OVERVIEW

Financial Highlights

Revenues In the first quarter of 2023, our net product revenues increased to $2.4 billion

primarily due to the

internationally and

Expenses Our total research and development ("R&D"), acquired in-process research and

administrative ("SG&A") expenses

compared to $818.3

primarily due to increased

in mid- to late-stage

net product revenues in

increased to $11.5

as of December 31, 2022

cash flows partially

Inc. ("Entrada") and

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

Potential Near-Term Launch Opportunities

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

Exa-cel in SCD and TDT

We recently completed rolling submissions of our biologics licensingapplications ("BLAs") for exa-cel in the U.S. Exa-cel has been granted FastTrack, Regenerative Medicine Advanced Therapy, Orphan Drug and Rare PediatricDisease designations in the U.S.

Vanzacaftor/tezacaftor/deutivacaftor in CF

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Pipeline

Cystic Fibrosis

Beta Thalassemia and Sickle Cell Disease

We are evaluating the use of exa-cel, a non-viral ex vivo CRISPR gene-editingtherapy, for the treatment of SCD and TDT.

Dosing in the Phase 3 CLIMB-111 and CLIMB 121 clinical trials evaluatingexa-cel continues, as does the CLIMB 131 long-term follow-up clinical trial inpatients 12 years of age and older.

Two additional Phase 3 clinical trials evaluating exa-cel in children with SCDor TDT 5 to 11 years of age are ongoing.

Neuropathic Pain

APOL1-Mediated Kidney Disease

The FDA granted inaxaplin Breakthrough Therapy designation for APOL1-mediatedFSGS and the EMA granted inaxaplin Orphan Drug and PRIME designations for AMKD.

Type 1 Diabetes

Our hypoimmune cell research program continues to progress.

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Alpha-1 Antitrypsin Deficiency

Additional Earlier Stage R&D Programs

Investments in External Innovation

Recent investments in external innovation are included below:

We announced a new licensing agreement for the use of CRISPR's gene-editingtechnology, known as CRISPR/Cas9, to accelerate the development of ourhypoimmune cell therapies for T1D.

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Sales of our products depend, to a large degree, on the extent to which ourproducts are reimbursed by third-party payors, such as government healthprograms, 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. Wededicate substantial management and other resources to obtain and maintainappropriate levels of reimbursement for our products from third-party payors,including governmental organizations in the U.S. and ex-U.S. markets.

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

Collaboration and In-Licensing Arrangements

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In February 2023, we closed our strategic collaboration and licensing agreementwith Entrada. Upon closing, we made an upfront payment of $225.1 million toEntrada, and purchased $24.9 million of Entrada's common stock.

Acquired In-Process Research and Development Expenses

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millions, except percentages and per share amounts)Product revenues, net

millions, except percentages)

millions, except percentages)

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Research and Development Expenses

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Our research expenses have been increasing over the last several years as wehave invested in our pipeline and expanded our cell and genetic therapycapabilities, resulting in increased headcount, outside services and otherdirect expenses and infrastructure costs associated with our researchfacilities. We expect to continue to invest in our research programs with afocus on creating transformative medicines for serious diseases.

Our development expenses increased by $118.5 million, or 26%, in the firstquarter of 2023 as compared to the first quarter of 2022, primarily due toincreased costs to support clinical trials associated with our advancingpipeline programs, including pain, our CF triple combination ofvanzacaftor/tezacaftor/deutivacaftor, exa-cel and T1D. We are significantlyinvesting in internal headcount, leveraging outsourced services, and investingin infrastructure to support these programs.

Acquired In-process Research and Development Expenses

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to another due to upfront, contingent milestone, and other payments pursuant toour existing and future business development transactions, includingcollaborations, licenses of third-party technologies, and asset acquisitions.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by 12% in the firstquarter of 2023 as compared to the first quarter of 2022, primarily due to thecontinued investment to support the commercialization of our medicines andincreased support for our pipeline product candidates.

Contingent Consideration

The fair value of our contingent consideration decreased by $1.9 million and$7.5 million in the first quarter of 2023 and 2022, respectively.

Other Non-Operating Income (Expense), Net

Interest Income

Interest Expense

Interest expense was $11.4 million and $14.9 million in the first quarter of2023 and 2022, respectively. The majority of our interest expense in theseperiods was related to imputed interest expense associated with our leasedcorporate headquarters in Boston.

Other Income (Expense), Net

Income Taxes

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LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes the components of our financial condition as ofMarch 31, 2023 and December 31, 2022:

Net cash provided by (used in):

Investing Activities

Financing Activities

Sources and Uses of Liquidity

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Credit Facilities & Financing Strategy

Future Capital Requirements

We have significant future capital requirements, including:

Facility and finance lease obligations.

Royalties we pay to the Cystic Fibrosis Foundation on sales of our CF products.

Cash paid for income taxes.

In addition, we have significant potential future capital requirementsincluding:

To the extent we borrow amounts under our existing credit agreement, we wouldbe required to repay any outstanding principal amounts in 2027.

As of March 31, 2023, we had $2.9 billion remaining authorization availableunder our Share Repurchase Program.

There have not been any material changes to our future capital requirementsdisclosed in our Annual Report on Form 10-K for the year ended December 31,2022, which was filed with the Securities and Exchange Commission, or SEC, onFebruary 10, 2023.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operationsare based upon our condensed consolidated financial statements prepared inaccordance with generally accepted accounting principles in the U.S. The

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RECENT ACCOUNTING PRONOUNCEMENTS

See more here:
VERTEX PHARMACEUTICALS INC / MA Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) - Marketscreener.com