complexity of our information technology and information security systems makes such systems potentially vulnerable to service interruptions and to security breaches.

There can be no assurance that our efforts to protect our data and information systems will prevent breakdowns or breaches in our systems that could adversely affect our business.

We are subject to taxation in numerous countries, states and other jurisdictions.

We have four approved medicines to treat cystic fibrosis, or CF, a life-threatening genetic disease, and [removed: we] are focused on increasing the number of [removed: patients] [added: people with CF] eligible and able to receive our [removed: current] medicines through label expansions, approval of new medicines and expanded reimbursement.

Our triple combination regimen, [removed: TRIKAFTA/KAFTRIO,] [added: TRIKAFTA/KAFTRIO] was approved in 2019 in the United States, or U.S., and in 2020 in the European Union, or E.U. Collectively, our four medicines are [removed: approved to treat] [added: being used by] the majority of the approximately 83,000 people with CF in North America, Europe and Australia.

We are evaluating our [removed: medicines, including our triple combination regimen,] [added: medicines] in additional patient populations, including younger children, with the goal of having small molecule treatments for [removed: up to] [added: approximately] 90% of people with CF.

[added: -] We are evaluating [removed: CTX001,] [added: the use of] a [removed: genetic] [added: non-viral ex vivo CRISPR gene-editing] therapy, [removed: as a potential treatment] [added: CTX001,] for [added: the treatment of severe] sickle cell disease, or SCD, and transfusion-dependent beta thalassemia, or [removed: TDT, in Phase 1/2 clinical trials in collaboration with CRISPR Therapeutics AG, or CRISPR.][added: TDT.]

[removed: *Revenues*][added: Other Revenues]

[removed: *Expenses*][added: | Research Expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

[removed: In 2020,] [added: Our] cost of sales [removed: was approximately 12%] [added: as a percentage] of our net product [removed: revenues.][added: revenues was 12% in each of 2021 and 2020.]

[removed: ][added: ]

[removed: ][added: ]

[removed: *Cystic Fibrosis*][added: Cystic Fibrosis]

We expect to continue to grow our CF business [removed: through] [added: by] increasing the number of people with CF eligible and able to receive our medicines and providing improved treatment options for people who are already eligible for one of our medicines.

Since the beginning of [removed: 2020,] [added: 2021,] we have made [removed: important] [added: significant] progress in activities supporting these efforts.

- [removed: In January 2021, the FDA accepted our supplemental New] [added: The U.S. Food and] Drug [removed: Application,] [added: Administration,] or [removed: sNDA, for TRIKAFTA for] the [removed: treatment] [added: FDA, approved the use] of [added: TRIKAFTA for] children with CF 6 [removed: to] [added: through] 11 years of age [removed: with] [added: who have] at least one [removed: *F508del*] [added: F508del] mutation or [removed: have certain mutations] [added: at least one mutation] that [removed: are] [added: is] responsive to [removed: TRIKAFTA based on *in vitro* data.][added: TRIKAFTA.]

We continue to advance a [removed: broad] pipeline of potentially transformative small molecule, [added: and] cell and genetic therapies aimed at treating serious diseases.

[removed: Beta Thalassemia and] Sickle Cell Disease [added: and Beta Thalassemia]

Alpha-1 [removed: Antitrypsin] [added: Antitrypsin, or AAT,] Deficiency

APOL1-Mediated Kidney [removed: Diseases][added: Disease]

[removed: Investment] [added: *Investments] in External [removed: Innovation][added: Innovation*]

COVID-19 has not [added: materially] affected our supply chain or the demand for our medicines, and we believe that we will be able to continue to supply all of our approved medicines to patients globally.

We [removed: continue to monitor local COVID-19 trends and government guidance for each of our site locations, and] are utilizing a [removed: phased,] site-specific approach to assess [added: and permit] employee access to our sites.

Our strategy is to combine transformative advances in the understanding of human disease [added: biology] and the science of therapeutics in order to [removed: identify] [added: discover] and develop new medicines.

We believe that pursuing [removed: innovative approaches to treat] [added: research in] diverse [removed: diseases of great unmet need] [added: areas] allows us to balance the risks inherent in [removed: drug] [added: product] development and may provide [removed: drug] [added: product] candidates that will form our pipeline in future years.

Discovery and development of a new pharmaceutical [added: or biological] product is a difficult and lengthy process that requires significant financial resources along with extensive technical and regulatory expertise.

Most chemical compounds that are investigated as potential drug [added: or biological product] candidates never progress into development, and most [removed: drug] [added: product] candidates that do advance into development never receive marketing approval.

[removed: Because our investments in drug candidates are subject to considerable risks, we] [added: We] closely monitor the results of our discovery, research, clinical trials and nonclinical studies and frequently evaluate our [removed: drug] [added: product] development programs in light of new data and scientific, business and commercial insights, with the objective of balancing risk and potential.

[removed: This process can result in rapid changes in focus and priorities as new] information becomes available and as we gain additional understanding of our ongoing programs and potential new programs, as well as those of our competitors.

We dedicate substantial management and other resources in order to obtain and maintain appropriate levels of reimbursement for our products from third-party payors, including governmental [removed: organizations] [added: organizations,] in the U.S. and ex-U.S. markets.

In the U.S., we have worked successfully with [removed: third party] [added: third-party] payors in order to promptly obtain appropriate levels of reimbursement for our CF medicines.

We plan to continue to engage in discussions with numerous commercial insurers and managed health care organizations, along with government health programs that are typically managed by authorities in the individual states, to ensure that payors recognize the significant benefits that our medicines provide [removed: by treating the underlying cause of CF] and [removed: continue to] provide [added: patients with appropriate levels of] access to our [removed: medicines.][added: medicines now and in the future.]

In Europe and other ex-U.S. markets, we seek government reimbursement for our medicines on a country-by-country [removed: basis.][added: or region-by-region basis, as required.]

This is necessary for each new medicine, as well as [added: for] label expansions for our current medicines.

We expect to continue to focus significant resources to obtain [removed: appropriate] [added: expanded] reimbursement for our [removed: products] [added: CF medicines and, ultimately, pipeline therapies] in [added: U.S. and] ex-U.S. markets.

As part of our business strategy, we seek to acquire [removed: drugs, drug] [added: products, product] candidates and other technologies and businesses that [removed: have the potential to] [added: are aligned with our corporate and research and development strategies and] complement [added: and advance] our ongoing research and development efforts.

In 2019, we invested significantly in business development transactions designed to augment our pipeline, including the acquisition of Semma Therapeutics, Inc., or Semma, a privately-held company focused on the use of stem cell-derived human islets as a [removed: potentially curative] treatment for T1D, and Exonics Therapeutics, Inc., or Exonics, a privately-held company focused on creating transformative gene-editing therapies to repair mutations that cause [removed: DMD] [added: Duchenne muscular dystrophy, or DMD,] and other severe neuromuscular diseases, including [added: myotonic dystrophy type 1, or] DM1.

We expect to continue to identify and evaluate potential acquisitions and may include larger transactions or [removed: later stage] [added: later-stage] assets.

As of the acquisition date for each transaction, the cash payments, as well as the fair value of contingent consideration for Exonics, were allocated primarily to [removed: goodwill and the fair value of several in-process research and development assets that we acquired.]

Please refer to our critical accounting policies, [removed: “*Acquisitions*,”] [added: “Acquisitions,”] for further information regarding the significant judgments and estimates related to our acquisitions.

We enter into arrangements with third parties, including collaboration and licensing arrangements, for the development, manufacture and commercialization of [removed: drugs, drug candidates] [added: products, product candidates,] and other technologies that have the potential to complement our ongoing research and development efforts.

We have entered into collaborations with biotechnology and pharmaceutical companies in order to acquire rights or to license [removed: drug] [added: product] candidates or technologies that enhance our pipeline and/or our research capabilities.

Over the last several years, we entered into collaboration agreements with a number of companies, including [removed: Affinia,] Arbor Biotechnologies, Inc., CRISPR, Kymera Therapeutics, Inc., [added: Mammoth Biosciences, Inc.,] Moderna, [removed: Molecular Templates,] [added: Inc., and Obsidian Therapeutics,] Inc. [added: Generally, when we in-license a technology or product candidate, we make upfront payments to the collaborator, assume the costs of the program, and/or agree to make contingent payments, which could consist of milestone, royalty,] and [removed: Skyhawk.][added: option payments.]

*Our discussion and analysis of our financial condition and results of operations for 2021 as compared to 2020 are discussed below.

For a discussion of our financial condition and results of operations for 2020 as compared to 2019, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2020 Annual Report on Form 10-K, except as set forth below.*

We continue to research and develop product candidates for the treatment of serious diseases, including genetic therapies to address the remaining approximately 10% of people with CF, sickle cell disease, beta thalassemia, APOL1-mediated kidney disease, type 1 diabetes, pain, alpha-1 antitrypsin deficiency, Duchenne muscular dystrophy, and myotonic dystrophy type 1.

| *Revenues* | | | In 2021, our net product revenues continued to increase due to the uptake of KAFTRIO in Europe and continued strong performance of TRIKAFTA in the U.S., including the expanded indication of TRIKAFTA for children with CF 6 through 11 years of age. | | |

| *Expenses* | | | Our total R&D and SG&A expenses increased to $3.9 billion as compared to $2.6 billion in 2020 primarily due to a $900.0 million upfront payment we made to CRISPR in connection with an amendment to our CTX001 collaboration. In 2021, cost of sales was 12% of our net product revenues. | | |

| *Cash* | | | Our cash, cash equivalents and marketable securities increased to $7.5 billion as of December 31, 2021 as compared to $6.7 billion as of December 31, 2020 primarily due to our net product revenues and profitability, offset by repurchases of our common stock and the $900.0 million payment to CRISPR. | | |

*Marketed Products*

- In January 2022, the European Commission and the U.K.’s Medicines and Healthcare products Regulatory Agency granted marketing authorization for KAFTRIO in the treatment of children with CF 6 through 11 years of age who have at least one F508del mutation in the CFTR gene.

- TRIKAFTA/KAFTRIO is now approved and reimbursed or accessible in more than 20 countries outside the U.S.

- Our Phase 3 clinical trial evaluating ORKAMBI for the treatment of children with CF 12 through 24 months of age met its primary endpoint.

Based on these data, we plan to submit regulatory filings in the U.S. and Europe in the first and second quarters of 2022, respectively.

Since the beginning of 2021, we have made important progress in activities supporting these programs.

- In the third quarter of 2021, we announced the initiation of Phase 3 clinical trials evaluating a once-daily investigational triple combination of VX-121/tezacaftor/VX-561 (deutivacaftor).

Enrollment is underway in these two Phase 3 clinical trials, and we expect to complete enrollment in both trials by late 2022 or early 2023.

- We are conducting enabling studies for CF messenger ribonucleic acid, or mRNA, therapeutics designed to treat the underlying cause of CF by enabling cells in the lungs to produce functional CFTR protein for the treatment of the approximately 10% of people with CF who do not produce any CFTR protein.

We expect to submit an Investigational New Drug Application, or IND, for this program in 2022.

Enrollment is complete in the ongoing clinical trials evaluating CTX001 in severe SCD and TDT.

- Data presented to date support the profile of CTX001 as a potential one-time functional cure for people with severe SCD and TDT.

CTX001 safety data to date is generally consistent with an autologous stem cell transplant and myeloablative conditioning.

We anticipate regulatory submissions of CTX001 in late 2022.

- In December 2021, we announced that patients with APOL1-mediated focal segmental glomerulosclerosis, or FSGS, treated with VX-147, a small molecule inhibitor of APOL1 function, on top of standard of care achieved a statistically significant, substantial and clinically meaningful reduction of proteinuria in a Phase 2 proof-of-concept clinical trial.

We anticipate completing our end of Phase 2 meetings with regulators and advancing VX-147 into pivotal development in people with APOL1-mediated kidney disease, or AMKD, including APOL1-mediated FSGS, in the first quarter of 2022.

- VX-880 is a stem cell-derived, allogeneic, fully differentiated, insulin-secreting islet cell replacement therapy, using standard immunosuppression to protect the implanted cells.

Our Phase 1/2 clinical trial evaluating VX-880 as a potential treatment for type 1 diabetes, or T1D, is ongoing at multiple clinical sites in the U.S. In January 2022, we announced positive Day 150 data for the first T1D patient in this clinical trial, including restoration of islet cell function and rapid improvements in multiple measures.

In this first patient, the safety of VX-880 was generally consistent with the immunosuppressive regimen used in this study.

We will continue to dose patients in 2022.

- We also are pursuing additional programs in T1D, in which these stem cell-derived, fully differentiated, insulin-secreting islet cells are encapsulated and implanted in an immunoprotective device or modified to produce hypoimmune cells.

