VERTEX PHARMACEUTICALS INC MA

Previous wording

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 four approved medicines that treat the underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, and one approved therapy that treats severe sickle cell disease (“SCD”) and transfusion dependent beta thalassemia (“TDT”), life-shortening inherited blood disorders. Our pipeline includes clinical-stage programs in CF, sickle cell disease, beta thalassemia, acute and neuropathic pain, APOL1-mediated kidney disease, type 1 diabetes, myotonic dystrophy type 1, alpha-1 antitrypsin deficiency, and autosomal dominant polycystic kidney disease.

Current wording

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 four approved medicines that treat the underlying cause of cystic fibrosis (“CF”), a life-threatening genetic disease, and one approved therapy that treats severe sickle cell disease (“SCD”) and transfusion dependent beta thalassemia (“TDT”), life-shortening inherited blood disorders. Our pipeline includes clinical-stage programs in CF, sickle cell disease, beta thalassemia, acute and neuropathic pain, APOL1-mediated kidney disease, IgA nephropathy (as well as other autoimmune renal diseases and cytopenias), type 1 diabetes, myotonic dystrophy type 1, and autosomal dominant polycystic kidney disease.

Previous wording

In late 2023 and early 2024, CASGEVY (exagamglogene autotemcel or “exa-cel”), an ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, was 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 or 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.

Current wording

In late 2023 and early 2024, CASGEVY (exagamglogene autotemcel or “exa-cel”), an ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, was approved in the U.S., the European Union (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 or 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.

Previous wording

We expect to grow our CF business with (i) continued uptake by patients in countries where we are early in our launch, (ii) label expansions, including into younger patient groups, and (iii) growth in the number of people living with CF. Recent progress in activities supporting continued uptake and label expansions is included below:

Current wording

We expect to grow our CF business with (i) label expansions, including into younger patient groups and rare mutations, (ii) continued uptake in younger patient groups, and (iii) growth in the number of people living with CF. Recent progress in activities supporting continued uptake and label expansions is included below:

Previous wording

•We submitted regulatory marketing applications for the vanzacaftor triple in people with CF 6 years of age and older to the U.S. Food and Drug Administration (“FDA”), using a priority review voucher, and to the European Medicines Agency (the “EMA”). We expect to complete additional global regulatory submissions for people with CF 6 years of age and older in 2024.

Current wording

•We submitted regulatory applications to the U.S. Food and Drug Administration (“FDA”) and the European Medicines Agency (the “EMA”) for TRIKAFTA/KAFTRIO for the treatment of people with CF and rare responsive mutations.

Previous wording

•We completed regulatory submissions for CASGEVY in both SCD and TDT in Switzerland and Canada, and our regulatory submission in Canada has been granted priority review.

Current wording

•We completed regulatory submissions for CASGEVY for SCD and TDT in Switzerland and Canada, and our regulatory submission in Canada has been granted Priority Review.

Previous wording

•We have activated more than 25 authorized treatment centers globally, and multiple patients have initiated cell collection.

Current wording

•We have activated more than 35 authorized treatment centers globally, and patients across all regions have initiated cell collection.

Previous wording

•In the U.S., the FDA has granted rolling submission to the new drug application (“NDA”) for suzetrigine for the treatment of moderate-to-severe acute pain and we have begun the NDA submission process. We expect to complete the submission in the second quarter of 2024. Suzetrigine has been granted Fast Track and Breakthrough Therapy designations by the FDA in moderate-to-severe acute pain.

Current wording

•The FDA accepted the NDA submission for suzetrigine for the treatment of moderate-to-severe acute pain and granted Priority Review with a PDUFA target action date of January 30, 2025. Suzetrigine has been granted Fast Track and Breakthrough Therapy designations by the FDA for the treatment of moderate-to-severe acute pain.

Previous wording

•In the second half of 2024, we plan to initiate a new cohort in the Phase 3 clinical trial, RIDGELINE, evaluating the vanzacaftor triple in children with CF 2 to 5 years of age who have at least one F508del mutation or a mutation responsive to triple combination CFTR modulators.

