VERTEX PHARMACEUTICALS INC MA

Previous wording

•Health Canada approved TRIKAFTA for the treatment of people with CF with 152 rare responsive mutations in the CFTR gene.

Current wording

•Health Canada approved TRIKAFTA for an additional 152 rare mutations in the CFTR gene.

Previous 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.

Current wording

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

Previous wording

•CASGEVY is 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.

Current wording

•CASGEVY received approval in Switzerland and Canada for people 12 years of age and older with SCD or TDT.

Previous wording

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

Current wording

•We have activated 45 authorized treatment centers globally. Patients across all regions have initiated cell collection.

Previous wording

•The French National Authority for Health (“HAS”) approved our request for the implementation of an early access program for the use of CASGEVY in indicated patients with SCD. HAS previously approved the implementation of an early access program for CASGEVY in indicated patients with TDT in the first quarter of 2024.

Current wording

•The Italian Medicines Agency approved our request for the implementation of an early access program for CASGEVY for the treatment of people with TDT and SCD.

Previous wording

•The FDA accepted the new drug application (“NDA”) for the once-daily vanzacaftor triple in people with CF 6 years of age and older and granted Priority Review with a PDUFA target action date of January 2, 2025.

Current wording

•The FDA assigned the once-daily vanzacaftor triple in people with CF 6 years of age and older a Prescription Drug User Fee Act (“PDUFA”) target action date of January 2, 2025. The FDA granted Priority Review for the vanzacaftor triple.

Previous wording

•We received validation of our vanzacaftor triple marketing authorization application (“MAA”) submissions from the EMA in the E.U. and the Medicines and Healthcare products Regulatory Agency (“MHRA”) in the U.K. We have also completed regulatory submissions for the vanzacaftor triple in Canada, Australia, New Zealand, and Switzerland.

Current wording

•We have completed regulatory submissions for the vanzacaftor triple in the E.U., the U.K., Canada, Australia, New Zealand, and Switzerland.

Previous 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.

Current wording

•The FDA assigned a PDUFA target action date of January 30, 2025 for suzetrigine for the treatment of moderate-to-severe acute pain. The FDA granted Priority Review to suzetrigine.

Previous 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.

Current wording

•We are enrolling and dosing in a 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. 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.

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 share data from this clinical trial in the first half of 2025.

Previous 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.

Current wording

•We have initiated a Phase 2 clinical trial evaluating an oral formulation of VX-993, a next-generation selective NaV1.8 pain signal inhibitor, for the treatment of moderate-to-severe acute pain following bunionectomy surgery.

Previous wording

•We are enrolling and dosing patients in a Phase 1 clinical trial evaluating an intravenous formulation of VX-993, a next-generation selective NaV1.8 pain signal inhibitor.

Current wording

•We are enrolling and dosing healthy volunteers in a Phase 1 clinical trial evaluating an intravenous formulation of VX-993.

Previous 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.

Current wording

•We have initiated the Phase 3 pivotal program evaluating suzetrigine in people with diabetic peripheral neuropathy, a common form of chronic peripheral neuropathic pain. The FDA has granted suzetrigine Breakthrough Therapy designation in diabetic peripheral neuropathy.

Previous 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.

Current wording

•We have completed 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 the fourth quarter of 2024.

Previous 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.

Current wording

•We have initiated a Phase 2 clinical trial evaluating the oral formulation of VX-993 for the treatment of diabetic peripheral neuropathy.

Previous wording

•We are developing povetacicept, a dual inhibitor of the BAFF and APRIL pathways, as a potentially best-in-class approach to treat IgA nephropathy (“IgAN”), a serious progressive, autoimmune kidney disease that can lead to end-stage renal disease. We have completed end-of-phase 2 regulatory interactions and we expect to initiate the Phase 3 clinical trial evaluating povetacicept in IgAN (the “RAINIER” trial) in the third quarter of 2024.

Current wording

•We are developing povetacicept, a dual inhibitor of the BAFF and APRIL pathways, as a potentially best-in-class approach to treat immunoglobulin A (“IgA”) nephropathy (“IgAN”), a serious progressive, autoimmune kidney disease that can lead to end-stage renal disease. We have initiated the Phase 3 clinical trial evaluating povetacicept in people with IgAN (the “RAINIER” trial).

Previous wording

•RAINIER is a global pivotal trial evaluating povetacicept in approximately 480 people with IgAN. The trial is designed to have a pre-planned interim analysis evaluating urine protein creatinine ratio (“UPCR”) after a certain number of patients reach 36 weeks of treatment. If positive, the interim analysis may serve as the basis for seeking accelerated approval in the U.S. Final analysis will occur at two years of treatment, with a primary endpoint of total eGFR slope through Week 104.

