Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

We are a global biotechnology company that invests in scientific innovation to create transformative medicines for

people with serious diseases, with a focus on specialty markets. We have seven approved medicines: five that treat the

underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, one that treats severe sickle cell disease

(“SCD”) and transfusion dependent beta thalassemia (“TDT”), life shortening inherited blood disorders, and one that treats

moderate-to-severe acute pain. We are also preparing for the anticipated launch of povetacicept, a potential treatment for IgA

nephropathy (“IgAN”). Our clinical-stage pipeline spans a range of programs targeting CF, SCD, beta thalassemia,

neuropathic pain, type 1 diabetes, IgA nephropathy, primary membranous nephropathy and other autoimmune diseases and

cytopenias, APOL1-mediated kidney disease, autosomal dominant polycystic kidney disease and myotonic dystrophy type 1,

reflecting our commitment to addressing significant unmet medical needs globally.

Financial Highlights

Total Revenues	In the first quarter of 2026, our total revenues increased to $3.0 billion as compared to $2.8 billion in the first quarter of 2025, primarily due to continued performance of our CF therapies and growth from diversification into additional disease areas.
Cost of Sales	Our cost of sales as a percentage of our net product revenues was 13.2% in each of the first quarters of 2026 and 2025, as a result of a lower overall royalty rate for our CF medicines, offset by changes in product mix.
Total R&D, AIPR&D and SG&A Expenses	Our total research and development (“R&D”), acquired in-process research and development expenses (“AIPR&D”) and selling, general and administrative (“SG&A”) expenses increased to $1.5 billion in the first quarter of 2026 as compared to $1.4 billion in the first quarter of 2025, primarily due to increased investment to commercialize our new products.
Cash	Our total cash, cash equivalents and marketable securities increased to $13.0 billion as of March 31, 2026 as compared to $12.3 billion as of December 31, 2025, primarily due to cash flows provided by our operating activities partially offset by repurchases of our common stock.

Q1 2025

Q1 2026

December 31, 2025

March 31, 2026

Note: Charts above m**ay not add due to rounding.

Business Updates

Marketed Products

Cystic Fibrosis

We expect that the number of people with CF taking our medicines will continue to grow through new approvals and

reimbursement agreements, treatment of younger patients, increased survival and expansion into additional geographies.

Recent and anticipated progress in activities expanding our CF business is included below:

• The U.S. Food and Drug Administration (the “FDA”) approved label extensions for ALYFTREK and TRIKAFTA,

expanding availability of these medicines to approximately 95% of all people with CF in the United States (the

“U.S.”). With these label extensions, approximately 800 people with CF in the U.S. are newly eligible for a

medicine that treats the underlying cause of CF.

• We secured reimbursement agreements for ALYFTREK in Scotland, Spain, Sweden, Switzerland, New Zealand,

Israel, and Finland, and we are working to secure access for eligible patients in additional countries.

Sickle Cell Disease and Beta Thalassemia

• In the first quarter of 2026, we recorded $43 million of CASGEVY product revenues.

• We secured a pricing agreement for CASGEVY for eligible patients with SCD or TDT in Germany, and we are

working through final implementation to provide long-term reimbursed access to patients at a sustainable price.

• We completed the regulatory submission in the U.S. for approval of CASGEVY in children with SCD or TDT five

to less than twelve years of age. The FDA awarded a Commissioner’s National Priority Voucher for this pediatric

submission, indicating an accelerated timeline for review once the submission is accepted.

Acute Pain

• Since the launch of JOURNAVX in March 2025, more than 1 million prescriptions have been filled for

JOURNAVX across the hospital and retail settings for a broad range of acute pain conditions. In the first quarter of

2026, more than 350,000 prescriptions were filled, and we recorded $29 million of JOURNAVX product revenues.

• We have reached an agreement with a major pharmacy benefit manager for Medicare Part D coverage for

JOURNAVX effective on May 1. This agreement adds approximately 10 million lives covered under Part D.

Twenty-two states provide coverage for JOURNAVX via Medicaid. In total, approximately 240 million individuals

have reimbursed access to JOURNAVX across a wide range of commercial and government payers.

