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 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. Our clinical-stage pipeline includes programs in CF, SCD, beta thalassemia, acute and peripheral neuropathic pain, APOL1-mediated kidney disease, IgA nephropathy and other autoimmune renal diseases and cytopenias, type 1 diabetes, myotonic dystrophy type 1, 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 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. Our clinical-stage pipeline includes programs in CF, SCD, beta thalassemia, acute and peripheral neuropathic pain, type 1 diabetes, IgA nephropathy, primary membranous nephropathy and other autoimmune renal diseases and cytopenias, APOL1-mediated kidney disease, myotonic dystrophy type 1, and autosomal dominant polycystic kidney disease.

Previous wording

In December 2024, the U.S. Food and Drug Administration (the “FDA”) approved ALYFTREK (vanzacaftor/tezacaftor/deutivacaftor), our once-daily next-in-class triple combination for the treatment of people with CF 6 years of age and older, and our fifth CF medicine. ALYFTREK is also approved in the United Kingdom (the “U.K.”). Collectively, our five medicines, led by TRIKAFTA/KAFTRIO (elexacaftor/tezacaftor/ivacaftor and ivacaftor), are being used to treat nearly three quarters of the approximately 94,000 people with CF in the U.S., Europe, Australia, and Canada. Through approvals of new medicines, label expansions, and expanded reimbursement, we are focused on increasing the number of people with CF who are eligible and able to receive our medicines. In addition, we are evaluating our CF medicines in additional patient populations, including younger children, with the goal of having small molecule treatments for all people who have at least one mutation in their CFTR gene that is responsive to our CFTR modulators. We also are pursuing messenger ribonucleic acid (“mRNA”) and genetic therapies for people with CF who do not make full-length CFTR protein and, as a result, cannot benefit from our current CF medicines.

Current wording

In December 2024, the U.S. Food and Drug Administration (the “FDA”) approved ALYFTREK (vanzacaftor/tezacaftor/deutivacaftor), our once-daily next-in-class triple combination for the treatment of people with CF 6 years of age and older, and our fifth CF medicine. ALYFTREK is also approved in the United Kingdom (the “U.K.”), the European Union (“E.U.”), and Canada. Collectively, our five medicines, led by TRIKAFTA/KAFTRIO (elexacaftor/tezacaftor/ivacaftor and ivacaftor), are being used to treat more than three quarters of the approximately 94,000 people with CF in the U.S., Europe, Australia, and Canada.

Previous wording

CASGEVY (exagamglogene autotemcel), our ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, is approved in the U.S., the European Union (“E.U.”), the U.K., the Kingdom of Saudi Arabia (“Saudi Arabia”), the Kingdom of Bahrain (“Bahrain”), the United Arab Emirates (the “UAE”), Switzerland and Canada for the treatment of people 12 years of age and older with SCD or TDT. We estimate approximately 60,000 people with severe SCD or TDT are or could become eligible for CASGEVY in the U.S., Canada, Europe, Saudi Arabia and Bahrain.

Current wording

CASGEVY (exagamglogene autotemcel), our ex-vivo, non-viral CRISPR/Cas9 gene-edited cell therapy, is approved in the U.S., the E.U., the U.K., the Kingdom of Saudi Arabia (“Saudi Arabia”), the Kingdom of Bahrain (“Bahrain”), Qatar, the United Arab Emirates (the “UAE”), Switzerland and Canada for the treatment of people 12 years of age and older with SCD or TDT. We estimate approximately 60,000 people with severe SCD or TDT are or could become eligible for CASGEVY in the U.S., Canada, Europe, and the Middle East.

Previous wording

In January 2025, the FDA approved JOURNAVX, our selective non-opioid NaV1.8 pain signal inhibitor, for the treatment of people with moderate-to-severe acute pain. We have begun our commercial launch of JOURNAVX in the U.S. for eligible adults. In addition, we are enrolling and dosing patients in a Phase 3 clinical trial evaluating suzetrigine for the treatment of diabetic peripheral neuropathy, a common form of peripheral neuropathic pain.

Current wording

In January 2025, the FDA approved JOURNAVX, our selective non-opioid NaV1.8 pain signal inhibitor, for the treatment of people with moderate-to-severe acute pain. We have begun our commercial launch of JOURNAVX in the U.S. for eligible adults.

