Vertex Pharmaceuticals (VRTX) 10-K risk factor changes: FY2023 vs FY2022

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

If we are unable to continue to increase revenues from sales of our CF [removed: medicines or to eventually derive revenues from the sales of our pipeline products,] [added: medicines,] our business would be materially harmed and the market price of our common stock would likely decline.

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

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

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

- 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, [removed: sanctions] [added: sanctions,] and fines that could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

- We may not realize the anticipated benefits of [added: existing or future] acquisitions of businesses or technologies, and the integration following any such acquisition may disrupt our business and management.

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

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

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

We invest significant resources in the research and development of [removed: medicines] [added: therapies] for serious [removed: diseases] [added: diseases,] including [added: CF,] SCD, [removed: beta thalassemia,] [added: TDT, acute and neuropathic] pain, AMKD, T1D, [removed: AATD, DMD] [added: DM1,] and [removed: DM1.][added: AATD.]

For example, in October [removed: 2020,] [added: 2023,] we decided not to progress [removed: VX-814,] [added: VX-864,] a drug candidate for the treatment of AATD, into further development [removed: based on safety and pharmacokinetic data observed] [added: due to non-serious rash events] in [removed: a Phase 2 clinical trial.][added: some patients.]

[removed: Even if] [added: When] we [removed: gain] [added: receive] marketing approval for [removed: one or more] [added: a] pipeline [removed: products,] [added: product,] we cannot be sure that we will obtain market acceptance or adequate reimbursement levels from third-party payors or foreign governments for such [removed: products.][added: product.]

If we are unable to continue to increase revenues from sales of our CF [removed: medicines or to eventually derive revenues from the sales of our pipeline products,] [added: medicines,] our business would be materially harmed and the market price of our common stock would likely decline.

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

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

We [removed: are investing] [added: invested] significant resources in the [removed: research, development, manufacturing,] [added: research] and [removed: commercialization] [added: development] of [removed: cell and][added: CASGEVY.]

While we have previously successfully [removed: developed, manufactured, and] commercialized several small molecule drugs, we have limited experience with the [removed: development, manufacture, and] commercialization of cell and genetic therapies.

[removed: Development, manufacturing,] [added: Manufacturing] and commercialization of [removed: cell and genetic therapies are] [added: CASGEVY is] subject to similar risks and uncertainties as small molecules.

- [added: the manufacturing process for CASGEVY is more complex than the manufacturing processes for our CF medicines and] we may encounter difficulties in the production of [removed: our cell and genetic therapies] [added: CASGEVY] and ensuring that the product meets required [removed: specifications;]

- the commercial success of [removed: cell or genetic therapies, including exa-cel and VX-880, if approved,] [added: CASGEVY] will depend in part on the medical community, patients, governments, and third-party or governmental payors accepting and providing adequate reimbursement [removed: for cell or genetic therapy products in general,] [added: of CASGEVY products,] and recognizing the applicable medicine as medically useful, cost-effective, ethical, and safe; and

- market acceptance will be dependent in part on the prevalence and severity of side effects associated with the procedure by which [removed: the cell or genetic therapy] [added: CASGEVY] is administered, [removed: including, with respect to exa-cel and VX-880, if approved,] the prevalence and severity of any side effects resulting from the myeloablative preconditioning [removed: regime or immunosuppression, respectively.][added: regime.]

For [added: cell and genetic therapy] programs addressing rare genetic diseases with small patient populations, we may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired characteristics, to complete our clinical studies in an adequate and timely manner.

Additionally, patients may be unwilling to participate in our clinical trials because of concerns that cell and genetic therapies are unsafe or unethical, negative publicity from adverse [added: safety] events in the biotechnology or gene therapy industries, or for other reasons, including competitive clinical studies for similar patient populations.

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 [removed: governing cell and genetic therapy products have changed frequently and may continue to change in the future.]

Even with the relevant experience and expertise, manufacturers of cell and genetic therapy products often encounter difficulties in production, including difficulties with production costs and yields, quality control, and compliance with federal, state and [removed: foreign regulations.]

[removed: To the extent we develop manufacturing capabilities internally, there] [added: There] are many risks that could result in delays and additional costs, including the need to hire and train qualified employees and obtain access to necessary equipment and third-party technology.

[removed: To the extent we partner with third parties to manufacture our cell or genetic therapies, the complexity in the] [added: The] manufacture of our products and product candidates [added: can be complex, which] may require lengthy technology [removed: transfers.][added: transfers between us and the third parties on which we rely.]

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

[removed: If we obtain regulatory approval, the] [added: The] commercial success of cell and gene therapy [removed: treatments] [added: treatments, including CASGEVY,] will depend, in part, on the acceptance of physicians, patients, and third-party payors of gene therapy products in general, and our product candidates in particular, as medically necessary, [removed: cost-effective,] [added: cost-effective] and safe.

In particular, our success will depend upon physicians prescribing our [removed: product candidates] [added: therapies] 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 [removed: therapy product candidates] [added: therapies] until the [removed: product candidates] [added: therapies] have been on the market for a certain amount of time.

In addition, medical [removed: centers] [added: centers, including ATCs,] 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.

There [removed: also] is significant uncertainty related to the insurance coverage and reimbursement of cell or genetic therapy products, including gene therapies that are potential one-time [removed: treatments.][added: treatments (e.g., CASGEVY).]

It is difficult to predict what third party payors, including U.S. or ex-U.S. governments or private insurance companies, will decide with respect to reimbursement for [added: CASGEVY and the other] novel cell and genetic therapies [removed: like the ones] in our pipeline.

Inadequate reimbursement for such services may [removed: adversely affect physicians’] [added: discourage physicians from recommending] decisions to recommend any product for which we obtain approval in the future and [added: impair] our ability to market or sell the associated cell or genetic therapy.

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

A number of companies are seeking to identify and develop product candidates for the treatment of [removed: CF] [added: CF, SCD, TDT, pain,] 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 [added: competitive treatments.]

If one or more competing therapies are successfully developed as a treatment for people with [removed: CF] [added: CF, SCD, TDT, pain] or any of the other [removed: diseases] [added: disease areas] we are currently targeting in our pipeline, our products and our net product revenues could face competitive pressures.

- Over the last several years all of our product revenues were derived from sales of our CF medicines.

- If we are not successful in commercializing CASGEVY, our revenue growth could be limited and our business could be materially harmed.

- If we are unable to successfully develop, obtain approval, and commercialize treatments for acute and neuropathic pain, our business could be materially harmed.

- Cell and genetic therapies face increased scrutiny from the public and medical communities and commercial success will depend, in part, upon the acceptance of those communities.

- Insurance coverage and reimbursement of our cell or genetic therapies is uncertain.

- Enrollment for clinical trials for our cell and gene therapies may face additional and unique challenges and adverse developments associated with these clinical trials could result in action by regulatory bodies, including revised requirements for approval.

- The regulatory approval process for our cell and genetic therapies involves additional consultations with regulatory agencies, costs, and potentially longer timelines as compared to those for small molecules.

We rely on third party logistics providers to manage our shipments globally.

If we are not able to successfully develop and commercialize additional products our business could be materially harmed.

Over the last several years all of our product revenues were derived from sales of our CF medicines.

Substantially all of our net product revenues have been derived from the sale of our CF medicines over the last several years.

We seek to continue to increase our CF product revenue through serial innovation, including the potential approval of our vanzacaftor/tezacaftor/deutivacaftor triple combination, development and commercialization CF medicines in younger children with CF and through securing additional approvals and reimbursements for our CF medicines in ex-U.S. markets.

If we are not successful in commercializing CASGEVY, our revenue growth could be limited and our business could be materially harmed.

We recently obtained approval for CASGEVY for the treatment of people 12 years and older with SCD and TDT in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain.

specifications;

- there are multiple steps along the CASGEVY patient treatment journey, many of which involve significant clinical complexities performed by third parties, including the collection of blood cells from patients, transfer of those cells to and from a manufacturing facility, and other procedures either before or after delivery of CASGEVY;

If we are not successful in commercializing CASGEVY, our revenue growth could be limited and our business could be materially harmed.

If we are unable to successfully develop, obtain approval and commercialize treatments for acute and neuropathic pain, our business could be materially harmed.

We believe that a portion of the value attributed to our company by investors is based on our potential treatments for acute and neuropathic pain, including VX-548.

We have completed the Phase 3 development program for VX-548 in acute pain and we are planning to submit an NDA to the FDA by mid-2024.

We are planning to initiate a Phase 3 development program for VX-548 in neuropathic pain based on positive Phase 2 clinical results we received in the fourth quarter of 2023.

Obtaining approval for VX-548 is uncertain process and we may not be successful.

If we do not obtain approval of VX-548, our business may be materially harmed.

VX-548, if approved, may not gain or maintain market acceptance among physicians and patients or other members of the medical community.

In addition to the risks normally associated with launching a new branded product, VX-548 will need to compete in an acute pain market that largely consists of low-cost generic drugs, including opioids, non-steroidal anti-inflammatory drugs, acetaminophen and local anesthetics.

Similarly, if we are successful in developing and obtaining approval for VX-548 in neuropathic pain, VX-548 will face competition from generic anticonvulsant and antidepressant drugs.

If we are not able to successfully develop, obtain approval for and commercialize treatments for acute and neuropathic pain, our future net product revenues and cash flows will be adversely affected and our business could be materially harmed.

therapies or new therapies that may be developed by competitors.

In SCD and TDT, as part of the FDA approval for CASGEVY, we are required to conduct two post-marketing requirement safety studies to assess the long-term risk of hematologic malignancies and off-target genome editing effects by CRISPR/Cas9.

- inadequate sales, marketing and/or distribution support.

Cell and genetic therapies face increased scrutiny from the public and medical communities and commercial success will depend, in part, upon the acceptance of those communities.

phase and a 20% discount during the catastrophic phase of the Part D benefit.

It is possible the U.S. Congress or administration may take further actions to address health care costs and access to medicine, and specifically address coverage and reimbursement of cell and gene therapies.

In February 2023, the Secretary submitted a report to the White House describing three models that the Secretary selected for testing.

Among the selected models is a Cell & Gene Therapy Access Model, under which CMS would structure and coordinate multi-state Medicaid outcomes-based agreements between participating states and manufacturers.

The report also directs CMS to consider potential Medicare fee-for-service options to support cell and gene therapy access and affordability.

In October 2023, CMMI further announced that it will move the start-date for the Cell & Gene Therapy Access Model from 2026 to 2025.

On January 30, 2024,CMMI released additional information about the Cell & Gene Therapy Access Model, including the initial focus on cell and gene therapies for sickle cell disease.

CMS intends to negotiate outcomes-based agreements with manufacturers between May 2024 and November 2024.

In addition to the supplemental rebate negotiated under the outcomes-based agreement, participating manufacturers would be required to cover certain fertility preservation services and supports for ancillary services (e.g., travel, case management, behavioral health services).

- All of our product revenues and the vast majority of our total revenues are derived from sales of medicines for the treatment of CF.

- We have limited experience developing 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.

- We are subject to various and evolving laws and regulations governing the privacy and security of personal data, and our failure to comply could adversely affect our business, result in fines and/or criminal penalties, and damage our reputation.

- We may not be able to attract collaborators or external funding for the development and commercialization of certain of our product candidates.

Some of these programs have progressed into clinical trials, while others are still in pre-clinical development.

For these and other reasons, we may never be successful in expanding our pipeline and future revenue may continue to depend on sales of our CF medicines.

All of our product revenues and the vast majority of our total revenues are derived from sales of medicines for the treatment of CF.

Our net product revenues and the vast majority of our total revenues are derived from the sale of our CF medicines.

This will require us to continue to gain approval and reimbursement for TRIKAFTA/KAFTRIO in ex-U.S. markets, successfully develop and commercialize TRIKAFTA/KAFTRIO for younger children with CF or successfully develop and commercialize products from our pipeline.

We have limited experience developing 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.

genetic therapies, including exa-cel.

- the manufacturing processes for cell and genetic therapies are different, less mature and more complex than the manufacturing processes required for small molecule drugs and require investments in systems, equipment, facilities, and expertise to develop and maintain;

- there have been a limited number of regulatory approvals for genetic therapies to date, the regulatory requirements governing genetic therapies continue to evolve, and regulatory positions and interpretations can change or lead to delays or significant unexpected costs with respect to our genetic therapy programs;

To develop and commercialize cell or genetic therapies, including exa-cel, we are incurring substantial expenditures to develop, contract for, or otherwise arrange for the necessary supplies and manufacturing capabilities.

Additionally, the manufacture of cell and genetic therapies requires significant expertise.

We cannot make any assurances that these problems will not occur, or that we will be able to resolve or address problems that occur in a timely manner, or at all.