Pipeline

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

range of modalities. Recent and anticipated progress in activities supporting these efforts is included below:

Cystic Fibrosis

• Following positive results from the ALYFTREK clinical trial in children with CF two to five years of age, we expect

to submit for global regulatory approvals in this age group in the first half of 2026. We continue to enroll and dose

patients in the pivotal clinical trial evaluating ALYFTREK in children with CF one to less than two years of age.

• Following positive results from the TRIKAFTA clinical trial in children one to less than two years of age, we have

begun submissions for global regulatory approvals in this age group.

Peripheral Neuropathic Pain

• We expect to complete enrollment in both Phase 3 clinical trials evaluating suzetrigine in diabetic peripheral

neuropathy, a form of peripheral neuropathic pain, by the end of 2026.

IgA Nephropathy and Other B Cell-Mediated Diseases

• We are developing povetacicept, a dual inhibitor of B cell activating factor (“BAFF”) and a proliferation-inducing

ligand (“APRIL”) cytokines, for multiple diseases. Povetacicept represents a potentially best-in-class approach to

control B cell activity in IgAN.

• Following positive results from the RAINIER Phase 3 clinical trial evaluating povetacicept in adults with IgAN, we

completed in March the submission of the rolling biologics license application (“BLA”) to the FDA for potential

accelerated approval in the U.S. We are using a Priority Review Voucher and therefore expect the FDA review of

this BLA to be expedited to six months from the date of the FDA’s acceptance of the BLA.

• Povetacicept represents a potentially best-in-class approach to control B cell activity in primary membranous

nephropathy (“pMN”), another B cell-mediated disease. We completed enrollment in the Phase 2 portion of the

Phase 2/3 OLYMPUS pivotal trial evaluating povetacicept in people with pMN, and we initiated the Phase 3 portion

of this clinical trial. Enrollment and dosing in this clinical trial are ongoing.

APOL1-Mediated Kidney Disease

• Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”). We completed

enrollment in the interim analysis cohort of the global AMPLITUDE Phase 2/3 pivotal clinical trial evaluating

inaxaplin. We expect to conduct the pre-planned interim analysis for potential accelerated approval once this cohort

has been treated for 48 weeks. We expect to share data from the interim analysis in early 2027. We expect to

complete full enrollment in the AMPLITUDE clinical trial in the second half of 2026.

Type 1 Diabetes

• Zimislecel is an allogeneic, stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy,

using standard immunosuppression to protect the implanted cells. We have completed the internal manufacturing

analysis for the Phase 1/2/3 clinical trial of zimislecel in people with type 1 diabetes (“T1D”), and we have resumed

dosing in this clinical trial. Multiple people with T1D have been treated since the resumption of dosing. In 2026, we

expect to provide updated timelines for trial completion.

Our Business Environment

In the first quarter of 2026, our total product revenues came primarily from the sale of our medicines for the treatment of

CF. Our CF strategy involves continuing to develop and obtain approval and reimbursement for treatment regimens that will

provide benefits to all people with CF and increasing the number of people with CF eligible and able to receive our

medicines. Outside of CF, we continue to advance the commercialization of CASGEVY for the treatment of SCD and TDT,

and JOURNAVX for the treatment of acute pain, and we are preparing for a potential launch of povetacicept for the treatment

of IgAN. In addition, we are advancing our pipeline of product candidates for the treatment of serious diseases outside of CF,

SCD, TDT and acute pain.

Our strategy is to combine transformative advances in the understanding of causal human biology and the science of

therapeutics to discover and develop innovative medicines. This approach includes advancing multiple compounds or

therapies from each program, spanning multiple modalities, into early clinical trials to obtain patient data that can inform

selection of the most promising therapies for later-stage development, as well as to inform discovery and development

efforts. We aim to serially innovate in our disease areas of interest and follow our first-in-class therapies with potential best-

in-class candidates to provide durable clinical and commercial success.

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

believe that pursuing research in diverse areas allows us to balance the risks inherent in product development and may

provide product candidates that will form our pipeline in future years. To supplement our internal research programs, we

acquire technologies and programs and collaborate with biopharmaceutical and technology companies, leading academic

research institutions, government laboratories, foundations and other organizations, as needed, to advance research in our

areas of therapeutic interest and to access technologies needed to execute on our strategy.

