Vertex Pharmaceuticals Incorporated
02/13/2026 | Press release | Distributed by Public on 02/13/2026 15:21
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Our discussion and analysis of our financial condition and results of operations for 2025as compared to 2024are
discussed below. For a discussion of our financial condition and results of operations for 2024as compared to 2023, please
refer to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2024
Annual Report on Form 10-K, except as set forth below.
OVERVIEW
We are a global biotechnology company that invests in scientific innovation to create transformative medicines for
people with serious diseases, with a focus on specialty markets. We have approved medicines for cystic fibrosis ("CF"),
sickle cell disease ("SCD"), transfusion dependent beta thalassemia ("TDT"), and acute pain, and we continue to serially
innovate and advance next-generation clinical and research programs in these areas. Our mid- and late-stage clinical pipeline
includes programs across a range of modalities in additional serious diseases, including IgA nephropathy, APOL1-mediated
kidney disease, neuropathic pain, type 1 diabetes, primary membranous nephropathy, autosomal dominant polycystic kidney
disease, and myotonic dystrophy type 1.
Collectively, our five CF medicines, led by TRIKAFTA/KAFTRIO, are being used to treat nearly three quarters of the
people with CF in the U.S., Europe, Australia, and Canada. ALYFTREK, our newest CF medicine, is approved in the United
States (the "U.S."), the United Kingdom (the "U.K."), the European Union (the "E.U."), Canada, New Zealand, Switzerland,
Australia and Israel.
CASGEVY, 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"), Kuwait, Switzerland and Canada for the treatment of people 12 years of age and older with SCD or TDT.
JOURNAVX, our selective non-opioid NaV1.8 pain signal inhibitor, is approved in the U.S. for the treatment of people
with moderate-to-severe acute pain.We are continuing our commercial launch of JOURNAVX for eligible adults.
Financial Highlights
|
Total Revenues
|
In 2025, our total revenues increased to $12.0 billionas compared to $11.0 billionin 2024,
primarily due to continued strong demand for TRIKAFTA/KAFTRIO as well as contributions
from our launches of ALYFTREK, JOURNAVX and CASGEVY.
|
|
Cost of Sales
|
Our cost of sales as a percentage of our net product revenues decreasedfrom 13.9%in 2024to
13.8%in 2025as a result of a lower overall royalty rate for our CF medicines, partially offset by
changes in our product mix, and investments in network expansion and manufacturing process
improvements.
|
|
Total R&D and SG&A
Expenses
|
Our total research and development ("R&D") and selling, general and administrative ("SG&A")
expenses increased to $5.7 billionin 2025 as compared to $5.1 billionin 2024, primarily due to
increased investment to commercialize our new products and to advance our R&D pipeline.
|
|
AIPR&D Expenses
|
In 2025, our acquired in-process research and development expenses ("AIPR&D") of $133.0
millionincluded various upfront and milestone payments related to our collaboration and in-
licensing arrangements. In 2024, AIPR&D included $4.4 billion resulting from our acquisition of
Alpine Immune Sciences, Inc. ("Alpine"), which was accounted for as an asset acquisition.
|
|
Cash
|
Our total cash, cash equivalents and marketable securities increasedto $12.3 billionas of
December 31, 2025as compared to $11.2 billionas of December 31, 2024primarily due to cash
flows provided by our operating activities partially offset by repurchases of our common stock.
|
$0.1
$0.1
2024
2025
December 31, 2025
December 31, 2024
Note: Charts above may not add due to rounding.
Business Updates
Marketed Products
Cystic Fibrosis
We expect that the number of people with CF taking our medicines will continue to grow through new approvals and
reimbursement agreements, treatment of younger patients, increased survival and expansion into additional geographies.
•ALYFTREK is reimbursed for eligiblepeople with CF in the U.S., England, Ireland, Germany, Denmark, Northern
Ireland, Norway, Wales, Italy, Australia, New Zealand and Luxembourg. We are working to secure access for
eligible patients in additional countries.
Sickle Cell Disease and Beta Thalassemia
•In 2025, we recorded $115.8 million of CASGEVY product revenues. This reflects 64 patients receiving infusions
of CASGEVY in 2025, including 30 people infused in the fourth quarter. Globally, in 2025, 147 people with SCD or
TDT had their first cell collection for CASGEVY.
•As of the end of 2025, approximately 90 percent of people with SCD or TDT in the U.S. have reimbursed access to
CASGEVY, which is also reimbursed in the U.K., Italy, Austria, Denmark, Luxembourg, Saudi Arabia, the UAE,
Bahrain, and Kuwait. In January 2026, we secured reimbursed access to CASGEVY for eligible people with SCD in
Scotland, consistent with the reimbursement agreement reached in 2025 for people with TDT.
•We expect to begin global regulatory submissions for approvals for CASGEVY in children 5 to 11 years of age, in
the first half of 2026. The FDA awarded Vertex with a Commissioner's National Priority Voucher for this pediatric
submission, indicating an accelerated timeline for review once the submission is complete.
Acute Pain
•Since pharmacy availability in March 2025 through year-end 2025, more than 550,000prescriptions for
JOURNAVX were written and filled across the hospital and retail settings in different acute pain conditions,
consistent with JOURNAVX's broad label.
•We have secured access for JOURNAVX with all three national pharmacy benefit managers, and, as of January
2026, over 200 million individuals across commercial and government payers have coverage, representing two-
thirds of U.S. covered lives. In addition, 21 states provide coverage via Medicaid.
•More than 100 of the targeted 150 healthcare systems and more than 950 individual hospitals of the 2,000 targeted
institutions have added JOURNAVX to formularies, protocols or order sets.
Select R&D Pipeline Programs
We continue to advance a diversified pipeline of potentially transformative medicines for serious diseases utilizing a
range of modalities. Recent and anticipated progress in activities supporting these efforts is included below:
Cystic Fibrosis
•We completed the global trial evaluating ALYFTREK in children 2 to 5 years of age. Following positive results
from this clinical trial, we expect to submit for approval with global regulators in this age group in the first half of
2026. We also initiateda pivotal trial of ALYFTREK in children 1 year to less than 2 years of age.
•Following positive results from the clinical trial evaluating TRIKAFTA in children1 year to less than 2 years of age,
we expect to begin submissions for global regulatory approvals in this age group in the first half of 2026.