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 are also devoting substantial resources to expand our commercial organization to prepare for the anticipated future product launches from our pipeline programs.

For example, with respect to exa-cel, we are creating and developing the internal and external support systems to reach and support potential future patients, in addition to establishing and ensuring the necessary supply and manufacturing infrastructure.

We cannot make any assurances that we will obtain approval for products from our pipeline programs, or that, if approved, a future product will generate substantial revenues and cash flows.

Given there are only a few approved cell and genetic therapy products, it also is difficult to determine how long it will take or reasonably estimate the costs to develop, manufacture, and commercialize cell or genetic therapies.

In addition, our cell-based therapies include approaches involving devices, which are subject to additional regulatory requirements.

If we are unable to successfully develop, manufacture, or commercialize such therapies on a timely or profitable basis, or at all, we may not realize benefits or generate cash flows based on our investments in these programs and our business, financial condition, results of operations and our stock price would likely be adversely affected.

competitive treatments.

In addition, our business faces competition from major pharmaceutical companies possessing substantially greater financial resources than we possess.

In addition, treatment with some of our cell and genetic therapy product candidates, including exa-cel and VX-880, involve myeloablative preconditioning regimens or immunosuppression, and the patients in our clinical trials receiving these treatments may experience side effects (ranging from mild to severe) or adverse events.

- inadequate sales, marketing and/or distribution support, including as a result of limitations or restrictions resulting from COVID-19.

We are dependent upon a small number of customers for a significant portion of our revenue, and the loss of, or significant reduction in sales to, these customers would adversely affect our results of operations.

In the U.S., we sell our CF products principally to a limited number of specialty pharmacy and specialty distributors, which subsequently resell our products to patients and health care providers.

Internationally, we sell our products primarily through distributor arrangements and to a limited number of retail pharmacies or pharmacy chains, as well as to hospitals and clinics.

We expect this significant customer concentration in CF to continue for the foreseeable future.

Our ability to generate and grow sales of our CF medicines will depend significantly on the extent to which these specialty distributors and specialty pharmacies are able to provide adequate distribution of our products to patients and healthcare providers.

The loss of any large customer, a significant reduction in sales we make to them, any cancellation of orders they have made with us, or any failure to pay for the products we have shipped to them could adversely affect our business, financial condition, and results of operations.

For example, the ACA required

It is possible the U.S. Congress or administration may take further actions to control prescription drug pricing.

The Executive Order requires CMMI to submit a report to the White House on potential models.

with prices that increase faster than inflation.

We have experienced challenges in obtaining timely reimbursement for our products in various countries outside the U.S. 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.

Accordingly, even if we believe

development of a particular product candidate and our business.

*Our discussion and analysis of our financial condition and results of operations for [removed: 2022] [added: 2023] as compared to [removed: 2021] [added: 2022] are discussed below.

For a discussion of our financial condition and results of operations for [removed: 2021] [added: 2022] as compared to [removed: 2020,] [added: 2021,] please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our [removed: 2021] [added: 2022] Annual Report on Form 10-K, except as set forth below.*

We have four approved medicines that treat the underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, and [removed: we continue to focus on developing additional treatments for CF.][added: one approved therapy that treats severe sickle cell disease (“SCD”) and transfusion dependent beta thalassemia (“TDT”), life shortening inherited blood disorders.]

[removed: Beyond CF, we have a] [added: Our] pipeline [removed: that] includes [removed: mid- and late-stage clinical] [added: clinical-stage] programs in [added: CF,] sickle cell disease, beta thalassemia, acute and neuropathic pain, APOL1-mediated kidney disease, type 1 diabetes, [added: myotonic dystrophy type 1] and alpha-1 antitrypsin [removed: deficiency, and earlier-stage programs in diseases such as muscular dystrophies.][added: deficiency.]

Our triple combination regimen, TRIKAFTA/KAFTRIO (elexacaftor/tezacaftor/ivacaftor and ivacaftor), was approved in 2019 in the United States [removed: (the “U.S.”)] [added: (“U.S.”)] and in 2020 in the European Union [removed: (the “E.U.”).][added: (“E.U.”).]

Collectively, our four medicines are being used [removed: by the majority] [added: to treat nearly three quarters] of the approximately [removed: 88,000] [added: 92,000] people with CF in North America, Europe, and Australia.

We are evaluating our [added: CF] medicines in additional patient populations, including younger children, with the goal of having small molecule treatments for all people who have at least one mutation in their cystic fibrosis transmembrane conductance regulator (“CFTR”) gene that is [removed: response] [added: responsive] to our CFTR modulators.

We also are pursuing [added: messenger ribonucleic acid (“mRNA”) and] genetic therapies for people with CF who do not make [added: full-length] CFTR protein and, as a result, cannot benefit from our current CF medicines.

| *Revenues* | | | In [removed: 2022,] [added: 2023,] our net product revenues increased to [removed: $8.9] [added: $9.9] billion as compared to [removed: $7.6] [added: $8.9] billion in [removed: 2021,] [added: 2022. The increase was] primarily due to the [added: continued] strong uptake of TRIKAFTA/KAFTRIO in [removed: multiple countries internationally] [added: ex-U.S. markets] and [added: label extensions in younger age groups, and the] continued [removed: steady] performance of TRIKAFTA in the U.S., following the [removed: June 2021] launch of TRIKAFTA [removed: for] [added: in] children with CF [removed: 6 through 11] [added: 2 to 5] years of age. | | |

| *Expenses* | | | Our total research and development (“R&D”), acquired in-process research and development (“AIPR&D”), and selling, general and administrative (“SG&A”) expenses [removed: decreased] [added: increased] to [removed: $3.6] [added: $4.8] billion [added: in 2023] as compared to [removed: $3.9] [added: $3.6] billion in [removed: 2021.] [added: 2022.] The [removed: decrease] [added: increase] was primarily due to [removed: decreased AIPR&D following a $900.0 million upfront payment we made in 2021 to CRISPR in connection with an amendment to our exa-cel collaboration, partially offset by] increased [removed: spend to advance] [added: AIPR&D,] the progression of several product candidates [removed: into] [added: in] mid- to late-stage clinical [removed: development.] [added: development and costs to support global launches.] Cost of sales was [added: 13% and] 12% of our net product revenues in [removed: 2022] [added: 2023] and [removed: 2021.] [added: 2022, respectively.] | | |

| *Cash* | | | Our [added: total] cash, cash equivalents and marketable securities increased to [removed: $10.8] [added: $13.7] billion as of December 31, [removed: 2022] [added: 2023] as compared to [removed: $7.5] [added: $10.9] billion as of December 31, [removed: 2021] [added: 2022] primarily due to our [added: income from operations driven by our] net product [removed: revenues] [added: revenues,] and [removed: operating cash flows,] [added: interest income,] partially offset by [added: our] income tax payments and [removed: our $315.0 million acquisition] [added: repurchases] of [removed: ViaCyte.] [added: our common stock.] | | |

[removed: ][added: ]

- The [removed: European Commission] [added: U.S. Food] and [added: Drug Administration (“FDA”),] the [removed: United Kingdom’s] [added: European Commission, the] Medicines and Healthcare [removed: products] [added: Products] Regulatory Agency [removed: (“MHRA”) granted marketing authorization for KAFTRIO] [added: (“MHRA”), and Health Canada approved TRIKAFTA/KAFTRIO] for the treatment of children with CF [removed: 6 through 11] [added: 2 to 5] years of age who have at least one F508del mutation in the CFTR gene.

- The [removed: U.S. Food] [added: FDA] and [removed: Drug Administration (the “FDA”)] [added: the European Commission] approved the use of ORKAMBI [removed: in] [added: for] children with CF 12 [removed: months] to less than 24 months of age who are homozygous for the F508del mutation in the CFTR gene.

- [removed: In the fourth quarter of 2022, we submitted global regulatory filings for TRIKAFTA/KAFTRIO in children with CF 2 to 5 years of age] [added: The FDA] and [removed: for] [added: MHRA approved] KALYDECO in children with CF from 1 month to less than 4 months of age.

Recent [removed: and anticipated] progress in activities supporting [removed: these efforts] [added: continued uptake and label expansions] is included [removed: below.][added: below:]

- We [removed: are conducting two Phase 3 global, randomized, double-blind, active-controlled clinical trials,] [added: completed the pivotal] SKYLINE 102 and SKYLINE [removed: 103, evaluating] [added: 103 clinical trials, which evaluate the efficacy and safety of] our new once-daily investigational triple combination [removed: of vanzacaftor/tezacaftor/deutivacaftor, formerly known as VX-121/tezacaftor/VX-561,] [added: vanzacaftor/tezacaftor/deutivacaftor relative to TRIKAFTA] in people with CF 12 years of age and older, and [removed: have completed enrollment] [added: the RIDGELINE clinical trial of vanzacaftor/tezacaftor/deutivacaftor] in [removed: these trials.][added: children with CF 6 to 11 years of age, at the end of 2023.]

- In collaboration with Moderna, we are developing VX-522, [removed: an] [added: a CFTR] mRNA therapeutic for the treatment of people with CF who do not produce [removed: any] [added: full-length] CFTR protein.

We [removed: expect to complete this] [added: completed dosing in the] single ascending dose [added: part of the] clinical trial [added: for VX-522] and [removed: initiate] [added: initiated] the multiple ascending dose [added: part of the] clinical trial in [added: late] 2023.

[removed: The] [added: In the U.S., the] FDA has granted Fast Track designation for VX-522.

[added: Acute] Pain

- [removed: The FDA granted] [added: In the U.S.,] VX-548 [added: has been granted] Breakthrough Therapy and Fast Track designations for [removed: the treatment of moderate to severe] [added: moderate-to-severe] acute pain.

- [removed: Inaxaplin, formerly known as VX-147,] [added: Inaxaplin] is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”), including APOL1-mediated focal segmental glomerulosclerosis (“FSGS”).

We [removed: continue to enroll patients in this Phase 2/3 clinical trial and we] expect to [removed: complete] [added: select a dose and begin] the Phase [removed: 2 dose-ranging] [added: 3] portion of the [added: clinical] trial in [removed: 2023.][added: the first quarter of 2024.]

- The FDA granted [removed: inaxaplin] Breakthrough Therapy designation [added: to inaxaplin] for APOL1-mediated FSGS and the EMA granted [removed: inaxaplin] Orphan Drug and PRIME designations [added: to inaxaplin] for AMKD.

- VX-880 is [removed: a] [added: an allogeneic] stem cell-derived, [removed: allogeneic,] fully differentiated, insulin-producing islet cell replacement therapy, using standard immunosuppression to protect the implanted cells.

We [removed: have initiated a] [added: continue to enroll and dose healthy volunteers in] Phase 1 clinical [removed: trial for VX-634, which is the first in a series of] [added: trials evaluating VX-634 and VX-668, our] next-wave investigational [removed: molecules] [added: molecule AAT correctors] with significantly improved potency and drug-like properties as compared to [removed: our previous AAT correctors, allowing potential exploration of] the [removed: full dose response.][added: first-generation AATD correctors.]

[removed: Our] [added: In 2023, our] net product revenues [removed: come] [added: came] from the sale of our medicines for the treatment of CF.

We are advancing our pipeline of product candidates for the treatment of serious diseases outside of [removed: CF.][added: CF, including CASGEVY, which recently received marketing approvals in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain for the treatment of SCD and TDT.]

This approach includes advancing multiple compounds [added: or therapies] from each program, spanning multiple modalities, into early clinical trials to obtain patient data that can inform selection of the most promising [removed: compounds] [added: therapies] for later-stage development, [removed: and] [added: as well as] to inform discovery and development [removed: of additional compounds.][added: efforts.]

We rely on a global network of third parties and our internal capabilities to manufacture and distribute our products for commercial sale and post-approval clinical trials and to [removed: manufacture and distribute our product candidates for clinical trials.]

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

In the U.S., we have worked successfully with third-party payors to promptly obtain appropriate levels of reimbursement for our CF [removed: medicines.][added: medicines and are currently working with U.S. government and commercial payors with respect to CASGEVY.]

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 [removed: medicines] [added: therapies] provide and provide patients with appropriate levels of access to our medicines [added: and therapies] now and in the future.

We cannot, however, predict how recent changes in the law, including through the Inflation Reduction Act of [removed: 2022,] [added: 2022 and passage of state laws (e.g., transparency laws and prescription drug affordability boards),] will affect our ability to negotiate successfully with third-party payors [removed: in the future.][added: and distribute our products.]

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

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

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

In 2022, we acquired ViaCyte, [removed: a privately held biotechnology company with] [added: Inc. (“ViaCyte”), which had] intellectual property, tools, technologies and assets with [added: the] potential to accelerate development of our T1D [removed: programs, for $315.0 million; and acquired from Catalyst a portfolio of protease medicines that target the complement system and related intellectual property (the “Catalyst complement portfolio”) for $60.0 million.][added: programs.]