Discovery and development of a new pharmaceutical or biological product is a difficult and lengthy process that requires

significant financial resources along with extensive technical and regulatory expertise. Across the industry, most potential

drug or biological products never progress into development, and most products that advance into development never receive

marketing approval. Our investments in product candidates are subject to considerable risks. We closely monitor our research

and development activities, and frequently evaluate our pipeline programs in light of new data and scientific, business and

commercial insights, with the objective of balancing risk and potential. This process can result in rapid changes in focus and

priorities as new information becomes available and as we gain additional understanding of our ongoing programs and

potential new programs, as well as those of our competitors. In addition, our product candidates must satisfy rigorous

standards of safety and efficacy before they can be approved for sale by regulatory authorities. Our analysis of data obtained

from nonclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could

delay, limit or prevent regulatory approval.

Our business also requires ensuring appropriate manufacturing and supply of our products. As we advance our product

candidates through clinical development toward commercialization and market and sell our approved products, we build and

maintain our supply chain and quality assurance resources. We rely on a global network of third parties, including some in

China, and our internal capabilities to manufacture and distribute our products for commercial sale and post-approval clinical

trials and to manufacture and distribute our product candidates for clinical trials. In addition to establishing supply chains for

each newly approved product, we adapt our supply chain for existing products to include additional formulations or to

increase scale of production for existing products as needed. The processes for biological and cell and genetic therapies can

be more complex than those required for small molecule drugs and require additional investments in different systems,

equipment, facilities and expertise. We are focused on ensuring the stability of the supply chains for our current products, as

well as for our pipeline programs.

Sales of our products depend, to a large degree, on the extent to which our products are reimbursed by third-party payors,

such as government health programs, commercial insurance and managed health care organizations. Reimbursement for our

products, including our potential pipeline therapies, cannot be assured and may take significant periods of time to obtain. 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

work with government and commercial payors to obtain and maintain appropriate levels of reimbursement for our medicines.

In ex-U.S. markets, we seek government reimbursement for our medicines on a country-by-country or region-by-region, as

required. This is necessary for each new medicine, as well as for label expansions for our current medicines. We expect to

continue to focus significant resources to expand and maintain reimbursement for our CF medicines, CASGEVY,

JOURNAVX, and, ultimately, our pipeline therapies, in U.S. and ex-U.S. markets.

Strategic Transactions

Acquisitions

As part of our business strategy, we seek to license or acquire technologies, products, product candidates and businesses

that are aligned with our corporate and research and development strategies and complement and advance our ongoing

research and development efforts. We have acquired multiple biotechnology companies over the last several years and expect

to continue to identify and evaluate such opportunities. The accounting for these acquisitions can vary significantly based on

whether we conclude the transactions represent business combinations or asset acquisitions. In 2024, we acquired Alpine

Immune Sciences, Inc. (“Alpine”) and its lead molecule, povetacicept, for approximately $5.0 billion. Povetacicept, has

shown potential to treat multiple diseases or conditions and become a pipeline-in-a-product. We accounted for the Alpine

transaction as an asset acquisition because povetacicept represented substantially all of the fair value of the gross assets that

we acquired. As a result, $4.4 billion of the fair value attributed to povetacicept was expensed as AIPR&D in 2024.

Collaboration and In-Licensing Arrangements

We enter into arrangements with third parties, including collaboration and licensing arrangements, for the development,

manufacture and commercialization of products, product candidates and other technologies that have the potential to

complement our ongoing research and development efforts.

Over the last several years, we entered into collaboration agreements with a number of companies, including CRISPR

Therapeutics AG (“CRISPR”) and Entrada Therapeutics, Inc. (“Entrada”).

Generally, when we in-license a technology or product candidate, we make upfront payments to the collaborator, assume

the costs of the program and/or agree to make contingent payments, which could consist of milestone, royalty and option

payments. Most of these collaboration payments are expensed as AIPR&D because they were primarily attributable to

acquired in-process research and development for which there was no alternative future use. However, depending on many

factors, including the structure of the collaboration, the stage of development of the acquired technology, the significance of

the in-licensed product candidate to the collaborator’s operations and the other activities in which our collaborators are

engaged, the accounting for these transactions can vary significantly. We expect to continue to identify and evaluate

collaboration and licensing opportunities that may be similar to or different from the collaborations and licenses that we have

engaged in previously.

