VRTX
$263.13
Vertex Pharmaceutic
($.69)
(.26%)
Earnings Details
2nd Quarter June 2020
Thursday, July 30, 2020 4:01:00 PM
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Summary

Vertex Pharmaceutic Beats

Vertex Pharmaceutic (VRTX) reported 2nd Quarter June 2020 earnings of $2.57 per share on revenue of $1.5 billion. The consensus earnings estimate was $2.06 per share on revenue of $1.4 billion. The Earnings Whisper number was $2.21 per share. Revenue grew 62.0% on a year-over-year basis.

The company said it expects 2020 revenue of $5.70 billion to $5.90 billion. The company's previous guidance was revenue of $5.30 billion to $5.60 billion and the current consensus estimate is revenue of $5.71 billion for the year ending December 31, 2020.

Vertex Pharmaceuticals Inc is engaged in the business of discovering, developing, manufacturing and commercializing small molecule drugs for patients with serious diseases in specialty markets.

Results
Reported Earnings
$2.57
Earnings Whisper
$2.21
Consensus Estimate
$2.06
Reported Revenue
$1.52 Bil
Revenue Estimate
$1.40 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Vertex Reports Second-Quarter 2020 Financial Results

-Product revenues of $1.52 billion, a 62% increase compared to Q2 2019-

-Company raises revenue guidance; now expects 2020 CF revenues of $5.7 to $5.9 billion-

BOSTON--(BUSINESS WIRE)--Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today reported consolidated financial results for the second quarter ended June 30, 2020 and revised upward its full-year 2020 financial guidance for total cystic fibrosis (CF) product revenues.

"This has been an exceptional first half for Vertex on all fronts and most importantly, in our efforts to bring our CF medicines to more people around the world. We have seen remarkable uptake of TRIKAFTA in the U.S., with the majority of eligible patients now taking this medicine; and in Europe, we secured a positive CHMP opinion earlier than expected and entered into a landmark expansion of our reimbursement agreement with NHS England that will give patients in England access to this medicine rapidly following European Commission approval," said Reshma Kewalramani, M.D., Chief Executive Officer and President of Vertex. "Additionally, despite the challenges of this unprecedented year, we have continued to make steady progress in our research programs and across our clinical development pipeline that will position us for continued growth into the future.”

 

Second-Quarter 2020 Financial Highlights

 

Three Months Ended June 30,

%

 

2020

2019

Change

 

(in millions, except per share amounts)

Product revenues, net

$

1,524

$

940

62

%

TRIKAFTA

$

918

$

 

SYMDEKO/SYMKEVI

$

172

$

362

 

ORKAMBI

$

232

$

316

 

KALYDECO

$

203

$

262

 

 

 

 

 

GAAP Operating income

$

718

$

270

166

%

Non-GAAP Operating income

$

874

$

413

112

%

 

 

 

 

GAAP Net income

$

837

$

267

213

%

Non-GAAP Net income

$

687

$

327

110

%

 

 

 

 

GAAP Net income per share - diluted

$

3.18

$

1.03

209

%

Non-GAAP Net income per share - diluted

$

2.61

$

1.26

107

%

 

Total product revenues increased 62% compared to the second quarter of 2019, primarily driven by the uptake of TRIKAFTA in the U.S. and the uptake of our medicines outside the U.S. following the completion of key reimbursement agreements in 2019.

GAAP and Non-GAAP net income increased 213% and 110%, respectively, compared to the second quarter of 2019, largely driven by the strong growth in total product revenues.

Cash, cash equivalents and marketable securities as of June 30, 2020 were $5.5 billion, an increase of approximately $1.6 billion compared to $3.8 billion as of December 31, 2019.