Our acquisition of [removed: ViaCyte] [added: ViaCyte, for $315.0 million,] was accounted for as a business combination.

CASGEVY (exagamglogene autotemcel or “exa-cel”), an ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, was recently approved in the U.S., the E.U., the United Kingdom (“U.K.”), the Kingdom of Saudi Arabia (“Saudi Arabia”), and the Kingdom of Bahrain (“Bahrain”) for the treatment of people 12 years of age and older with SCD and TDT.

We estimate approximately 35,000 people with severe SCD or TDT could be eligible for CASGEVY in the U.S. and Europe, with additional people in Saudi Arabia and Bahrain.

In addition, we are preparing for near-term launches of potential new products in CF and acute pain.

*Note: Charts above may not add due to rounding.*

We expect to grow our CF business with (i) continued uptake by patients in countries where we are early in our launch, such as those with recently achieved reimbursement agreements, (ii) label expansions, including into younger patient groups, and (iii) growth in the number of people living with CF.

- The European Medicines Agency (“EMA”) validated the Marketing Authorization Application (“MAA”) extension for KAFTRIO in combination with ivacaftor to include people with CF who have a rare mutation in the CFTR gene that is responsive based on clinical and/or in vitro data, including the N1303K mutation.

We plan to submit regulatory filings for these mutations in Australia, Brazil, Canada, New Zealand and Switzerland, and we plan to submit for regulatory approval of a subset of these mutations not currently included in the U.S. TRIKAFTA label to the FDA.

- CASGEVY is now approved in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain for people 12 years of age and older with SCD or TDT.

- The French National Authority for Health (“HAS”) approved our request for the implementation of an early access program (“EAP”) for the use of CASGEVY to treat eligible people with TDT from 12 to 35 years of age.

We are also pursuing an EAP submission for SCD in France and we expect to receive the outcome of this decision in the coming months.

- Our regulatory submission for CASGEVY in both SCD and TDT is currently under review in Switzerland.

We expect to submit for regulatory approval of CASGEVY in Canada in the first half of 2024.

- We have activated 12 authorized treatment centers (“ATCs”) in the U.S. and three ATCs in Europe.

We are aiming to activate approximately 50 ATCs in the U.S. and 25 in Europe.

We also have activated one of two planned ATCs in Saudi Arabia.

- We entered into an agreement with Synergie Medication Collective, a medication contracting organization, which covers approximately 100 million people, to provide access to CASGEVY.

*Potential Near-Term Launch Opportunities*

We are preparing for the following near-term launches of potential new products:

Vanzacaftor/tezacaftor/deutivacaftor in CF

- In February 2024, we announced positive data from this Phase 3 program evaluating the new triple combination regimen.

We expect to submit global regulatory filings by mid-2024, including a New Drug Application (“NDA”) to the FDA, using a priority review voucher, and MAAs to the EMA and Health Canada.

VX-548 in Acute Pain

- We completed the pivotal program evaluating our lead compound, VX-548, for the treatment of moderate-to-severe acute pain, which included one randomized controlled Phase 3 pivotal trial in abdominoplasty, one randomized, controlled Phase 3 clinical trial in bunionectomy, and one single-arm safety and effectiveness clinical trial.

In January 2024, we announced positive results from these clinical trials and we announced our plans to submit an NDA to the FDA for VX-548 in moderate-to-severe acute pain by mid-2024.

We continue to advance a diversified pipeline of potentially transformative medicines for serious diseases utilizing a range of modalities.

Cystic Fibrosis

We expect to share data from this clinical trial in late 2024 or early 2025.

- We are investigating a portfolio of other small molecules targeting the underlying cause of CF with the aim of achieving carrier levels of CFTR function.

We also are investigating additional potential treatments for people with CF who do not make full-length CFTR protein and cannot benefit from CFTR modulators.

Sickle Cell Disease and Beta Thalassemia

- We have completed enrollment in two global Phase 3 clinical trials evaluating CASGEVY in children 5 to 11 years of age with SCD or TDT.

- We continue to work on preclinical assets for myeloablative conditioning agents that would have milder side-effects and could be used in connection with CASGEVY, which could broaden the eligible patient population.

Peripheral Neuropathic Pain

- We have completed the Phase 2 dose-ranging clinical trial evaluating VX-548 in patients with diabetic peripheral neuropathy, a common form of chronic peripheral neuropathic pain, and announced positive results from this clinical trial.

We plan to meet with regulators in the first quarter of 2024 and then we expect to advance VX-548 for the treatment of diabetic peripheral neuropathy into pivotal development.

- We initiated a second Phase 2 clinical trial evaluating VX-548 in patients with peripheral neuropathic pain in December 2023.

This clinical trial will evaluate VX-548 in patients with lumbosacral radiculopathy, a second type of peripheral neuropathic pain.

Screening, enrollment and dosing are underway in this clinical trial.

- We expect to initiate a Phase 2 clinical trial evaluating the oral formulation of VX-993, a next generation NaV1.8 inhibitor, for the treatment of peripheral neuropathic pain in 2024.

- We have completed a Phase 1 clinical trial evaluating an oral formulation of VX-993, a next generation NaV1.8 inhibitor.

We expect to continue to grow our CF business by increasing the number of people with CF who are eligible and able to receive our medicines, including younger people, and providing improved treatment options for people who are already eligible for one of our medicines.

- TRIKAFTA/KAFTRIO is now approved and reimbursed or accessible in more than 30 countries outside the U.S.

We continue to advance a pipeline of potentially transformative small molecule and cell and genetic therapies aimed at treating serious diseases.

We expect to complete these clinical trials by the end of 2023.

We also have initiated a clinical trial of vanzacaftor/tezacaftor/deutivacaftor in children with CF 6 to 11 years of age, known as the RIDGELINE study.

In December 2022, the FDA cleared our Investigational New Drug Application (“IND”) for VX-522.

We have initiated a single-ascending dose clinical trial for VX-522 in people with CF, which is active and enrolling patients.

- We are evaluating the use of a non-viral *ex vivo* CRISPR gene-editing therapy, exagamglogene autotemcel (“exa-cel”), formerly known as CTX001, for the treatment of sickle cell disease (“SCD”) and transfusion-dependent beta thalassemia (“TDT”).

- In the fourth quarter of 2022, we completed regulatory submissions to the European Medicines Agency (“EMA”) and the MHRA for exa-cel for SCD and TDT, and both the EMA and the MHRA have validated the marketing authorization application.

Exa-cel has been granted EMA Priority Medicines (“PRIME”) designation in the E.U. and Orphan Drug designation in the E.U. and the United Kingdom (the “U.K.”).

- In November 2022, we initiated the submission of a biologics licensing application (“BLA”) for exa-cel for SCD and TDT for rolling review by the FDA, and expect to complete the submission by the end of the first quarter of 2023.

In the U.S., exa-cel has been granted Fast Track, Regenerative Medicine Advanced Therapy, Rare Pediatric Disease, and Orphan Drug designations.

- Two additional Phase 3 clinical trials evaluating exa-cel in pediatric patients with SCD and TDT are ongoing.

- We have discovered multiple selective small molecule inhibitors of NaV1.8, with the objective of creating a new class of pain medicines that provide effective non-opioid pain relief, without abuse potential.

In March 2022, we announced positive Phase 2 data for VX-548, a NaV1.8 inhibitor, for treatment of acute pain.

We have initiated two randomized, double-blind, placebo-controlled Phase 3 trials with a total of 2,000 patients with moderate to severe acute pain following bunionectomy or abdominoplasty surgery.

The Phase 3 program for VX-548 also includes a single-arm study evaluating the safety and effectiveness of VX-548 in multiple other types of moderate to severe pain.

We expect to complete these Phase 3 trials in late 2023 or early 2024.

- At the end of 2022, we initiated a Phase 2 clinical trial evaluating VX-548 in diabetic peripheral neuropathy, a common form of peripheral neuropathic pain.

Based on positive Phase 2 data in FSGS, we initiated pivotal development of inaxaplin in a single Phase 2/3 adaptive clinical trial in patients with AMKD.

A clinical trial is ongoing to evaluate VX-880 as a potential treatment for type 1 diabetes (“T1D”), and proof-of-concept has been achieved.

We have completed enrollment in Part B of the Phase 1/2 clinical trial and, after completion of Part B, we expect to begin Part C of the trial, with concurrent dosing, in 2023.

- We continue to advance additional programs in T1D, in which these same stem cell-derived, fully differentiated, insulin-producing islet cells are encapsulated and implanted in an immunoprotective device or are modified to produce hypoimmune cells with the goal of eliminating the need for immunosuppression.

In December 2022, our Clinical Trial Application (“CTA”) in Canada for VX-264, the cells and device program, was authorized and we plan to begin screening, enrollment and dosing in Canada in the coming months.

In the U.S., the IND is on hold.

- We initiated a second Phase 2 clinical trial of VX-864, a first-generation AAT corrector, to assess the impact of longer-term treatment on the liver, as well as the levels of functional AAT in the plasma.

Duchenne Muscular Dystrophy

- We are investigating a novel approach to treating Duchenne muscular dystrophy (“DMD”), which delivers CRISPR/Cas9 gene-editing technology to muscle cells, with the goal of restoring near-full length dystrophin protein expression by targeting specific mutations in the dystrophin gene that cause the disease.

We are conducting enabling studies for our first in vivo gene-editing therapy for DMD and we expect to submit an IND for this program in 2023.

*Investment in External Innovation*

Recent investments in external innovation are included below.

- We acquired from Catalyst Biosciences, Inc. (“Catalyst”) a portfolio of protease medicines that target the complement system and related intellectual property.

- We acquired ViaCyte, Inc. (“ViaCyte”), a biotechnology company focused on delivering novel stem cell-derived cell replacement therapies as a potential functional cure for T1D.

A Phase 1/2 clinical trial of VCTX-211, a hypoimmune cell program that we are developing in partnership with CRISPR Therapeutics AG (“CRISPR”), is active and enrolling patients.

- We established a strategic collaboration and licensing agreement with Entrada Therapeutics, Inc. (“Entrada”), focused on discovering and developing intracellular Endosomal Escape Vehicle (“EEV”) therapeutics for DM1 (the “Entrada Agreement”).

We

We expect to continue to identify and evaluate potential acquisitions and may include larger transactions or later-stage assets.

Operating expenses incurred by ViaCyte after the acquisition date and specific expenses associated with the acquisition are reflected in our consolidated statement of operations.

Our acquisition of the Catalyst complement portfolio was accounted for as an asset acquisition because substantially all the fair value acquired was concentrated in in-process research and development assets, which did not constitute a business, and for which we determined there was no alternative future use.

As a result, we recorded our $60.0 million upfront payment to AIPR&D.

These instruments [removed: principally] [added: primarily] include securities issued by the U.S. government and its agencies, investment-grade corporate bonds and commercial paper, and money market funds.

As of December 31, [removed: 2022,] [added: 2023,] we had no principal or interest outstanding under our credit facility.

A portion of our “Interest expense” in [removed: 2023] [added: 2024] will be dependent on whether, and to what extent, we borrow amounts under this facility.

The current exposures arise primarily from cash, accounts receivable, intercompany receivables and payables, [removed: payables] [added: payables,] and [removed: accruals] [added: accruals,] and inventories.

As of December 31, [removed: 2022,] [added: 2023,] we held foreign exchange forward contracts that were designated as cash flow hedges with notional amounts totaling [removed: $2.2] [added: $2.4] billion representing a net [removed: fair value] [added: liability] of [removed: $33.1] [added: $31.9] million on our consolidated balance sheet.

If the December 31, [removed: 2022] [added: 2023] 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: 2022] [added: 2023] would change by approximately [removed: $220.2] [added: $239.2] 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 [added: (loss)] income” on our consolidated balance sheets and is

We hold strategic equity investments in certain public and private companies, and we expect to make additional strategic equity investments in the future.

In 2023 and 2022, we recorded net losses of $0.6 million and $149.1 million, respectively, to “Other Income (Expense), Net” in our consolidated statements of income to reflect changes in the fair value of equity investments with readily determinable fair values (including publicly traded securities).

The fair value of our equity investments in publicly traded companies was less than $50.0 million as of December 31, 2023.

To the extent that we continue to hold strategic equity investments in publicly traded companies, we expect that due to the volatility of the stock price of biotechnology companies, our “Other Income (Expense), Net” will fluctuate in future periods based on increases or decreases in the fair value of our strategic equity investments.