We are conducting IND-enabling studies for the cells and device program, and we expect to submit an Investigational New Drug Application, or IND, for this program in 2022.

Pain

- Two Phase 2 dose ranging acute pain clinical trials evaluating VX-548, a selective small molecule inhibitor of NaV1.8, are underway; one following bunionectomy surgery and the other following abdominoplasty surgery.

We expect to obtain data from the clinical trials evaluating VX-548 in the first quarter of 2022.

- We plan to advance one or more novel small molecule Z-AAT correctors into the clinic in 2022.

- Pursuant to a collaboration with CRISPR that we amended in 2021, we now lead global development, manufacturing and commercialization of CTX001, with support from CRISPR.

- We entered into research collaborations with Obsidian Therapeutics, Inc., Arbor Biotechnologies, Inc., and Mammoth Biosciences, Inc.

*Our Business Environment*

Our net product revenues come from the sale of our medicines for the treatment of CF.

Our CF strategy involves continuing to develop and obtain approval and reimbursement for treatment regimens that will provide benefits to all people with CF and increasing the number of people with CF eligible and able to receive our medicines, including through label expansions, expanded reimbursement, and the development of new medicines.

We are actively pursuing a pipeline of product candidates for the treatment of serious diseases outside of CF.

This approach includes advancing multiple compounds from each program, spanning multiple modalities, into early clinical trials and evaluating patient data to inform discovery and development of additional compounds, with the goal of bringing first-in-class and best-in-class therapies to patients, and to provide durable clinical and commercial success.

In pursuit of new product candidates and therapies in specialty markets, we invest in research and development.

We are also pursuing genetic therapies to address the remaining 10% of people with CF.

Beyond CF, our small molecule programs include programs focused on developing treatments for alpha-1 antitrypsin, or AAT, deficiency, APOL1-mediated kidney diseases and pain.

We are also focused on developing cell and genetic therapies for various diseases in our pipeline.

In T1D, we are pursuing two programs for the transplant of functional islets into patients: transplantation of islet cells alone, using immunosuppression to protect the implanted cells, and implantation of the islet cells inside a novel immunoprotective device.

In 2020, we continued to advance our cell and genetic therapy pipeline programs through internal research efforts and investing in business development transactions to access emerging technologies.

In 2020, our net product revenues continued to increase due to the approval of TRIKAFTA in late 2019 and uptake of our medicines in ex-U.S. markets following the approval of KAFTRIO and completion of several significant reimbursement agreements.

Our total R&D and SG&A expenses increased from $2.41 billion in 2019 to $2.60 billion in 2020.

- In August, the European Commission granted marketing authorization for KAFTRIO to treat people with CF 12 years of age and older with one *F508del* mutation and one minimal function mutation, or two *F508del* mutations.

- The FDA expanded the eligibility for TRIKAFTA to include people with CF 12 years of age and older with certain mutations that are responsive to TRIKAFTA based on *in vitro* data.

SYMDEKO and KALYDECO also received approvals to include additional responsive mutations in people with CF 6 years of age and older and 4 months of age and older, respectively.

The FDA granted Priority Review of the sNDA.

- The European Commission approved the label extension of SYMKEVI in combination with KALYDECO for the treatment of children with CF 6 years of age and older with two *F508del* mutations or one *F508del* mutation and certain residual function mutations.

- The FDA approved KALYDECO for treatment of infants with CF four months of age and older who have at least one mutation in their CFTR gene that is responsive to KALYDECO.

- The European Commission approved KALYDECO for treatment of infants with CF four months of age and older who have the *R117H* mutation or certain gating mutations.

*•*In December, we and our collaborator, CRISPR, announced positive interim data from 10 people with TDT or SCD treated with CTX001 and that 20 people with severe hemoglobinopathies have been dosed with CTX001 in the ongoing Phase 1/2 clinical trials.

Enrollment and dosing are ongoing, and completion of enrollment in both clinical trials is expected in 2021.

- Enrollment is ongoing in a Phase 2 proof-of-concept clinical trial for the corrector VX-864.

We expect data from this clinical trial in the first half of 2021.

- We discontinued development of VX-814, our first corrector, based on the safety and pharmacokinetic profile of VX-814 observed in a Phase 2 clinical trial.

- Enrollment is ongoing in a Phase 2 proof-of-concept clinical trial designed to evaluate the reduction of proteinuria in people with APOL1-mediated FSGS after treatment with VX-147.

We expect data from this clinical trial in 2021.

- We are developing a cell therapy designed to replace insulin-producing islet cells in patients with T1D.

We are pursuing two programs for the transplant of these functional islets into patients: transplantation of islet cells alone,

using immunosuppression to protect the implanted cells, and implantation of the islet cells inside a novel immunoprotective device.

- In January 2021, the FDA cleared our IND for VX-880, the islet cells alone program.

We expect to initiate a Phase 1/2 clinical trial evaluating this program in the first half of 2021.

This clinical trial will involve an infusion of fully differentiated, functional islet cells, and chronic administration of concomitant immunosuppressive therapy, to protect the islet cells from immune rejection.

- We entered into a collaboration with Skyhawk Therapeutics, Inc., or Skyhawk, for the discovery and development of novel small molecules that modulate RNA splicing for the treatment of serious diseases.

- We entered into a new collaboration with Moderna, Inc., or Moderna, aimed at the discovery and development of lipid nanoparticles and mRNAs that can deliver gene-editing therapies to lung cells for the treatment of CF.

*•*We entered into a collaboration with Affinia Therapeutics, Inc., or Affinia, to gain access to a novel library of AAV capsids to support on our ongoing research and development efforts in genetic therapies, including DMD, DM1 and CF.

We continue to monitor the impacts of the COVID-19 global pandemic on our business.

We have adjusted our business operations in response to COVID-19, with a majority of our employees continuing to work remotely.

Currently, all of our research and manufacturing sites are open to essential employees.

To provide a safe working environment for our on-site employees, we have, among other things, limited employee numbers at our open sites and increased safety measures, including at home and on-site testing in the U.S., enhanced cleaning and sanitation protocols, required use of personal protective equipment for all on-site employees, hand sanitation stations throughout our open sites and implementation of various social distancing measures while on-site.

Research

We continue to invest in our research programs and foster scientific innovation in order to identify and develop transformative medicines.

Drug Discovery and Development

Potential drug candidates are subjected to rigorous evaluations, driven in part by stringent regulatory considerations, designed to generate information concerning efficacy, side effects, proper dosage levels and a variety of other physical and chemical characteristics that are important in determining whether a drug candidate should be approved for marketing as a pharmaceutical product.

For example, in October 2020, we discontinued development of VX-814, a

drug candidate for the treatment of AAT, based on the safety and pharmacokinetic profile of VX-814 observed in a Phase 2 clinical trial.

Due to the conservative nature of these instruments, we do not believe that we have [removed: a] material exposure to interest rate risk.

[added: As] of December 31, [removed: 2020,] [added: 2021,] we had no principal or interest outstanding under either of our existing credit facilities.

A portion of our “Interest expense” in [removed: 2021] [added: 2022] will be dependent on whether, and to what extent, we borrow amounts under these existing facilities.

We currently have cash flow hedges for the Euro, British Pound, Canadian [removed: Dollar] [added: Dollar, Swiss Franc] and Australian Dollar related to a portion of our forecasted product revenues that qualify for hedge accounting treatment under U.S. GAAP.

As of December 31, [removed: 2020,] [added: 2021,] we held foreign exchange forward contracts that were designated as cash flow hedges with notional amounts totaling [removed: $1.1] [added: $1.9] billion representing a net [removed: liability] [added: fair value] of [removed: $63.5] [added: $38.2] million recorded on our consolidated balance sheet.

[removed: Assuming that] [added: If] the December 31, [removed: 2020] [added: 2021] exchange rates were to change by a hypothetical 10%, the fair value recorded on our consolidated balance sheet related to our foreign exchange forward contracts that were designated as cash flow hedges as of December 31, [removed: 2020] [added: 2021] would change by approximately [removed: $109.2] [added: $189.3] million.

However, since these contracts hedge a specific portion of our forecasted product revenues denominated in certain foreign currencies, any change in the fair value of these contracts is recorded in “Accumulated other comprehensive [removed: loss”] [added: income (loss)”] on our consolidated balance sheet and is reclassified to earnings in the same periods during which the underlying product revenues affect earnings.

As

Our goal [added: in CF] is to develop treatment regimens that will provide benefits to all people with [removed: cystic fibrosis, or CF,] [added: CF] and will enhance the benefits currently provided to people taking our medicines.

[removed: Our triple combination regimen, TRIKAFTA/KAFTRIO, was approved in 2019 in the United States, or U.S., and in 2020 in the European Union, or E.U.] Collectively, our four medicines are [removed: approved] [added: being used] to treat the majority of the approximately 83,000 people with CF in North America, Europe and Australia.

We are evaluating our [removed: medicines, including our triple combination regimen,] [added: current medicines] in additional patient populations, including younger children, with the goal of having small molecule treatments for [removed: up to] [added: approximately] 90% of people with CF.

Our [removed: goal] [added: strategy] is to [removed: identify] [added: discover] and develop innovative medicines by combining transformative advances in the understanding of human disease [added: biology] and in the science of [removed: therapeutics to advance human health.][added: therapeutics.]

[removed: Our] [added: This] research and early development strategy includes advancing multiple compounds from each program into early clinical trials and evaluating the resulting [added: patient] data to inform [removed: drug] [added: the] discovery and [removed: development,] [added: development of additional compounds,] with the goal of bringing [added: first-in-class and] best-in-class therapies to patients.

[removed: This] [added: Our] strategy and approach [removed: is] [added: are] intended to increase the likelihood of successfully bringing transformative medicines to [removed: patients.][added: patients, and to provide durable clinical and commercial success.]

We expect [added: to have] data from [removed: this] [added: these] clinical [removed: trial] [added: trials] in the first [removed: half] [added: quarter] of [removed: 2021.][added: 2022.]

[added: -] *Sickle [removed: cell disease] [added: Cell Disease] and [removed: transfusion-dependent beta thalassemia.*] [added: Beta Thalassemia.*] We are [removed: co-developing] [added: evaluating in Phase 3 clinical trials] CTX001, an investigational CRISPR/Cas9-based gene-editing therapy for [added: severe] sickle cell disease, or SCD, and transfusion-dependent beta thalassemia, or TDT, with CRISPR Therapeutics AG, or CRISPR.

We are pursuing [removed: two] [added: three] programs for the transplant of functional islets into patients: transplantation of islet cells alone, using immunosuppression to protect the implanted cells, [removed: and] implantation of the islet cells inside a novel immunoprotective [removed: device.][added: device, and]

We plan to continue investing in our research and development programs and fostering scientific innovation by [removed: continuing to identify] [added: identifying] additional [removed: drug] [added: product] candidates through our internal research efforts and investing in business development transactions to access emerging technologies, [removed: drugs] [added: products] and [removed: drug] [added: product] candidates.

CF is a life-shortening genetic disease caused by a defective or missing [removed: CFTR] [added: cystic fibrosis transmembrane conductance regulator, or CFTR,] protein resulting from mutations in the [removed: *CFTR*] [added: CFTR] gene.

To develop CF, children must inherit two defective [removed: *CFTR*] [added: CFTR] genes, which are referred to as alleles; one allele is inherited from each parent.

The vast majority of patients with CF carry at least one [removed: of the two most prevalent mutations, the *F508del* mutation and the *G551D*] [added: F508del] mutation.

The [removed: *F508del*] [added: F508del] mutation results in a defect in the CFTR protein in which the CFTR protein does not reach the surface of the cells in sufficient quantities and does not adequately transport chloride ions.

[removed: Our] CFTR correctors, such as lumacaftor, tezacaftor, and elexacaftor, help CFTR proteins reach the cell surface.