Acquired In-Process Research and Development Expenses

In the first quarter of 2026 and 2025, our AIPR&D included $0.5 million and $19.8 million, respectively, related to

upfront, contingent milestone, or other payments pursuant to our business development transactions, including the asset

acquisitions, collaborations, and licenses of third-party technologies described above. Please refer to Note B, “Collaboration,

License and Other Arrangements,” for further information regarding our asset acquisitions, collaborations and in-license

agreements.

Out-licensing Arrangements

We also have out-licensed certain development programs to collaborators who are leading the development or

commercialization of these programs, either globally or within certain geographic regions.

In January 2025 and June 2025, we entered into agreements with Zai Lab Limited (“Zai”) and Ono Pharmaceuticals Co.,

Ltd (“Ono”), respectively, for the development and commercialization of povetacicept in various Asian markets. Zai licensed

povetacicept for mainland China, Hong Kong SAR, Macau SAR, Taiwan region and Singapore, while Ono licensed

povetacicept for Japan and South Korea. Zai and Ono will help advance povetacicept clinical trials, and will be responsible

for obtaining marketing authorizations and commercialization activities, if povetacicept becomes an approved product, in

their licensed territories. We are eligible to receive certain future milestone payments and tiered royalties on future net sales

of povetacicept in these regions.

RESULTS OF OPERATIONS

Total Revenues

	Three Months Ended March 31,
	2026		2025		Change
(in millions, except percentages)
TRIKAFTA/KAFTRIO	$2,354.7		$2,535.5		(7)%
ALYFTREK	424.4		53.9		687%
Other CF product revenues (1)	135.9		155.3		(12)%
Total CF product revenues, net	2,915.0		2,744.7		6%
CASGEVY	42.9		14.2		202%
JOURNAVX	29.0		1.3		**
Product revenues, net	2,986.9		2,760.2		8%
Other revenues	—		10.0		**
Total revenues	$2,986.9		$2,770.2		8%
(1) Include KALYDECO, ORKAMBI and SYMDEKO/SYMKEVI.	** Not meaningful

Product Revenues, Net

In the first quarter of 2026, our net product revenues increased by $226.7 million, or 8%, as compared to the first quarter

of 2025, primarily due to continued performance of our CF therapies and growth from diversification into additional disease

areas.

Other Revenues

Other revenues were $10.0 million in the first quarter of 2025, related to an upfront payment received from our

collaboration agreement with Zai.

Revenues by Geographic Location

Our total revenues from the U.S. and from ex-U.S. markets were as follows:

	Three Months Ended March 31,
	2026		2025		Change
(in millions, except percentages)
United States	$1,775.9		$1,663.5		7%
ex-U.S.	1,211.0		1,106.7		9%
Total revenues	$2,986.9		$2,770.2		8%

In the first quarter of 2026, our U.S. total revenues increased 7%, as compared to the first quarter of 2025, due to

continued strong patient demand, including from new initiations of ALYFTREK, and higher realized net prices in CF, and

contributions from CASGEVY and JOURNAVX. In the first quarter of 2026, our ex-U.S. total revenues increased 9%, as

compared to the first quarter of 2025, primarily due to strong CF performance across multiple geographies, including

ALYFTREK uptake, increased CASGEVY product revenues, and a favorable impact from foreign exchange.

Operating Costs and Expenses

	Three Months Ended March 31,
	2026		2025		Change
(in millions, except percentages)
Cost of sales	$392.8		$363.0		8%
Research and development expenses	961.6		979.7		(2)%
Acquired in-process research and development expenses	0.5		19.8		**
Selling, general and administrative expenses	493.7		396.4		25%
Intangible asset impairment charge	—		379.0		**
Change in fair value of contingent consideration	0.2		2.2		**
Total costs and expenses	$1,848.8		$2,140.1		(14)%
	** Not meaningful

Cost of Sales

Our cost of sales primarily consists of third-party royalties payable on net sales of our CF products as well as the cost of

producing inventories. Our cost of sales as a percentage of our net product revenues was 13.2% in each of the first quarters of

2026 and 2025, as a result of a lower overall royalty rate for our CF medicines, offset by changes in product mix.