Current wording

•We have initiated a new cohort in the Phase 3 clinical trial evaluating the vanzacaftor triple in children with CF 2 to 5 years of age who have at least one F508del mutation or a mutation responsive to triple combination CFTR modulators.

Previous wording

•In collaboration with Moderna, Inc. (“Moderna”), we are developing VX-522, a nebulized mRNA therapy for the treatment of people with CF who do not produce full-length CFTR protein. We continue to enroll and dose patients in the multiple ascending dose portion of the Phase 1/2 clinical trial of VX-522 in people with CF. We expect to share data from this clinical trial in late 2024 or early 2025.

Current wording

•In collaboration with Moderna, Inc. (“Moderna”), we are developing VX-522, a nebulized mRNA therapy for the treatment of people with CF who do not produce full-length CFTR protein. The multiple ascending dose portion of the Phase 1/2 clinical trial of VX-522 in people with CF is ongoing. We expect to complete this clinical trial and share data in the first half of 2025.

Previous wording

•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.

Current wording

•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, and the trials are ongoing.

Previous wording

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

Current wording

•We expect to initiate a Phase 2 clinical trial evaluating an oral formulation of VX-993 for the treatment of moderate-to-severe acute pain following bunionectomy surgery in the third quarter of 2024.

Previous wording

•Following a successful end-of-Phase 2 meeting with the FDA, we expect to initiate the Phase 3 pivotal program evaluating suzetrigine in people with diabetic peripheral neuropathy, a common form of chronic peripheral neuropathic pain, in the second half of 2024. The FDA has granted suzetrigine Breakthrough Therapy designation in this indication.

Current wording

•We expect to initiate the Phase 3 pivotal program evaluating suzetrigine in people with diabetic peripheral neuropathy, a common form of chronic peripheral neuropathic pain, in the third quarter of 2024. The FDA has granted suzetrigine Breakthrough Therapy designation in diabetic peripheral neuropathy.

Previous wording

•We continue to enroll and dose patients in the Phase 2 clinical trial evaluating suzetrigine in people with lumbosacral radiculopathy, a second type of peripheral neuropathic pain. We expect to complete enrollment in the Phase 2 clinical trial by the end of 2024.

Current wording

•We have completed enrollment in the Phase 2 clinical trial evaluating suzetrigine in people with lumbosacral radiculopathy, a second type of peripheral neuropathic pain. We expect to share results from this clinical trial in late 2024.

Previous wording

•We expect to initiate a Phase 2 clinical trial evaluating the oral formulation of VX-993 for the treatment of peripheral neuropathic pain in 2024.

Current wording

•We expect to initiate a Phase 2 clinical trial evaluating the oral formulation of VX-993 for the treatment of diabetic peripheral neuropathy in the third quarter of 2024.

Previous wording

•We are advancing multiple NaV1.7 inhibitors through research and earlier stages of development, which could be used alone or in combination with NaV1.8 inhibitors for the treatment of acute and peripheral neuropathic pain.

Current wording

•We are advancing additional NaV1.8 inhibitors and NaV1.7 pain signal inhibitors, which could be used alone or in combination, for the treatment of peripheral neuropathic pain.

Previous wording

•Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”), including APOL1-mediated focal segmental glomerulosclerosis (“FSGS”). Based on the totality of the unblinded data reviewed by the Independent Data Safety Monitoring Committee (“IDMC”), we have advanced into the Phase 3 portion of the global Phase 2/3 pivotal clinical trial in people with AMKD. The trial has been expanded to include adolescents 10 to 17 years of age with AMKD.

Current wording

•Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”), including APOL1-mediated focal segmental glomerulosclerosis (“FSGS”). We continue to enroll and dose people with AMKD in the Phase 3 portion of the global Phase 2/3 pivotal clinical trial.

Previous wording

•The clinical trial is designed to have a pre-planned interim analysis at Week 48 evaluating eGFR slope, supported by a percentage change from baseline in proteinuria, in the inaxaplin arm versus placebo. If positive, we expect that the interim analysis may serve as the basis to seek accelerated approval in the U.S.