IgA Nephropathy
•We are developing povetacicept, a dual inhibitor of B cell activating factor ("BAFF") and a proliferation-inducing
ligand ("APRIL") cytokines, for multiple diseases. Povetacicept represents a potentially best-in-class approach to
control B cell activity in immunoglobulin A nephropathy ("IgAN").
•We completed enrollment in the Phase 3 clinical trial evaluating povetacicept for IgAN and, in the fourth quarter of
2025, we initiated the rolling Biologics Licensing Application ("BLA") filing for U.S. accelerated approval with
submission of the first module. We expect to release interim analysis data in the first half of 2026 and we expect to
complete the submission in the first half of 2026, if data from the interim analysis are supportive. We are using a
priority review voucher to expedite the review of the povetacicept BLA from ten months to six months.
APOL1-Mediated Kidney Disease
•Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease ("AMKD"). We completed
enrollment in the interim analysis cohort of the global Phase 2/3 pivotal clinical trial evaluating inaxaplin in people
with primary AMKD ("AMPLITUDE"). We expect to conduct the pre-planned interim analysis once this cohort has
been treated for 48 weeks and we expect to share data from the interim analysis in late 2026or early 2027. We
expect to complete full enrollment in AMPLITUDE in the second half of 2026.
Peripheral Neuropathic Pain
•We previously initiated the first Phase 3 clinical trial evaluating suzetrigine for the treatment of people with diabetic
peripheral neuropathy ("DPN"), a common form of peripheral neuropathic pain, and have initiated a second Phase 3
clinical trial evaluating suzetrigine in DPN in the fourth quarter of 2025. We expect to complete enrollment in both
Phase 3 clinical trials by the end of 2026.
Type 1 Diabetes
•Zimislecel is an allogeneic, stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy,
using standard immunosuppression to protect the implanted cells. We have completed enrollment in the Phase 1/2/3
clinical trial of zimislecel in people with type 1 diabetes ("T1D"). We have temporarily postponed completion of
dosing in this clinical trial, pending an internal manufacturing analysis.
Primary Membranous Nephropathy
•Povetacicept represents a potentially best-in-class approach to control B cell activity in primary membranous
nephropathy ("pMN"), another B cell-mediated disease. We are enrolling and dosing patients in the adaptive Phase
2/3 pivotal clinical trial of povetacicept for the treatment of people with pMN. We expect to complete the Phase 2
portion of the clinical trial and to initiate the Phase 3 portion in mid-2026.
External Innovation
Recent investments in external innovation include:
•An exclusive global license agreement with WuXi Biologics to develop and commercialize a trispecific T cell
engager for B cell-mediated autoimmune diseases, which is currently in preclinical development.
Our Business Environment
In 2025, our net product revenues were primarily from the sale of our medicines for the treatment of CF. Our CF strategy
involves continuing to develop and obtain approval and reimbursement for treatment regimens that will provide benefits to all
people with CF and increasing the number of people with CF eligible and able to receive our medicines. Outside of CF, we
continue to advance the commercialization of CASGEVY for the treatment of SCD and TDT, and JOURNAVX for the
treatment of acute pain. In addition, we are advancing our pipeline of product candidates for the treatment of serious diseases
outside of CF, SCD, TDT and acute pain.
Our strategy is to combine transformative advances in the understanding of causal human biology and the science of
therapeutics to discover and develop innovative medicines. This approach includes advancing multiple compounds or
therapies from each program, spanning multiple modalities, into early clinical trials to obtain patient data that can inform
selection of the most promising therapies for later-stage development, as well as to inform discovery and development
efforts. We aim to serially innovate in our disease areas of interest and follow our first-in-class therapies with potential best-
in-class candidates to provide durable clinical and commercial success.
In pursuit of new product candidates and therapies in specialty markets, we invest in research and development. We
believe that pursuing research in diverse areas allows us to balance the risks inherent in product development and may
provide product candidates that will form our pipeline in future years. To supplement our internal research programs, we
acquire technologies and programs and collaborate with biopharmaceutical and technology companies, leading academic
research institutions, government laboratories, foundations and other organizations, as needed, to advance research in our
areas of therapeutic interest and to access technologies needed to execute on our strategy.
Discovery and development of a new pharmaceutical or biological product is a difficult and lengthy process that requires
significant financial resources along with extensive technical and regulatory expertise. Across the industry, most potential
drug or biological products never progress into development, and most products that advance into development never receive
marketing approval. Our investments in product candidates are subject to considerable risks. We closely monitor our research
and development activities, and frequently evaluate our pipeline programs in light of new data and scientific, business and
commercial insights, with the objective of balancing risk and potential. This process can result in rapid changes in focus and
priorities as new information becomes available and as we gain additional understanding of our ongoing programs and
potential new programs, as well as those of our competitors. In addition, our product candidates must satisfy rigorous
standards of safety and efficacy before they can be approved for sale by regulatory authorities. Our analysis of data obtained
from nonclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could
delay, limit or prevent regulatory approval.
Our business also requires ensuring appropriate manufacturing and supply of our products. As we advance our product
candidates through clinical development toward commercialization and market and sell our approved products, we build and
maintain our supply chain and quality assurance resources. We rely on a global network of third parties, including some in
China, and our internal capabilities to manufacture and distribute our products for commercial sale and post-approval clinical
trials and to manufacture and distribute our product candidates for clinical trials. In addition to establishing supply chains for
each newly approved product, we adapt our supply chain for existing products to include additional formulations or to
increase scale of production for existing products as needed. The processes for biological and cell and genetic therapies can
be more complex than those required for small molecule drugs and require additional investments in different systems,
equipment, facilities and expertise. We are focused on ensuring the stability of the supply chains for our current products, as
well as for our pipeline programs.
Sales of our products depend, to a large degree, on the extent to which our products are reimbursed by third-party payors,
such as government health programs, commercial insurance and managed health care organizations. Reimbursement for our
products, including our potential pipeline therapies, cannot be assured and may take significant periods of time to obtain. We
dedicate substantial management and other resources to obtain and maintain appropriate levels of reimbursement for our
products from third-party payors, including governmental organizations in the U.S. and ex-U.S. markets. In the U.S., we
work with government and commercial payors to obtain and maintain appropriate levels of reimbursement for our medicines.