Pursuant to our agreement (the “CFF Agreement”) with the Cystic Fibrosis Foundation (the “CFF”), our tiered third-

party royalties on sales of ALYFTREK, TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, KALYDECO, and ORKAMBI,

calculated as a percentage of net sales, range from the single digits to the sub-teens, with lower royalties on sales of

ALYFTREK and TRIKAFTA/KAFTRIO than for our other products. The royalty burden associated with TRIKAFTA/

KAFTRIO is 9.33%, and our position is that the royalty burden associated with ALYFTREK is 4%. On October 10, 2025,

Royalty Pharma plc (“RP”), the third party to whom the CFF assigned its rights (and the CFF, which remains a party to the

CFF Agreement), initiated a confidential arbitration alleging the royalty burden on ALYFTREK is approximately 8%. RP is

seeking a declaratory judgment regarding the royalty burden on ALYFTREK as well as alleged unpaid royalties and other

alleged damages available under the CFF Agreement or applicable law, costs, expenses, attorneys’ fees, and interest. We

believe RP’s position is contrary to the plain terms of the CFF Agreement and intend to vigorously defend our position under

the CFF Agreement.

Research and Development Expenses

	Three Months Ended March 31,
	2026		2025		Change
(in millions, except percentages)
Research expenses	$205.0		$206.1		(1)%
Development expenses	756.6		773.6		(2)%
Total research and development expenses	$961.6		$979.7		(2)%

Research Expenses

	Three Months Ended March 31,
	2026		2025		Change
(in millions, except percentages)
Research Expenses:
Salary and benefits	$55.2		$53.1		4%
Stock-based compensation expense	21.2		22.3		(5)%
Outsourced services and other direct expenses	66.6		73.1		(9)%
Infrastructure costs	62.0		57.6		8%
Total research expenses	$205.0		$206.1		(1)%

Our research expenses include investment in our pipeline, including our cell and genetic therapy capabilities, which has

increased our salary and benefits and infrastructure costs in the first quarter of 2026 as compared to the first quarter of 2025.

We expect to continue to invest in our research programs with a focus on creating transformative medicines for serious

diseases.

Development Expenses

	Three Months Ended March 31,
	2026		2025		Change
(in millions, except percentages)
Development Expenses:
Salary and benefits	$212.6		$195.9		9%
Stock-based compensation expense	80.5		77.8		3%
Outsourced services and other direct expenses	326.2		379.7		(14)%
Infrastructure costs	137.3		120.2		14%
Total development expenses	$756.6		$773.6		(2)%

As we have advanced our pipeline of transformative medicines, we have invested in internal headcount and infrastructure

to support multiple mid- and late-stage clinical development programs, including our povetacicept, T1D, peripheral

neuropathic pain and AMKD programs. We expect to continue to invest in these programs, launch new products and advance

our pipeline going forward. Our outsourced services and other direct expenses were lower as compared to the first quarter of

2025 due to the discontinuation of certain clinical programs during 2025.

Our research and development expenses include internal and external costs incurred for research and development of our

products and product candidates. We assign external costs of services provided to us by clinical research organizations and

other outsourced research by individual program. Our internal costs include salary and benefits, stock-based compensation

expense, laboratory supplies and other direct expenses and infrastructure costs, the majority of which are not assigned to

individual products or product candidates. Our stock-based compensation expenses, including those recorded as research and

development expenses, have historically fluctuated and are expected to continue to fluctuate from one period to another

primarily due to changes in the probability of achieving milestones associated with our performance-based awards.

Acquired In-Process Research and Development Expenses

	Three Months Ended March 31,
	2026		2025		Change
(in millions, except percentages)
Acquired in-process research and development expenses	$0.5		$19.8		**
	** Not meaningful

AIPR&D in the first quarters of 2026 and 2025 included various upfront and milestone payments related to our

collaboration and in-licensing arrangements. Our AIPR&D has historically fluctuated, and is expected to continue to

fluctuate, from one period to another due to upfront, contingent milestone, and other payments pursuant to our existing and

future business development transactions, including collaborations, licenses of third-party technologies, and asset

acquisitions.