Information required by this section is incorporated by reference from the discussion in the “Strategic Investments” section of this Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We have four approved medicines that treat the underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, and [removed: we continue to focus on developing additional treatments for CF.][added: one approved therapy that treats severe sickle cell disease (“SCD”) and transfusion dependent beta thalassemia (“TDT”), life shortening inherited blood disorders.]

[removed: Beyond CF, we have a] [added: Our] pipeline [removed: that] includes [removed: mid- and late-stage clinical] [added: clinical-stage] programs in [added: CF,] sickle cell disease, beta thalassemia, acute and neuropathic pain, APOL1-mediated kidney disease, type 1 diabetes, [added: myotonic dystrophy type 1] and alpha-1 antitrypsin [removed: deficiency, and earlier-stage programs in diseases such as muscular dystrophies.][added: deficiency.]

Our marketed medicines [added: that treat people with CF] are TRIKAFTA/KAFTRIO (elexacaftor/tezacaftor/ivacaftor and ivacaftor), SYMDEKO/SYMKEVI (tezacaftor/ivacaftor and ivacaftor), ORKAMBI (lumacaftor/ivacaftor) and KALYDECO (ivacaftor).

[removed: Collectively, our] [added: Our] CF medicines are [added: collectively] being used [removed: to treat the majority] [added: by nearly three quarters] of the approximately [removed: 88,000] [added: 92,000] people with CF in North America, [removed: Europe] [added: Europe,] and Australia.

Beyond CF, [added: SCD, TDT and pain,] we are advancing programs across multiple disease areas and modalities, including:

[removed: - *Pain*.][added: *Acute Pain*]

[removed: We are] [added: In January 2024, we announced positive results from our Phase 3 clinical trials] evaluating VX-548, a [removed: non-opioid,] [added: non-opioid] investigational NaV 1.8 inhibitor, for the treatment of [added: moderate-to-severe acute] pain.

- *Type 1 Diabetes.* We are evaluating VX-880, an investigational [added: allogeneic] stem-cell [removed: derived fully-differentiated] [added: derived, fully differentiated] islet cell therapy, for the treatment of type 1 diabetes (“T1D”) in a Phase 1/2 clinical trial in which patients [added: also] receive immunosuppressive therapy to protect the islet cells from immune rejection.

Our [removed: Clinical Trial Application (“CTA”) in Canada for our] second [added: clinical] program in T1D, VX-264, in which the implanted islet cells are encapsulated in an immunoprotective device, [removed: was authorized and we plan to begin screening, enrollment and dosing in Canada in the coming months.][added: is ongoing.]

- *Alpha-1 Antitrypsin Deficiency.* We [removed: initiated a] [added: continue to enroll and dose healthy volunteers in Phase 1] clinical [removed: trial] [added: trials] for [removed: VX-634, which is the first in a series of] [added: VX-634 and VX-668, our] next-wave investigational molecules with significantly improved potency and drug-like properties as compared to our previous [removed: Alpha-1 Antitrypsin] [added: alpha-1 antitrypsin] (“AAT”) correctors.

[added: - *Myotonic Dystrophy Type 1.*] We are exploring multiple approaches to address the underlying causal biology for [removed: Myotonic Dystrophy Type] [added: myotonic dystrophy type] 1 (“DM1”), including small molecules.

- In addition to the programs listed above, we have [removed: a number of earlier-stage] [added: additional] research programs aimed at diseases that fit our research and development [removed: strategy.][added: strategy and follow-on programs in our existing disease areas in accord with our serial innovation approach.]

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

Our [removed: research and early development strategy] [added: approach] includes advancing multiple compounds or therapies from each program into early clinical trials to obtain patient data that can inform selection of the most promising [removed: compounds] [added: therapies] for later stage development as well as inform our ongoing discovery and development efforts.

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

[removed: Our] [added: Collectively, our four marketed CF] medicines are [removed: collectively] being used [removed: by approximately two-thirds] [added: to treat nearly three quarters] of [added: the approximately 92,000] people with CF in North America, Europe and Australia.

[removed: Our approved medicines,] [added: Information regarding our marketed products,] including information regarding the [removed: indication] [added: disease area, initial approval] and age [removed: groups] [added: group] for which the [removed: medicine] [added: therapy] is [removed: approved in the U.S. and Europe,] [added: approved,] are set forth in the table below.

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

[removed: TRIKAFTA/KAFTRIO is now approved and reimbursed or accessible in more than 30 countries outside the U.S.] In addition to the [removed: European Union (the “E.U.”)] [added: E.U.] and the U.S., we market our products in additional countries, including the [removed: United Kingdom (the “U.K.”),] [added: U.K.,] Australia, [added: Canada, Brazil] and [removed: Canada.][added: Switzerland.]

We [removed: continuously seek] [added: continue] to increase the number of patients eligible and able to receive our current medicines through label [removed: expansions, approval of new medicines] [added: expansions] and expanded reimbursement.

[removed: This approach] [added: Our research and development strategy] has been validated through our success in moving novel product candidates into clinical trials and obtaining marketing approvals for TRIKAFTA/KAFTRIO, KALYDECO, ORKAMBI, and SYMDEKO/SYMKEVI for the treatment of [removed: CF] [added: CF,] and [removed: INCIVEK (telaprevir)] [added: CASGEVY] for the treatment of [removed: hepatitis C infection.][added: SCD and TDT.]

Our approach to drug discovery has been further validated by our successful demonstration of clinical proof-of-concept in [removed: six] [added: four] additional disease areas: in [removed: SCD and beta thalassemia with exa-cel, in] acute and neuropathic pain with our NaV1.8 inhibitors, in AMKD with inaxaplin, and in T1D with a stem cell-derived islet cell therapy.

[removed: Our] [added: In pursuit of serial innovation, our] research and development approach includes [removed: pursuing multiple modalities tailored to the specific disease target under investigation, using clinical and non-clinical data to inform drug discovery and development, and] advancing multiple candidates into clinical trials [added: and pursuing multiple modalities] with the goal of bringing first-in-class [removed: followed by] [added: and/or] best-in-class therapies to patients.

Over the last several years, [removed: we have expanded] [added: this strategy has led us to expand] our capabilities to include additional innovative therapeutic 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.

[removed: We have increased our internal investment in cell and genetic therapies, including establishment] [added: These investments include the development] of a [removed: new] [added: Boston-based campus for] research and current Good Manufacturing Practices (“cGMP”) clinical manufacturing [removed: site in Boston, Massachusetts] [added: capabilities dedicated] to [removed: bring together] our portfolio of cell and genetic therapy technologies and teams.

- [removed: validated] targets [removed: that address] [added: validated by] causal human biology;

- [removed: rapid] [added: efficient] path to registration and [removed: approval; and][added: approval.]

- potential for transformative benefit regardless of [removed: modality.][added: modality; and]

To augment our internal programs, we [removed: plan to continue acquiring] [added: acquire] businesses and technologies and [removed: collaborating] [added: collaborate] with biopharmaceutical and technology companies, leading academic research institutions, government laboratories, foundations and other organizations to advance research in our disease areas [added: of] interest, as well as to access technologies needed to execute [added: on our strategy.]

The absence of working CFTR [removed: proteins] [added: protein] results in poor flow of salt and water into and out of cells in a number of organs, including the lungs.

CFTR [removed: potentiators] [added: potentiators,] such as [removed: ivacaftor and deutivacaftor, formerly VX-561,] [added: ivacaftor,] increase the probability that the CFTR protein channels open on the cell surface, increasing the flow of salt and water into and out of the cell.

CFTR correctors, such as lumacaftor, tezacaftor, [removed: elexacaftor,] and [removed: vanzacaftor, formerly VX-121,] [added: elexacaftor,] increase the proper protein processing and folding of mutant CFTR proteins, such that a larger amount of [removed: functional CFTR protein reaches the cell surface.]

We have completed [removed: enrollment of two] [added: the] Phase 3 [removed: global, randomized, double-blind, active-controlled clinical trials] [added: global program] evaluating a once-daily investigational triple combination of vanzacaftor/tezacaftor/deutivacaftor.

[removed: Clinical and preclinical] [added: The] data [removed: indicate] [added: from these trials demonstrate] that this triple combination [removed: has the potential to provide enhanced] [added: provides additional] benefit beyond [removed: TRIKAFTA/KAFTRIO] [added: TRIKAFTA] for people with CF who have the F508del mutation on at least one [removed: allele.][added: allele that is CFTR modulator responsive.]

Our Phase 3 program [removed: consists] [added: consisted] of two 52-week [added: randomized, controlled] clinical trials, SKYLINE 102 and SKYLINE 103, which [removed: evaluate] [added: evaluated] the safety and efficacy of the new combination relative to TRIKAFTA in approximately 950 people with CF 12 years of age and [removed: older.][added: older, and the single arm RIDGELINE trial, evaluating vanzacaftor/tezacaftor/deutivacaftor in children with CF 6 to 11 years of age.]

We continue to identify and develop additional CFTR modulators with the goal of [removed: achieving carrier levels of CFTR activity for people with CF] [added: developing best-in-class medicines that can help more patients] who respond to CFTR [removed: modulators.][added: modulators achieve carrier levels of CFTR activity.]

[removed: We continue to research genetic therapies, such as mRNA, and gene-editing approaches,] [added: In order] to treat people with CF who do not make [added: full-length] CFTR [removed: protein and,] [added: protein, and] as a result, cannot benefit from our CFTR [removed: modulators.][added: modulators, we are researching and developing genetic therapies, such as mRNA, and gene-editing approaches to CF.]

[removed: We have initiated a] [added: At the end of 2023, we completed dosing in the] single ascending dose [added: part of the Phase 1/2] clinical trial for VX-522 in people with CF, [removed: which is active] and [removed: enrolling patients.][added: we initiated the]

SCD and [removed: beta thalassemia] [added: TDT] are hemoglobinopathies, a group of inherited blood disorders that result from gene mutations that alter hemoglobin, a protein in red blood cells that delivers oxygen throughout the body.

SCD is caused by the change of a single amino acid in the [removed: hemoglobin] [added: β-hemoglobin] gene that causes red cells to change shape in settings of low oxygen.

We have completed Phase 3 development of a triple combination of vanzacaftor/tezacaftor/deutivacaftor, which has demonstrated the potential to provide additional clinical benefits, as well as once-daily dosing, to people with CF who have at least one mutation in their CFTR gene that is responsive to CFTR modulators.

We plan to submit global regulatory filings for this new triple combination regimen by mid-2024.

In addition, we have initiated the multiple ascending dose portion of the Phase 1/2 clinical trial of VX-522, an investigational messenger ribonucleic acid (“mRNA”) therapeutic we are developing in collaboration with Moderna, Inc. (“Moderna”).

We expect to share data from this clinical trial in late 2024 or early 2025.

VX-522 has the potential to benefit the more than 5,000 people with CF in North America, Europe and Australia who do not make full-length CFTR protein and cannot benefit from CFTR modulators.

In addition, we are continuing our research and development of CFTR modulators, with the aim of developing best-in-class medicines that can help more patients achieve carrier levels of CFTR function, and we are investigating additional potential treatments for people with CF who do not make full-length CFTR protein and cannot benefit from CFTR modulators.

In SCD and TDT, our goal is to eliminate vaso-occlusive crises (“VOCs”) (as well as vaso-occlusive organ damage) and transfusion dependence, respectively.

Our marketed therapy is CASGEVY (exagamglogene autotemcel, or “exa-cel”), an ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, which has been approved in the United States (“U.S.”), the European Union (“E.U.”), the United Kingdom (“U.K.”), the Kingdom of Saudi Arabia (“Saudi Arabia”), and the Kingdom of Bahrain (“Bahrain”) for treatment of SCD and TDT.

We estimate approximately 35,000 people with severe SCD or TDT could be eligible for CASGEVY in the U.S. and Europe, with additional eligible people in Saudi Arabia and Bahrain.

In connection with our serial innovation approach, we are progressing preclinical assets for gentler conditioning for CASGEVY, which could broaden the eligible patient population, and we are investigating small molecules for the potential treatment of SCD and TDT.

We plan to submit for regulatory approval of VX-548 in moderate-to-severe acute pain in the U.S. by mid-2024.

In addition, in December 2023, we announced positive results from the Phase 2 clinical trial evaluating VX-548 for the treatment of diabetic peripheral neuropathy (“DPN”), a type of peripheral neuropathic pain.

We expect to advance VX-548 into pivotal development in DPN in 2024.

The following chart represents our clinical-stage programs, and select pre-clinical programs:


We have completed enrollment in Part C of this clinical trial.

VX-880 is on a protocol-specified pause, pending review of the totality of the data by the independent data monitoring committee and global regulators.

We have completed Part A of this Phase 1/2 clinical trial and we have initiated Part B in multiple centers and countries.