Our [removed: medicines, TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, ORKAMBI and KALYDECO,] [added: medicines] are collectively [removed: approved to treat] [added: being used by] the majority of people with CF in North America, Europe and Australia.

| Product | | | Scientific Name | | | Region/Initial Approval [added: (1)] | | | Indication | | | Eligible Age Group | | |

| [removed: ] [added: ] | | | elexacaftor/tezacaftor/ivacaftor and ivacaftor | | | U.S. (2019) | | | People with CF with (i) at least one [removed: *F508del*] [added: F508del] mutation, or (ii) another mutation that is responsive to elexacaftor/tezacaftor/ivacaftor and ivacaftor | | | [removed: 12] [added: 6] years of age and older | | |

| [removed: ] [added: ] | | | elexacaftor/tezacaftor/ivacaftor and ivacaftor | | | E.U. (2020) | | | People with CF with [removed: (i)] at least one [removed: *F508del*] [added: F508del] mutation [removed: and one minimal function mutation, or (ii) two *F508del* mutations] | | | [removed: 12] [added: 6] years of age and older | | |

| [removed: ] [added: ] | | | tezacaftor/ivacaftor and ivacaftor | | | U.S. (2018) | | | People with CF (i) homozygous for the [removed: *F508del*] [added: F508del] mutation or (ii) with at least one mutation that is responsive to tezacaftor/ivacaftor | | | 6 years of age and older | | |

| [removed: ] [added: ] | | | tezacaftor/ivacaftor | | | E.U. (2018) | | | People with CF (i) homozygous for the [removed: *F508del*] [added: F508del] mutation or (ii) with one copy of the [removed: *F508del*] [added: F508del] mutation and one copy of certain mutations that result in residual CFTR activity | | | 6 years of age and older | | |

| [removed: ] [added: ] | | | lumacaftor/ivacaftor | | | U.S. (2015) | | | People with CF homozygous for the [removed: *F508del*] [added: F508del] mutation | | | 2 years of age and older | | |

| lumacaftor/ivacaftor | | | E.U. (2015) | | | People with CF homozygous for the [removed: *F508del*] [added: F508del] mutation | | | 2 years of age and older | | | | | |

| [removed: ] [added: ] | | | ivacaftor | | | U.S. (2012) | | | People with CF with [removed: *G551D* and other specified mutations] [added: a mutation that is responsive to ivacaftor] | | | 4 months of age and older | | |

| ivacaftor | | | E.U. (2012) | | | People with CF with [removed: *G551D* and other specified] [added: R117H mutation or one of certain gating] mutations | | | 4 months of age and older | | | | | |

In addition to the [added: European Union, or the] E.U. and the [added: United States, or the] U.S., we market our products in additional countries, including the United Kingdom, [added: or the U.K.,] Australia, Switzerland, Israel, and Canada.

- In [removed: August,] [added: January 2022,] the European Commission [added: and the MHRA] granted marketing authorization for KAFTRIO [removed: to treat people] [added: for the treatment of children] with CF [removed: 12] [added: 6 through 11] years of age [removed: and older with] [added: who have at least] one [removed: *F508del*] [added: F508del] mutation [removed: and one minimal function mutation, or two *F508del* mutations.][added: in the CFTR gene.]

- [removed: Swissmedic, the Swiss Agency for Therapeutic Products,] [added: Health Canada] granted marketing authorization [removed: and a reimbursement agreement was reached] for TRIKAFTA [removed: in Switzerland] for [removed: the treatment of] people with CF 12 years of age and older who have [removed: two copies of the *F508del* mutation, or one *F508del* mutation and] [added: at least] one [removed: minimal function] [added: F508del] mutation.

[removed: *CF PIPELINE*][added: CF Pipeline]

[removed: -] We continue to identify and develop additional CFTR modulators with the goal of achieving carrier levels of CFTR activity for [removed: the] [added: approximately] 90% of people with CF who respond to CFTR modulators.

[removed: -] We continue to research genetic therapies, such as messenger ribonucleic acid, or mRNA, and gene-editing approaches, to treat the remaining [added: approximately] 10% of people [added: with CF] who do not make CFTR protein and, as a result, are not [removed: eligible for CFTR modulators.][added: expected to benefit from our small molecule medicines.]

- [removed: We extended] our collaboration with Moderna, Inc., or Moderna, [removed: aimed at] [added: for] the discovery and development of [removed: mRNA therapeutics for the treatment of CF.][added: lipid nanoparticles and mRNAs that can deliver gene-editing therapies.]

In [removed: addition,] [added: 2020,] we entered into a new collaboration with Moderna [removed: for] [added: aimed at] the discovery and development of lipid nanoparticles and mRNAs that can deliver gene-editing therapies to lung cells for the treatment of CF.

We invest in research and development [removed: in order] to discover and develop transformative medicines for people with serious [removed: diseases] [added: diseases,] with a focus on specialty markets.

Our [added: research] strategy is to combine transformative advances in the understanding of human disease [added: biology] and the science of therapeutics [removed: in order] to discover and develop new medicines.

Our approach to drug discovery has been validated through our success in moving novel small molecule [removed: drug] [added: product] candidates into clinical trials and obtaining marketing approvals for TRIKAFTA/KAFTRIO, KALYDECO, [removed: ORKAMBI] [added: ORKAMBI,] and SYMDEKO/SYMKEVI for the treatment of CF and INCIVEK (telaprevir) for the treatment of hepatitis C infection.

In addition, we have achieved clinical [removed: proof of concept for Nav1.8 inhibition in the treatment of three different pain models, and] [added: proof-of-concept] for gene-editing of BCL11A for the treatment of beta thalassemia and [removed: SCD.][added: SCD, for APOL1 inhibition to decrease proteinuria in patients with APOL1-mediated kidney disease, and for NaV1.8 inhibition in the treatment of three different pain models.]

We continue to research and develop small molecule [removed: drug] [added: product] candidates for the treatment of serious diseases, including CF, [removed: AAT deficiency,] APOL1-mediated kidney [removed: diseases,] [added: disease, pain, AATD, DMD] and [removed: pain.][added: DM1.]

Our research and development approach includes advancing multiple [removed: small molecules] [added: candidates] into clinical trials, pursuing multiple modalities and evaluating clinical and non-clinical data to inform drug discovery and development, with the goal of bringing best-in-class therapies to patients.

Over the last several years, we have expanded our capabilities to include additional innovative therapeutic [removed: approaches] [added: modalities] with a focus on cell and genetic therapies, which have the potential to treat, and in some cases, cure diseases by addressing the underlying cause of the disease.

We have multiple approved medicines that treat the underlying cause of cystic fibrosis, or CF, a life-threatening genetic disease, and we have several ongoing clinical and research programs to advance and extend treatment of CF.

Beyond CF, we have a pipeline of investigational therapies in other serious diseases where we are leveraging insight into causal human biology, including sickle cell disease, beta thalassemia, APOL1-mediated kidney disease, type 1 diabetes, pain, alpha-1 antitrypsin deficiency, and muscular dystrophies.

Marketed Products

We are focused on increasing the number of people with CF eligible and able to receive our medicines through label expansions, approval of new medicines, and expanded reimbursement.

We are advancing programs across multiple disease areas and modalities, including:

- *Cystic Fibrosis.* We are evaluating in Phase 3 clinical trials a new, once-daily investigational triple combination of VX-121/tezacaftor/VX-561 (deutivacaftor).

We also are researching genetic therapies and gene-editing approaches to treat the remaining approximately 10% of people with CF who are not expected to benefit from our small molecule medicines.

Enrollment is complete, and we anticipate regulatory submissions for CTX001 in late 2022.

- *APOL1-Mediated Kidney Disease.* Based on positive Phase 2 data for VX-147, our small molecule for the treatment of APOL1-mediated focal segmental glomerulosclerosis, or FSGS, we expect to advance VX-147 into pivotal development in a broader population of people with APOL1-mediated kidney disease, or AMKD, in the first quarter of 2022.

- *Type 1 Diabetes.* We are evaluating VX-880, a stem-cell derived islet cell therapy involving the transplantation of islet cells, for the potential treatment of type 1 diabetes, or T1D, in a Phase 1/2 clinical trial, and recently announced positive Day 150 data for the first T1D patient in this clinical trial.

We will continue to dose patients in 2022.

We also are pursuing additional programs in T1D, in which the implanted islet cells are encapsulated in an immunoprotective device or modified to produce hypoimmune cells.

We are evaluating VX-548, a NaV 1.8 inhibitor, for the non-opioid treatment of acute pain in two Phase 2 clinical trials.

- *Alpha-1 Antitrypsin, or AAT, Deficiency.* We obtained proof-of-mechanism for VX-864 in a Phase 2 study of protein folding correction of the Z-AAT protein.

We plan to advance into the clinic one or more novel small molecule correctors intended to address the lung and liver manifestations of AAT deficiency, or AATD, in 2022.

- *Duchenne muscular dystrophy, or DMD, and myotonic dystrophy type 1, or DM1.* We are focused on advancing gene-editing therapies aimed at treating the underlying cause of DMD and DM1.

We are also exploring potential small molecule approaches to address the underlying causal biology for both DMD and DM1.

- In addition to the clinical stage programs listed above, we have a number of early-stage research programs aimed at other targets that represent the causal human biology of serious diseases.

| (1) At the end of the Brexit transition period on January 1, 2021, the Medicines and Healthcare products Regulatory Agency, or MHRA, in Great Britain approved licenses for supply of each product in England, Scotland and Wales. The existing European Medicines Agency, or EMA, licenses continue to authorize supply in Northern Ireland. | | | | | | | | | | | | | | |

Since the beginning of 2021, events that have resulted from our efforts include:

- The U.S. Food and Drug Administration, or the FDA, approved the use of TRIKAFTA for children with CF 6 through 11 years of age who have at least one F508del mutation or at least one other mutation that is responsive to TRIKAFTA.

Our application for approval of TRIKAFTA for children 6 through 11 years of age has been accepted for priority review by Health Canada.

- TRIKAFTA/KAFTRIO is now approved and reimbursed or accessible in more than 20 countries outside the U.S.

We will

The following chart represents our pipeline programs by disease area, stage of development, and modality, for programs that have lead assets in the clinic.


We have initiated Phase 3 clinical trials evaluating a once-daily investigational triple combination of VX-121/tezacaftor/VX-561 (deutivacaftor).

Clinical and preclinical data indicate that this triple combination has the potential to provide enhanced benefit beyond TRIKAFTA/KAFTRIO for people with CF who have the F508del mutation on at least one allele.

Our Phase 3 program consists of two 52-week clinical trials, which will evaluate the safety and efficacy of the new combination relative to TRIKAFTA in a total of 950 people with CF.

Both clinical trials will measure the regulatory-enabling endpoint of absolute change in ppFEV1, a measure of lung function, that will be analyzed for non-inferiority to TRIKAFTA.

The clinical trials also are designed to assess the absolute change from baseline in ppFEV1 and sweat chloride for superiority to TRIKAFTA.

In collaboration with Moderna, we are developing CF mRNA therapeutics designed to treat the underlying cause of CF for these people by enabling cells in the lungs to produce functional CFTR protein.

We are conducting enabling studies and expect to submit an Investigational New Drug Application, or IND, for this program in 2022.

Data presented to date support the profile of CTX001 as a potential one-time functional cure for people with severe SCD and TDT.

CTX001 safety data to date is generally consistent with an autologous stem cell transplant and myeloablative conditioning.

Enrollment is complete in the ongoing clinical trials evaluating CTX001 in severe SCD and TDT.

We anticipate regulatory submissions of CTX001 in late 2022.

Patients with AMKD inherit two mutations in the APOL1 gene resulting in significant proteinuria, and are characterized by a high risk of progression to end stage renal disease.

Among patients with AMKD are those with the histological finding of FSGS and co-morbidities such as hypertension.

In December 2021, we announced that patients with APOL1-mediated FSGS treated with VX-147 on top of standard of care achieved a statistically significant, substantial, and clinically meaningful reduction of proteinuria in a Phase 2 proof-of-concept clinical trial.

Cystic Fibrosis

We are pursuing genetic therapies to address the remaining 10% of people with CF.

Small Molecule Programs

*Alpha-1 Antitrypsin Deficiency.* We are focused on identifying and developing multiple drug candidates with the potential to increase the levels of functional alpha-1 antitrypsin, or AAT, in the blood, to address the lung and liver manifestations of AAT deficiency.

Enrollment is ongoing in a Phase 2 proof-of-concept trial for VX-864, an investigational small molecule corrector for the treatment of AAT deficiency.

*APOL1-Mediated Kidney Diseases.* We are evaluating inhibitors of APOL1 function to reduce levels of protein in the urine, or proteinuria, in people with serious kidney diseases, including focal segmental glomerulosclerosis, or FSGS, and other APOL1-mediated kidney diseases.

In 2020, we initiated a Phase 2 proof-of-concept clinical trial designed to evaluate the reduction in proteinuria in people with APOL1-mediated FSGS after treatment with VX-147.

Enrollment in this clinical trial is ongoing and we expect data in 2021.

*Pain.* We believe that NaV1.8 inhibitors have the potential to provide an effective non-opioid treatment for pain.

We are advancing a portfolio of NaV1.8 inhibitors through pre-clinical and early clinical development.

Cell and Genetic Therapies

Enrollment and dosing are ongoing in two Phase 1/2 clinical trials to evaluate CTX001 as a potential one-time curative therapy for people with severe SCD and TDT.

In December 2020, we announced positive interim data from 10 people treated with CTX001 and that a total of thirteen people with TDT and seven people with severe SCD have been dosed with CTX001.

We expect to complete enrollment in both clinical trials in 2021.