In ex-U.S. markets, we seek government reimbursement for our medicines on a country-by-country or region-by-region, as
required. This is necessary for each new medicine, as well as for label expansions for our current medicines. We expect to
continue to focus significant resources to expand and maintain reimbursement for our CF medicines, CASGEVY,
JOURNAVX, and, ultimately, our pipeline therapies, in U.S. and ex-U.S. markets.
Strategic Transactions
Acquisitions
As part of our business strategy, we seek to 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 acquired multiple biotechnology companies over the last several years and expect to
continue to identify and evaluate such opportunities. The accounting for these acquisitions can vary significantly based on
whether we conclude the transactions represent business combinations or asset acquisitions. In 2024, we acquired Alpine and
its lead molecule, povetacicept, for approximately $5.0 billion. Povetacicept has shown potential to treat multiple diseases or
conditions and become a pipeline-in-a-product. We accounted for the Alpine transaction as an asset acquisition because
povetacicept represented substantially all of the fair value of the gross assets that we acquired. As a result, $4.4 billion of the
fair value attributed to povetacicept was expensed as AIPR&D in 2024. In 2019 and 2022, we acquired Semma Therapeutics,
Inc. ("Semma") and ViaCyte, Inc. ("ViaCyte"), respectively, pursuant to which we established and accelerated the
development of our T1D program. We accounted for each of these acquisitions as a business combination.
Please refer to our critical accounting policies, "Acquisitions," for further information regarding the significant
judgments and estimates related to our acquisitions.
Collaboration and In-Licensing Arrangements
We enter into arrangements with third parties, including collaboration and licensing arrangements, for the development,
manufacture and commercialization of products, product candidates, and other technologies that have the potential to
complement our ongoing research and development efforts.
Over the last several years, we entered into collaboration agreements with a number of companies, including CRISPR
Therapeutics AG ("CRISPR"), Entrada Therapeutics, Inc. ("Entrada"), and Moderna, Inc.
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 paid to
Entrada in 2024, and, in 2023, total payments of $242.6 million to Entrada and total upfront and milestone payments of
$170.0 million to CRISPR related to T1D. 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.
Joint Development and Commercialization Agreement with CRISPR
In 2017, we entered into a joint development and commercialization agreement with CRISPR (the "CRISPR JDCA"),
which we amended and restated in 2021.
Pursuant to the CRISPR JDCA, we lead global development, manufacturing and commercialization of CASGEVY, with
support from CRISPR. We also conduct all research, development, manufacturing and commercialization activities relating
to other product candidates and products under the CRISPR JDCA throughout the world subject to CRISPR's reserved right
to conduct certain activities.
CASGEVY was approved by the FDA in December 2023 for the treatment of SCD. In connection with this approval, we
made a $200.0 millionmilestone payment to CRISPR in January 2024. We are recording intangible asset amortization
expense to "Cost of sales" related to this intangible asset. Subsequent to receiving marketing approval for CASGEVY, we
continue to lead the research and development activities under the CRISPR JDCA, subject to CRISPR's reserved right to
conduct certain activities. We are reimbursed by CRISPR for its 40% share of these research and development activities,
subject to certain adjustments, and we record this reimbursement from CRISPR as a credit within "Research and development
expenses." We also share with CRISPR 40% of the net commercial profits or losses incurred with respect to CASGEVY,
subject to certain adjustments, which is recorded to "Cost of sales." The net commercial profits or losses equal the sum of the
product revenues, cost of sales and selling, general and administrative expenses that we have recognized related to the
CRISPR JDCA.
Prior to receiving marketing approval from the FDA for CASGEVY in December 2023, we accounted for the CRISPR
JDCA as a cost-sharing arrangement, with costs incurred related to CASGEVY allocated 60% to us and 40% to CRISPR,
subject to certain adjustments. In 2023, we recognized net reimbursements from CRISPR as credits to "Research and
development expenses" and to "Selling, general and administrative expenses," related to CRISPR's share of the CRISPR
JDCA's operating expenses.
Acquired In-Process Research and Development Expenses
In 2025and 2024, our AIPR&D included $133.0 millionand $4.6 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.
Out-licensing Arrangements
We also have out-licensed certain development programs to collaborators who are leading the development or
commercialization of these programs, either globally or within certain geographic regions.
In 2025,we entered into agreements with Zai Lab Limited ("Zai") and Ono Pharmaceuticals, Co Ltd ("Ono")
respectively, for the development and commercialization of povetacicept in various Asian markets. Zai licensed povetacicept
for mainland China, Hong Kong SAR, Macau SAR, Taiwan region, and Singapore, while Ono licensed povetacicept for
Japan and South Korea. Zai and Ono will help advance povetacicept clinical trials, and willbe responsible for obtaining
marketing authorizations and commercialization activities, if povetacicept becomes an approved product, in their licensed
territories. We are eligible to receive certain future milestone payments and tiered royalties on future net sales of povetacicept
in these regions.
RESULTS OF OPERATIONS
Total Revenues
|
2025
|
% Change
|
2024
|
% Change
|
2023
|
|||||
|
(in millions, except percentages)
|
|||||||||
|
TRIKAFTA/KAFTRIO
|
$10,312.7
|
1%
|
$10,238.6
|
14%
|
$8,944.7
|
||||
|
ALYFTREK
|
837.8
|
**
|
-
|
**
|
-
|
||||
|
Other product revenues
|
820.1
|
5%
|
781.5
|
(15)%
|
924.5
|
||||
|
Product revenues, net
|
11,970.6
|
9%
|
11,020.1
|
12%
|
9,869.2
|
||||
|
Other revenues
|
30.7
|
**
|
-
|
**
|
-
|
||||
|
Total revenues
|
$12,001.3
|
9%
|
$11,020.1
|
12%
|
$9,869.2
|
||||
|
** Not meaningful
|
|||||||||
Product Revenues, Net
In 2025, our net product revenues increased $950.5 million, or 9%, as compared to 2024, primarily due to continued
strong demand for TRIKAFTA/KAFTRIO as well as contributions from our launches of ALYFTREK, JOURNAVX and
CASGEVY. In 2025, "Other product revenues" included $115.8 millionfrom CASGEVY and $59.6 millionfrom
JOURNAVX. In 2024,"Other product revenues"included CASGEVY product revenues of $10.0 million. Our remaining
"Other product revenues" are related to KALYDECO, ORKAMBI, and SYMDEKO/SYMKEVI, our other CF products.