Previous wording

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

Current wording

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:

Previous wording

•ALYFTREK, the once-daily next-in-class combination CFTR modulator for the treatment of people with CF 6 years of age and older who have at least one F508del mutation or another responsive mutation in the CFTR gene, is approved in the U.S. and the U.K. We are working with the National Health Service in the U.K. to secure coverage for eligible patients.

Current wording

•Health Canada approved ALYFTREK for the treatment of people with CF 6 years of age and older who have at least one F508del mutation or another responsive mutation in the CFTR gene. We are working to secure reimbursement for eligible patients in Canada.

Previous wording

•The European Medical Agency’s (the “EMA”) Committee for Medicinal Products for Human Use adopted a positive opinion for ALYFTREK for the treatment of people with CF 6 years of age and older who have at least one non-class I mutation in the CFTR gene. European Commission approval for ALYFTREK is expected in the second half of 2025. Regulatory submissions for ALYFTREK are under review in Canada, Switzerland, Australia and New Zealand.

Current wording

•Regulatory submissions for ALYFTREK are under review in Switzerland, Australia and New Zealand.

Previous wording

•Since JOURNAVX became available in early March, more than 20,000 prescriptions have been written and filled across the hospital and retail settings in different acute pain conditions, consistent with its broad label.

Current wording

•Since JOURNAVX became available at pharmacies in March through mid-July, more than 110,000 prescriptions have been written and filled across the hospital and retail settings in different acute pain conditions, consistent with its broad label.

Previous wording

•We are enrolling and dosing patients in a Phase 3 clinical trial of TRIKAFTA/KAFTRIO in children 1 to 2 years of age and in a Phase 3 clinical trial of ALYFTREK in children 2 to 5 years of age to expand the labels and enable earlier treatment of children with CF.

Current wording

•We are completing Phase 3 clinical trials in younger age groups to expand the TRIKAFTA/KAFTRIO and ALYFTREK labels and to enable earlier treatment of children with CF. We have completed enrollment in a global trial evaluating ALYFTREK in children 2 to 5 years of age.

Previous wording

•In collaboration with Moderna, Inc. (“Moderna”), we are developing VX-522, a nebulized CFTR mRNA therapy for the treatment of people with CF who do not produce full-length CFTR protein. We have implemented a temporary pause to the multiple ascending dose portion of the Phase 1/2 clinical trial of VX-522 in order to assess a tolerability issue.

Current wording

•In collaboration with Moderna, Inc. (“Moderna”), we are developing VX-522, a nebulized CFTR mRNA therapy for the treatment of people with CF who do not produce full-length CFTR protein. The Independent Data Monitoring Committee has completed its review of VX-522, and endorsed restart of the Phase 1/2 clinical trial evaluating VX-522. We expect to resume dosing in the multiple ascending dose portion of this trial in the near term.

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 expect to complete dosing in the second half of 2025.

Previous wording

•We are enrolling and dosing people with diabetic peripheral neuropathy, a common form of chronic peripheral neuropathic pain, in a Phase 3 pivotal trial evaluating suzetrigine. The FDA has granted suzetrigine Fast Track designation in peripheral neuropathic pain and Breakthrough Therapy designation in diabetic peripheral neuropathy.

Current wording

•We continue to enroll and dose people with diabetic peripheral neuropathy, a common form of chronic peripheral neuropathic pain, in a Phase 3 pivotal trial evaluating suzetrigine.

Previous wording

•Zimislecel is an allogeneic, stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy, using standard immunosuppression to protect the implanted cells. We are enrolling and dosing patients in the Phase 3 portion of the Phase 1/2/3 clinical trial of zimislecel in people with type 1 diabetes (“T1D”) with severe hypoglycemic events and impaired awareness of hypoglycemia in the U.S., Canada, U.K. and E.U. We expect to complete enrollment and dosing in this pivotal clinical trial in the second quarter of 2025 and we expect to submit marketing applications to global regulators in 2026. We also expect to share updated clinical trial data in the second quarter of 2025.

Current wording

•Zimislecel is an allogeneic, stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy, using standard immunosuppression to protect the implanted cells. We expect to complete enrollment and dosing in the Phase 3 portion of the Phase 1/2/3 clinical trial of zimislecel in people with type 1 diabetes (“T1D”) with severe hypoglycemic events and impaired awareness of hypoglycemia in the near term. We expect global regulatory submissions for zimislecel in 2026.