*Type 1 Diabetes.* In 2019, we acquired Semma Therapeutics, Inc., or Semma, and established preclinical cell therapy programs for type 1 diabetes, or T1D.

The FDA has cleared our Investigational New Drug Application, or IND, for

VX-880, the first program (transplantation of islet cells alone), and we expect to initiate a Phase 1/2 clinical trial evaluating VX-880 in the first half of 2021.

*Duchenne muscular dystrophy, or DMD, and myotonic dystrophy type 1, or DM1.* In 2019, we acquired Exonics Therapeutics, Inc., or Exonics, and expanded our collaboration with CRISPR enabling the establishment of preclinical genetic therapy programs for DMD and DM1.

The *G551D* mutation results in a defect in the CFTR protein in which the defective protein reaches the surface of a cell but does not adequately transport chloride ions across the cell membrane.

Currently, our medicines treat almost half of the people with CF in these geographies.

Since the beginning of 2020, activities in support of these efforts include:

*TRIKAFTA/KAFTRIO*

- The FDA expanded the eligibility for TRIKAFTA to include people with CF 12 years of age and older with certain mutations that are responsive to TRIKAFTA based on *in vitro* data.

- In January 2021, the FDA accepted our supplemental New Drug Application, or sNDA, for TRIKAFTA for the treatment of children 6 to 11 years of age with at least one *F508del* mutation or have certain mutations that are responsive to TRIKAFTA based on *in vitro* data.

The FDA granted Priority Review of the sNDA.

- Health Canada accepted for Priority Review a New Drug Submission for TRIKAFTA for the treatment of people with CF 12 years of age and older.

*SYMDEKO/SYMKEVI*

- The European Commission approved SYMKEVI for the treatment of people with CF 6 years of age and older with two copies of the *F508del* mutation, or one *F508del* mutation and certain residual function mutations.

- The FDA approved SYMDEKO for additional responsive mutations in people with CF 6 years of age and older.

*ORKAMBI*

- We entered into a reimbursement agreement with the Swiss government for ORKAMBI for the treatment of people with CF 2 years of age and older, and for SYMDEKO for the treatment of people 12 years of age and older in Switzerland.

*KALYDECO*

- The FDA approved KALYDECO for treatment of infants with CF four months of age and older who have at least one mutation in their CFTR gene that is responsive to KALYDECO.

- The European Commission approved KALYDECO for treatment of infants with CF four months of age and older who have the *R117H* mutation or certain gating mutations.

- The FDA approved KALYDECO for treatment of infants with CF four months of age and older with additional responsive mutations.

- VX-561, a CFTR potentiator we acquired from Concert Pharmaceuticals, Inc., and VX-121, a CFTR corrector, are being evaluated in Phase 2 clinical development.

- our collaboration with Moderna for the discovery and development of lipid nanoparticles and mRNAs that can deliver gene-editing therapies; and

- our collaboration with Affinia Therapeutics, Inc., or Affinia, to engineer novel adeno-associated virus (AAV) capsids to deliver gene therapies.

The mutations result in a defect in the AAT protein in which the protein does not fold correctly.

in the liver.

For the Fiscal Year Ended December 31, [removed: 2020][added: 2021]

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant based on the closing price on June 30, [removed: 2020] [added: 2021] (the last business day of the registrant’s most recently completed second fiscal quarter of [removed: 2020)] [added: 2021)] was [removed: $74.8] [added: $51.6] billion.

As of January 31, [removed: 2021,] [added: 2022,] the registrant had [removed: 259,960,062] [added: 254,576,691] shares of common stock outstanding.

Portions of the definitive proxy statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders, which we expect to hold on May [removed: 19, 2021,] [added: 18, 2022,] are incorporated by reference into Part III of this Annual Report on Form 10-K.

| [Item [removed: 1.](#ie9507193ff02432287519a21dc937872_13)] [added: 1.](#iaef11c99474e4a9694d7f63d097bb40f_13)] | | | [removed: [Business](#ie9507193ff02432287519a21dc937872_13)] [added: [Business](#iaef11c99474e4a9694d7f63d097bb40f_13)] | | | [removed: [1](#ie9507193ff02432287519a21dc937872_13)] [added: [1](#iaef11c99474e4a9694d7f63d097bb40f_13)] | | |

| | | | [Information about our Executive [removed: Officers](#ie9507193ff02432287519a21dc937872_46)] [added: Officers](#iaef11c99474e4a9694d7f63d097bb40f_46)] | | | [removed: [23](#ie9507193ff02432287519a21dc937872_46)] [added: [24](#iaef11c99474e4a9694d7f63d097bb40f_46)] | | |

| [Item [removed: 1A.](#ie9507193ff02432287519a21dc937872_49)] [added: 1A.](#iaef11c99474e4a9694d7f63d097bb40f_49)] | | | [Risk [removed: Factors](#ie9507193ff02432287519a21dc937872_49)] [added: Factors](#iaef11c99474e4a9694d7f63d097bb40f_49)] | | | [removed: [26](#ie9507193ff02432287519a21dc937872_49)] [added: [27](#iaef11c99474e4a9694d7f63d097bb40f_49)] | | |

| [Item [removed: 1B.](#ie9507193ff02432287519a21dc937872_52)] [added: 1B.](#iaef11c99474e4a9694d7f63d097bb40f_52)] | | | [Unresolved Staff [removed: Comments](#ie9507193ff02432287519a21dc937872_52)] [added: Comments](#iaef11c99474e4a9694d7f63d097bb40f_52)] | | | [removed: [53](#ie9507193ff02432287519a21dc937872_52)] [added: [58](#iaef11c99474e4a9694d7f63d097bb40f_52)] | | |

| [Item [removed: 2.](#ie9507193ff02432287519a21dc937872_55)] [added: 2.](#iaef11c99474e4a9694d7f63d097bb40f_55)] | | | [removed: [Properties](#ie9507193ff02432287519a21dc937872_55)] [added: [Properties](#iaef11c99474e4a9694d7f63d097bb40f_55)] | | | [removed: [53](#ie9507193ff02432287519a21dc937872_55)] [added: [58](#iaef11c99474e4a9694d7f63d097bb40f_55)] | | |

| [Item [removed: 3.](#ie9507193ff02432287519a21dc937872_58)] [added: 3.](#iaef11c99474e4a9694d7f63d097bb40f_58)] | | | [Legal [removed: Proceedings](#ie9507193ff02432287519a21dc937872_58)] [added: Proceedings](#iaef11c99474e4a9694d7f63d097bb40f_58)] | | | [removed: [53](#ie9507193ff02432287519a21dc937872_58)] [added: [58](#iaef11c99474e4a9694d7f63d097bb40f_58)] | | |

| [Item [removed: 4.](#ie9507193ff02432287519a21dc937872_61)] [added: 4.](#iaef11c99474e4a9694d7f63d097bb40f_61)] | | | [Mine Safety [removed: Disclosures](#ie9507193ff02432287519a21dc937872_61)] [added: Disclosures](#iaef11c99474e4a9694d7f63d097bb40f_61)] | | | [removed: [54](#ie9507193ff02432287519a21dc937872_61)] [added: [58](#iaef11c99474e4a9694d7f63d097bb40f_61)] | | |

| [Item [removed: 5.](#ie9507193ff02432287519a21dc937872_67)] [added: 5.](#iaef11c99474e4a9694d7f63d097bb40f_67)] | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ie9507193ff02432287519a21dc937872_67)] [added: Securities](#iaef11c99474e4a9694d7f63d097bb40f_67)] | | | [removed: [55](#ie9507193ff02432287519a21dc937872_67)] [added: [59](#iaef11c99474e4a9694d7f63d097bb40f_67)] | | |

| [Item [removed: 7.](#ie9507193ff02432287519a21dc937872_73)] [added: 7.](#iaef11c99474e4a9694d7f63d097bb40f_73)] | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ie9507193ff02432287519a21dc937872_73)] [added: Operations](#iaef11c99474e4a9694d7f63d097bb40f_73)] | | | [removed: [58](#ie9507193ff02432287519a21dc937872_73)] [added: [61](#iaef11c99474e4a9694d7f63d097bb40f_73)] | | |

| [Item [removed: 7A.](#ie9507193ff02432287519a21dc937872_91)] [added: 7A.](#iaef11c99474e4a9694d7f63d097bb40f_91)] | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#ie9507193ff02432287519a21dc937872_91)] [added: Risk](#iaef11c99474e4a9694d7f63d097bb40f_91)] | | | [removed: [75](#ie9507193ff02432287519a21dc937872_91)] [added: [77](#iaef11c99474e4a9694d7f63d097bb40f_91)] | | |

| [Item [removed: 8.](#ie9507193ff02432287519a21dc937872_94)] [added: 8.](#iaef11c99474e4a9694d7f63d097bb40f_94)] | | | [Financial Statements and Supplementary [removed: Data](#ie9507193ff02432287519a21dc937872_94)] [added: Data](#iaef11c99474e4a9694d7f63d097bb40f_94)] | | | [removed: [76](#ie9507193ff02432287519a21dc937872_94)] [added: [78](#iaef11c99474e4a9694d7f63d097bb40f_94)] | | |

| [Item [removed: 9.](#ie9507193ff02432287519a21dc937872_97)] [added: 9.](#iaef11c99474e4a9694d7f63d097bb40f_97)] | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ie9507193ff02432287519a21dc937872_97)] [added: Disclosure](#iaef11c99474e4a9694d7f63d097bb40f_97)] | | | [removed: [76](#ie9507193ff02432287519a21dc937872_97)] [added: [78](#iaef11c99474e4a9694d7f63d097bb40f_97)] | | |

| [Item [removed: 9A.](#ie9507193ff02432287519a21dc937872_100)] [added: 9A.](#iaef11c99474e4a9694d7f63d097bb40f_100)] | | | [Controls and [removed: Procedures](#ie9507193ff02432287519a21dc937872_100)] [added: Procedures](#iaef11c99474e4a9694d7f63d097bb40f_100)] | | | [removed: [77](#ie9507193ff02432287519a21dc937872_100)] [added: [78](#iaef11c99474e4a9694d7f63d097bb40f_100)] | | |

| [Item [removed: 9B.](#ie9507193ff02432287519a21dc937872_2362)] [added: 9B.](#iaef11c99474e4a9694d7f63d097bb40f_103)] | | | [Other [removed: Information](#ie9507193ff02432287519a21dc937872_2362)] [added: Information](#iaef11c99474e4a9694d7f63d097bb40f_103)] | | | [removed: [79](#ie9507193ff02432287519a21dc937872_2362)] [added: [80](#iaef11c99474e4a9694d7f63d097bb40f_103)] | | |

| [PART [removed: III](#ie9507193ff02432287519a21dc937872_106)] [added: III](#iaef11c99474e4a9694d7f63d097bb40f_106)] | | | | | | | | |

| [Item [removed: 10.](#ie9507193ff02432287519a21dc937872_109)] [added: 10.](#iaef11c99474e4a9694d7f63d097bb40f_109)] | | | [Directors, Executive Officers and Corporate [removed: Governance](#ie9507193ff02432287519a21dc937872_109)] [added: Governance](#iaef11c99474e4a9694d7f63d097bb40f_109)] | | | [removed: [80](#ie9507193ff02432287519a21dc937872_109)] [added: [81](#iaef11c99474e4a9694d7f63d097bb40f_109)] | | |

| [Item [removed: 11.](#ie9507193ff02432287519a21dc937872_112)] [added: 11.](#iaef11c99474e4a9694d7f63d097bb40f_112)] | | | [Executive [removed: Compensation](#ie9507193ff02432287519a21dc937872_112)] [added: Compensation](#iaef11c99474e4a9694d7f63d097bb40f_112)] | | | [removed: [80](#ie9507193ff02432287519a21dc937872_112)] [added: [81](#iaef11c99474e4a9694d7f63d097bb40f_112)] | | |

| [Item [removed: 12.](#ie9507193ff02432287519a21dc937872_115)] [added: 12.](#iaef11c99474e4a9694d7f63d097bb40f_115)] | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ie9507193ff02432287519a21dc937872_115)] [added: Matters](#iaef11c99474e4a9694d7f63d097bb40f_115)] | | | [removed: [80](#ie9507193ff02432287519a21dc937872_115)] [added: [81](#iaef11c99474e4a9694d7f63d097bb40f_115)] | | |

| [Item [removed: 13.](#ie9507193ff02432287519a21dc937872_118)] [added: 13.](#iaef11c99474e4a9694d7f63d097bb40f_118)] | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#ie9507193ff02432287519a21dc937872_118)] [added: Independence](#iaef11c99474e4a9694d7f63d097bb40f_118)] | | | [removed: [80](#ie9507193ff02432287519a21dc937872_118)] [added: [81](#iaef11c99474e4a9694d7f63d097bb40f_118)] | | |