We initiated a Phase 1/2 clinical trial evaluating VX-670, an oligonucleotide-based approach that we have in-licensed from Entrada Therapeutics, Inc. (“Entrada”).

The clinical trial is active and enrolling in Canada and will initiate in the U.K. in the near term.

emerging technologies, products and product candidates.

Our CF medicines are the exemplar of this strategy, as we continue to reach more people with CF than ever before through label expansions, approvals of new medicines and expanded reimbursement.

In addition, we have obtained historic approvals for CASGEVY for the treatment of SCD and TDT and are working towards broad access for eligible patients to this potentially curative treatment option.

We continue to advance our broad and diverse pipeline and prepare for potential near-term global commercial launches in new disease areas, and further strengthen our financial profile.

| Cystic Fibrosis | | | | | | | | |

|  | | | 2019 | | | 2 years of age and older | | |

|  | | | 2020 | | | 2 years of age and older | | |

|  | | | 2018 | | | 6 years of age and older | | |

|  | | | 2018 | | | 6 years of age and older | | |

|  | | | 2015 | | | 1 year of age and older | | |

|  | | | 2012 | | | 1 month of age and older | | |

| Sickle Cell Disease and Transfusion-Dependent Beta Thalassemia | | | | | | | | |

|  | | | 2023 | | | 12 years of age and older | | |

(1) Specifies the youngest eligible age group in any major market.

CF

functional CFTR protein reaches the cell surface.

Our CFTR regimens target the underlying cause of disease and have been shown to improve CFTR protein function in people with CF, and as such have been shown to provide transformative benefit for people living with CF.

Our CF medicines are used by patients in over 60 countries, and TRIKAFTA/KAFTRIO is now approved and reimbursed or accessible in more than 40 of these countries.

CASGEVY, our therapy for SCD and TDT, was recently approved in the U.S., the E.U., the U.K. Saudi Arabia, and Bahrain.

We estimate approximately 35,000 people with severe SCD or TDT could be eligible for CASGEVY in the U.S. and Europe, with additional eligible people in Saudi Arabia and Bahrain.

We are evaluating a once-daily triple combination of vanzacaftor/tezacaftor/deutivacaftor, formerly known as VX-121/tezacaftor/VX-561, in Phase 3 clinical trials.

We believe this new triple-combination has the potential to provide enhanced benefits to CF patients who have at least one mutation in their CFTR gene.

In addition, in December 2022, the U.S. Food and Drug Administration (“FDA”), cleared our Investigational New Drug Application (“IND”) for VX-522, a messenger ribonucleic acid (“mRNA”) therapeutic we are developing in collaboration with Moderna, Inc. (“Moderna”), that has the potential to benefit the approximately 5,000 people with CF in North America, Europe and Australia who cannot benefit from CFTR modulators.

- *Sickle Cell Disease and Beta Thalassemia.* We have completed enrollment in two ongoing Phase 3 clinical trials of exagamglogene autotemcel (“exa-cel”), formerly known as CTX001, an investigational CRISPR/Cas9-based gene-editing therapy for severe sickle cell disease (“SCD”), and transfusion-dependent beta thalassemia (“TDT”).

In the fourth quarter of 2022, we completed European regulatory submissions for exa-cel and initiated a rolling submission in the United States (the “U.S.”).

The European Medicines Agency (“EMA”) and the Medicines and Healthcare products Regulatory Agency (“MHRA”) have validated the marketing authorization application (“MAA”) for exa-cel.

Our most advanced clinical trials in pain are three Phase 3 clinical trials of VX-548 as a potential treatment for moderate to severe acute pain.

In addition, we have initiated a Phase 2 clinical trial evaluating VX-548 in chronic neuropathic pain.

In the U.S., the IND is on hold.

We initiated a Phase 2 clinical trial of VX-864, a first-generation AAT corrector, to assess the impact of longer-term treatment on the liver, as well as the levels of functional AAT in the plasma.

- *Duchenne Muscular Dystrophy and Myotonic Dystrophy Type 1.* We are conducting IND-enabling studies for our first in vivo gene-editing therapy for Duchenne Muscular Dystrophy (“DMD”), and we expect to submit an IND for this program in 2023.

We continue to invest in active research to identify additional candidate therapies in support of the clinical stage programs described above and in other targets that are consistent with our core research strategy.

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

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

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

|  | | | elexacaftor/tezacaftor/ivacaftor and ivacaftor | | | E.U. (2020) | | | People with CF with at least one F508del mutation | | | 6 years of age and older | | |

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

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

|  | | | lumacaftor/ivacaftor | | | U.S. (2015) | | | People with CF homozygous for the F508del mutation | | | 1 year of age and older | | |

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

|  | | | ivacaftor | | | U.S. (2012) | | | People with CF with a mutation that is responsive to ivacaftor | | | 4 months of age and older | | |

| ivacaftor | | | E.U. (2012) | | | People with CF with R117H mutation or one of certain gating mutations | | | 4 months of age and older | | | | | |

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

Since the beginning of 2022, events that have resulted from our efforts include:

- The European Commission and the MHRA granted marketing authorization for KAFTRIO for the treatment of children with CF 6 through 11 years of age who have at least one F508del mutation in the CFTR gene.

- Health Canada granted marketing authorization for TRIKAFTA for people with CF 6 through 11 years of age who have at least one F508del mutation.

- The FDA approved the use of ORKAMBI for children with CF 12 to less than 24 months of age who are homozygous for the F508del mutation in the CFTR gene.

- In the fourth quarter of 2022, we submitted global regulatory filings for TRIKAFTA/KAFTRIO in children with CF 2 to 5 years of age and for KALYDECO in children with CF from 1 month to less than 4 months of age.

We continue to research and develop small molecule product candidates for the treatment of serious diseases, including CF, pain, AMKD, AAT deficiency (“AATD”) and DM1.

In addition, we have made several significant investments in external innovation, including:

- our collaborations with CRISPR Therapeutics AG (“CRISPR”) to access and develop therapeutics based on the CRISPR gene-editing technology, including an agreement under which we now lead the worldwide development, manufacturing and commercialization of exa-cel;

- our establishment of cell therapy programs for T1D through our acquisition of Semma;

- our acquisition of ViaCyte, Inc. (“ViaCyte”), a biotechnology company with intellectual property, tools, technologies and assets with potential to accelerate development of our stem-cell based T1D programs;

- our advancement of our genetic therapy programs for DMD and DM1, through our acquisition of Exonics, and our collaboration with Entrada Therapeutics, Inc. (“Entrada”), focused on intracellular Endosomal Escape Vehicle (“EEV”) therapeutics for DM1; and

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

Consistent with our research and development strategy, all of our investments in research and development and in external innovation are designed to deliver a portfolio with greater likelihood of success.

on our strategy.

We have established and we nurture such relationships with organizations around the world and intend to extend and leverage that experience to further our research efforts to discover transformational medicines for serious diseases.

We will continue to identify and evaluate potential acquisitions and collaborations that may be similar to or different from the transactions that we have engaged in previously.

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

For the Fiscal Year Ended December 31, [removed: 2022][added: 2023]

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: 2022] [added: 2023] (the last business day of the registrant’s most recently completed second fiscal quarter of [removed: 2022)] [added: 2023)] was [removed: $71.8] [added: $90.7] billion.

As of [removed: January 31, 2023,] [added: February 9, 2024,] the registrant had [removed: 257,091,441] [added: 258,307,816] shares of common stock outstanding.

Portions of the definitive proxy statement for the [removed: 2023] [added: 2024] Annual Meeting of Shareholders, which we expect to hold on May [removed: 17, 2023,] [added: 15, 2024,] are incorporated by reference into Part III of this Annual Report on Form 10-K.

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

Otherwise, including in discussions of our cystic [removed: fibrosis] [added: fibrosis, sickle cell disease, and beta thalassemia] development programs, we refer to our [removed: compounds] [added: product candidates] by their scientific (or generic) name or VX developmental designation.

| [PART I](#i426abec21e574c9bbd8ccf8e3524d2a6_10) | | | | | | | | |

| [Item 1C](#i426abec21e574c9bbd8ccf8e3524d2a6_2280). | | | [Cybersecurity](#i426abec21e574c9bbd8ccf8e3524d2a6_2280) | | | [62](#i426abec21e574c9bbd8ccf8e3524d2a6_2280) | | |

| [PART II](#i426abec21e574c9bbd8ccf8e3524d2a6_64) | | | | | | | | |

| [PART III](#i426abec21e574c9bbd8ccf8e3524d2a6_109) | | | | | | | | |

| [PART IV](#i426abec21e574c9bbd8ccf8e3524d2a6_127) | | | | | | | | |

| | | | [Signatures](#i426abec21e574c9bbd8ccf8e3524d2a6_136) | | | [93](#i426abec21e574c9bbd8ccf8e3524d2a6_136) | | |

| [PART I](#i5c4c42cb7ea848439e393b69b8c9b2a8_10) | | | | | | | | |

| [PART II](#i5c4c42cb7ea848439e393b69b8c9b2a8_64) | | | | | | | | |

| [PART III](#i5c4c42cb7ea848439e393b69b8c9b2a8_103) | | | | | | | | |

| [PART IV](#i5c4c42cb7ea848439e393b69b8c9b2a8_121) | | | | | | | | |

| | | | [Signatures](#i5c4c42cb7ea848439e393b69b8c9b2a8_130) | | | [90](#i5c4c42cb7ea848439e393b69b8c9b2a8_130) | | |

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: 2022] [added: 2023] regarding our filings under the Securities Exchange Act of 1934, as amended, that have not been resolved.

*Risk Management and Strategy*

We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to maintain the security, confidentiality, integrity, and availability of our business systems and confidential information, including personal information and intellectual property.

Our cybersecurity program includes systems and processes for assessing, identifying and managing material risks from cybersecurity threats and include maintenance and monitoring of information security policies aligned with global regulatory controls; user and employee awareness of cyber policies and practices; information systems configuration management; third-party risk management systems; identity and information asset protection; infrastructure security systems; and cyber threat operations with continuous monitoring and threat hunting.

This program includes processes to oversee and identify material risks from cybersecurity threats associated with our use of third-party service providers.

We also engage a range of third-party experts in connection with various development, implementation, and maintenance activities related to our cybersecurity program.

Our cybersecurity program is integrated into our overall risk management systems, including our annual enterprise risk management program, internal audit program, business continuity and crisis management programs, third-party risk management program, insurance risk management program, and employee compliance programs.

As part of our overall risk management program, we maintain a global insurance portfolio with comprehensive cyber coverage.

Our Chief Information Security Officer (“CISO”) and the Information Security function advises, consults with, or provides input to each of these programs to ensure that material risks from cybersecurity threats are appropriately assessed, identified, and managed.

As of the date of this report, there have been no cybersecurity threats that have materially affected or are reasonably likely to materially affect our business, operations, or financial condition.

*Governance*

While our board of directors has oversight responsibility for risk management generally, the Audit and Finance Committee (“Audit Committee”) is specifically responsible for overseeing our cybersecurity risk management program to ensure that cybersecurity risks are identified, assessed, managed, and monitored.

Our CISO provides periodic updates to the Audit Committee in this regard, and covers the state of our cybersecurity program, supported by key performance indicators across the range of cybersecurity functions related to risk management and governance, identity and information asset protection, core security and endpoint security, and cyber threat operations.

These updates include descriptions of cybersecurity incidents of interest, including those associated with our third-party service providers; the board will be informed promptly of material risks from cybersecurity threats.

We strive to create a culture of cybersecurity resilience and awareness and believe that cybersecurity is the responsibility of every employee and contractor.

At the same time, primary responsibility for assessing, monitoring, and managing our cybersecurity risks lies with our CISO, Michael Daly.

Mr. Daly has more than 35 years of experience in security and information systems and spent 25 years with Raytheon Technologies, most recently as Chief Technology Officer of Cybersecurity, Special Missions, Training & Services.

Mr. Daly supported the U.S. President's National Security Telecommunications Advisory Committee for more than 20 years, is a member of the Massachusetts Cybersecurity Strategy Council, and is Chair of the Kogod Cybersecurity Governance Center at American University.

Formerly, he served on the Rhode Island Homeland Security Advisory Board and was a member of various commercial cyber product councils.

Mr. Daly oversees a team of skilled cybersecurity professionals who have Certified Information Systems Security Professional (“CISSP”) credentials, Global Information Assurance Certification from the SANS Institute, and other security and network certifications.

The cybersecurity team monitors and evaluates our cybersecurity posture and performance on an ongoing basis, including through regular vulnerability scans, penetration tests, and threat intelligence feeds.

The cybersecurity team uses various tools and methodologies to manage cybersecurity risk that are tested on a regular cadence,

and assesses and evaluates cybersecurity incidents, escalating certain cybersecurity incidents to Mr. Daly according to protocol.