Current wording

•RAINIER is a global pivotal trial evaluating povetacicept in approximately 480 people with IgAN. The trial is designed to have a pre-planned interim analysis evaluating the change from baseline in urine protein creatinine ratio (“UPCR”) after a certain number of patients reach 36 weeks of treatment. If positive, the interim analysis may serve as the basis for seeking accelerated approval in the U.S. Final analysis will occur at two years of treatment, with a primary endpoint of total eGFR slope through Week 104.

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 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.

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 clinical trial. Following successful end of Phase 2 meetings with the FDA, the EMA and the Medicines and Healthcare products Regulatory Agency in the U.K., we have reached an agreement to advance VX-880 into pivotal development with the conversion of the ongoing Phase 1/2 clinical trial to a Phase 1/2/3 clinical trial. The Phase 1/2/3 clinical trial will include a total of 50 people with T1D infused with a single target dose of VX-880, and the primary endpoint is the proportion of patients with insulin independence and absence of severe hypoglycemic episodes.

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 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.

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 period. We expect to share initial data from this clinical trial in 2025.

Previous wording

•We are enrolling and dosing people with DM1 in the global Phase 1/2 clinical trial for VX-670 and expect to complete the single ascending dose portion of the clinical trial by the end of 2024. Following the completion of the single ascending dose portion, we expect to move into the multiple ascending dose portion of the trial, which will evaluate the safety and efficacy of VX-670.

Current wording

•We completed the single ascending dose portion of the global Phase 1/2 clinical trial for VX-670 in people with DM1. We have initiated the multiple ascending dose portion of the trial, which will evaluate the safety and efficacy of VX-670.

Previous 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.

Current wording

In the nine months ended September 30, 2024, our net 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, 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, Bahrain, Switzerland and Canada for the treatment of SCD and TDT.

Previous wording

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 do advance into development never receive marketing approval. Our investments in product candidates are subject to considerable risks. We closely monitor the results of our discovery, research, clinical trials and nonclinical studies and frequently evaluate our product development 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.

Current wording

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 do advance into development never receive marketing approval. Our investments in product candidates are subject to considerable risks. We closely monitor the results of our discovery, research, nonclinical studies and clinical trials and frequently evaluate our product development 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.

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 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.

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 TDT in England. In addition, the Italian Medicines Agency has approved our request for the implementation of an early access program for people with TDT and SCD. 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 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.

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 for approximately $5.0 billion in cash. 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 nine months ended September 30, 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. In July 2024, we entered into a multi-target license and option agreement with Orum Therapeutics for the use of their degrader- antibody conjugate technology for the discovery of novel targeted conditioning agents for gene-edited therapies, such as CASGEVY, which included an upfront payment of approximately $15.0 million.

Current 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. In July 2024, we entered into a multi-target license and option agreement with Orum Therapeutics, Inc. for the use of their degrader-antibody conjugate technology for the discovery of novel targeted conditioning agents for gene-edited therapies, such as CASGEVY, which included an upfront payment of $14.8 million.

Previous 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.

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 nine months ended September 30, 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 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.

Current wording

In the nine months ended September 30, 2024 and 2023, our AIPR&D included $4.5 billion and $509.3 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 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.

Current wording

In the third quarter and nine months ended September 30, 2024, our net product revenues increased by $288.4 million and $756.6 million, or 12% and 10%, as compared to the third quarter and nine months ended September 30, 2023, respectively. Increases in our TRIKAFTA/KAFTRIO product revenues were due to strong demand globally, including in younger age groups, and higher net realized pricing in the U.S. Decreases in revenues for our other CF products were primarily the result of patients switching from these medicines to TRIKAFTA/KAFTRIO. In the three and nine months ended September 30, 2024, "Other product revenues" included $2.0 million related to CASGEVY.

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 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.

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% in each of the third quarter and nine months ended September 30, 2024 as compared to 13% and 12% in the third quarter and nine months ended September 30, 2023, respectively, 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 $7.5 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.

Current wording

Since January 2022, we have incurred approximately $8.3 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 research expenses have been increasing over the last several years as we have invested in our pipeline and expanded our cell and genetic therapy capabilities, resulting in increased headcount, and outside services and other direct expenses. We expect to continue to invest in our research programs with a focus on creating transformative medicines for serious diseases.

Current wording

Our research expenses have been increasing over the last several years as we have invested in our pipeline and expanded our cell and genetic therapy capabilities, resulting in increased headcount and stock-based compensation expense, and outsourced services, other direct expenses and infrastructure costs. We expect to continue to invest in our research programs with a focus on creating transformative medicines for serious diseases.