Other Revenues
In 2025, other revenues were $30.7 million, which included $20.6 million and $10.0 million related to upfront payments
received from our agreements with Ono and Zai, respectively.
Revenues by Geographic Location
Our total revenues from the U.S. and from ex-U.S. markets were as follows:
|
2025
|
% Change
|
2024
|
% Change
|
2023
|
|||||
|
(in millions, except percentages)
|
|||||||||
|
United States
|
$7,548.6
|
13%
|
$6,684.9
|
11%
|
$6,040.4
|
||||
|
ex-U.S.
|
4,452.7
|
3%
|
4,335.2
|
13%
|
3,828.8
|
||||
|
Total revenues
|
$12,001.3
|
9%
|
$11,020.1
|
12%
|
$9,869.2
|
||||
Our U.S. total revenues increased 13%in 2025, as compared to 2024, due to continued strong patient demand, new
patient initiations and higher realized net prices. Our ex-U.S. total revenues increased 3%in 2025, as compared to 2024,
primarily due to solid CF performance across multiple geographies and increased CASGEVY product revenues, partially
offset by a decline in product revenues in Russia, where we are continuing to experience a violation of our intellectual
property rights.
In 2026, we expect our total revenues to increase due to continued growth of our CF product revenues, including from
ALYFTREK globally, and increased contributions from CASGEVY and JOURNAVX.
Operating Costs and Expenses
|
2025
|
% Change
|
2024
|
% Change
|
2023
|
|||||
|
(in millions, except percentages)
|
|||||||||
|
Cost of sales
|
$1,651.3
|
8%
|
$1,530.5
|
21%
|
$1,262.2
|
||||
|
Research and development expenses
|
3,909.5
|
8%
|
3,630.3
|
15%
|
3,162.9
|
||||
|
Acquired in-process research and development
expenses
|
133.0
|
**
|
4,628.4
|
**
|
527.1
|
||||
|
Selling, general and administrative expenses
|
1,753.1
|
20%
|
1,464.3
|
29%
|
1,136.6
|
||||
|
Intangible asset impairment charge
|
379.0
|
**
|
-
|
**
|
-
|
||||
|
Change in fair value of contingent consideration
|
2.1
|
**
|
(0.5)
|
**
|
(51.6)
|
||||
|
Total costs and expenses
|
$7,828.0
|
(30)%
|
$11,253.0
|
86%
|
$6,037.2
|
||||
|
** Not meaningful
|
|||||||||
Cost of Sales
Our cost of sales primarily consists of third-party royalties payable on net sales of our CF products as well as the cost of
producing inventories. Pursuant to our agreement (the "CFF Agreement") with the Cystic Fibrosis Foundation (the "CFF"),
our tiered third-party royalties on sales of ALYFTREK, TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, KALYDECO, and
ORKAMBI, calculated as a percentage of net sales, range from the single digits to the sub-teens, with lower royalties on sales
of ALYFTREK and TRIKAFTA/KAFTRIO than for our other products. The royalty burden associated with TRIKAFTA/
KAFTRIO is 9.33% and our position is that the royalty burden associated with ALYFTREK is 4%. On October 10, 2025,
Royalty Pharma plc ("RP"), the third party to whom the CFF assigned its rights (and the CFF, which remains a party to the
CFF Agreement), initiated a confidential arbitration alleging the royalty burden on ALYFTREK is approximately 8%. RP is
seeking a declaratory judgment regarding the royalty burden on ALYFTREK as well as alleged unpaid royalties and other
alleged damages available under the CFF Agreement or applicable law, costs, expenses, attorneys' fees, and interest. We
believe RP's position is contrary to the plain terms of the CFF Agreement and intend to vigorously defend our position under
the CFF Agreement.
Our cost of sales as a percentage of our net product revenues was 13.8%and 13.9%in 2025and 2024, respectively,
primarily due to ALYFTREK sales in 2025, which has the royalty burden lower than TRIKAFTA/KAFTRIO, partially offset
by changes in product mix, and investments in network expansion and manufacturing process improvements.
In 2026, we expect our cost of sales as a percentage of our net product revenues to increase due to a higher proportion of
products outside of CF, which currently have greater manufacturing costs relative to their net product revenue contributions,
and continued investments in efficient manufacturing and delivery processes.
Research and Development Expenses
|
2025
|
% Change
|
2024
|
% Change
|
2023
|
|||||
|
(in millions, except percentages)
|
|||||||||
|
Research expenses
|
$827.9
|
3%
|
$804.5
|
14%
|
$705.6
|
||||
|
Development expenses
|
3,081.6
|
9%
|
2,825.8
|
15%
|
2,457.3
|
||||
|
Total research and development expenses
|
$3,909.5
|
8%
|
$3,630.3
|
15%
|
$3,162.9
|
||||
Over the past three years, we have incurred approximately $10.7 billionin 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.
Research Expenses
|
2025
|
Change %
|
2024
|
Change %
|
2023
|
|||||
|
(in millions, except percentages)
|
|||||||||
|
Research Expenses:
|
|||||||||
|
Salary and benefits
|
$203.9
|
(3)%
|
$210.7
|
14%
|
$184.1
|
||||
|
Stock-based compensation expense
|
94.8
|
(15)%
|
112.1
|
21%
|
92.4
|
||||
|
Outsourced services and other direct expenses
|
286.2
|
5%
|
271.4
|
15%
|
237.0
|
||||
|
Infrastructure costs
|
243.0
|
16%
|
210.3
|
9%
|
192.1
|
||||
|
Total research expenses
|
$827.9
|
3%
|
$804.5
|
14%
|
$705.6
|
||||
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 2025as compared to 2024.