Mr. Daly is continually informed regarding the performance of the cybersecurity program, as well as the latest developments in cybersecurity, including potential threats and innovative risk management techniques.

In addition to our corporate headquarters, we lease an aggregate of approximately [removed: 838,000] [added: 840,000] square feet of space globally.

As of [removed: January 31, 2023,] [added: February 9, 2024,] there were [removed: 107] [added: 106] holders of record of our common stock.

[removed: ][added: ]

In [removed: June 2021,] [added: February 2023,] our Board of Directors approved a share repurchase program (the [removed: “2021 Share] [added: “Share] Repurchase [removed: Program”),] [added: Program”)] pursuant to which we [removed: were] [added: are] authorized to repurchase up to [removed: $1.5] [added: $3.0] billion of our common [removed: stock by December 31, 2022.][added: stock.]

Our Share Repurchase Program does not have an expiration date and can be discontinued at any time.

The table set forth below shows repurchases of securities by us during the three months ended December 31, 2023 under our Share Repurchase Program.

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

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

| Period | | | Total Number of Shares Purchased | | | | | | Average Price Paid per Share | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Programs (1) | | | | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs (1) | | |

| Oct. 1, 2023 to Oct. 31, 2023 | | | 179,000 | | | | | | $ | 360.95 | | | | | 179,000 | | | | | | $ | 2,651,316,977 | |

| Nov. 1, 2023 to Nov. 30, 2023 | | | 172,552 | | | | | | $ | 362.50 | | | | | 172,552 | | | | | | $ | 2,588,767,489 | |

| Dec. 1, 2023 to Dec. 31, 2023 | | | 46,464 | | | | | | $ | 352.39 | | | | | 46,464 | | | | | | $ | 2,572,394,027 | |

| Total | | | 398,016 | | | | | | $ | 360.62 | | | | | 398,016 | | | | | | $ | 2,572,394,027 | |

(1)Under our Share Repurchase Program, we are authorized to purchase shares from time to time through open market or privately negotiated transactions.

Such purchases may be made pursuant to Rule 10b5-1 plans or other means as determined by our management and in accordance with the requirements of the Securities and Exchange Commission.

We did not repurchase any shares of our common stock under the 2021 Share Repurchase Program in the three months ended December 31, 2022.

On December 31, 2022, the 2021 Share Repurchase Program expired with $499.7 million remaining authorization.

In February 2023, our Board of Directors approved a share repurchase program (the “2023 Share Repurchase Program”) pursuant to which we are authorized to repurchase up to $3.0 billion of our common stock.

The information required by this Item 8 is contained on pages F-1 through [removed: F-45] [added: F-46] of this Annual Report on Form 10-K.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2022.][added: 2023.]

Based on our assessment, management has concluded that, as of December 31, [removed: 2022,] [added: 2023,] our internal control over financial reporting is effective based on those criteria.

(3) Changes in Internal Controls. During the quarter ended December 31, [removed: 2022,] [added: 2023,] there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

[removed: (4) Report] [added: Report] of Independent Registered Public Accounting Firm

We have audited Vertex Pharmaceuticals Incorporated’s internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] based on criteria established in Internal [removed: Control-Integrated] [added: 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: 2022,] [added: 2023,] 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: 2022] [added: 2023] consolidated financial statements of the Company and our report dated February [removed: 10, 2023,] [added: 15, 2024,] expressed an unqualified opinion thereon.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s [added: Annual] Report on Internal Control Over Financial Reporting.

(4)

February 15, 2024

February 10, 2023

*Rule 10b5-1 Trading Plans*

Our policy governing transactions in our securities by our directors, officers, and employees permits our officers, directors and employees to enter into trading plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which plans are intended to satisfy the affirmative defense conditions of Rule 10b5-1 (each, a “Trading Plan”).

None of our executive officers or directors entered into a Trading Plan in the fourth quarter of 2023.

*Other Information*

Dr. Bastiano Sanna has stepped down from his role as Executive Vice President and Chief of Cell and Genetic Therapies for personal reasons.

Dr. Sanna will continue to provide advisory services in his new role as a consultant to the company.

*Amended and Restated By-Laws*

On February 8, 2023, our Board of Directors approved an amendment and restatement of our By-Laws (the “Amended and Restated By-Laws”), effective immediately upon approval by the Board.

The Amended and Restated By-Laws had the effect of amending the previous By-Laws of the Company by:

- expanding the advanced notice by-law to cover both board nominations by a shareholder and any other business brought by a shareholder before an annual or special meeting (unless the proposal is made pursuant to Rule 14a-8 of the Exchange Act, in which case Rule 14a-8 of the Exchange Act will govern);

- providing that, for an annual meeting of shareholder, a shareholders’ advanced notice of shareholder business or a nomination must be provided no earlier than 120 days and no later than 90 days prior to the anniversary date of the immediately preceding annual meeting;

- expanding the disclosures required to be made by a shareholder seeking to bring business or a nomination before a shareholders’ meeting under the by-laws, including, among other things, certain ownership information of the nominating shareholder and a completed director questionnaire with respect to the nominee;

- requiring a nominating shareholder to comply with Rule 14a-9 under the U.S. Securities Exchange Act of 1934, as amended, which is also known as the “universal proxy card rules”;

- mandating that a nominating shareholder use a color for its proxy card that is other than white;

- expressly permitting the Chief Executive Officer to call special meetings of the Board, and increasing the number of directors necessary to call a special meeting from two to three; and

- expressly stating that the Chief Executive Officer of the Company (which may or may not be the same person as the President of the Company) is an officer of the Company.

The amendments also include various conforming, technical and non-substantive changes, including gender-neutral language.

The foregoing summary of the amendments to the Amended and Restated By-Laws does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated By-Laws, which is filed as Exhibit 3.2 to this Annual Report on Form 10-K and is incorporated herein by reference.

*Jeffrey Leiden Amendment*

On February 8, 2023, the Company entered into an amendment to Dr. Jeffrey Leiden’s employment agreement, which was scheduled to expire on March 31, 2024.

Among other things, the amendment extends the term for one year through March 31, 2025 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 10.23 to this Annual Report on Form 10-K and incorporated herein by reference.

Portions of our definitive Proxy Statement for the [removed: 2023] [added: 2024] Annual Meeting of Shareholders [removed: (“2023] [added: (“2024] Proxy Statement”) are incorporated by reference into this Part III of our Annual Report on Form 10-K.

The information regarding directors required by this Item 10 will be included in our [removed: 2023] [added: 2024] 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: 2024] [added: 2025] 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: 2023] [added: 2024] Proxy Statement and is incorporated herein by reference.

The information required by this Item 12 will be included in the [removed: 2023] [added: 2024] Proxy Statement and is incorporated herein by reference.

The information required by this Item 13 will be included in the [removed: 2023] [added: 2024] Proxy Statement and is incorporated herein by reference.

The information required by this Item 14 will be included in the [removed: 2023] [added: 2024] Proxy Statement and is incorporated herein by reference.

| Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) | | | [removed: F-[1](#i5c4c42cb7ea848439e393b69b8c9b2a8_133)] [added: F-[1](#i426abec21e574c9bbd8ccf8e3524d2a6_139)] | | |

| Consolidated Statements of [removed: Operations] [added: Income] for the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020] [added: 2021] | | | [removed: F-[3](#i5c4c42cb7ea848439e393b69b8c9b2a8_136)] [added: F-[3](#i426abec21e574c9bbd8ccf8e3524d2a6_142)] | | |

| Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020] [added: 2021] | | | [removed: F-[4](#i5c4c42cb7ea848439e393b69b8c9b2a8_139)] [added: F-[4](#i426abec21e574c9bbd8ccf8e3524d2a6_145)] | | |

| Consolidated Balance Sheets as of December 31, [removed: 2022] [added: 2023] and [removed: 2021] [added: 2022] | | | [removed: F-[5](#i5c4c42cb7ea848439e393b69b8c9b2a8_142)] [added: F-[5](#i426abec21e574c9bbd8ccf8e3524d2a6_148)] | | |

| Consolidated Statements of Shareholders’ Equity for the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020] [added: 2021] | | | [removed: F-[6](#i5c4c42cb7ea848439e393b69b8c9b2a8_145)] [added: F-[6](#i426abec21e574c9bbd8ccf8e3524d2a6_151)] | | |

| Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020] [added: 2021] | | | [removed: F-[7](#i5c4c42cb7ea848439e393b69b8c9b2a8_148)] [added: F-[7](#i426abec21e574c9bbd8ccf8e3524d2a6_154)] | | |

| Notes to Consolidated Financial Statements | | | [removed: F-[8](#i5c4c42cb7ea848439e393b69b8c9b2a8_151)] [added: F-[8](#i426abec21e574c9bbd8ccf8e3524d2a6_157)] | | |

| 3.2 | | | [Amended and Restated By-Laws of Vertex Pharmaceuticals Incorporated.](https://www.sec.gov/Archives/edgar/data/875320/000087532023000007/a10k_2022-exhibit32.htm) | | | [removed: X] | | | [added: 10-K (Exhibit 3.2)] | | | [added: February 10, 2023] | | | [added: 000-19319] | | |

| 4.2 | | | [Description of Securities.](https://www.sec.gov/Archives/edgar/data/875320/000087532023000007/a10k_2022-exhibit42.htm) | | | [removed: X] | | | [added: 10-K (Exhibit 4.2)] | | | [added: February 10, 2023] | | | [added: 000-19319] | | |

| [removed: 10.7] [added: 10.8] | | | [Lease, dated May 5, 2011, between Fifty Northern Avenue LLC and Vertex Pharmaceuticals Incorporated.†](https://www.sec.gov/Archives/edgar/data/0000875320/000087532021000027/a2021q210-qexhibit102.htm) | | | | | | 10-Q (Exhibit 10.2) | | | July 30, 2021 | | | 000-19319 | | |

| [removed: 10.8] [added: 10.9] | | | [Lease, dated May 5, 2011, between Eleven Fan Pier Boulevard LLC and Vertex Pharmaceuticals Incorporated.†](https://www.sec.gov/Archives/edgar/data/0000875320/000087532021000027/a2021q210-qexhibit103.htm) | | | | | | 10-Q (Exhibit 10.3) | | | July 30, 2021 | | | 000-19319 | | |

| [removed: 10.9] [added: 10.10] | | | [Credit Agreement, dated as [removed: of](https://www.sec.gov/Archives/edgar/data/875320/000087532022000030/a2022q210-qexhibit101.htm) [July] [added: of July] 1, [removed: 2022](https://www.sec.gov/Archives/edgar/data/875320/000087532022000030/a2022q210-qexhibit101.htm)[,] [added: 2022,] by and among Vertex Pharmaceuticals Incorporated, Bank of America, N.A. and the other lenders party thereto.](https://www.sec.gov/Archives/edgar/data/875320/000087532022000030/a2022q210-qexhibit101.htm) | | | | | | 10-Q (Exhibit 10.1) | | | August 5, 2022 | | | 000-19319 | | |

| [removed: 10.1] [added: 10.11] | | | [Amended and Restated 2006 Stock and Option Plan.*](http://www.sec.gov/Archives/edgar/data/875320/000087532018000029/a2018q310-q_exhibit101.htm) | | | | | | 10-Q (Exhibit 10.1) | | | October 25, 2018 | | | 000-19319 | | |

| [removed: 10.11] [added: 10.15] | | | [Form of [added: Restricted] Stock [removed: Option] [added: Unit] Agreement under [removed: Amended and Restated 2006] [added: 2013] Stock and Option Plan [removed: (granted prior to July 30, 2013).*](http://www.sec.gov/Archives/edgar/data/875320/000110465906035103/a06-11895_1ex10d2.htm)] [added: (U.S.).*](http://www.sec.gov/Archives/edgar/data/875320/000087532016000067/vrtx10k_2015-exhibit1025.htm)] | | | | | | [removed: 8-K] [added: 10-K] (Exhibit [removed: 10.2)] [added: 10.25)] | | | [removed: May 15, 2006] [added: February 16, 2016] | | | 000-19319 | | |

| [removed: 10.15] [added: 10.16] | | | [Form of Restricted Stock [added: Unit] Agreement under 2013 Stock and Option [removed: Plan.*](http://www.sec.gov/Archives/edgar/data/875320/000087532015000012/vrtx10k_2014-exhibit1018.htm)] [added: Plan (International).*](http://www.sec.gov/Archives/edgar/data/875320/000087532015000012/vrtx10k_2014-exhibit1019.htm)] | | | | | | 10-K (Exhibit [removed: 10.18)] [added: 10.19)] | | | February 13, 2015 | | | 000-19319 | | |