Selling, General and Administrative Expenses

	Three Months Ended March 31,
	2026		2025		Change
(in millions, except percentages)
Selling, general and administrative expenses	$493.7		$396.4		25%

Selling, general and administrative expenses increased by 25% in the first quarter of 2026, as compared to the first

quarter of 2025, primarily due to increased internal headcount and commercial investment to support JOURNAVX and

povetacicept in IgAN.

Intangible Asset Impairment Charge

In the first quarter of 2025, based on results from a Phase 1/2 clinical trial evaluating our VX-264 clinical program in

patients with T1D, we concluded that VX-264 will not be advancing further in clinical development. Based on this event, we

performed an interim impairment test on the fair value of our VX-264 indefinite-lived in-process research and development

asset. As a result, we recorded a full intangible asset impairment charge of $379.0 million associated with VX-264 in the first

quarter of 2025.

Non-Operating Income (Expense), Net

Interest Income, Net

Our net interest income of $114.8 million in the first quarter of 2026 was similar to $117.9 million of net interest income

in the first quarter of 2025. Our future net interest income is primarily dependent on the amount of, and prevailing market

interest rates on our outstanding cash, cash equivalents and available-for-sale debt securities.

Other Income (Expense), Net

Other income (expense), net was $0.0 million in the first quarter of 2026 and net expenses of $17.6 million in the first

quarter of 2025. Our other income (expense), net primarily relates to net unrealized and realized losses resulting from

changes in the fair value of certain of our strategic equity investments and net foreign currency exchange losses.

Income Taxes

Our effective tax rate fluctuates from period to period due to the global nature of our operations. The factors that most

significantly impact our effective tax rate include changes in tax laws, excess tax benefits related to stock-based

compensation, variability in the amount and allocation of our taxable earnings among multiple jurisdictions, the amount and

characterization of our research and development expenses, the levels of certain deductions and credits, adjustments to the

value of our uncertain tax positions, acquisitions and third-party collaboration and licensing transactions.

In July 2025, the U.S. enacted H.R.1, which includes significant provisions modifying the U.S. tax framework, including

the ability for companies to immediately deduct research and development expenditures for 2025 and provisions for

deducting previously capitalized amounts. H.R.1 does not have a material impact on our U.S. taxes for the first quarter of

2026, but we expect further guidance to be issued. We will review guidance when issued for impacts on future years and

disclose any impacts if needed at that time. These legislative changes could have an impact on our future effective tax rates,

tax liabilities, and cash taxes.

Our effective tax rates of 17.7% and 11.5% in the first quarter of 2026 and 2025, respectively, were lower than the U.S.

statutory rate primarily due to excess tax benefits related to stock-based compensation.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes the components of our financial condition as of March 31, 2026 and December 31,

2025:

	As of March 31, 2026		As of December 31, 2025		Change
	(in millions, except percentages)
Cash, cash equivalents and marketable securities:
Cash and cash equivalents	$5,492.9		$5,084.8
Marketable securities	1,753.8		1,523.3
Long-term marketable securities	5,749.9		5,712.3
Total cash, cash equivalents and marketable securities	$12,996.6		$12,320.4		5%
Working Capital:
Total current assets	$11,730.3		$11,201.0		5%
Total current liabilities	(3,880.6)		(3,861.2)		1%
Total working capital	$7,849.7		$7,339.8		7%

Working Capital

As of March 31, 2026, total working capital was $7.8 billion, which represented an increase of $509.9 million, or 7%,

compared to December 31, 2025, primarily due to increased cash, cash equivalents and marketable securities resulting from

our growing portfolio of products, partially offset by tax accruals and payments.

Cash Flows

	Three Months Ended March 31,
	2026		2025
	(in millions)
Net cash provided by (used in):
Operating activities	$1,428.1		$818.9
Investing activities	$(431.9)		$(55.8)
Financing activities	$(538.8)		$(680.4)

Operating Activities

Cash provided by operating activities increased to $1.4 billion in the first quarter of 2026, as compared to $818.9 million

in the first quarter of 2025, primarily due to the timing of tax payments and increased accounts receivable during the first

quarter of 2025 resulting from our product launches.