| [Item [removed: 14.](#ie9507193ff02432287519a21dc937872_121)] [added: 14.](#iaef11c99474e4a9694d7f63d097bb40f_121)] | | | [Principal Accountant Fees and [removed: Services](#ie9507193ff02432287519a21dc937872_121)] [added: Services](#iaef11c99474e4a9694d7f63d097bb40f_121)] | | | [removed: [80](#ie9507193ff02432287519a21dc937872_121)] [added: [81](#iaef11c99474e4a9694d7f63d097bb40f_121)] | | |

| [PART [removed: IV](#ie9507193ff02432287519a21dc937872_124)] [added: IV](#iaef11c99474e4a9694d7f63d097bb40f_124)] | | | | | | | | |

| [Item [removed: 15.](#ie9507193ff02432287519a21dc937872_127)] [added: 15.](#iaef11c99474e4a9694d7f63d097bb40f_127)] | | | [Exhibits and Financial Statement [removed: Schedules](#ie9507193ff02432287519a21dc937872_127)] [added: Schedules](#iaef11c99474e4a9694d7f63d097bb40f_127)] | | | [removed: [81](#ie9507193ff02432287519a21dc937872_127)] [added: [82](#iaef11c99474e4a9694d7f63d097bb40f_127)] | | |

| [Item [removed: 16.](#ie9507193ff02432287519a21dc937872_130)] [added: 16.](#iaef11c99474e4a9694d7f63d097bb40f_130)] | | | [Form 10-K [removed: Summary](#ie9507193ff02432287519a21dc937872_130)] [added: Summary](#iaef11c99474e4a9694d7f63d097bb40f_130)] | | | [removed: [84](#ie9507193ff02432287519a21dc937872_130)] [added: [84](#iaef11c99474e4a9694d7f63d097bb40f_130)] | | |

| | | | [removed: [Signatures](#ie9507193ff02432287519a21dc937872_133)] [added: [Signatures](#iaef11c99474e4a9694d7f63d097bb40f_133)] | | | [removed: [85](#ie9507193ff02432287519a21dc937872_133)] [added: [85](#iaef11c99474e4a9694d7f63d097bb40f_133)] | | |

[removed: “We,” “us,” “Vertex”] [added: “Vertex,” “we,” “us”] and [removed: the “Company”] [added: “our”] as used in this Annual Report on Form 10-K refer to Vertex Pharmaceuticals Incorporated, a Massachusetts corporation, and its subsidiaries.

[removed: “Vertex,”] [added: “VERTEX®,”] “KALYDECO®,” “ORKAMBI®,” “SYMDEKO®,” “SYMKEVI®” and “TRIKAFTA®” are registered trademarks of Vertex.

| [PART I](#iaef11c99474e4a9694d7f63d097bb40f_10) | | | | | | | | |

| [PART II](#iaef11c99474e4a9694d7f63d097bb40f_64) | | | | | | | | |

| [Item 6.](#iaef11c99474e4a9694d7f63d097bb40f_1957) | | | [\[Reserved\]](#iaef11c99474e4a9694d7f63d097bb40f_1957) | | | [60](#iaef11c99474e4a9694d7f63d097bb40f_1957) | | |

| | | | | | | | | |

| [PART I](#ie9507193ff02432287519a21dc937872_10) | | | | | | | | |

| [PART II](#ie9507193ff02432287519a21dc937872_64) | | | | | | | | |

| [Item 6.](#ie9507193ff02432287519a21dc937872_70) | | | [Selected Financial Data](#ie9507193ff02432287519a21dc937872_70) | | | [57](#ie9507193ff02432287519a21dc937872_70) | | |

We did not receive any written comments from the Securities and Exchange Commission prior to the date 180 days before the end of the fiscal year ended December 31, [removed: 2020] [added: 2021] regarding our filings under the Securities Exchange Act of 1934, as amended, that have not been resolved.

These leases commenced in December 2013 and [removed: will] extend until December 2028.

In addition to our corporate headquarters, we lease an aggregate of approximately [removed: 678,000] [added: 728,000] square feet of space globally.

As of January 31, [removed: 2021,] [added: 2022,] there were [removed: 115] [added: 107] holders of record of our common stock.

[removed: ][added: ]

In [removed: July 2019,] [added: June 2021,] our [removed: Board] [added: board] of [removed: Directors] [added: directors] approved a share repurchase program (the [removed: “2019] [added: “2021] Share Repurchase Program”), pursuant to which we were authorized to repurchase up to [removed: $500.0 million] [added: $1.5 billion] of our common stock [removed: between August 1, 2019 and] [added: by] December 31, [removed: 2020.][added: 2022.]

The table set forth below shows repurchases of securities by us during the three months ended December 31, [removed: 2020] [added: 2021] under our [removed: 2019 Share Repurchase Program and our 2020] [added: 2021] Share Repurchase Program.

| Period | | | Total Number of Shares Purchased | | | [added: | | |] Average Price Paid per Share | | | [added: | | |] Total Number of Shares Purchased as Part [removed: of Publicly] [added: of Publicly] Announced Plans or Programs [removed: (3)] [added: (1)] | | | [added: | | |] Approximate dollar value of Shares that May Yet [removed: be Purchased] [added: be Purchased] Under the Plans or Programs [removed: (3)] [added: (1)] | | |

[removed: (3)Under] [added: (1)Under] our [removed: 2020] [added: 2021] Share Repurchase Program, we are authorized to purchase shares from time to time through open market or privately negotiated transactions.

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Oct. 1, 2021 to Oct. 31, 2021 | | | 1,984,142 | | | | | | $ | 180.33 | | | | | 1,984,142 | | | | | | $ | 500,000,086 | |

| Nov. 1, 2021 to Nov. 30, 2021 | | | 1,900 | | | | | | $ | 180.00 | | | | | 1,900 | | | | | | $ | 499,658,094 | |

| Dec. 1, 2021 to Dec. 31, 2021 | | | — | | | | | | $ | — | | | | | — | | | | | | $ | 499,658,094 | |

| Total | | | 1,986,042 | | | | | | $ | 180.33 | | | | | 1,986,042 | | | | | | $ | 499,658,094 | |

As of December 31, 2020, we had repurchased the entire $500.0 million of common stock that was authorized under the 2019 Share Repurchase Program.

In November 2020, our Board of Directors approved a new share repurchase program (the “2020 Share Repurchase Program”), pursuant to which we are authorized to repurchase up to $500.0 million of our common stock by December 31, 2022.

As of December 31, 2020, there was a total of $424.9 million remaining for repurchases under the 2020 Share Repurchase Program.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Oct. 1, 2020 to Oct. 31, 2020 (1) | | | 252,375 | | | $ | 221.90 | | 252,375 | | | $ | — | |

| Nov. 1, 2020 to Nov. 30, 2020 (2) | | | 345,897 | | | $ | 217.08 | | 345,897 | | | $ | 424,912,410 | |

| Dec. 1, 2020 to Dec. 31, 2020 (2) | | | — | | | $ | — | | — | | | $ | 424,912,410 | |

| Total | | | 598,272 | | | $ | 219.12 | | 598,272 | | | $ | 424,912,410 | |

(1)Shares purchased and approximate dollar value of shares that may yet be purchased under our 2019 Share Repurchase Program.

(2)Shares purchased and approximate dollar value of shares that may yet be purchased under our 2020 Share Repurchase Program.

The following unaudited selected consolidated financial data are derived from our audited consolidated financial statements.

These data should be read in conjunction with our audited consolidated financial statements and related notes that are included elsewhere in this Annual Report on Form 10-K and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

| Consolidated Statements of Operations Data: | | | (in thousands, except per share amounts) | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Product revenues, net | | | $ | 6,202,783 | | | | | $ | 4,160,726 | | | | | $ | 3,038,325 | | | | | $ | 2,165,480 | | | | | $ | 1,683,632 | |

| Collaborative and royalty revenues | | | 2,900 | | | | | | 2,095 | | | | | | 9,272 | | | | | | 323,172 | | | | | | 18,545 | | |

| Total revenues | | | 6,205,683 | | | | | | 4,162,821 | | | | | | 3,047,597 | | | | | | 2,488,652 | | | | | | 1,702,177 | | |

| Total costs and expenses (1) | | | 3,349,393 | | | | | | 2,965,255 | | | | | | 2,412,447 | | | | | | 2,365,409 | | | | | | 1,692,241 | | |

| Provision for (benefit from) income taxes (2) | | | 405,151 | | | | | | 218,109 | | | | | | (1,486,862) | | | | | | (107,324) | | | | | | 16,665 | | |

| Net income (loss) attributable to Vertex | | | $ | 2,711,647 | | | | | $ | 1,176,810 | | | | | $ | 2,096,896 | | | | | $ | 263,484 | | | | | $ | (112,052) | |

| Diluted income (loss) per share attributable to Vertex common shareholders | | | $ | 10.29 | | | | | $ | 4.51 | | | | | $ | 8.09 | | | | | $ | 1.04 | | | | | $ | (0.46) | |

| Shares used in per diluted share calculations | | | 263,396 | | | | | | 260,673 | | | | | | 259,185 | | | | | | 253,225 | | | | | | 244,685 | | |

| | | | As of December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Consolidated Balance Sheet Data: | | | (in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Cash, cash equivalents and marketable securities | | | $ | 6,658,897 | | | | | $ | 3,808,294 | | | | | $ | 3,168,242 | | | | | $ | 2,088,666 | | | | | $ | 1,434,557 | |

| Deferred tax assets (2) | | | 882,779 | | | | | | 1,190,815 | | | | | | 1,499,672 | | | | | | — | | | | | | — | | |

| Total assets | | | 11,751,808 | | | | | | 8,318,465 | | | | | | 6,245,898 | | | | | | 3,546,014 | | | | | | 2,896,787 | | |

| Total current liabilities | | | 1,877,533 | | | | | | 1,334,827 | | | | | | 1,120,290 | | | | | | 807,260 | | | | | | 792,537 | | |

| Long-term finance leases | | | 539,042 | | | | | | 538,576 | | | | | | 581,550 | | | | | | 583,902 | | | | | | 521,335 | | |

| Other long-term liabilities | | | 648,418 | | | | | | 359,818 | | | | | | 108,853 | | | | | | 112,546 | | | | | | 244,724 | | |

| Total shareholders’ equity | | | 8,686,815 | | | | | | 6,085,244 | | | | | | 4,435.203 | | | | | | 2,042,306 | | | | | | 1,338,191 | | |

(1) Total costs and expenses included (i) in 2017, an intangible asset impairment charge of $255.3 million, and (ii) in 2020, 2019, 2018 and 2017, collaborative license and asset acquisition expenses of $184.6 million, $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 2020 and 2019, we began recording a provision for income taxes on our pre-tax income approximating statutory rates.

In 2020, our provision for income taxes included discrete tax benefits associated with the $209.0 million transfer of intellectual property rights to the U.K., the write-off of a long-term intercompany receivable, and an increase in the U.K.’s corporate tax rate.

See Note O, “Income Taxes.” In 2017, we recorded a benefit from income taxes related to the impairment of an intangible asset.

The information required by this Item 8 is contained on pages F-1 through [removed: F-49] [added: F-45] of this Annual Report on Form 10-K.

(1) Evaluation of Disclosure Controls and Procedures. [removed: The Company’s] [added: Our] chief executive officer and chief financial officer, after evaluating the effectiveness of [removed: the Company’s] [added: our] disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Annual Report on Form 10-K, have concluded that, based on such evaluation, [removed: the Company’s] [added: our] disclosure controls and procedures were effective.

In designing and evaluating the disclosure controls and procedures, [removed: the Company’s] management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and [removed: the Company’s] management necessarily was required to apply [removed: its] [added: our] judgment in evaluating the cost-benefit relationship of possible controls and procedures.

(2) Management’s Annual Report on Internal Control Over Financial Reporting. [removed: The management of the Company] [added: Management] is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined in Rule 13a-15(f) and Rule 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, [removed: the Company’s] [added: our] principal executive and principal financial officers and effected by [removed: the Company’s] [added: our] board of directors, management and other personnel, 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.

[removed: The Company’s] [added: Our] internal control over financial reporting [removed: includes] [added: include] those policies and procedures that:

- pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of [removed: the assets of the Company;][added: our assets;]

- provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that [added: our] receipts and expenditures [removed: of the Company] are being made only in accordance with authorizations of management and [removed: directors of the Company;] [added: our directors;] and

- provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of [removed: the Company’s] [added: our] assets that could have a material effect on the financial statements.

[removed: The Company’s management] [added: Management] assessed the effectiveness of [removed: the Company’s] [added: our] internal control over financial reporting as of December 31, [removed: 2020.][added: 2021.]