Previous wording

IgA Nephropathy, Primary Membranous Nephropathy and Other B Cell-Mediated Diseases

Current wording

IgA Nephropathy, Primary Membranous Nephropathy and Other B Cell-Driven Diseases

Previous wording

•We are developing povetacicept, a dual antagonist of B cell activating factor (“BAFF”) and a proliferation-inducing ligand (“APRIL”) cytokines, as a potentially best-in-class approach to treat immunoglobulin A nephropathy (“IgAN”) and primary membranous nephropathy (“pMN”).

Current wording

•We are developing povetacicept, a dual antagonist of B cell activating factor (“BAFF”) and a proliferation-inducing ligand (“APRIL”) cytokines, as a potentially best-in-class approach to treat immunoglobulin A nephropathy (“IgAN”) and primary membranous nephropathy (“pMN”). We believe povetacicept holds pipeline-in-a-product potential.

Previous wording

•The global Phase 3 RAINIER trial evaluating povetacicept in people with IgAN has completed enrollment of the interim analysis cohort. The interim analysis will be conducted once this cohort reaches 36 weeks of treatment, with the potential to file for Accelerated Approval in the U.S. in the first half of 2026, if results are supportive. Clinical trials to support the launch of povetacicept for home administration are underway.

Current wording

•The global Phase 3 RAINIER trial evaluating povetacicept in people with IgAN completed enrollment of the interim analysis cohort in the second quarter. The interim analysis will be conducted once this cohort reaches 36 weeks of treatment, with the potential to file for Accelerated Approval in the U.S. in the first half of 2026, if results are supportive. We expect to complete enrollment in the full clinical trial in 2025. Clinical trials to support the launch of povetacicept for at-home self-administration are underway.

Previous wording

•Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”). We expect to complete enrollment in the interim analysis cohort of the Phase 3 portion of the global Phase 2/3 pivotal clinical trial (“AMPLITUDE”) in the second half of 2025. We expect to conduct the pre-planned interim analysis once this cohort has been treated for 48 weeks, with potential to file for accelerated approval in the U.S. if the results are supportive.

Current wording

•Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease (“AMKD”). We expect to complete enrollment in the interim analysis cohort of the global Phase 2/3 pivotal clinical trial evaluating inaxaplin (“AMPLITUDE”) in 2025. We expect to conduct the pre-planned interim analysis once this cohort has been treated for 48 weeks, with potential to file for accelerated approval in the U.S. if the results are supportive. This trial has met its minimum target for pediatric enrollment (10 - 17 years of age) and continues to enroll both pediatric and adult patients.

Previous wording

In the first quarter of 2025, 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. We are continuing to progress commercialization of CASGEVY, which has received marketing approvals in the U.S., the E.U., the U.K., Saudi Arabia, Bahrain, the UAE, Switzerland and Canada for the treatment of SCD and TDT. In addition, we have begun our commercial launch of JOURNAVX for the treatment of acute pain, which received marketing approval in the U.S. in January 2025. We also continue to advance our pipeline of product candidates for the treatment of serious diseases outside of CF, SCD, TDT, and acute pain.

Current wording

In the first half of 2025, 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. We are continuing to progress commercialization of CASGEVY, which has received marketing approvals in the U.S. and across multiple geographies, including countries in Europe and the Middle East, for the treatment of SCD and TDT. In addition, we have begun our commercial launch of JOURNAVX for the treatment of acute pain, which received marketing approval in the U.S. in January 2025. We also continue to advance our pipeline of product candidates for the treatment of serious diseases outside of CF, SCD, TDT, and acute pain.

Previous wording

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. Our foreign third-party manufacturers and suppliers may be subject to U.S. legislation, including the BIOSECURE Act, tariffs, sanctions, trade restrictions and other foreign regulatory requirements which could increase costs or reduce the supply of material available to us, or delay the procurement or supply of such material. 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.

Current wording

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. Our foreign third-party manufacturers and suppliers may be subject to U.S. legislation, including the BIOSECURE Act, tariffs, sanctions, trade restrictions and other foreign regulatory requirements which could increase costs or reduce the supply of material available to us, or delay the procurement or supply of such material. 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.

Previous wording

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.

Current wording

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., for example, recently enacted changes to the Medicaid program may result in a less favorable coverage environment that may impact our revenues.