Current wording

•The clinical trial is designed to have a pre-planned interim analysis at Week 48 evaluating estimated glomerular filtration rate (“eGFR”) slope, a measure of kidney function, supported by a percentage change from baseline in proteinuria, in the inaxaplin arm versus placebo. If positive, we expect that the interim analysis may serve as the basis to seek accelerated approval in the U.S.

Previous wording

•VX-880 is an allogeneic stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy, using standard immunosuppression to protect the implanted cells. We are evaluating VX-880 as a potential treatment for type 1 diabetes (“T1D”) in a sequential, three-part Phase 1/2 clinical trial. Based on the totality of the data reviewed by the IDMC, we have resumed dosing in the Phase 1/2 clinical trial in people with T1D and impaired awareness of hypoglycemia and recurrent hypoglycemic events. Enrollment in Parts A, B and C of the global 17-patient clinical trial is complete and we expect to complete dosing in the coming months.

Current wording

•VX-880 is an allogeneic stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy, using standard immunosuppression to protect the implanted cells. We are evaluating VX-880 as a potential treatment for type 1 diabetes (“T1D”) in a sequential, three-part Phase 1/2 clinical trial. Based on positive data announced in June 2024, we have expanded the Phase 1/2 clinical trial in people with T1D to include a total of 37 patients. We have completed enrollment and dosing in the original Phase 1/2 17-patient clinical trial.

Previous wording

•Our second Phase 1/2 program in T1D evaluates VX-264, which encapsulates the same VX-880 islet cells in a novel device designed to eliminate the need for immunosuppression. This trial is a sequential, multi-part study to evaluate the safety, tolerability and efficacy of VX-264. We have completed Part A of the clinical trial and initiated Part B.

Current wording

•Our second Phase 1/2 program in T1D evaluates VX-264, which encapsulates the same VX-880 islet cells in a novel device designed to eliminate the need for immunosuppression. This trial is a sequential, multi-part study to evaluate the safety, tolerability and efficacy of VX-264. We have completed Part A of the clinical trial and we are enrolling and dosing people with TID in Part B of the clinical trial, where patients receive the full-target dose with a stagger period between patients. In Part C, we expect that patients will receive the full target dose with no stagger.

Previous wording

•Our hypoimmune islet cell program uses CRISPR/Cas9 technology to gene-edit the same allogeneic stem cell-derived, fully differentiated islet cells used in the VX-880 and VX-264 programs. The goal is to cloak the cells from the immune system to explore another possible path to eliminate the need for immunosuppressive therapy. This program continues to progress through the research stage.

Current wording

•Our hypoimmune islet cell program uses CRISPR/Cas9 technology to gene-edit the same allogeneic stem cell-derived, fully differentiated islet cells used in the VX-880 and VX-264 programs. The goal is to protect the cells from the immune system to explore another possible path to eliminate the need for immunosuppressive therapy. This program continues to progress through the research stage.

Previous wording

•We have initiated a Phase 1 clinical trial in healthy volunteers evaluating VX-407, our first-in-class small molecule corrector that targets the underlying cause of autosomal dominant polycystic kidney disease (“ADPKD”) in people with a subset of PKD1 variants.

Current wording

•We are enrolling and dosing in a Phase 1 clinical trial in healthy volunteers evaluating VX-407, our first-in-class small molecule corrector that targets the underlying cause of autosomal dominant polycystic kidney disease (“ADPKD”) in people with a subset of PKD1 variants.

Previous wording

In the first quarter of 2024, our net product revenues came from the sale of our medicines for the treatment of CF. Our CF strategy involves continuing to develop and obtain approval and reimbursement for treatment regimens that will provide benefits to all people with CF and increasing the number of people with CF eligible and able to receive our medicines, including through label expansions, expanded reimbursement, and the development of new medicines. We are advancing our pipeline of product candidates for the treatment of serious diseases outside of CF, including CASGEVY, which has received marketing approvals in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain for the treatment of SCD and TDT.

Current wording

In the first half of 2024, our net product revenues came from the sale of our medicines for the treatment of CF. Our CF strategy involves continuing to develop and obtain approval and reimbursement for treatment regimens that will provide benefits to all people with CF and increasing the number of people with CF eligible and able to receive our medicines, including through label expansions, expanded reimbursement, and the development of new medicines. We are advancing our pipeline of product candidates for the treatment of serious diseases outside of CF, including CASGEVY, which has received marketing approvals in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain for the treatment of SCD and TDT.