| [removed: 10.16] [added: 10.17] | | | [Form of Restricted Stock Unit Agreement [removed: under] [added: Under] 2013 Stock and Option [removed: Plan (U.S.).*](http://www.sec.gov/Archives/edgar/data/875320/000087532016000067/vrtx10k_2015-exhibit1025.htm)] [added: Plan.*](http://www.sec.gov/Archives/edgar/data/875320/000087532020000007/a10k2019-exhibit1017.htm)] | | | | | | 10-K (Exhibit [removed: 10.25)] [added: 10.17)] | | | February [removed: 16, 2016] [added: 13, 2020] | | | 000-19319 | | |

| [removed: 10.19] [added: 10.18] | | | [Non-Employee Director Deferred Compensation Plan.*](http://www.sec.gov/Archives/edgar/data/875320/000087532016000067/vrtx10k_2015-exhibit1027.htm) | | | | | | 10-K (Exhibit 10.27) | | | February 16, 2016 | | | 000-19319 | | |

| [removed: 10.20] [added: 10.19] | | | [Vertex Pharmaceuticals Incorporated Employee Stock Purchase Plan.*](http://www.sec.gov/Archives/edgar/data/875320/000130817919000189/lvrt2019_def14a.htm) | | | | | | DEF 14A (Appendix B) | | | April 26, 2019 | | | 000-19319 | | |

| [removed: 10.21] [added: 10.20] | | | [Employment Agreement, dated as of April 1, 2020, by and between Vertex Pharmaceuticals Incorporated and Jeffrey M. Leiden, M.D., Ph.D.*](http://www.sec.gov/Archives/edgar/data/875320/000087532020000011/employmentagreement.htm) | | | | | | 8-K (Exhibit 10.1) | | | April 1, 2020 | | | 000-19319 | | |

| [removed: 10.22] [added: 10.21] | | | [Amendment No. 1 to Employment Agreement, between Jeffrey M. Leiden and Vertex Pharmaceuticals Incorporated, dated as of February 7, 2022.*](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1024.htm) | | | | | | 10-K (Exhibit 10.24) | | | February 9, 2022 | | | 000-19319 | | |

| [removed: 10.23] [added: 10.22] | | | [Amendment No. 2 to Employment Agreement, between Jeffrey M. Leiden and Vertex Pharmaceuticals Incorporated, dated as of [removed: February](https://www.sec.gov/Archives/edgar/data/875320/000087532023000007/a10k_2022-exhibit1023.htm) [8](https://www.sec.gov/Archives/edgar/data/875320/000087532023000007/a10k_2022-exhibit1023.htm)[,] [added: February 8,] 2023*](https://www.sec.gov/Archives/edgar/data/875320/000087532023000007/a10k_2022-exhibit1023.htm) | | | [removed: X] | | | [added: 10-K (Exhibit 10.23)] | | | [added: February 10, 2023] | | | [added: 000-19319] | | |

| [removed: 10.24] [added: 10.23] | | | [Employee Non-disclosure, Non-competition and Inventions Agreement between Jeffrey M. Leiden and Vertex Pharmaceuticals Incorporated, 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: 10.24] | | | [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: 10.25] | | | [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: 10.26] | | | [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: 10.27] | | | [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: 10.28] | | | [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: 10.29] | | | [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: 10.30] | | | [Third Amended and Restated Employment Agreement, dated as of February 26, 2013, between Vertex Pharmaceuticals Incorporated and Amit Sachdev.*](http://www.sec.gov/Archives/edgar/data/875320/000087532017000017/a10k_2016-exhibit1042.htm) | | | | | | 10-K (Exhibit 10.42) | | | February 23, 2017 | | | 000-19319 | | |

| [removed: 10.32] [added: 10.31] | | | [Third Amended and Restated Change of Control Agreement, dated as of February 26, 2013, between Vertex Pharmaceuticals Incorporated and Amit Sachdev.*](http://www.sec.gov/Archives/edgar/data/875320/000087532017000017/a10k_2016-exhibit1043.htm) | | | | | | 10-K (Exhibit 10.43) | | | February 23, 2017 | | | 000-19319 | | |

| [removed: 10.33] [added: 10.32] | | | [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 | | |

| [removed: 10.34] [added: 10.33] | | | [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 | | |

| [removed: 10.35] [added: 10.34] | | | [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) | | | | | | 10-K (Exhibit 10.36) | | | February 9, 2022 | | | 000-19319 | | |

| [removed: 10.36] [added: 10.35] | | | [Change of Control 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-exhibit1037.htm) | | | | | | 10-K (Exhibit 10.37) | | | February 9, 2022 | | | 000-19319 | | |

| [removed: 10.37] [added: 10.36] | | | [Vertex Pharmaceuticals Employee Compensation [removed: Plan.*](https://www.sec.gov/Archives/edgar/data/875320/000087532023000007/a10k_2022-exhibit1037.htm)] [added: Plan.*](https://www.sec.gov/Archives/edgar/data/875320/000087532024000062/a10k_2023-exhibit1036.htm)] | | | X | | | | | | | | | | | |

| [removed: 10.38] [added: 10.37] | | | [Vertex Pharmaceuticals Non-Employee Board Compensation.*](https://www.sec.gov/Archives/edgar/data/875320/000087532022000007/a10k_2021-exhibit1039.htm) | | | | | | 10-K (Exhibit 10.39) | | | February 9, 2022 | | | 000-19319 | | |

| 21.1 | | | [Subsidiaries of Vertex Pharmaceuticals [removed: Incorporated.](https://www.sec.gov/Archives/edgar/data/875320/000087532023000007/a10k_2022-exhibit211.htm)] [added: Incorporated.](https://www.sec.gov/Archives/edgar/data/875320/000087532024000062/a10k_2023-exhibit211.htm)] | | | X | | | | | | | | | | | |

| 23.1 | | | [Consent of Independent Registered Public Accounting Firm, Ernst & Young [removed: LLP.](https://www.sec.gov/Archives/edgar/data/875320/000087532023000007/a10k_2022-exhibit231.htm)] [added: LLP.](https://www.sec.gov/Archives/edgar/data/875320/000087532024000062/a10k_2023-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/875320/000087532023000007/a10k_2022-exhibit311.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/875320/000087532024000062/a10k_2023-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/875320/000087532023000007/a10k_2022-exhibit312.htm)] [added: 2002.](https://www.sec.gov/Archives/edgar/data/875320/000087532024000062/a10k_2023-exhibit312.htm)] | | | X | | | | | | | | | | | |

| 10.7 | | | [Amendment No. 1 to Amended and Restated Joint Development and Commercialization Agreement, dated December 23, 3023, between Vertex Pharmaceuticals Incorporated, Vertex Pharmaceuticals (Europe) Limited and CRISPR Therapeutics AG, CRISPR Therapeutics Limited, CRISPR Therapeutics, Inc., TRACR Hematology Ltd.†](https://www.sec.gov/Archives/edgar/data/875320/000087532024000062/a10k_2023-exhibit107.htm) | | | X | | | | | | | | | | | |

| Clawback Policy | | | | | | | | | | | | | | | | | |

| 97.1 | | | [Policy Relating to Recovery of Erroneously Awarded Compensation](https://www.sec.gov/Archives/edgar/data/875320/000087532024000062/a10k_2023-exhibit971.htm) | | | X | | | | | | | | | | | |

| 10.17 | | | [Form of Restricted Stock Unit Agreement under 2013 Stock and Option Plan (International).*](http://www.sec.gov/Archives/edgar/data/875320/000087532015000012/vrtx10k_2014-exhibit1019.htm) | | | | | | 10-K (Exhibit 10.19) | | | February 13, 2015 | | | 000-19319 | | |

| 10.18 | | | [Form of Restricted Stock Unit Agreement Under 2013 Stock and Option Plan.*](http://www.sec.gov/Archives/edgar/data/875320/000087532020000007/a10k2019-exhibit1017.htm) | | | | | | 10-K (Exhibit 10.17) | | | February 13, 2020 | | | 000-19319 | | |

| February [removed: 10, 2023] [added: 15, 2024] | | | By: | | | /s/ Reshma Kewalramani | | |

| Reshma Kewalramani | | | | | | | | | | | | President, Chief Executive Officer and Director (Principal Executive Officer) | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

| Charles F. Wagner, Jr. | | | | | | | | | | | | Executive Vice President and Chief Financial Officer (Principal Financial Officer) | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

| Kristen C. Ambrose | | | | | | | | | | | | Senior Vice President and Chief Accounting Officer (Principal Accounting Officer) | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

| Jeffrey M. Leiden | | | | | | | | | | | | Executive Chairman | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

| Sangeeta N. Bhatia | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

| Lloyd Carney | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

| Alan Garber | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

| Terrence C. Kearney | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

| Diana McKenzie | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

| Bruce I. Sachs | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

| Suketu Upadhyay | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February [removed: 10, 2023] [added: 15, 2024] | | | | | | | | | | | | | | |

We have audited the accompanying consolidated balance sheets of Vertex Pharmaceuticals Incorporated (the Company) as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] the related consolidated statements of [removed: operations,] [added: income,] comprehensive income, shareholders’ [removed: equity,] [added: equity] and cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] 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: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] 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: 2022,] [added: 2023,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 [removed: framework)] [added: framework),] and our report dated February [removed: 10, 2023,] [added: 15, 2024,] expressed an unqualified opinion thereon.

| *How We Addressed the Matter in Our Audit* | | | | | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s revenue recognition process, including controls over [removed: the underlying assumptions and inputs used by management to estimate amounts due to third-party payors and the completeness and accuracy] [added: management’s review] of the [removed: data used in the estimates.] [added: allowances for Medicaid rebates.] We [removed: also] tested the Company’s controls to assess the completeness and accuracy of the current and historical data that supports the [removed: estimate.] [added: Medicaid estimate, significant assumptions related to the inputs utilized as well as management’s review of the application of the government pricing regulations.] Our audit procedures to test the [removed: Company’s recognition of net product revenues] [added: allowances for rebates owed pursuant to the Medicaid Drug Rebate Program in the U.S.,] included, [removed: among others, assessing] the [added: following: we performed audit procedures to assess the] methodology used to determine the estimate and [removed: testing] [added: tested] the significant assumptions [removed: and] [added: as well as] the underlying data used by the Company in its [removed: analysis, which included] [added: analysis. We also assessed the] historical [added: accuracy of the Company’s estimates of Medicaid rebates by comparing assumptions to historical trends and evaluating the change from prior periods. We further tested the completeness and accuracy of the underlying data used in the Company’s calculations through reconciliation to third-party invoices,] claims [removed: data.] [added: data and actual cash payments.] In addition, we involved our government pricing [removed: subject matter professionals] [added: specialists] to assist in evaluating management’s methodology and calculations used in the measurement of certain estimated rebates. [removed: To assess the payor mix assumptions we tested contracted rates, historical claims and payment data and related trends, and other relevant factors. We also assessed the historical accuracy of the Company’s estimates of third-party payor rebates.] | | |