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 and JOURNAVX. 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 such access. For JOURNAVX in the U.S., we have been working with government and commercial payors pre- and post-approval to support rapid and broad access. 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 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 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, Bahrain, Luxembourg, and England. In addition, the Italian Medicines Agency has approved early access for CASGEVY, on a case-by-case basis, to treat people with SCD and TDT. 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.

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 and JOURNAVX. 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 such access. For JOURNAVX in the U.S., we have been working with government and commercial payors pre- and post-approval to support rapid and broad access. 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 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 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. In addition, federal and state governments in the U.S. continue to consider policies to lower prescription drug costs. The logistics of such initiatives continue to be discussed, and we cannot anticipate how these actions, if enacted, may impact our revenues and our business. 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 across multiple geographies, including countries in Europe and the Middle East. 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.

Previous wording

Over the last several years, we entered into collaboration agreements with a number of companies, including CRISPR Therapeutics AG (“CRISPR”), Entrada Therapeutics, Inc. (“Entrada”), and Moderna, Inc.

Current wording

Over the last several years, we entered into collaboration agreements with a number of companies, including CRISPR Therapeutics AG (“CRISPR”), Entrada Therapeutics, Inc. (“Entrada”), and Moderna.

Previous wording

In the first quarter of 2025 and 2024, our AIPR&D included $19.8 million and $76.8 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.

Current wording

In the first half of 2025 and 2024, our AIPR&D included $22.0 million and $4.5 billion, 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.

Previous wording

In January 2025, we entered into a collaboration agreement with Zai Lab Limited (“Zai”) for the development and commercialization of povetacicept in mainland China, Hong Kong SAR, Macau SAR, Taiwan region and Singapore. Zai is responsible for the povetacicept clinical trials and regulatory submissions in the licensed territories. Zai will also be responsible for commercialization activities in the licensed territories, if povetacicept becomes an approved product. We are eligible to receive certain regulatory milestone payments and tiered royalties on future net sales of povetacicept in the region of focus for Zai.

Current wording

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 in mainland China, Hong Kong SAR, Macau SAR, Taiwan region and Singapore, while Ono licensed povetacicept in Japan and South Korea. Zai and Ono are responsible for povetacicept clinical trials, regulatory submissions, and all commercialization activities, if povetacicept becomes an approved product, in their licensed territories. We are eligible to receive certain regulatory milestone payments and tiered royalties on future net sales of povetacicept in these regions.

Previous wording

In the first quarter of 2025, our net product revenues increased by $69.6 million, or 3%, as compared to the first quarter of 2024, primarily due to the continued performance of TRIKAFTA/KAFTRIO and initial contributions from ALYFTREK. In the first quarter of 2025, "Other product revenues" included $14.2 million from CASGEVY, and an insignificant amount from JOURNAVX. In the first quarter of 2024, there were no revenues for these products.

Current wording

In the second quarter and first half of 2025, our net product revenues increased by $298.4 million and $368.0 million, or 11% and 7%, as compared to the second quarter and first half of 2024, respectively, primarily due to continued strong demand for TRIKAFTA/KAFTRIO and early contributions from three ongoing launches. In the second quarter and first half of 2025, "Other product revenues" included $30.4 million and $44.6 million, respectively, from CASGEVY, and $12.0 million and $13.3 million, respectively, from JOURNAVX. In the second quarter and first half of 2024, there were no revenues for these products.

Previous wording

Our net product revenues increased 9% in the U.S. due to higher net realized pricing and continued strong patient demand. Our net product revenues decreased 5% outside the U.S. primarily due to an expected decline in product revenues in Russia, where we are continuing to experience a violation of our intellectual property rights.

Current wording

In the second quarter and first half of 2025, our net product revenues increased 13% and 11% in the U.S., as compared to the second quarter and first half of 2024, respectively, due to higher net realized pricing and continued strong patient demand. In the second quarter of 2025, our ex-U.S. net product revenues increased 8% as compared to the second quarter of 2024, primarily due to strong performance across multiple geographies. In the first half of 2025, our ex-U.S. net product revenues increased 1%, as compared to the first half of 2024, primarily due to an expected decline in product revenues in Russia, where we are continuing to experience a violation of our intellectual property rights.

Previous wording

In the first quarter of 2025, “Other revenues” included a $10.0 million upfront payment we received from our collaboration agreement with Zai.