Previous wording

In the U.S., we have worked successfully with third-party payors to promptly obtain appropriate levels of reimbursement for our CF medicines. In addition, we are working with U.S. government and commercial payors with respect to CASGEVY. We anticipate broad access with government and commercial payors for CASGEVY in the U.S., and we have recently entered into multiple agreements with government and commercial health insurance providers to provide access 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 all of our therapies provide and provide patients with appropriate levels of access to our medicines and therapies now and in the future. We cannot, however, predict how recent changes in the law, including through the Inflation Reduction Act of 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 and distribute our products. 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. This is necessary for each new medicine, as well as for label expansions for our current medicines. We are working with ex-U.S. payors with respect to CASGEVY, and we are pursuing long-term reimbursement agreements. We have secured reimbursed access for people with SCD or TDT in Saudi Arabia and Bahrain and for people with TDT in France through an expanded access program. We expect to continue to focus significant resources to expand and maintain reimbursement for our CF medicines, CASGEVY and, ultimately, pipeline therapies, in U.S. and ex-U.S. markets.

Current wording

In the U.S., we have worked successfully with third-party payors to promptly obtain appropriate levels of reimbursement for our CF medicines. In addition, we are working with U.S. government and commercial payors with respect to CASGEVY. We anticipate broad access with government and commercial payors for CASGEVY in the U.S., and we have recently entered into multiple agreements with government and commercial health insurance providers to provide access 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 all of our therapies provide and provide patients with appropriate levels of access to our medicines and therapies now and in the future. We cannot, however, predict how recent changes in the law, including through the Inflation Reduction Act of 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 and distribute our products. 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. This is necessary for each new medicine, as well as for label expansions for our current medicines. We are working with ex-U.S. payors with respect to CASGEVY, and we are pursuing long-term reimbursement agreements. We have secured reimbursed access for people with SCD or TDT in Saudi Arabia and Bahrain, and for people with SCD or TDT in France through an expanded access program. We expect to continue to focus significant resources to expand and maintain reimbursement for our CF medicines, CASGEVY and, ultimately, pipeline therapies, in U.S. and ex-U.S. markets.

Previous wording

As part of our business strategy, we seek to acquire technologies, products, product candidates and other businesses that are aligned with our corporate and research and development strategies and complement and advance our ongoing research and development efforts. We have engaged in a number of acquisitions of privately held biotechnology companies over the last several years. In 2019, we acquired Semma Therapeutics, Inc., pursuant to which we established our T1D program, and Exonics Therapeutics, Inc., which enhanced our gene-editing capabilities to repair mutations that cause severe neuromuscular diseases, such as DM1 and Duchenne muscular dystrophy. In 2022, we acquired ViaCyte, Inc. (“ViaCyte”), which had intellectual property, tools, technologies and assets with the potential to accelerate development of our T1D programs. Our acquisition of ViaCyte, for $315.0 million, was accounted for as a business combination. As of the acquisition date, the cash payment was allocated primarily to goodwill and the fair value of an in-process research and development asset.

Current wording

As part of our business strategy, we seek to acquire technologies, products, product candidates and other businesses that are aligned with our corporate and research and development strategies and complement and advance our ongoing research and development efforts. We have engaged in a number of acquisitions of biotechnology companies over the last several years and expect to continue to identify and evaluate opportunities to acquire additional biotechnology companies. The accounting for these acquisitions can vary significantly based on whether we conclude the transactions represent business combinations or asset acquisitions. In May 2024, we acquired Alpine as described above. Alpine’s lead molecule, povetacicept, has shown potential best-in-class efficacy in IgAN through Phase 2 development. We accounted for the Alpine transaction as an asset acquisition because povetacicept represents 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 the second quarter and first half of 2024. In 2022, we acquired ViaCyte, Inc. (“ViaCyte”), which had intellectual property, tools, technologies and assets with the potential to accelerate development of our T1D programs. We accounted for our acquisition of ViaCyte as a business combination.