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 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.

Current wording

Increased development expenses as compared to the three and nine months ended September 30, 2023 were due to continued investments in internal headcount and related expenses and infrastructure to support advancement of additional therapies into mid-to-late-stage development, including our T1D program. Additional headcount over the last several years has increased our stock-based compensation expense, which 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. These increases were partially offset by decrease outsourced services and other direct expenses. The decreases were 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.

Previous 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.

Current wording

AIPR&D in the three months ended September 30, 2024 was primarily related to an upfront payment associated with a collaboration arrangement. AIPR&D in the nine months ended September 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, and also included the $75.0 million milestone to Entrada from the first quarter of 2024. AIPR&D in the third quarter of 2023 was primarily related to our $47.5 million acquisition of a novel GPCR program from Septerna. AIPR&D in the nine months ended September 30, 2023 also included our $225.1 million upfront payment to Entrada and our $100.0 million upfront payment and $70.0 million research milestone to CRISPR related to T1D. 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 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.

Current wording

Selling, general and administrative expenses increased by 41% and 42% in the third quarter and nine months ended September 30, 2024 as compared to the third quarter and nine months ended September 30, 2023, respectively, primarily due to increased commercial investments to support the launches of our therapies globally and prepare for near-term launches of multiple potential new products, and stock-based compensation expense.

Previous 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.

Current wording

The fair value of our contingent consideration increased by $0.3 million and $0.7 million in the third quarter and nine months ended September 30, 2024, respectively, and increased by $1.2 million and decreased by $1.3 million in the third quarter and nine months ended September 30, 2023, respectively.

Previous 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.

Current wording

Interest income decreased from $167.9 million in the third quarter of 2023 to $132.2 million in the third quarter of 2024, primarily due to decreased cash equivalents and available-for-sale debt securities following our acquisition of Alpine in the second quarter of 2024. Interest income increased from $435.2 million in the nine months ended September 30, 2023 to $469.9 million in the nine months ended September 30, 2024, primarily due to the mix of our cash equivalents and available-for-sale debt securities partially offset by the impact from our acquisition of Alpine on the amount 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 $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.

Current wording

Interest expense was $7.5 million and $10.9 million in the third quarter of 2024 and 2023, respectively, and $27.8 million and $33.5 million in the nine months ended September 30, 2024 and 2023, respectively. The majority of our interest expense in these periods was related to imputed interest expense associated with finance leases for our corporate headquarters in Boston. As discussed in Note M, “Leases,” our corporate headquarters leases were amended in August 2024, which resulted in a classification change to operating leases as of September 30, 2024. As a result, we expect our interest expense to decrease in future periods because operating lease expenses are recorded entirely within operating expenses in our condensed consolidated statements of operations.

Previous 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.

Current wording

Other income (expense), net was expenses of $16.9 million and $15.9 million in the third quarter of 2024 and 2023, respectively, and $71.2 million and $13.0 million in the nine months ended September 30, 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 September 30, 2024, the fair value of our investments in publicly traded companies was $33.4 million.

Previous wording

We recorded provisions for income taxes of $202.4 million and $245.8 million in the second quarter of 2024 and 2023, respectively, and $381.9 million and $437.5 million in the first half of 2024 and 2023, respectively. Our effective tax rate of (18.1)% in the first half of 2024 was materially different than the U.S. statutory rate primarily due to the $4.4 billion of AIPR&D resulting from our acquisition of Alpine, which drove our pre-tax loss in each of these periods. Our effective tax rate of 21.3% in the first half of 2023 was similar to the U.S. statutory rate.

Current wording

We recorded provisions for income taxes of $178.7 million and $143.9 million in the third quarter of 2024 and 2023, respectively, and $560.6 million and $581.4 million in the nine months ended September 30, 2024 and 2023, respectively. Our effective tax rate of (63.1)% in the nine months ended September 30, 2024 was materially different than the U.S. statutory rate primarily due to the $4.4 billion of AIPR&D resulting from our acquisition of Alpine, which drove our pre-tax loss in this period. Our effective tax rate of 18.0% in the nine months ended September 30, 2023 was lower than the U.S. statutory rate primarily due to a benefit from a research and development tax credit study that was completed during the third quarter of 2023 and excess tax benefits related to stock-based compensation, partially offset by changes in uncertain tax positions.

Previous 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.

Current wording

As of September 30, 2024, total working capital was $5.8 billion, which represented a decrease of $4.8 billion from $10.6 billion as of December 31, 2023 primarily due to the cash consideration paid to acquire Alpine.