Salary and benefits in 2024included $13.1 million associated with cash-settled unvested Alpine equity awards. Compared to
2024, our total research expenses in 2025 increased $23.4 million, or 3%. We expect to continue to invest in our research
programs with a focus on creating transformative medicines for serious diseases.
Development Expenses
|
2025
|
Change %
|
2024
|
Change %
|
2023
|
|||||
|
(in millions, except percentages)
|
|||||||||
|
Development Expenses:
|
|||||||||
|
Salary and benefits
|
$744.8
|
8%
|
$686.7
|
16%
|
$590.9
|
||||
|
Stock-based compensation expense
|
320.6
|
2%
|
313.7
|
20%
|
262.5
|
||||
|
Compensation expense for cash-settled
unvested Alpine equity awards
|
-
|
**
|
151.9
|
**
|
-
|
||||
|
Outsourced services and other direct expenses
|
1,493.5
|
21%
|
1,239.1
|
0%
|
1,238.7
|
||||
|
Infrastructure costs
|
522.7
|
20%
|
434.4
|
19%
|
365.2
|
||||
|
Total development expenses
|
$3,081.6
|
9%
|
$2,825.8
|
15%
|
$2,457.3
|
||||
|
** Not meaningful
|
|||||||||
As we have advanced our pipeline of transformative medicines, we have invested in internal headcount and infrastructure
to support multiple mid- and late-stage clinical development programs. These include our povetacicept programs acquired
from Alpine, pain and T1D programs, which together have increased our outsourced services and other direct expenses. In
conjunction with our acquisition of Alpine, we incurred $151.9 million associated with cash-settled unvested Alpine equity
awards within development expenses in 2024. Compared to 2024, our total development expenses in 2025 increasedby
$255.8 million, or 9%. In 2026, we expect our development expenses to continue to increase due to our advancing pipeline
programs, including our T1D programs.
Our stock-based compensation expenses, including those recorded as research and development expenses, have
historically fluctuated and are expected to continue to fluctuate from one period to another primarily due to changes in the
probability of achieving milestones associated with our performance-based awards.
Acquired In-Process Research and Development Expenses
|
2025
|
% Change
|
2024
|
% Change
|
2023
|
|||||
|
(in millions, except percentages)
|
|||||||||
|
Acquired in-process research and development
expenses
|
$133.0
|
**
|
$4,628.4
|
**
|
$527.1
|
||||
|
** Not meaningful
|
|||||||||
In 2025, AIPR&D included various upfront and milestone payments related to our collaboration and in-licensing
arrangements.In 2024, AIPR&D included $4.4 billion resulting from our acquisition of Alpine, which was accounted for as
an asset acquisition, and various other upfront and milestone payments.Our AIPR&D has historically fluctuated, and is
expected to continue to fluctuate, from one period to another due to upfront, contingent milestone, and other payments
pursuant to our existing and future business development transactions, including collaborations, licenses of third-party
technologies, and asset acquisitions.
Selling, General and Administrative Expenses
|
2025
|
% Change
|
2024
|
% Change
|
2023
|
|||||
|
(in millions, except percentages)
|
|||||||||
|
Selling, general and administrative expenses
|
$1,753.1
|
20%
|
$1,464.3
|
29%
|
$1,136.6
|
||||
Selling, general and administrative expenses increasedby 20%in 2025as compared to 2024, primarily due to increased
commercial investment to support the launch of JOURNAVX. We expect our selling, general and administrative expenses to
continue to increase in 2026to as we expand the commercialization of JOURNAVX, prepare for our anticipated launch of
povetacicept for the treatment of IgAN, and further investmentsin infrastructure to scale our organization.
Intangible Asset Impairment Charge
In the first quarter of 2025, based on results from a Phase 1/2 clinical trial evaluating our VX-264 clinical program in
patients with T1D, we concluded that VX-264 will not be advancing further in clinical development. Based on this event, we
performed an interim impairment test on the fair value of our VX-264 indefinite-lived in-process research and development
asset that we acquired from Semma Therapeutics, Inc. As a result, we recorded a full intangible asset impairment charge of
$379.0 million associated with VX-264 in the first quarter of 2025.
Non-Operating Income (Expense), Net
Interest Income
Interest income decreased from $598.1 millionin 2024to $490.9 millionin 2025, primarily due to decreased market
interest rates.Our future interest income is dependent on the amount of, and prevailing market interest rates on, our
outstandingcash, cash equivalents and available-for-sale debt securities.
Other Income (Expense), Net
Other income (expense), net were expensesof $7.7 millionand $86.1 millionin 2025and 2024, respectively. These
amounts primarily related to net unrealized and realized losses resulting from changes in the fair value of certain of our
strategic equity investments and net foreign currency exchange losses.
Income Taxes
Our effective tax rate fluctuates from year to year due to the global nature of our operations. The factors that most
significantly impact our effective tax rate include changes in tax laws, variability in the amount and allocation of our taxable
earnings among multiple jurisdictions, the amount and characterization of our research and development expenses, the levels
of certain deductions and credits, adjustments to the value of our uncertain tax positions, acquisitions and third-party
collaboration and licensing transactions.
In July 2025, the U.S. enacted H.R.1, which includes significant provisions modifying the U.S. tax framework, including
the ability for companies to immediately deduct research and development expenditures for 2025 and provisions for
deducting previously capitalized amounts. H.R.1 does not have a material impact on our 2025 U.S. taxes, but we expect
further guidance to be issued. We will review guidance when issued for impacts on future years and disclose any impacts if
needed at that time. These legislative changes could have an impact on our future effective tax rates, tax liabilities, and cash
taxes.
Our provision forincome taxes was $690.0 millionin 2025and $784.1 millionin 2024. In 2025, our 14.9%effective tax
rate was lower than the U.S. statutory rate primarily due to research and development tax credits, increased utilization of
foreign tax credits, and excess tax benefits related to stock-based compensation.
In 2024, our 315.5%effective tax rate was materially different than the U.S. statutory rate primarily due to the
$4.4 billion of non-deductible AIPR&D resulting from our acquisition of Alpine, which significantly lowered our pre-tax
income. The non-deductible AIPR&D was partially offset by a benefit from a research and development tax credit study that
was completed in 2024 and excess tax benefits related to stock-based compensation.
LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes the components of our financial condition as of December 31, 2025and 2024:
|
2025
|
2024
|
% Change
|
|||
|
(in millions, except percentages)
|
|||||
|
Cash, cash equivalents and marketable securities:
|
|||||
|
Cash and cash equivalents
|
$5,084.8
|
$4,569.6
|
|||
|
Marketable securities
|
1,523.3
|
1,546.3
|
|||
|
Long-term marketable securities
|
5,712.3
|
5,107.9
|
|||
|
Total cash, cash equivalents and marketable securities
|
$12,320.4
|
$11,223.8
|
10%
|
||
|
Working Capital:
|
|||||
|
Total current assets
|
$11,201.0
|
$9,596.4
|
17%
|
||
|
Total current liabilities
|
(3,861.2)
|
(3,564.6)
|
8%
|
||
|
Total working capital
|
$7,339.8
|
$6,031.8
|
22%
|
||
Working Capital
As of December 31, 2025, total working capital was $7.3 billion, which represented an increaseof $1.3 billion, or 22%,
from $6.0 billionas of December 31, 2024, primarilydue to increased cash and marketable securities due to product revenue
growth, as well as increased inventories to support our recent commercial launches.
Cash Flows
|
2025
|
2024
|
2023
|
|||
|
(in millions)
|
|||||
|
Net cash provided by (used in):
|
|||||
|
Operating activities
|
$3,631.4
|
$(492.6)
|
$3,537.3
|
||
|
Investing activities
|
$(945.4)
|
$(3,770.0)
|
$(3,141.7)
|
||
|
Financing activities
|
$(2,261.3)
|
$(1,494.9)
|
$(562.2)
|
||
Operating Activities
Cash provided by operating activities was $3.6 billionin 2025, primarily due to income from operations of $4.2 billion
driven by our net product revenues partially offset by purchases of inventoryand other changes in operating assets and
liabilities. Cash used in operating activities was $492.6 millionin 2024, primarily due to our acquisition of Alpine partially
offset by cash flows provided by other operating activities.
Investing Activities
Cash used in investing activities was $945.4 millionin 2025, primarily related to net purchases of available-for-sale debt
securities and purchases of property and equipment. Cash used in investing activities was $3.8 billionin 2024, which
included net purchases of available-for-sale debt securities of $3.0 billion.
Financing Activities
Cash used in financing activities were $2.3 billionand $1.5 billionin 2025and 2024, respectively. Our financing
activities in each year were primarily related to repurchases of our common stock pursuant to our share repurchase programs
and payments in connection with common stock withheld for employee tax obligations.
Sources and Uses of Liquidity
We intend to rely on our existing cash, cash equivalents and current marketable securities together with our operating
profitability as our primary source of liquidity. We expect that cash flows from our product sales together with our cash, cash
equivalents and current marketable securities will be sufficient to fund our operations for at least the next twelve months. The
adequacy of our available funds to meet our future operating and capital requirements will depend on many factors, including
our future sales of currently marketed products, and the potential introduction of one or more new product candidates to the
market, our business development activities, and the number, breadth and cost of our research and development programs.
Credit Facilities & Financing Strategy
We may borrow up to a total of $500.0 million pursuant to a revolving credit facility that we entered into in July 2022
and could repay and reborrow amounts under this revolving credit agreement without penalty. Subject to certain conditions,
we could request that the borrowing capacity be increased by an additional $500.0 million, for a total of $1.0 billion.
Negative covenants in our credit agreement could prohibit or limit our ability to access this source of liquidity. As of
December 31, 2025, the facility was undrawn, and we were in compliance with these covenants.
We may also raise additional capital by borrowing under credit agreements, through public offerings or private
placements of our securities, or securing new collaborative agreements or other methods of financing. We will continue to
manage our capital structure and will consider all financing opportunities, whenever they may occur, that could strengthen
our long-term liquidity profile. There can be no assurance that any such financing opportunities will be available on
acceptable terms, if at all.
Future Capital Requirements
We have significant future capital requirements, including:
•Expected operating expenses to conduct research and development activities, manufacture and commercialize our
existing and future products, and to operate our organization.
•Cash that we pay for income taxes.
•Royalties we pay related to sales of our CF products.
•Facility, operating and finance lease obligations as described below.
•Firm purchase obligations related to our supply and manufacturing processes.
In addition, other potential significant future capital requirements may include:
•We have entered into certain agreements with third parties that include the funding of certain research, development,
manufacturing and commercialization efforts. Certain of our transactions, including collaborations, licensing
arrangements, and asset acquisitions, include the potential for future milestone and royalty payments by us upon the
achievement of pre-established developmental and regulatory targets and/or commercial targets. Other transactions
include the potential for future lease-related expenses and other costs. Our obligation to fund these research and
development and commercialization efforts and to pay these potential milestones, expenses and royalties is
contingent upon continued involvement in the programs and/or the lack of any adverse events that could cause their
discontinuance. We may enter into additional agreements, including acquisitions, collaborations, licensing
arrangements and equity investments, which require additional capital.
•To the extent we borrow amounts under our existing credit agreement, we would be required to repay any
outstanding principal amounts in 2027.
•As of December 31, 2025, we had $3.4 billionremaining authorization available under the share repurchase program
that our Board of Directors approved in May 2025. The program does not have an expiration date and can be
discontinued at any time. We expect to fund the program through a combination of cash on hand and cash generated
by operations.
Additional information on several of our future capital requirements is provided below.
Research and Development Costs
We have ongoing clinical trials of product candidates at various stages of clinical development. Our clinical trial costs
are dependent on, among other things, the size, number, and length of our clinical trials. These costs can increase as product
candidates move from earlier-stage clinical trials into later-stage clinical development.
Leases
We account for the majority of our real estate leases and each of our embedded leases with contract manufacturing
organizations as operating leases. These include leases for our corporate headquarters at Fan Pier in Boston, Massachusetts,
which continues through June 2044, and office and laboratory space at the Jeffrey Leiden Center for Biologics, Cell and
Genetic Therapies Campus (the "Leiden Campus") near our corporate headquarters. As of December 31, 2025, the longest
lease at the Leiden Campus continuesthrough the first quarter of 2042. We also have several embedded leases with contract
manufacturing organizations related to the manufacturing and commercialization of our products with remaining lease terms
up to 7 yearsas of December 31, 2025.