Current wording

In the second quarter and first half of 2025, “Other revenues” were $20.7 million and $30.7 million, respectively. In the second quarter of 2025, Other revenues included a $20.6 million upfront payment received from our collaboration agreement with Ono. In the first half of 2025, Other revenues also included a $10.0 million upfront payment received from our collaboration agreement with Zai.

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 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.

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 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 is 9.33% and the royalty burden associated with ALYFTREK is 4%. As previously disclosed, the third party to whom the Cystic Fibrosis Foundation has assigned its ALYFTREK royalty rights has made public statements that they believe the ALYFTREK royalty burden is in the high single-digits. We believe that these statements are inconsistent with the plain terms of our agreement with the Cystic Fibrosis Foundation and would not survive close scrutiny. Following our earnings call on August 4, 2025, the third party requested that we engage in discussions to resolve this disagreement, which engagement is required by the agreement.

Previous wording

In the first quarter of 2025, our cost of sales increased $20.4 million, or 6%, as compared to the first quarter of 2024, primarily due to increased sales volume and changes in product mix. Our cost of sales as a percentage of our net product revenues was 13% in each of the first quarter of 2025 and 2024.

Current wording

In the second quarter and first half of 2025, our cost of sales increased $35.6 million and $56.0 million, or 10% and 8%, as compared to the second quarter and first half of 2024, respectively, primarily due to increased sales volume and changes in product mix. Our cost of sales as a percentage of our net product revenues was 14% in each of the second quarter of 2025, second quarter of 2024, and first half of 2025, and 13% in the first half of 2024.

Previous wording

Our research and development expenses include internal and external costs incurred for research and development of our products and product candidates. We do not assign our internal costs, such as salary and benefits, stock-based compensation expense, laboratory supplies and other direct expenses and infrastructure costs, to individual products or product candidates, because the employees within our research and development groups typically are deployed across multiple research and development programs. We assign external costs of services provided to us by clinical research organizations and other outsourced research by individual program. Our internal costs are greater than our external costs. All research and development costs for our products and product candidates are expensed as incurred.

Current wording

Since January 2023, we have incurred approximately $8.8 billion in research and development expenses associated with product discovery and development. 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.

Previous wording

Our research expenses have been increasing over the last several years as we invested in our pipeline and expanded our cell and genetic therapy capabilities, which resulted in increased outsourced services and other direct expenses and infrastructure costs in the first quarter of 2025 as compared to the first quarter of 2024. 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 reflect investment in our pipeline and expansion of our cell and genetic therapy capabilities, which has increased our outsourced services and other direct expenses and infrastructure costs in the second quarter and first half of 2025 as compared to the second quarter and first half of 2024. Salary and benefits in the second quarter and first half of 2024 included $13.1 million associated with cash-settled unvested Alpine equity awards. Compared to the second quarter and first half of 2024, our research expenses increased by $2.0 million, or 1%, and $12.0 million, or 3%, respectively. We expect to continue to invest in our research programs with a focus on creating transformative medicines for serious diseases.

Previous wording

AIPR&D in the first quarter of 2025 was primarily related to milestone payments. AIPR&D in the first quarter of 2024 was primarily related to the $75.0 million milestone to Entrada. 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 second quarter and first half of 2025 included milestone payments. AIPR&D in the second quarter and first half of 2024 was primarily related to $4.4 billion 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 paid to Entrada during the first quarter of 2024. 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 16% in the first quarter of 2025 as compared to the first quarter of 2024 primarily due to increased commercial investment to support the launch of JOURNAVX.

Current wording

Selling, general and administrative expenses increased by 14% and 15% in the second quarter and first half of 2025, respectively, as compared to the second quarter and first half of 2024 primarily due to increased commercial investment to support the launch of JOURNAVX.

Previous wording

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 that we acquired from Semma Therapeutics, Inc. in 2019. As a result, we recorded a full intangible asset impairment charge of $379.0 million associated with VX-264.

Current wording

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 that we acquired from Semma Therapeutics, Inc. in 2019. 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.

Previous wording

The fair value of our contingent consideration increased by $2.2 million in the first quarter of 2025 and decreased by $0.1 million in the first quarter of 2024.

Current wording

The fair value of our contingent consideration increased by $0.9 million and $3.1 million in the second quarter and first half of 2025, respectively, and increased by $0.5 million and $0.4 million in the second quarter and first half of 2024, respectively.