In making this assessment, [removed: it] [added: we] used the criteria set forth in the *Internal Control—Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on [removed: its] [added: our] assessment, [removed: the Company’s] management has concluded that, as of December 31, [removed: 2020, the Company’s] [added: 2021, our] internal control over financial reporting is effective based on those criteria.

[removed: The Company’s] [added: Our] independent registered public accounting firm, Ernst & Young LLP, issued an attestation report on [removed: the Company’s] [added: our] internal control over financial reporting.

(3) Changes in Internal Controls. During the quarter ended December 31, [removed: 2020,] [added: 2021,] there were no changes in [removed: the Company’s] [added: our] internal control over financial reporting that materially affected, or are reasonably likely to materially affect, [removed: the Company’s] [added: our] internal control over financial reporting.

We have audited Vertex Pharmaceuticals Incorporated’s internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Vertex Pharmaceuticals Incorporated (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the [removed: 2020] [added: 2021] consolidated financial statements of the Company and our report dated February [removed: 11, 2021,] [added: 9, 2022,] expressed an unqualified opinion thereon.

February 9, 2022

February 11, 2021

Portions of our definitive Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Shareholders, or [removed: 2021] [added: 2022] Proxy Statement, are incorporated by reference into this Part III of our Annual Report on Form 10-K.

On February 7, 2022, the Company entered into an amendment to Dr. Jeffrey Leiden’s employment agreement, which was scheduled to expire on March 31, 2023.

Among other things, the amendment extends the term for one year through March 31, 2024 and provides that Dr. Leiden’s equity compensation during the final year of the amended employment agreement will be equivalent to his equity compensation in the preceding year.

The foregoing description of the amendment to Dr. Leiden’s employment agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such agreement, which is filed as Exhibit 10.24 to this Annual Report on Form 10-K and incorporated by reference herein.

Michael Parini, one of our current executive officers, has informed us that he will be leaving his position at our company effective March 1, 2021.

Stuart Arbuckle, one of our current executive officers, will assume additional responsibilities and be appointed to the position of EVP and Chief Commercial and Operations Officer, effective March 1, 2021.

Additional information regarding Mr. Arbuckle and Mr. Parini is provided in Part I, Item 1 of this Annual Report on Form 10-K.

The information regarding directors required by this Item 10 will be included in our [removed: 2021] [added: 2022] Proxy Statement and is incorporated herein by reference.

We expect this information to be provided under “Election of Directors,” “Corporate Governance and Risk Management,” “Shareholder Proposals for the [removed: 2021] [added: 2022] Annual Meeting and Nominations for Director,” “Delinquent Section 16(a) Reports” and “Code of Conduct.” The information regarding executive officers required by this Item 10 is included in Part I of this Annual Report on Form 10-K.

The information required by this Item 11 will be included in the [removed: 2021] [added: 2022] Proxy Statement and is incorporated herein by reference.

The information required by this Item 12 will be included in the [removed: 2021] [added: 2022] Proxy Statement and is incorporated herein by reference.

The information required by this Item 13 will be included in the [removed: 2021] [added: 2022] Proxy Statement and is incorporated herein by reference.

The information required by this Item 14 will be included in the [removed: 2021] [added: 2022] Proxy Statement and is incorporated herein by reference.

| Report of Independent Registered Public Accounting Firm [added: (PCAOB ID: 42)] | | | [removed: F-[1](#ie9507193ff02432287519a21dc937872_136)] [added: F-[1](#iaef11c99474e4a9694d7f63d097bb40f_136)] | | |

| Consolidated Statements of Operations for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] | | | [removed: F-[3](#ie9507193ff02432287519a21dc937872_139)] [added: F-[3](#iaef11c99474e4a9694d7f63d097bb40f_139)] | | |

| Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] | | | [removed: F-[4](#ie9507193ff02432287519a21dc937872_142)] [added: F-[4](#iaef11c99474e4a9694d7f63d097bb40f_142)] | | |

| Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] | | | [removed: F-[5](#ie9507193ff02432287519a21dc937872_148)] [added: F-[5](#iaef11c99474e4a9694d7f63d097bb40f_145)] | | |

| Consolidated Statements of Shareholders’ Equity [removed: and Noncontrolling Interest] for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] | | | [removed: F-[6](#ie9507193ff02432287519a21dc937872_154)] [added: F-[6](#iaef11c99474e4a9694d7f63d097bb40f_148)] | | |

| Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019] | | | [removed: F-[7](#ie9507193ff02432287519a21dc937872_157)] [added: F-[7](#iaef11c99474e4a9694d7f63d097bb40f_151)] | | |

| Notes to Consolidated Financial Statements | | | [removed: F-[8](#ie9507193ff02432287519a21dc937872_160)] [added: F-[8](#iaef11c99474e4a9694d7f63d097bb40f_157)] | | |

| Exhibit Number | | | Exhibit Description | | | Filed with this report | | | Incorporated by Reference herein from—Form or Schedule | | | Filing Date/ Period Covered | | | SEC [removed: File/Reg. Number] [added: File/Reg. Number] | | |

| 2.1 | | | [Agreement and Plan of Merger, dated as of [removed: August 30,] [added: June 6,] 2019, [added: among Vertex Pharmaceuticals Incorporated, VXP Merger Sub, Inc., Exonics Therapeutics, Inc. and Shareholder Representative Services LLC, solely in its Capacity as Shareholders’ Representative, as amended] by [added: the Amendment to Agreement] and [added: Plan of Merger, dated as of June 12, 2019,] among Vertex Pharmaceuticals Incorporated, [removed: Vertex Disc] [added: VXP Merger Sub,] Inc., [removed: Semma] [added: Exonics] Therapeutics, [removed: Inc.,] [added: Inc.] and Shareholder Representative Services LLC, solely in its [removed: capacity] [added: Capacity] as [removed: agent for the Equityholders.†](http://www.sec.gov/Archives/edgar/data/875320/000087532019000057/a2019q310-qexhibit21.htm)] [added: Shareholders’ Representative.†](http://www.sec.gov/Archives/edgar/data/875320/000087532019000037/a2019q210-qexhibit101.htm)] | | | | | | 10-Q (Exhibit [removed: 2.1)] [added: 10.1)] | | | [removed: October 31,] [added: August 1,] 2019 | | | 000-19319 | | |

| 4.1 | | | [removed: [Specimen](http://www.sec.gov/Archives/edgar/data/875320/000087532018000009/a10k2017exhibit41.htm) [S](http://www.sec.gov/Archives/edgar/data/875320/000087532018000009/a10k2017exhibit41.htm)[tock](http://www.sec.gov/Archives/edgar/data/875320/000087532018000009/a10k2017exhibit41.htm) [C](http://www.sec.gov/Archives/edgar/data/875320/000087532018000009/a10k2017exhibit41.htm)[ertificate.](http://www.sec.gov/Archives/edgar/data/875320/000087532018000009/a10k2017exhibit41.htm)] [added: [Specimen Stock Certificate.](http://www.sec.gov/Archives/edgar/data/875320/000087532018000009/a10k2017exhibit41.htm)] | | | | | | 10-K (Exhibit 4.1) | | | February 15, 2018 | | | 000-19319 | | |

| 10.1 | | | [Research, Development and Commercialization Agreement, dated as of May 24, 2004, between Vertex Pharmaceuticals Incorporated and Cystic Fibrosis Foundation Therapeutics [removed: Incorporated.†](http://www.sec.gov/Archives/edgar/data/875320/000110465911047955/a11-13893_4ex10d2.htm)] [added: Incorporated.†](https://www.sec.gov/Archives/edgar/data/0000875320/000087532021000033/a2021q310-qexhibit101.htm)] | | | | | | [removed: 10-Q/A] [added: 10-Q] (Exhibit [removed: 10.2)] [added: 10.1)] | | | [removed: August 19, 2011] [added: November 3, 2021] | | | 000-19319 | | |

| 10.2 | | | [Amendment No. 1 to Research, Development and Commercialization Agreement, dated as of January 6, 2006, between Vertex Pharmaceuticals Incorporated and Cystic Fibrosis Foundation Therapeutics [removed: Incorporated.†](http://www.sec.gov/Archives/edgar/data/875320/000104746906003585/a2167642zex-10_9.htm)] [added: Incorporated.†](https://www.sec.gov/Archives/edgar/data/0000875320/000087532021000033/a2021q310-qexhibit102.htm)] | | | | | | [removed: 10-K] [added: 10-Q] (Exhibit [removed: 10.9)] [added: 10.2)] | | | [removed: March 16, 2006] [added: November 3, 2021] | | | 000-19319 | | |

| 10.4 | | | [Amendment No. 5 to Research, Development and Commercialization Agreement, effective as of April 1, 2011, between Vertex Pharmaceuticals Incorporated and Cystic Fibrosis Foundation Therapeutics [removed: Incorporated.†](http://www.sec.gov/Archives/edgar/data/875320/000104746911007153/a2205008zex-10_3.htm)] [added: Incorporated.†](https://www.sec.gov/Archives/edgar/data/0000875320/000087532021000033/a2021q310-qexhibit103.htm)] | | | | | | 10-Q (Exhibit 10.3) | | | [removed: August 9, 2011] [added: November 3, 2021] | | | 000-19319 | | |

| 10.5 | | | [Amendment No. 7 to Research, Development and Commercialization Agreement, dated October 13, 2016, between Vertex Pharmaceuticals Incorporated and Cystic Fibrosis Foundation Therapeutics [removed: Incorporated.](http://www.sec.gov/Archives/edgar/data/875320/000087532017000017/a10k_2016-exhibit105.htm)[†](http://www.sec.gov/Archives/edgar/data/875320/000087532017000017/a10k_2016-exhibit105.htm)] [added: Incorporated.†](https://www.sec.gov/Archives/edgar/data/0000875320/000087532021000033/a2021q310-qexhibit104.htm)] | | | | | | [removed: 10-K] [added: 10-Q] (Exhibit [removed: 10.05)] [added: 10.4)] | | | [removed: February 23, 2017] [added: November 3, 2021] | | | 000-19319 | | |

| 10.6 | | | [removed: [Joint] [added: [Amended and Restated Joint] Development and Commercialization Agreement, dated [removed: December 12, 2017,] [added: April 16, 2021,] between Vertex Pharmaceuticals Incorporated, Vertex Pharmaceuticals (Europe) Limited and CRISPR Therapeutics AG, CRISPR Therapeutics Limited, CRISPR Therapeutics, [removed: Inc.](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit106.htm)[,] [added: Inc.,] TRACR Hematology [removed: Ltd.](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit106.htm)[†](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit106.htm)] [added: Ltd.†](https://www.sec.gov/Archives/edgar/data/0000875320/000087532021000027/a2021q210-qexhibit101.htm)] | | | [removed: X] | | | [added: 10-Q (Exhibit 10.1)] | | | [added: July 30, 2021] | | | [added: 000-19319] | | |

| 10.7 | | | [Lease, dated May 5, 2011, between Fifty Northern Avenue LLC and Vertex Pharmaceuticals [removed: Incorporated.†](http://www.sec.gov/Archives/edgar/data/875320/000104746911007153/a2205008zex-10_4.htm)] [added: Incorporated.†](https://www.sec.gov/Archives/edgar/data/0000875320/000087532021000027/a2021q210-qexhibit102.htm)] | | | | | | 10-Q (Exhibit [removed: 10.4)] [added: 10.2)] | | | [removed: August 9, 2011] [added: July 30, 2021] | | | 000-19319 | | |

| 10.8 | | | [Lease, dated May 5, 2011, between Eleven Fan Pier Boulevard LLC and Vertex Pharmaceuticals [removed: Incorporated.†](http://www.sec.gov/Archives/edgar/data/875320/000104746911007153/a2205008zex-10_5.htm)] [added: Incorporated.†](https://www.sec.gov/Archives/edgar/data/0000875320/000087532021000027/a2021q210-qexhibit103.htm)] | | | | | | 10-Q (Exhibit [removed: 10.5)] [added: 10.3)] | | | [removed: August 9, 2011] [added: July 30, 2021] | | | 000-19319 | | |

| 10.10 | | | [First Amendment to Credit Agreement, dated as of December 29, 2020, by and among Vertex Pharmaceuticals [removed: Incorporated,](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1010.htm) [Bank] [added: Incorporated, Bank] of America, [removed: N.](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1010.htm)[A](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1010.htm)[.] [added: N.A.] and the other [removed: lender](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1010.htm) [part](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1010.htm)[ies](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1010.htm) [there](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1010.htm)[t](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1010.htm)[o.](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1010.htm)] [added: lender parties thereto.](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1010.htm)] | | | [removed: X] | | | [added: 10-K (Exhibit 10.10)] | | | [added: February 11, 2021] | | | [added: 000-19319] | | |