Previous wording

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”), Entrada, and Moderna. 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, including a $75.0 million milestone due to Entrada in the first quarter of 2024, and our upfront payments of $225.1 million to Entrada and $100.0 million to CRISPR related to T1D in the first quarter of 2023. These payments were expensed to 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.

Current wording

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, including a $75.0 million milestone due to Entrada in the first quarter of 2024, and our upfront payment of $225.1 million to Entrada and $170.0 million in total upfront and milestone payments to CRISPR related to T1D in the first half of 2023. These payments were expensed to 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.

Previous wording

In the first quarter of 2024 and 2023, our AIPR&D included $76.8 million and $347.1 million, respectively, related to upfront, contingent milestone, or other payments pursuant to our business development transactions, including the collaborations, licenses of third-party technologies, and asset acquisitions described above. Please refer to Note C, “Collaboration, License and Other Arrangements,” for further information regarding our collaboration, in-license agreements and asset acquisitions.

Current wording

In the first half of 2024 and 2023, our AIPR&D included $4.5 billion and $457.6 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 C, “Collaboration, License and Other Arrangements,” for further information regarding our asset acquisitions, collaborations and in-license agreements.

Previous wording

In the first quarter of 2024, our net product revenues increased by $315.8 million, or 13%, as compared to the first quarter of 2023. The increase was primarily due to the continued strong uptake of TRIKAFTA/KAFTRIO in ex-U.S. markets and label extensions in younger age groups and performance of TRIKAFTA in the U.S., following the launch of TRIKAFTA in children with CF 2 to 5 years of age. Decreases in revenues for our CF products other than TRIKAFTA/KAFTRIO were primarily the result of patients switching from these medicines to TRIKAFTA/KAFTRIO.

Current wording

In the second quarter and first half of 2024, our net product revenues increased by $152.4 million and $468.2 million, or 6% and 10%, as compared to the second quarter and first half of 2023, respectively. The increase was primarily due to the performance of TRIKAFTA in the U.S., following the launch of TRIKAFTA in children with CF 2 to 5 years of age, and continued strong uptake of TRIKAFTA/KAFTRIO in ex-U.S. markets and label extensions in younger age groups. Decreases in revenues for our CF products other than TRIKAFTA/KAFTRIO were primarily the result of patients switching from these medicines to TRIKAFTA/KAFTRIO.

Previous wording

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. Pursuant to our agreement with the Cystic Fibrosis Foundation, our tiered third-party royalties on sales of 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 TRIKAFTA/KAFTRIO than for our other products. Over the last several years, our cost of sales has been increasing due to increased net product revenues. Our cost of sales as a percentage of our net product revenues increased to 13% in the first quarter of 2024 as compared to 11% in the first quarter of 2023, primarily due to cost of sales associated with CASGEVY following its regulatory approval in the fourth quarter of 2023.

Current wording

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. Pursuant to our agreement with the Cystic Fibrosis Foundation, our tiered third-party royalties on sales of 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 TRIKAFTA/KAFTRIO than for our other products. Over the last several years, our cost of sales has been increasing due to increased net product revenues. Our cost of sales as a percentage of our net product revenues increased to 14% and 13% in the second quarter and first half of 2024, respectively, as compared to 12% in the second quarter and first half of 2023, primarily due to cost of sales associated with CASGEVY following its regulatory approval in the fourth quarter of 2023.

Previous wording

Since January 2022, we have incurred approximately $7.2 billion in total research and development and AIPR&D expenses associated with product discovery and development. The successful development of our product candidates is highly uncertain and subject to a number of risks. In addition, the duration of clinical trials may vary substantially according to the type, complexity and novelty of the product candidate and the disease indication being targeted. The FDA and comparable agencies in foreign countries impose substantial requirements on the introduction of therapeutic pharmaceutical products, typically requiring lengthy and detailed laboratory and clinical testing procedures, sampling activities and other costly and time-consuming procedures. Data obtained from nonclinical and clinical activities at any step in the testing process may be adverse and lead to discontinuation or redirection of development activities. Data obtained from these activities also are susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The duration and cost of discovery, nonclinical studies and clinical trials may vary significantly over the life of a project and are difficult to predict. Therefore, accurate and meaningful estimates of the ultimate costs to bring our product candidates to market are not available.