Consolidated Statements of [removed: Operations][added: Income]

| | | | [added: 2023 | | | | | |] 2022 | | | | | | 2021 | | | | | | 2020 | | |

| Product revenues, net | | | $ | [removed: 8,930.7] [added: 9,869.2] | | | | | $ | [removed: 7,573.4] [added: 8,930.7] | | | | | $ | [removed: 6,202.8] [added: 7,573.4] | |

| Other revenues | | | — | | | | | | [removed: 1.0] [added: —] | | | | | | [removed: 2.9] [added: 1.0] | | |

| Total revenues | | | [removed: 8,930.7] [added: 9,869.2] | | | | | | [removed: 7,574.4] [added: 8,930.7] | | | | | | [removed: 6,205.7] [added: 7,574.4] | | |

| Cost of sales | | | [removed: 1,080.3] [added: 1,262.2] | | | | | | [removed: 904.2] [added: 1,080.3] | | | | | | [removed: 736.3] [added: 904.2] | | |

| Research and development expenses | | | [removed: 2,540.3] [added: 3,162.9] | | | | | | [removed: 1,937.8] [added: 2,540.3] | | | | | | [removed: 1,644.9] [added: 1,937.8] | | |

| Acquired in-process research and development expenses | | | [removed: 115.5] [added: 527.1] | | | | | | [removed: 1,113.3] [added: 115.5] | | | | | | [removed: 184.6] [added: 1,113.3] | | |

| Selling, general and administrative expenses | | | [removed: 944.7] [added: 1,136.6] | | | | | | [removed: 840.1] [added: 944.7] | | | | | | [removed: 770.5] [added: 840.1] | | |

| Change in fair value of contingent consideration | | | [removed: (57.5)] [added: (51.6)] | | | | | | [removed: (3.1)] [added: (57.5)] | | | | | | [removed: 13.1] [added: (3.1)] | | |

| Total costs and expenses | | | [removed: 4,623.3] [added: 6,037.2] | | | | | | [removed: 4,792.3] [added: 4,623.3] | | | | | | [removed: 3,349.4] [added: 4,792.3] | | |

| Income from operations | | | [removed: 4,307.4] [added: 3,832.0] | | | | | | [removed: 2,782.1] [added: 4,307.4] | | | | | | [removed: 2,856.3] [added: 2,782.1] | | |

| Interest income | | | [removed: 144.6] [added: 614.7] | | | | | | [removed: 4.9] [added: 144.6] | | | | | | [removed: 22.2] [added: 4.9] | | |

| Interest expense | | | [removed: (54.8)] [added: (44.1)] | | | | | | [removed: (61.5)] [added: (54.8)] | | | | | | [removed: (58.2)] [added: (61.5)] | | |

| Other (expense) income, net | | | [removed: (164.8)] [added: (22.8)] | | | | | | [removed: 4.9] [added: (164.8)] | | | | | | [removed: 296.6] [added: 4.9] | | |

| Income before provision for income taxes | | | [removed: 4,232.4] [added: 4,379.8] | | | | | | [removed: 2,730.4] [added: 4,232.4] | | | | | | [removed: 3,116.9] [added: 2,730.4] | | |

| Provision for income taxes | | | [removed: 910.4] [added: 760.2] | | | | | | [removed: 388.3] [added: 910.4] | | | | | | [removed: 405.2] [added: 388.3] | | |

| Net income | | | $ | [removed: 3,322.0] [added: 3,619.6] | | | | | $ | [removed: 2,342.1] [added: 3,322.0] | | | | | $ | [removed: 2,711.7] [added: 2,342.1] | |

| Basic | | | $ | [removed: 12.97] [added: 14.05] | | | | | $ | [removed: 9.09] [added: 12.97] | | | | | $ | [removed: 10.44] [added: 9.09] | |

| Diluted | | | $ | [removed: 12.82] [added: 13.89] | | | | | $ | [removed: 9.01] [added: 12.82] | | | | | $ | [removed: 10.29] [added: 9.01] | |

| Basic | | | [removed: 256.1] [added: 257.7] | | | | | | [removed: 257.7] [added: 256.1] | | | | | | [removed: 259.8] [added: 257.7] | | |

| Diluted | | | [removed: 259.1] [added: 260.5] | | | | | | [removed: 259.9] [added: 259.1] | | | | | | [removed: 263.4] [added: 259.9] | | |

Please refer to Note A, “Nature of Business and Accounting Policies,” for an explanation of amounts reclassified from “Research and development expenses” to “Acquired in-process research and development expenses” for [removed: 2021 and 2020.][added: 2021.]

The accompanying notes are an integral part of [removed: the] [added: these] consolidated financial statements.

| /s/ Michel Lagarde | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Michel Lagarde | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February 15, 2024 | | | | | | | | | | | | | | |

| /s/ Nancy A. Thornberry | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Nancy A. Thornberry | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February 15, 2024 | | | | | | | | | | | | | | |

| | | | | | | Medicaid Drug Rebate Program in the U.S. | | |

| *Description of the Matter* | | | | | | As discussed in Note A to the Company’s consolidated financial statements, the Company recognizes revenue from product sales based on amounts due from customers net of allowances for variable consideration, which include, among others, rebates mandated by law under Medicaid and other government pricing programs. The most significant estimates relate to government and private payor rebates, chargebacks, discounts and fees, collectively rebates. The Company includes an estimate of variable consideration in its transaction price at the time of sale, when control of the product transfers to the customer. The Company estimates its Medicaid and other government pricing accruals based on monthly sales, historical experience of claims submitted by the various states and jurisdictions, historical rebate rates and estimated lag time of the rebate invoices. Rebate accruals inclusive of estimated amounts due for claims not yet received or processed as part of the Company’s Medicaid program are recorded within accrued expenses on the Company’s consolidated balance sheet. Auditing the allowances for rebates owed pursuant to the Medicaid Drug Rebate Program in the U.S. was complex and judgmental due to the significant estimation required in determining certain assumptions including the levels of expected utilization of these rebates based on the amount of product sold to eligible patients, as well as the complexity of the government mandated calculations. The allowances for rebates owed pursuant to the Medicaid Drug Rebate Program in the U.S. are sensitive to these significant assumptions and calculations. | | |

February 15, 2024

| Net income | | | $ | 3,619.6 | | | | | $ | 3,322.0 | | | | | $ | 2,342.1 | |

The accompanying notes are an integral part of these consolidated financial statements.

| | | | 2023 | | | | | | 2022 | | |

| Long-term marketable securities | | | 2,497.8 | | | | | | 112.2 | | |

The accompanying notes are an integral part of these consolidated financial statements.

| Balance at December 31, 2023 | | | 257.7 | | | | | | $ | 2.6 | | | | | $ | 7,449.7 | | | | | $ | (14.3) | | | | | $ | 10,142.4 | | | | | $ | 17,580.4 | |

The accompanying notes are an integral part of these consolidated financial statements.

| Net income | | | $ | 3,619.6 | | | | | $ | 3,322.0 | | | | | $ | 2,342.1 | |

| Depreciation and amortization expenses | | | 181.3 | | | | | | 148.3 | | | | | | 125.6 | | |

| Payments related to finite-lived intangible assets | | | (58.0) | | | | | | — | | | | | | — | | |

| Net payments due to CRISPR Therapeutics related to finite-lived intangible assets | | | $ | 180.0 | | | | | $ | — | | | | | $ | — | |

The accompanying notes are an integral part of these consolidated financial statements.

Starting in the fourth quarter of 2023, we have received approval to market CASGEVY (exagamglogene autotemcel or “exa-cel”) for the treatment of SCD and TDT in the United States (“U.S.”), the European Union, the United Kingdom (“U.K.”), the Kingdom of Saudi Arabia, and the Kingdom of Bahrain.

Once a contract is determined to be within the

CF Product Revenues

which account for the largest portion of our total revenues.

CASGEVY Product Revenues

We expect to sell CASGEVY principally to a limited number of specialty distributors or directly to authorized hospitals and clinics in markets where a specialty distributor is not utilized.

Control is expected to transfer to our CASGEVY customers, resulting in revenue recognition, upon infusion of this gene-editing therapy into our patients.

The fair value of

We record the fair value of in-process research and development assets as of the transaction date of a business combination on our consolidated balance sheets as “Other intangible assets, net.” These assets are used in research and development activities but have not yet reached technological feasibility, which occurs when we complete the research and development efforts by obtaining regulatory approval to market an underlying product candidate.

We characterize in-process research and development assets on our consolidated balance sheets as indefinite-lived intangible assets until either they achieve regulatory approval and become finite-lived intangible assets, or the assets are impaired.

Upon completion of the associated research and development efforts, we will determine the remaining estimated life of the marketed product and begin amortizing the carrying value of the assets over this period.

*Finite-lived Intangible Assets*

We record finite-lived intangible assets at cost, net of accumulated amortization, on our consolidated balance sheets as “Other intangible assets, net.” Each of these assets relates to our marketed products and may include, among other things, completed research and development projects that were previously reflected on our consolidated balance sheets as in-process research and development assets, or rights to developed technology associated with in-licenses, regulatory approval milestones due to our collaborators, or other payments.

We amortize our finite-lived intangible assets using the straight-line method within “Cost of sales” over the remaining estimated life of the assets beginning in the period in which regulatory

approval is achieved or the assets are acquired and continuing through the period that we no longer have either exclusive rights to market the products associated with the assets or in-license rights to the intellectual property underlying the assets.

We test our finite-lived intangible assets for impairment if indicators are present or changes in circumstances suggest that the carrying value of the assets may not be recoverable.

If we determine that the carrying value of a finite-lived intangible asset may not be recoverable, we compare the carrying value of the asset to the undiscounted cash flows that we expect the asset to generate.

When we determine that a finite-lived intangible asset has become impaired, we write down the carrying value of the asset to its fair value and record an impairment charge in the period in which the impairment occurs.

currency forward contracts designed to mitigate their effect on our consolidated statements of income.

The proceeds of such vestings or exercises are assumed to have been used to repurchase outstanding stock using the treasury-stock method.

*Recently Issued Accounting Standards*

| /s/ Yuchun Lee | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Yuchun Lee | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February 10, 2023 | | | | | | | | | | | | | | |

| /s/ Margaret G. McGlynn | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Margaret G. McGlynn | | | | | | | | | | | | Director | | | | | | | | | | | | | | | February 10, 2023 | | | | | | | | | | | | | | |

| | | | | | | Revenue recognition - Payor Mix Impact on Measuring Variable Consideration | | |

| *Description of the Matter* | | | | | | As discussed in Note A to the Company’s consolidated financial statements, the Company records product sales at the net sales price, or “transaction price,” which requires the Company to make several significant estimates regarding the net sales price. The most significant estimates relate to government rebates, chargebacks, discounts and fees, and 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 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. | | |

February 10, 2023

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

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

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

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

| Other assets | | | 521.8 | | | | | | 110.8 | | |

| Balance, December 31, 2019 | | | 259.0 | | | | | | $ | 2.6 | | | | | $ | 7,937.6 | | | | | $ | (2.0) | | | | | $ | (1,853.0) | | | | | $ | 6,085.2 | |

| Depreciation expense | | | 148.3 | | | | | | 125.6 | | | | | | 109.5 | | |

| Proceeds from finance leases | | | — | | | | | | 22.6 | | | | | | 13.3 | | |

when that performance obligation is satisfied or as it is satisfied.

Amortization of capitalized internally developed software costs is recorded in depreciation expense over the useful life of the related asset.

*Fair Value of In-process Research and Development Assets and Contingent Payments*

The present-value models we use to estimate the fair values of in-process research and development assets and contingent payments pursuant to third-party license agreements and acquisitions incorporate significant assumptions.

We record the fair value of in-process research and development assets as of the transaction date of a business combination.

Each of these assets is accounted for as an indefinite-lived intangible asset and is maintained on our consolidated balance sheets until either the underlying project is completed or the asset becomes impaired.

If a project is completed, the carrying value of the related intangible asset is amortized as a part of “Cost of sales” over the remaining estimated life of the asset beginning in the period in which the project is completed.

We do not expect any recently issued accounting standards to have a significant impact on our consolidated financial statements.

We concluded that we did not have any alternative future use for the acquired in-process research and development and recorded this upfront payment to “Acquired in-process research and development expenses.” CRISPR has the potential to receive an additional one-time $200.0 million milestone payment upon receipt of the first marketing approval of exa-cel from the U.S. Food and Drug Administration or the European Commission.

We and CRISPR shared equally all expenses incurred under the Original CTX001 JDCA.

On July 1, 2021, the net profits and net losses incurred with respect to exa-cel pursuant to the A&R JDCA began to be allocated 60% to us and 40% to CRISPR, subject to certain adjustments, while all other product candidates and products continue to have net profits and net losses shared equally between the parties.

We concluded that the Original CTX001 JDCA and the A&R JDCA are cost-sharing arrangements, which result in the net impact of the arrangements being recorded in “Total costs and expenses” within our consolidated statements of operations.

During the three years ended December 31, 2022, we recognized the following amounts in total, not including amounts recorded to “Acquired in-process research and development expenses,” related to these agreements:

| Total expenses incurred under the Original CTX001 JDCA and A&R JDCA | | | $ | 365.8 | | | | | $ | 230.4 | | | | | $ | 101.2 | |

| Vertex’s share recognized in “Total costs and expenses” in our consolidated statements of operations | | | 251.1 | | | | | | 129.0 | | | | | | 50.6 | | |

In February 2023, the Entrada Agreement closed upon, among other things, the satisfaction of customary closing conditions and the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, resulting in no financial statement impact during 2022.

The collaboration includes Entrada’s program for DM1, ENTR-701, which is in late preclinical development.

We will account for the Entrada Agreement in the first quarter of 2023.

We concluded that we did not have any alternative future use for the acquired in-process research and development and recorded the upfront payment to “Acquired in-process research and development expenses.”

*Asset Acquisition*

third-party collaborators.

We record our royalties payable to the Cystic Fibrosis Foundation to “Cost of sales.”

C.Business Combination

On September 27, 2022, we acquired all outstanding shares of ViaCyte, Inc. (“ViaCyte”), a privately held biotechnology company primarily focused on delivering novel stem cell-derived cell replacement therapies as a functional cure for type 1 diabetes, in exchange for $315.0 million.

ViaCyte’s intellectual property and assembled workforce complement our ongoing programs and have the potential to produce therapies for patients with type 1 diabetes.