Previous wording

Interest income decreased from $181.2 million in the first quarter of 2024 to $120.9 million in the first quarter of 2025, primarily due to decreased cash equivalents and available-for-sale debt securities following our acquisition of Alpine in the second quarter of 2024 and decreased market interest rates compared to the first quarter of 2024. 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 $156.5 million and $337.7 million in the second quarter and first half of 2024, respectively, to $122.4 million and $243.3 million in the second quarter and first half of 2025, respectively, primarily due to decreased market interest rates and decreased cash equivalents and available-for-sale debt securities following our acquisition of Alpine in the second quarter of 2024. 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 $3.0 million and $10.4 million in the first quarter of 2025 and 2024, respectively. The majority of our interest expense in these periods was related to imputed interest expense associated with our finance leases, including interest expense imputed on our corporate headquarters leases in Boston in the first quarter of 2024. Our corporate headquarters leases were amended in the third quarter of 2024 resulting in a classification change from finance to operating leases, which are recorded entirely within operating expenses in our condensed consolidated statements of operations.

Current wording

Interest expense was $3.7 million and $6.7 million in the second quarter and first half of 2025, respectively, and $9.9 million and $20.3 million in the second quarter and first half of 2024, respectively. Prior to the third quarter of 2024, the majority of our interest expense related to imputed interest expense associated with our corporate headquarters leases in Boston. Following the amendment of these leases in the third quarter of 2024 that changed their classifications from finance to operating leases, the operating lease costs associated with the leases are recorded entirely within operating expenses in our condensed consolidated statements of income (loss).

Previous wording

Other income (expense), net were expenses of $17.6 million and $31.2 million in the first quarter of 2025 and 2024, respectively. These amounts primarily related to net unrealized losses resulting from changes in the fair value of certain of our strategic equity investments, which consist of investments in our collaborators that may be public or privately-held companies. To the extent that we continue to hold strategic equity investments in publicly traded biotechnology companies, we expect that our other income (expense), net will continue to fluctuate in future periods due to the volatility in the stock prices of these companies that impacts the fair value of our investments. As of March 31, 2025, the fair value of our investments in publicly traded companies was $21.6 million.

Current wording

Other income (expense), net was income of $13.2 million and expense of $23.1 million in the second quarter of 2025 and 2024, respectively, and expenses of $4.4 million and $54.3 million in the first half of 2025 and 2024, respectively. These amounts primarily related to net unrealized gains or losses resulting from changes in the fair value of certain of our strategic equity investments, which consist of investments in our collaborators that may be public or privately-held companies. To the extent that we continue to hold strategic equity investments in publicly traded biotechnology companies, we expect that our other income (expense), net will continue to fluctuate in future periods due to the volatility in the stock prices of these companies that impacts the fair value of our investments. As of June 30, 2025, the fair value of our investments in publicly traded companies was $27.9 million.

Previous wording

We recorded provisions for income taxes of $84.1 million and $179.5 million in the first quarter of 2025 and 2024, respectively. Our effective tax rate of 11.5% in the first quarter of 2025 was lower than the U.S. statutory rate primarily due to excess tax benefits related to stock-based compensation. Our effective tax rate of 14.0% in the first quarter of 2024 was lower than the U.S. statutory rate primarily due to changes in our unrecognized tax positions as well as excess tax benefits related to stock-based compensation.

Current wording

We recorded provisions for income taxes of $250.1 million and $202.4 million in the second quarter of 2025 and 2024, respectively, and $334.2 million and $381.9 million in the first half of 2025 and 2024, respectively. Our effective tax rate of 16.6% in the first half of 2025 was lower than the U.S. statutory rate primarily due to excess tax benefits related to stock-based compensation and tax credits. 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 the first half of 2024.

Previous wording

As of March 31, 2025, total working capital was $6.2 billion, which represented an increase of $193.8 million, or 3%, compared to December 31, 2024, primarily due to increased cash and cash equivalents resulting from our operations and increased inventories following the regulatory approvals of ALYFTREK and JOURNAVX.

Current wording

As of June 30, 2025, total working capital was $6.3 billion, which represented an increase of $257.7 million, or 4%, compared to December 31, 2024, primarily due to increased cash and cash equivalents resulting from our operations and increased inventories following the commercial launches of ALYFTREK and JOURNAVX.