Current wording

Since January 2022, we have incurred approximately $7.5 billion in total research and development expenses associated with product discovery and development. The successful development of our product candidates is highly uncertain and subject to a number of risks. In addition, the duration of clinical trials may vary substantially according to the type, complexity and novelty of the product candidate and the disease indication being targeted. The FDA and comparable agencies in foreign countries impose substantial requirements on the introduction of therapeutic pharmaceutical products, typically requiring lengthy and detailed laboratory and clinical testing procedures, sampling activities and other costly and time-consuming procedures. Data obtained from nonclinical and clinical activities at any step in the testing process may be adverse and lead to discontinuation or redirection of development activities. Data obtained from these activities also are susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The duration and cost of discovery, nonclinical studies and clinical trials may vary significantly over the life of a project and are difficult to predict. Therefore, accurate and meaningful estimates of the ultimate costs to bring our product candidates to market are not available.

Previous wording

Our development expenses increased by $17.2 million, or 3%, in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to increased headcount costs, including stock-based compensation expense, and infrastructure costs to support our clinical trials, partially offset by decreased outsourced services and other direct expenses.

Current wording

Our development expenses increased by $144.3 million and $161.5 million, or 23% and 14%, in the second quarter and first half of 2024 as compared to the second quarter and first half of 2023, respectively, primarily due to compensation expense associated with cash-settled unvested Alpine equity awards as well as increased salaries and benefits, stock-based compensation expense and infrastructure costs to support our clinical trials. These increases were partially offset by decreased outsourced services and other direct expenses.

Previous wording

We are investing significantly in internal headcount and in infrastructure to support our advancing pipeline. Additional headcount over the last several years has resulted in increased stock-based compensation expense. Our stock-based compensation expense has historically fluctuated, and is expected to continue to fluctuate from one period to another based on the probability of achieving milestones associated with our performance-based awards. Our outsourced services and other direct expenses decreased as compared to the three months ended March 31, 2023 primarily due to lower clinical trial costs resulting from the commercialization of CASGEVY, as well as advancements in both our suzetrigine program in acute pain and the vanzacaftor triple for CF. These decreased clinical trial expenses were partially offset by increased costs to support our T1D program.

Current wording

We are investing significantly in internal headcount and in infrastructure to support our advancing pipeline. Additional headcount over the last several years has resulted in increased stock-based compensation expense. Our stock-based compensation expense has historically fluctuated and is expected to continue to fluctuate from one period to another based on the probability of achieving milestones associated with our performance-based awards. Our outsourced services and other direct expenses decreased as compared to the three and six months ended June 30, 2023 primarily due to lower clinical trial costs resulting from advancements in both our suzetrigine program in acute pain and the vanzacaftor triple for CF as well as the commercialization of CASGEVY. These decreased clinical trial expenses were partially offset by increased costs to support our T1D program.

Previous wording

AIPR&D in the first quarter of 2024 was primarily related to the $75.0 million milestone due to Entrada. AIPR&D in the first quarter of 2023 was primarily related to our upfront payments of $225.1 million to Entrada and $100.0 million to CRISPR. 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.

Current wording

AIPR&D in the three and six months ended June 30, 2024 was primarily related to $4.4 billion of AIPR&D resulting from our acquisition of Alpine, which was accounted for as an asset acquisition. AIPR&D in the first half of 2024 also included the $75.0 million milestone to Entrada from the first quarter of 2024. AIPR&D in the second quarter of 2023 was primarily related to a $70.0 million T1D research milestone to CRISPR and various other milestones. AIPR&D in the first half of 2023 also included our upfront payments of $225.1 million to Entrada and $100.0 million to CRISPR related to T1D from the first quarter of 2023. 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.

Previous wording

Selling, general and administrative expenses increased by 42% in the first quarter of 2024 as compared to the first quarter of 2023, primarily due to increased investments to support the launches of our therapies globally and prepare for near-term launches of multiple potential new products.