| 10.13 | | | [Form of Stock Option Agreement under Amended and Restated 2006 Stock and Option [removed: Plan (granted] [added: Plan](http://www.sec.gov/Archives/edgar/data/875320/000110465906035103/a06-11895_1ex10d2.htm) [(granted] prior to July 30, 2013).*](http://www.sec.gov/Archives/edgar/data/875320/000110465906035103/a06-11895_1ex10d2.htm) | | | | | | 8-K (Exhibit 10.2) | | | May 15, 2006 | | | 000-19319 | | |

| 10.23 | | | [Employment Agreement, [removed: dated](http://www.sec.gov/Archives/edgar/data/875320/000087532020000011/employmentagreement.htm) [as](http://www.sec.gov/Archives/edgar/data/875320/000087532020000011/employmentagreement.htm) [of] [added: dated as of] April 1, [removed: 2020,](http://www.sec.gov/Archives/edgar/data/875320/000087532020000011/employmentagreement.htm) [by] [added: 2020, by] and between Vertex Pharmaceuticals Incorporated and Jeffrey M. Leiden, M.D., [removed: Ph.D](http://www.sec.gov/Archives/edgar/data/875320/000087532020000011/employmentagreement.htm)[.](http://www.sec.gov/Archives/edgar/data/875320/000087532020000011/employmentagreement.htm)[*](http://www.sec.gov/Archives/edgar/data/875320/000087532020000011/employmentagreement.htm)] [added: Ph.D.*](http://www.sec.gov/Archives/edgar/data/875320/000087532020000011/employmentagreement.htm)] | | | | | | 8-K (Exhibit 10.1) | | | April 1, 2020 | | | 000-19319 | | |

| [removed: 10.24] [added: 10.25] | | | [Employee Non-disclosure, Non-competition and Inventions Agreement between Jeffrey M. Leiden and [removed: Vertex,] [added: Vertex](http://www.sec.gov/Archives/edgar/data/875320/000104746912001298/a2206536zex-10_35.htm) [Pharmaceuticals Incorporated](http://www.sec.gov/Archives/edgar/data/875320/000104746912001298/a2206536zex-10_35.htm)[,] dated December 14, 2011.*](http://www.sec.gov/Archives/edgar/data/875320/000104746912001298/a2206536zex-10_35.htm) | | | | | | 10-K (Exhibit 10.35) | | | February 22, 2012 | | | 000-19319 | | |

| [removed: 10.25] [added: 10.26] | | | [Employment Agreement, dated as of July 24, 2019, between Vertex Pharmaceuticals Incorporated and Reshma Kewalramani.*](http://www.sec.gov/Archives/edgar/data/875320/000087532019000026/executiveemploymentagreeme.htm) | | | | | | 8-K (Exhibit 10.1) | | | July 25, 2019 | | | 000-19319 | | |

| [removed: 10.26] [added: 10.27] | | | [Change of Control Agreement, dated as of July 24, 2019, between Vertex Pharmaceuticals Incorporated and Reshma Kewalramani.*](http://www.sec.gov/Archives/edgar/data/875320/000087532019000026/changeofcontrol-rk1.htm) | | | | | | 8-K (Exhibit 10.2) | | | July 25, 2019 | | | 000-19319 | | |

| [removed: 10.27] [added: 10.28] | | | [Employment Agreement, dated as of August 27, 2012, between Vertex Pharmaceuticals Incorporated and Stuart Arbuckle.*](http://www.sec.gov/Archives/edgar/data/875320/000104746912010125/a2211595zex-10_1.htm) | | | | | | 10-Q (Exhibit 10.1) | | | November 6, 2012 | | | 000-19319 | | |

| [removed: 10.28] [added: 10.29] | | | [Change of Control Agreement, dated as of August 27, 2012, between Vertex Pharmaceuticals Incorporated and Stuart Arbuckle.*](http://www.sec.gov/Archives/edgar/data/875320/000104746912010125/a2211595zex-10_2.htm) | | | | | | 10-Q (Exhibit 10.2) | | | November 6, 2012 | | | 000-19319 | | |

| [removed: 10.29] [added: 10.30] | | | [Employment Agreement, dated as of December 12, 2014, between Vertex Pharmaceuticals Incorporated and David Altshuler.*](http://www.sec.gov/Archives/edgar/data/875320/000087532016000067/vrtx10-k_2015xexhibit1034.htm) | | | | | | 10-K (Exhibit 10.34) | | | February 16, 2016 | | | 000-19319 | | |

| [removed: 10.30] [added: 10.31] | | | [Change of Control Agreement, dated as of December 10, 2014, between Vertex Pharmaceuticals Incorporated and David Altshuler.*](http://www.sec.gov/Archives/edgar/data/875320/000087532016000067/vrtx10-k2015xexhibit1035.htm) | | | | | | 10-K (Exhibit 10.35) | | | February 16, 2016 | | | 000-19319 | | |

| [removed: 10.31] [added: 10.32] | | | [removed: [Employment] [added: [Third Amended and Restated Employment] Agreement, dated as of [removed: November 14, 2015,] [added: February 26, 2013,] between Vertex Pharmaceuticals Incorporated and [removed: Michael Parini.*](http://www.sec.gov/Archives/edgar/data/875320/000087532017000017/a10k_2016-exhibit1040.htm)] [added: Amit Sachdev.*](http://www.sec.gov/Archives/edgar/data/875320/000087532017000017/a10k_2016-exhibit1042.htm)] | | | | | | 10-K (Exhibit [removed: 10.40)] [added: 10.42)] | | | February 23, 2017 | | | 000-19319 | | |

| [removed: 10.32] [added: 10.33] | | | [removed: [Change] [added: [Third Amended and Restated Change] of Control Agreement, dated as of [removed: November 9, 2015,] [added: February 26, 2013,] between Vertex Pharmaceuticals Incorporated and [removed: Michael Parini.*](http://www.sec.gov/Archives/edgar/data/875320/000087532017000017/a10k_2016-exhibit1041.htm)] [added: Amit Sachdev.*](http://www.sec.gov/Archives/edgar/data/875320/000087532017000017/a10k_2016-exhibit1043.htm)] | | | | | | 10-K (Exhibit [removed: 10.41)] [added: 10.43)] | | | February 23, 2017 | | | 000-19319 | | |

| [removed: 10.33] [added: 10.34] | | | [removed: [Third Amended and Restated Employment] [added: [Employment] Agreement, dated [removed: as of February 26, 2013,] [added: March 28, 2019, by and] between Vertex Pharmaceuticals Incorporated and [removed: Amit Sachdev.*](http://www.sec.gov/Archives/edgar/data/875320/000087532017000017/a10k_2016-exhibit1042.htm)] [added: Charles F. Wagner, Jr.*](http://www.sec.gov/Archives/edgar/data/875320/000087532019000019/a2019q110-q_exhibit101.htm)] | | | | | | [removed: 10-K] [added: 10-Q] (Exhibit [removed: 10.42)] [added: 10.1)] | | | [removed: February 23, 2017] [added: May 1, 2019] | | | 000-19319 | | |

| [removed: 10.34] [added: 10.35] | | | [removed: [Third Amended and Restated Change] [added: [Change] of Control Agreement, dated as of [removed: February 26, 2013,] [added: March 28, 2019, by and] between Vertex Pharmaceuticals Incorporated and [removed: Amit Sachdev.*](http://www.sec.gov/Archives/edgar/data/875320/000087532017000017/a10k_2016-exhibit1043.htm)] [added: Charles F. Wagner, Jr.*](http://www.sec.gov/Archives/edgar/data/875320/000087532019000019/a2019q110-qexhibit102.htm)] | | | | | | [removed: 10-K] [added: 10-Q] (Exhibit [removed: 10.43)] [added: 10.2)] | | | [removed: February 23, 2017] [added: May 1, 2019] | | | 000-19319 | | |

| 10.37 | | | [removed: [Amended and Restated Change] [added: [Change] of Control Agreement, dated [removed: as of May 18, 2012,] [added: August 1, 2020, by and] between Vertex Pharmaceuticals Incorporated and [removed: Paul M. Silva.*](https://www.sec.gov/Archives/edgar/data/875320/000087532020000007/a10k2019-exhibit1035.htm)] [added: Nia Tatsis](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1037.htm)[.*](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1037.htm)] | | | [added: X] | | | [removed: 10-K (Exhibit 10.35)] | | | [removed: February 13, 2020] | | | [removed: 000-19319] | | |

| [removed: 10.39] [added: 10.24] | | | [Amendment No. 1 to [removed: Amended and Restated] Employment [removed: Agreement] [added: Agreement,] between [removed: Ian F. Smith] [added: Jeffrey M. Leiden] and [removed: Vertex Pharmaceuticals Incorporated,] [added: Vertex](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1024.htm) [Pharmaceuticals Incorporated](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1024.htm)[,] dated [removed: December 29, 2008.*](https://www.sec.gov/Archives/edgar/data/875320/000104746909001305/a2190245zex-10_66.htm)] [added: as of February 7, 2022.*](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1024.htm)] | | | [added: X] | | | [removed: 10-K (Exhibit 10.66)] | | | [removed: February 17, 2009] | | | [removed: 000-19319] | | |

| [removed: 10.40] [added: 10.38] | | | [removed: [Vertex Employee] [added: [Vertex](http://www.sec.gov/Archives/edgar/data/875320/000087532018000009/a10k_2017-exhibit1046.htm) [Pharmaceuticals](http://www.sec.gov/Archives/edgar/data/875320/000087532018000009/a10k_2017-exhibit1046.htm) [Employee] Compensation Plan.*](http://www.sec.gov/Archives/edgar/data/875320/000087532018000009/a10k_2017-exhibit1046.htm) | | | | | | 10-K (Exhibit 10.46) | | | February 15, 2018 | | | 000-19319 | | |

| [removed: 10.41] [added: 10.39] | | | [Vertex Pharmaceuticals Non-Employee Board [removed: Compensation.*](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit1041.htm)] [added: Compensation.*](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1039.htm)] | | | X | | | | | | | | | | | |

| 21.1 | | | [Subsidiaries of Vertex Pharmaceuticals [removed: Incorporated.](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit211.htm)] [added: Incorporated.](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit211.htm)] | | | X | | | | | | | | | | | |

| 23.1 | | | [Consent of Independent Registered Public Accounting Firm, Ernst & Young [removed: LLP.](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit231.htm)] [added: LLP.](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit231.htm)] | | | X | | | | | | | | | | | |

| 31.1 | | | [Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit311.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit311.htm)] | | | X | | | | | | | | | | | |

| 31.2 | | | [Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit312.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit312.htm)] | | | X | | | | | | | | | | | |

| 32.1 | | | [Certification of the Chief Executive Officer and the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of [removed: 2002.](https://www.sec.gov/Archives/edgar/data/875320/000087532021000006/a10k_2020-exhibit321.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit321.htm)] | | | X | | | | | | | | | | | |

| Exhibit Number | | | Exhibit Description | | | Filed with this report | | | Incorporated by Reference herein from—Form or Schedule | | | Filing Date/ Period Covered | | | SEC File/Reg. Number | | |

| Exhibit Number | | | Exhibit Description | | | Filed with this report | | | Incorporated by Reference herein from—Form or Schedule | | | Filing Date/ Period Covered | | | SEC File/Reg. Number | | |

| 10.36 | | | [Employment Agreement, dated August 1, 2020, by and between Vertex Pharmaceuticals Incorporated and Nia Tatsis](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1036.htm)[.](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1036.htm)[*](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1036.htm) | | | X | | | | | | | | | | | |

| 2.2 | | | [Agreement and Plan of Merger, dated as of June 6, 2019, among Vertex Pharmaceuticals Incorporated, VXP Merger Sub, Inc., Exonics Therapeutics, Inc. and Shareholder Representative Services LLC, solely in its Capacity as Shareholders’ Representative, as amended by the Amendment to Agreement and Plan of Merger, dated as of June 12, 2019, among Vertex Pharmaceuticals Incorporated, VXP Merger Sub, Inc., Exonics Therapeutics, Inc. and Shareholder Representative Services LLC, solely in its Capacity as Shareholders’ Representative.†](http://www.sec.gov/Archives/edgar/data/875320/000087532019000037/a2019q210-qexhibit101.htm) | | | | | | 10-Q (Exhibit 10.1) | | | August 1, 2019 | | | 000-19319 | | |

| 10.35 | | | [Employment Agreement, dated March 28, 2019, by and between Vertex Pharmaceuticals Incorporated and Charles F. Wagner, Jr.*](http://www.sec.gov/Archives/edgar/data/875320/000087532019000019/a2019q110-q_exhibit101.htm) | | | | | | 10-Q (Exhibit 10.1) | | | May 1, 2019 | | | 000-19319 | | |

| 10.36 | | | [Change of Control Agreement, dated as of March 28, 2019, by and between Vertex Pharmaceuticals Incorporated and Charles F. Wagner, Jr.*](http://www.sec.gov/Archives/edgar/data/875320/000087532019000019/a2019q110-qexhibit102.htm) | | | | | | 10-Q (Exhibit 10.2) | | | May 1, 2019 | | | 000-19319 | | |

| 10.38 | | | [Amended and Restated Employment Agreement, dated as of November 8, 2004, between Vertex Pharmaceuticals Incorporated and Ian F. Smith.*](https://www.sec.gov/Archives/edgar/data/875320/000104746904033612/a2145707zex-10_13.txt) | | | | | | 10-Q (Exhibit 10.13) | | | November 4, 2009 | | | 000-19319 | | |

| February [removed: 11, 2021] [added: 9, 2022] | | | By: | | | /s/ Reshma Kewalramani | | |

| | | | [added: Name] | | | [removed: Name] | | | | | | | | | | | | Title | | | | | | | | | | | | [added: Date] | | | [removed: Date] | | | | | | | | |

| Reshma Kewalramani | | | | | | | | | | | | President, Chief Executive Officer and Director (Principal Executive Officer) | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| Charles F. Wagner, Jr. | | | | | | | | | | | | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| [removed: Paul M. Silva] [added: Kristen C. Ambrose] | | | | | | | | | | | | Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| Jeffrey M. Leiden | | | | | | | | | | | | Executive Chairman | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| Sangeeta N. Bhatia | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| Lloyd Carney | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| Alan Garber | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| Terrence C. Kearney | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| Yuchun Lee | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| Margaret G. McGlynn | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| Diana McKenzie | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

| Bruce I. Sachs | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 11, 2021] [added: 9, 2022] | | | | | | | | | | | | | | |