Investing Activities

Cash used in investing activities was $431.9 million in the first quarter of 2026, primarily related to net purchases of

available-for-sale debt securities. Cash used in investing activities was $55.8 million in the first quarter of 2025, primarily

related to purchases of property and equipment.

Financing Activities

Cash used in financing activities were $538.8 million and $680.4 million in the first quarter of 2026 and 2025,

respectively. Our financing activities in each of these periods were primarily related to repurchases of our common stock

pursuant to our share repurchase programs and payments in connection with common stock withheld for employee tax

obligations.

Sources and Uses of Liquidity

We intend to rely on our existing cash, cash equivalents and current marketable securities together with our operating

profitability as our primary source of liquidity. We expect that cash flows from our product sales together with our cash, cash

equivalents and current marketable securities will be sufficient to fund our operations for at least the next twelve months. The

adequacy of our available funds to meet our future operating and capital requirements will depend on many factors, including

our future sales of currently marketed products, and the potential introduction of one or more new product candidates to the

market, our business development activities, and the number, breadth and cost of our research and development programs.

Credit Facilities & Financing Strategy

We may borrow up to a total of $500.0 million pursuant to a revolving credit facility that we entered into in July 2022

and could repay and reborrow amounts under this revolving credit agreement without penalty. Subject to certain conditions,

we could request that the borrowing capacity be increased by an additional $500.0 million, for a total of $1.0 billion.

Negative covenants in our credit agreement could prohibit or limit our ability to access this source of liquidity. As of March

31, 2026, the facility was undrawn, and we were in compliance with these covenants.

We may also raise additional capital by borrowing under credit agreements, through public offerings or private

placements of our securities, or securing new collaborative agreements or other methods of financing. We will continue to

manage our capital structure and will consider all financing opportunities, whenever they may occur, that could strengthen

our long-term liquidity profile. There can be no assurance that any such financing opportunities will be available on

acceptable terms, if at all.

Future Capital Requirements

We have significant future capital requirements, including:

• Expected operating expenses to conduct research and development activities, manufacture and commercialize our

existing and future products, and to operate our organization.

• Cash that we pay for income taxes.

• Royalties we pay related to sales of our CF products.

• Facility, operating and finance lease obligations.

• Firm purchase obligations related to our supply and manufacturing processes.

In addition, other potential significant future capital requirements may include:

• We have entered into certain agreements with third parties that include the funding of certain research, development,

manufacturing and commercialization efforts. Certain of our transactions, including collaborations, licensing

arrangements, and asset acquisitions, include the potential for future milestone and royalty payments by us upon the

achievement of pre-established developmental and regulatory targets and/or commercial targets. Other transactions

include the potential for future lease-related expenses and other costs. Our obligation to fund these research and

development and commercialization efforts and to pay these potential milestones, expenses and royalties is

contingent upon continued involvement in the programs and/or the lack of any adverse events that could cause their

discontinuance. We may enter into additional agreements, including acquisitions, collaborations, licensing

arrangements and equity investments, which require additional capital.

• To the extent we borrow amounts under our existing credit agreement, we would be required to repay any

outstanding principal amounts in July 2027.

• As of March 31, 2026, we had $3.0 billion remaining available under the share repurchase program that our Board

of Directors authorized in May 2025. The program does not have an expiration date and can be discontinued at any

time. We expect to fund the program through a combination of cash on hand and cash generated by operations.

There have not been any material changes to our future capital requirements disclosed in our Annual Report on Form 10-

K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission, or SEC, on

February 13, 2026.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations are based upon our condensed

consolidated financial statements prepared in accordance with generally accepted accounting principles in the U.S. The

preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported

amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated

financial statements and the reported amounts of revenues and expenses during the reported periods. These items are

monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates

could occur in the future. Changes in estimates are reflected in reported results for the period in which the change occurs. We

base our estimates on historical experience and various other assumptions that we believe to be reasonable under the

circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be

substantially accurate. During the three months ended March 31, 2026, there were no material changes to our critical

accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed

with the SEC on February 13, 2026.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements, please refer to Note A, “Basis of Presentation and Accounting

Policies.”