Our total future minimum lease payments for our leases for each of the next five years and in total are included in Note
L, "Leases."The total future undiscounted minimum lease payments were $3.2 billionand $178.1 millionrelated to our
operating and finance leases, respectively, as of December 31, 2025.
In addition to the items described above, wehave a strategic agreement with Lonza to support the manufacture of T1D
cell therapy product candidates, pursuant to which we have partnered with Lonza to build a 130,000 square foot dedicated
new facility operated by Lonza in New Hampshire. Lease payments will begin in the first quarter of 2026 and continue
through the tenth anniversary of the facility's regulatory approval for commercial production. We may enter into additional
lease agreements to support future product development and commercialization efforts, which would require additional
capital.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial
statements prepared in accordance with generally accepted accounting principles in the U.S. The preparation of these
financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reported periods. These items are monitored and analyzed by
management for changes in facts and circumstances, and material changes in these estimates could occur in the future.
Changes in estimates are reflected in reported results for the period in which the change occurs. We base our estimates on
historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results
may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate.
We believe that our application of the following accounting policies, each of which requires significant judgments and
estimates on the part of management, are the most critical to aid in fully understanding and evaluating our reported financial
results:
•revenue recognition;
•acquisitions, including intangible assets;
•pre-launch inventories; and
•income taxes.
Our accounting policies, including the ones discussed below, are more fully described in Note A, "Nature of Business
and Accounting Policies."
Revenue Recognition
Product Revenues, Net
We generate product revenues from sales in the U.S. and in international markets. We sell our products principally to a
limited number of specialty pharmacy and specialty distributors as well as certain major wholesalers in the U.S., which
account for the largest portion of our total revenues. Our customers in the U.S. subsequently resell our products to patients,
health care providers, retail pharmacies, hospitals, or authorized treatment centers ("ATCs") for CASGEVY. We contract
with government agencies so that our products will be eligible for purchase by, or partial or full reimbursement from, such
third-party payors. We make international sales primarily through distributor arrangements and to retail pharmacies, as well
as to hospitals and clinics, many of which are government-owned or supported customers. In certain markets, we may not
utilize a specialty distributor or specialty pharmacy to distribute CASGEVY. In these markets, we sell CASGEVY directly to
ATCs. We recognize net product revenues from sales of our products when our customers obtain control of our products,
which typically occurs upon delivery to customers for our small molecule products, including our CF products and
JOURNAVX, and upon infusion of our gene-therapy products, including CASGEVY. Revenues from our product sales are
recorded at the net sales price, or transaction price, which requires us to make several significant estimates regarding the net
sales price.
We are required to make estimates for our product revenues related to government, commercial, and private payor
rebates, chargebacks, discounts and fees, collectively rebates. The values of the rebates provided to third-party payors per
course of treatment vary significantly and are based on government-mandated discounts and our arrangements with other
third-party payors. Our most significant estimate relates to determining amounts due pursuant to the Medicaid Drug Rebate
Program, including estimating the level of expected utilization of the rebates based on the amount of product sold to eligible
patients. We track available information regarding changes, if any, to the payor mix for our products, to our contractual terms
with third-party payors and to applicable governmental programs and regulations and levels of our products in the
distribution channel. We adjust our estimated rebates based upon new information as it becomes available, including
information regarding actual rebates for our products. Claims by third-party payors for rebates are submitted to us
significantly after the related sales, potentially resulting in adjustments in the period in which the new information becomes
known.
The following table summarizes activity related to our product revenue accruals for rebatesfor 2025, 2024and 2023:
|
(in millions)
|
|
|
Balance at December 31, 2022
|
$1,291.4
|
|
Provision related to 2023sales
|
3,481.4
|
|
Adjustments related to prior year(s) sales
|
(6.5)
|
|
Credits/payments made
|
(3,064.7)
|
|
Balance at December 31, 2023
|
$1,701.6
|
|
Provision related to 2024sales
|
3,673.0
|
|
Adjustments related to prior year(s) sales
|
(42.1)
|
|
Credits/payments made
|
(3,725.4)
|
|
Balance at December 31, 2024
|
$1,607.1
|
|
Provision related to 2025sales
|
3,780.4
|
|
Adjustments related to prior year(s) sales
|
(90.4)
|
|
Credits/payments made
|
(3,519.5)
|
|
Balance at December 31, 2025
|
$1,777.6
|
We have also entered into annual contracts with government-owned and supported customers in international markets
that limit the amount of annual reimbursement we can receive for our products. Upon exceeding the annual reimbursement
amount provided by the customer's contract with us, products are provided free of charge, which is a material right. If we
estimate that the annual reimbursement amount under a contract will be exceeded for an annual period, we defer a portion of
the consideration received, which includes upfront payments and fees, for shipments made up to the annual reimbursement
limit as "Other current liabilities." Once the annual reimbursement limit has been reached, we recognize the deferred amount
as revenue when we deliver the free products. To estimate the portion of the consideration received to be recognized as
revenue and the portion of the amount to be deferred, we rely on our forecast of the number of units we will distribute during
the applicable annual period in each international market in which our contracts with government-owned and supported
customers limit the amount of annual reimbursement we can receive. Our forecasts are based on, among other things, our
historical experience.
The preceding estimates and judgments materially affect our recognition of net product revenues. Changes in our
estimates of net product revenues could have a material effect on net product revenues recorded in the period in which we
determine that change occurs.
Acquisitions
As part of our business strategy, we seek to acquire products, product candidates and other technologies and businesses
that are aligned with our corporate and research and development strategies and complement and advance our ongoing
research and development efforts.
We are required to make several significant judgments and estimates to determine the accounting treatment for each
acquisition transaction. If we determine that substantially all the fair value associated with an acquisition is concentrated in a
single asset, or the acquisition does not constitute a business, we account for it as an asset acquisition. For example, we
accounted for our $5.0 billion acquisition of Alpine in 2024 as an asset acquisition because povetacicept, Alpine's lead
molecule, represented substantially all of the fair value of the gross assets that we acquired. As a result, $4.4 billion of the fair
value attributed to povetacicept was expensed to AIPR&D in 2024. If the fair value that we acquired in an acquisition is
distributed among more than one asset, and the acquisition constitutes a business, we account for it as a business
combination.