To the Shareholders and the Board of [added: Directors of] Vertex Pharmaceuticals Incorporated

We have audited the accompanying consolidated balance sheets of Vertex Pharmaceuticals Incorporated (the Company) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of operations, comprehensive income, shareholders’ [removed: equity and noncontrolling interest,] [added: equity,] and cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February [removed: 11, 2021,] [added: 9, 2022,] expressed an unqualified opinion thereon.

| *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 [removed: 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. | | |

(in [removed: thousands,] [added: millions,] except per share amounts)

| | | | [added: 2021 | | | | | |] 2020 | | | | | | 2019 | | | | | | 2018 | | |

| Change in fair value of contingent consideration | | | [removed: 13,100] [added: (3.1)] | | | | | | [removed: 4,459] [added: 13.1] | | | | | | [removed: —] [added: 4.5] | | |

| Net [removed: income:] [added: income] | | | [added: —] | | | | | | [added: —] | | | | | | [added: —] | | | [added: | | | — | | | | | | 1,176.8 | | | | | | 1,176.8 | | |]

| Basic | | | $ | [removed: 10.44] [added: 9.09] | | | | | $ | [removed: 4.58] [added: 10.44] | | | | | $ | [removed: 8.24] [added: 4.58] | |

| Diluted | | | $ | [removed: 10.29] [added: 9.01] | | | | | $ | [removed: 4.51] [added: 10.29] | | | | | $ | [removed: 8.09] [added: 4.51] | |

[added: | | | | | | | | | | | | | | | | | | |] (in thousands) [added: | | | | | | | | |]

| [removed: Changes in other] [added: Other] comprehensive income: | | | | | | | | | | | | | | | | | |

| Unrealized holding (losses) gains on marketable securities, net | | | [removed: (169)] [added: (0.8)] | | | | | | [removed: 1,039] [added: (0.2)] | | | | | | [removed: 58] [added: 1.0] | | |

| Unrealized [removed: (losses)] gains [added: (losses)] on foreign currency forward contracts, net of tax of [added: $(21.8),] $14.3 [removed: million, $7.0 million] and [removed: $(7.1) million,] [added: $7.0,] respectively | | | [removed: (51,555)] [added: 83.2] | | | | | | [removed: (14,003)] [added: (51.6)] | | | | | | [removed: 27,438] [added: (14.0)] | | |

| Foreign currency translation adjustment | | | [removed: (14,783)] [added: 2.0] | | | | | | [removed: 10,332] [added: (14.7)] | | | | | | [removed: 8,855] [added: 10.3] | | |

| Total other comprehensive [removed: (loss)] income [added: (loss)] | | | [removed: (66,507)] [added: 84.4] | | | | | | [removed: (2,632)] [added: (66.5)] | | | | | | [removed: 36,351] [added: (2.7)] | | |

[added: | | | |] (in [removed: thousands,] [added: millions,] except [removed: share and] per share amounts) [added: | | | | | | | | | | | | | | |]

| | | | [added: 2021 | | | | | |] 2020 | | | | | | 2019 | | |

| Prepaid expenses and other current assets | | | [removed: 308,353] [added: 545.8] | | | | | | [removed: 213,515] [added: 308.3] | | |

| Property and equipment, net | | | [removed: 958,534] [added: 1,094.1] | | | | | | [removed: 745,080] [added: 958.5] | | |

| Intangible assets | | | [removed: 400,000] [added: 400.0] | | | | | | [removed: 400,000] [added: 400.0] | | |

| Other [removed: assets] [added: assets:] | | | [removed: 49,394] | | | | | | [removed: 69,381] | | | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Long-term finance lease liabilities | | | [removed: 539,042] [added: 509.8] | | | | | | [removed: 538,576] [added: 539.0] | | |

| Long-term operating lease liabilities | | | [removed: 350,463] [added: 377.4] | | | | | | [removed: 84,292] [added: 350.5] | | |

| Long-term contingent consideration | | | [removed: 189,600] [added: 186.5] | | | | | | [removed: 176,500] [added: 189.6] | | |

| /s/ Kristen C. Ambrose | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

February 9, 2022

| Product revenues, net | | | $ | 7,573.4 | | | | | $ | 6,202.8 | | | | | $ | 4,160.7 | |

| Other revenues | | | 1.0 | | | | | | 2.9 | | | | | | 2.1 | | |

| Total revenues | | | 7,574.4 | | | | | | 6,205.7 | | | | | | 4,162.8 | | |

| Cost of sales | | | 904.2 | | | | | | 736.3 | | | | | | 547.8 | | |

| Research and development expenses | | | 3,051.1 | | | | | | 1,829.5 | | | | | | 1,754.5 | | |

| Selling, general and administrative expenses | | | 840.1 | | | | | | 770.5 | | | | | | 658.5 | | |

| Income from operations | | | 2,782.1 | | | | | | 2,856.3 | | | | | | 1,197.5 | | |

| Interest income | | | 4.9 | | | | | | 22.2 | | | | | | 63.7 | | |

| Interest expense | | | (61.5) | | | | | | (58.2) | | | | | | (58.5) | | |

| Other income, net | | | 4.9 | | | | | | 296.6 | | | | | | 192.2 | | |

| Income before provision for income taxes | | | 2,730.4 | | | | | | 3,116.9 | | | | | | 1,394.9 | | |

| Provision for income taxes | | | 388.3 | | | | | | 405.2 | | | | | | 218.1 | | |

| Basic | | | 257.7 | | | | | | 259.8 | | | | | | 256.7 | | |

| Diluted | | | 259.9 | | | | | | 263.4 | | | | | | 260.7 | | |

(in millions)

| Net income | | | $ | 2,342.1 | | | | | $ | 2,711.7 | | | | | $ | 1,176.8 | |

| Comprehensive income | | | $ | 2,426.5 | | | | | $ | 2,645.2 | | | | | $ | 1,174.1 | |

(in millions, except share data)

| | | | 2021 | | | | | | 2020 | | |

| Cash and cash equivalents | | | $ | 6,795.0 | | | | | $ | 5,988.2 | |

| Marketable securities | | | 729.9 | | | | | | 670.7 | | |

| Accounts receivable, net | | | 1,136.8 | | | | | | 885.4 | | |

| Inventories | | | 353.1 | | | | | | 280.8 | | |

| Total current assets | | | 9,560.6 | | | | | | 8,133.4 | | |

| Goodwill | | | 1,002.2 | | | | | | 1,002.2 | | |

| Deferred tax assets | | | 934.5 | | | | | | 882.8 | | |

| Other assets | | | 110.8 | | | | | | 49.3 | | |

| Total assets | | | $ | 13,432.5 | | | | | $ | 11,751.8 | |

| Accounts payable | | | $ | 195.0 | | | | | $ | 155.1 | |

| Accrued expenses | | | 1,678.6 | | | | | | 1,405.0 | | |

| Total current liabilities | | | 2,142.0 | | | | | | 1,877.5 | | |

| Total liabilities | | | 3,332.5 | | | | | | 3,065.0 | | |

| Additional paid-in capital | | | 6,880.8 | | | | | | 7,894.0 | | |

| Retained earnings | | | 3,200.8 | | | | | | 858.7 | | |

| Total shareholders’ equity | | | 10,100.0 | | | | | | 8,686.8 | | |

(in millions)

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| /s/ Paul M. Silva | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Adoption of New Accounting Standard

ASU No. 2016-02

As discussed in Note A to the consolidated financial statements, the Company changed its method for lease accounting as a result of the adoption of ASU No. 2016-02, Leases (Topic 842), and the related amendments effective January 1, 2019.

February 11, 2021

VERTEX PHARMACEUTICALS INCORPORATED

| Product revenues, net | | | $ | 6,202,783 | | | | | $ | 4,160,726 | | | | | $ | 3,038,325 | |

| Collaborative and royalty revenues | | | 2,900 | | | | | | 2,095 | | | | | | 9,272 | | |

| Total revenues | | | 6,205,683 | | | | | | 4,162,821 | | | | | | 3,047,597 | | |

| Cost of sales | | | 736,300 | | | | | | 547,758 | | | | | | 409,539 | | |

| Research and development expenses | | | 1,829,537 | | | | | | 1,754,540 | | | | | | 1,416,476 | | |

| Sales, general and administrative expenses | | | 770,456 | | | | | | 658,498 | | | | | | 557,616 | | |

| Restructuring income | | | — | | | | | | — | | | | | | (184) | | |

| Intangible asset impairment charge | | | — | | | | | | — | | | | | | 29,000 | | |

| Total costs and expenses | | | 3,349,393 | | | | | | 2,965,255 | | | | | | 2,412,447 | | |

| Income from operations | | | 2,856,290 | | | | | | 1,197,566 | | | | | | 635,150 | | |

| Interest income | | | 22,239 | | | | | | 63,678 | | | | | | 38,352 | | |

| Interest expense | | | (58,151) | | | | | | (58,502) | | | | | | (72,471) | | |

| Other income (expense), net | | | 296,420 | | | | | | 192,177 | | | | | | (790) | | |

| Income before provision for (benefit from) income taxes | | | 3,116,798 | | | | | | 1,394,919 | | | | | | 600,241 | | |

| Provision for (benefit from) income taxes | | | 405,151 | | | | | | 218,109 | | | | | | (1,486,862) | | |

| Net income | | | 2,711,647 | | | | | | 1,176,810 | | | | | | 2,087,103 | | |

| Loss attributable to noncontrolling interest | | | — | | | | | | — | | | | | | 9,793 | | |

| Net income attributable to Vertex | | | $ | 2,711,647 | | | | | $ | 1,176,810 | | | | | $ | 2,096,896 | |

| Amounts per share attributable to Vertex common shareholders: | | | | | | | | | | | | | | | | | |

| Basic | | | 259,841 | | | | | | 256,728 | | | | | | 254,292 | | |

| Diluted | | | 263,396 | | | | | | 260,673 | | | | | | 259,185 | | |

| Net income | | | $ | 2,711,647 | | | | | $ | 1,176,810 | | | | | $ | 2,087,103 | |

| Comprehensive income | | | 2,645,140 | | | | | | 1,174,178 | | | | | | 2,123,454 | | |

| Comprehensive loss attributable to noncontrolling interest | | | — | | | | | | — | | | | | | 9,793 | | |

| Comprehensive income attributable to Vertex | | | $ | 2,645,140 | | | | | $ | 1,174,178 | | | | | $ | 2,133,247 | |

| | | | | | | | | | | | |

| Cash and cash equivalents | | | $ | 5,988,187 | | | | | $ | 3,109,322 | |

| Marketable securities | | | 670,710 | | | | | | 698,972 | | |

| Accounts receivable, net | | | 885,352 | | | | | | 633,518 | | |

| Inventories | | | 280,777 | | | | | | 167,502 | | |

| Total current assets | | | 8,133,379 | | | | | | 4,822,829 | | |

| Goodwill | | | 1,002,158 | | | | | | 1,002,158 | | |

| Deferred tax assets | | | 882,779 | | | | | | 1,190,815 | | |

| Operating lease assets | | | 325,564 | | | | | | 88,202 | | |