Current wording

Selling, general and administrative expenses increased by 42% in each of the second quarter and first half of 2024 as compared to the second quarter and first half of 2023, primarily due to increased investments to support the launches of our therapies globally and prepare for near-term launches of multiple potential new products. Our selling, general and administrative expenses also increased as compared to the second quarter and first half of 2023 as a result of compensation expense associated with cash-settled unvested Alpine equity awards.

Previous wording

The fair value of our contingent consideration decreased by $0.1 million and $1.9 million in the first quarter of 2024 and 2023, respectively.

Current wording

The fair value of our contingent consideration increased by $0.5 million and $0.4 million in the second quarter and first half of 2024, respectively, and decreased by $0.6 million and $2.5 million in the second quarter and first half of 2023, respectively.

Previous wording

Interest income increased to $181.2 million in the first quarter of 2024, as compared to $122.6 million in the first quarter of 2023, primarily due to increased market interest rates, increased cash equivalents and available-for-sale debt securities and mix of available-for-sale debt securities earning higher yields. Our future interest income is dependent on the amount of, and prevailing market interest rates on, our outstanding cash equivalents and available-for-sale debt securities.

Current wording

Interest income increased to $156.5 million and $337.7 million in the second quarter and first half of 2024, respectively, as compared to $144.7 million and $267.3 million in the second quarter and first half of 2023, respectively, primarily due to the mix of our cash equivalents and available-for-sale debt securities. Our future interest income is dependent on the amount of, and prevailing market interest rates on, our outstanding cash equivalents and available-for-sale debt securities.

Previous wording

Interest expense was $10.4 million and $11.4 million in the first quarter of 2024 and 2023, respectively. The majority of our interest expense in these periods was related to imputed interest expense associated with our leased corporate headquarters in Boston.

Current wording

Interest expense was $9.9 million and $11.2 million in the second quarter of 2024 and 2023, respectively, and $20.3 million and $22.6 million in the first half of 2024 and 2023, respectively. The majority of our interest expense in these periods was related to imputed interest expense associated with our leased corporate headquarters in Boston.

Previous wording

Other income (expense), net was expense of $31.2 million and income of $1.3 million in the first quarter of 2024 and 2023, respectively. These amounts related primarily to net unrealized gains or losses resulting from changes in the fair value of our strategic equity investments, which consist of investments in our collaborators that may be public or private companies. 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. As of March 31, 2024, the fair value of our investments in publicly traded companies was $43.4 million.

Current wording

Other income (expense), net was expense of $23.1 million and income of $1.6 million in the second quarter of 2024 and 2023, respectively, and expense of $54.3 million and income of $2.9 million in the first half of 2024 and 2023, respectively. These amounts related primarily to net unrealized gains or losses resulting from changes in the fair value of our strategic equity investments, which consist of investments in our collaborators that may be public or private companies. 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. As of June 30, 2024, the fair value of our investments in publicly traded companies was $30.6 million.

Previous wording

As of March 31, 2024, total working capital was $9.5 billion, which represented a decrease of $1.1 billion from $10.6 billion as of December 31, 2023. The decrease in total working capital during the first quarter of 2024 was primarily due to net purchases of long-term marketable securities of $2.1 billion.

Current wording

As of June 30, 2024, total working capital was $5.4 billion, which represented a decrease of $5.2 billion from $10.6 billion as of December 31, 2023 primarily due to the cash consideration paid to acquire Alpine.

Previous wording

Cash used in investing activities were $2.1 billion and $1.8 billion in the first quarter of 2024 and 2023, respectively, which primarily relate to net purchases of available-for-sale debt securities.

Current wording

Cash used in investing activities were $2.6 billion and $2.1 billion in the first half of 2024 and 2023, respectively. The largest portion of our investing activities in each of these periods were net purchases of available-for-sale debt securities.

Previous wording

Cash used in financing activities were $357.5 million and $294.7 million in the first quarter of 2024 and 2023, respectively. The largest portions of our financing activities in each of these periods were payments related to our employee stock benefit plans and repurchases of our common stock pursuant to our share repurchase program.

Current wording

Cash used in financing activities were $716.1 million and $277.4 million in the first half of 2024 and 2023, respectively. Our financing activities in each of these periods were primarily related to repurchases of our common stock pursuant to our share repurchase program and payments related to our employee stock benefit plans.