For an asset acquisition involving rights to intellectual property related to in-process research and development that is not
yet associated with a product that has achieved regulatory approval, we generally expense our upfront payment to AIPR&D,
because there is no alternative future use for the asset that was acquired.
For business combinations, we are required to make several significant judgments and estimates to calculate and allocate
the purchase price, including the fair value of contingent consideration liabilities, to the assets that we have acquired and the
liabilities that we have assumed on our consolidated balance sheet. The most significant judgment and estimate we have
made for our business combinations relates to the fair value of the in-process research and development assets.
In-process Research and Development Intangible Assets
As of December 31, 2025and 2024, we had $224.6 millionand $603.6 million, respectively, of in-process research and
development assets on our consolidated balance sheet within "Other intangible assets, net." During 2025, we recorded a
$379.0 millionimpairment of one of these assets, which was classified as an "Intangible asset impairment charge." As of
December 31, 2025, our remaining indefinite-lived in-process research and development assets were associated with our T1D
program.
We characterize in-process research and development assets on our consolidated balance sheets as indefinite-lived
intangible assets until the completion or abandonment of the associated research and development efforts. We test our in-
process research and development intangible assets for impairment on an annual basis, and more frequently if indicators are
present or changes in circumstances suggest that impairment may exist. When we determine that an indefinite-lived
intangible asset has become impaired or we abandon the associated research and development project, we write down the
carrying value to its fair value and record an impairment charge in the period in which the impairment occurs.
For example, in 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. We recorded the $379.0 million impairment charge based on
the results of this impairment test.
We use significant judgment to determine the fair value of our in-process research and development assets and have
utilized either the multi-period excess earnings or the relief from royalty methods of the income approach. Each method
requires us to estimate the probability of technical and regulatory success, revenue projections and growth rates, and
appropriate discount and tax rates. The multi-period excess earnings method also requires us to estimate development and
commercial costs. The relief from royalty method also requires us to estimate the after-tax royalty savings expected from
ownership of the asset that we acquired. In 2025, we used the multi-period earnings method to record the impairment
described above.
If one of our product candidates achieves regulatory approval, the in-process research and development intangible assets
associated with the product candidate become finite-lived intangible assets as described below.
Finite-lived Intangible Assets
As of December 31, 2025and 2024, we had $199.6 millionand $222.3 million, respectively, of finite-lived intangible
assets on our consolidated balance sheet within "Other intangible assets, net." These finite-lived intangible assets primarily
relate to $208.0 million of CASGEVY regulatory approval milestones recorded in 2023.
We amortize our finite-lived intangible assets related to our marketed products, which represent the majority of our
finite-lived intangible assets, using the straight-line method within "Cost of sales" over the remaining estimated life of the
assets beginning in the period in which regulatory approval is achieved or the assets are acquired and continuing through the
period that we no longer have either exclusive rights to market the products associated with the assets or in-license rights to
the intellectual property underlying the assets. We test finite-lived intangible assets for impairment if indicators are present or
changes in circumstances suggest that the carrying value of an asset may not be recoverable. If we determine that the carrying
value of a finite-lived intangible asset may not be recoverable, we compare the carrying value of the asset to the undiscounted
cash flows that we expect the asset to generate. When we determine that a finite-lived intangible asset has become impaired,
we write down the carrying value of the asset to its fair value and record an impairment charge in the period in which the
impairment occurs.
Pre-Launch Inventories
We capitalize inventories prior to regulatory approval when we consider the related product candidate to have a high
likelihood of regulatory approval and expect to recover the related costs. In making this determination, we evaluate, among
other factors, the status of regulatory submissions and communications with regulatory authorities, information regarding the
product candidate's safety and efficacy, and the outlook for commercial sales, including the existence of any competition. As
an example, during the first quarter of 2024, following positive results related to our Phase 3 trials for JOURNAVX, we
began capitalizing inventories produced in preparation for our planned product launch. In January 2025, we received approval
from the FDA to market JOURNAVX in the U.S. Prior to making this determination, we expensed inventoriable and related
costs associated with JOURNAVX as "Research and development expenses."
Income Taxes
We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial statement carrying amounts and tax basis of assets and
liabilities using enacted tax rates in effect for years in which the temporary differences are expected to reverse. If our estimate
of the tax effect of reversing temporary differences is (i) not reflective of actual outcomes, (ii) modified to reflect new
developments or interpretations of the tax law, or (iii) revised to incorporate new accounting principles, or changes in the
expected timing or manner of the reversal, our results of operations could be materially impacted.
We provide a valuation allowance when it is more likely than not that deferred tax assets will not be realized. On a
periodic basis, we reassess our valuation allowances on our deferred tax assets, weighing positive and negative evidence to
assess the recoverability of the deferred tax assets. Judgment is required in making these assessments to maintain or adjust
our valuation allowances and, to the extent our future expectations change we would have to assess the recoverability of these
deferred tax assets at that time. As of December 31, 2025, we maintained a valuation allowance of $326.2 millionrelated
primarily to U.S. state tax attributes.
We record liabilities related to uncertain tax positions by prescribing a minimum recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax
return. We adjust our liability to reflect any subsequent changes in the relevant facts and circumstances surrounding the
uncertain positions. We are subject to tax laws and audits in multiple jurisdictions and judgment is required in making this
assessment. Consequently, we regularly re-evaluate uncertain tax positions and consider various factors, including changes in
tax law, the measurement of tax positions taken or expected to be taken in tax returns, and changes in facts or circumstances
related to a tax position. As of December 31, 2025, our liability for uncertain tax positions was $852.1 million.
RECENT ACCOUNTING PRONOUNCEMENTS
Refer to Note A, "Nature of Business and Accounting Policies,"in the accompanying notes to the consolidated financial
statements for a discussion of recent accounting pronouncements and new accounting pronouncements adopted during 2025.
Vertex Pharmaceuticals Incorporated published this content on February 13, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 13, 2026 at 21:21 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]