 

Second-Quarter 2020 Expenses

 

Three Months Ended June 30,

 

2020

 

2019

 

(in millions)

Combined GAAP R&D and SG&A expenses

$

613

 

$

536

 

Combined Non-GAAP R&D and SG&A expenses

$

467

 

$

394

 

 

 

 

GAAP R&D expense

$

421

 

$

379

 

Non-GAAP R&D expense

$

321

 

$

271

 

 

 

 

GAAP SG&A expense

$

192

 

$

157

 

Non-GAAP SG&A expense

$

146

 

$

123

 

 

 

 

GAAP income taxes

$

(13

)

$

60

 

Non-GAAP income taxes

$

184

 

$

86

 

 

 

 

GAAP effective tax rate

 

(2

)%

 

18

%

Non-GAAP effective tax rate

 

21

%

 

21

%

 

Combined GAAP and Non-GAAP R&D and SG&A expenses increased compared to the second quarter of 2019, primarily due to the incremental investment to support the global use of Vertex's medicines and the expansion of Vertex's pipeline in CF and other new disease areas.

GAAP income taxes decreased compared to the second quarter of 2019. Non-GAAP income taxes increased compared to the second quarter of 2019 primarily due to Vertex's increased operating income. Refer to the "Supplemental Income Tax Information" section for discussion of the cash versus non-cash components of Vertex's provision for income taxes.

Full-Year 2020 Financial Guidance

Vertex today revised upward its guidance for full-year 2020 CF product revenues and reiterated its guidance for GAAP and non-GAAP combined R&D and SG&A expenses and for its non-GAAP effective tax rate, as summarized below:

 

 

Current FY 2020

 

Previous FY 2020

 

 

 

 

TOTAL product revenues

$5.7 to 5.9 billion

 

$5.3 to 5.6 billion

 

 

 

 

Combined GAAP R&D and SG&A expenses

Unchanged

 

$2.4 to 2.55 billion

Combined Non-GAAP R&D and SG&A expenses

Unchanged

 

$1.95 to 2.0 billion

Non-GAAP effective tax rate

Unchanged

 

21% to 22%

 

Key Business Highlights:

TRIKAFTA/KAFTRIO (elexacaftor, tezacaftor and ivacaftor)

  • The majority of the approximately 18,000 eligible patients have initiated treatment with TRIKAFTA.
  • In June, the European Medical Agency's (EMA's) Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion for KAFTRIO for the treatment of European CF patients ages 12 and older with one F508del mutation and one minimal function mutation or two F508del mutations.
  • In June, Vertex also announced the expansion of its reimbursement agreement with the National Health Service (NHS) England to include KAFTRIO, ahead of the medicine’s anticipated approval by the European Commission. If approved, KAFTRIO will be available to people with CF in England ages 12 and older with one F508del mutation and one minimal function mutation or two F508del mutations.
  • In July, Vertex announced positive Phase 3 study results for TRIKAFTA in people with CF ages 12 and older who have one copy of the F508del mutation and one gating or residual function mutation. This study was a post-marketing commitment and will be submitted to the U.S. FDA. In addition, the study data will be submitted to the EMA to support future indication expansion of the European Union (EU) label.
  • Data from the Phase 3 study evaluating the use of the elexacaftor, tezacaftor and ivacaftor triple combination in children with CF ages 6 through 11 who have two copies of the F508del mutation or who have one F508del mutation and one minimal function mutation is expected in the second half of 2020. Pending data from the study, Vertex will submit a supplemental New Drug Application (sNDA) to the U.S. FDA in the fourth quarter of 2020 for children ages 6 through 11 with at least one F508del mutation, followed by regulatory submissions in other countries.

SYMDEKO/SYMKEVI (tezacaftor and ivacaftor)

  • The EMA review of the application for use of SYMKEVI in patients ages 6 through 11 in Europe is ongoing. If approved, this will be the first CFTR modulator to treat patients ages 6 through 11 with residual function mutations in the EU.

KALYDECO (ivacaftor)

  • In June, Vertex announced that the European Commission granted approval of the label extension for KALYDECO for the treatment of children and adolescents ages 6 months and older who have the R117H mutation.

Development Pipeline:

Vertex continues to progress a broad pipeline of potentially transformative small molecule, cell and genetic therapies aimed at serious diseases. Recent and anticipated progress for key pipeline programs is noted below:

Beta Thalassemia and Sickle Cell Disease:

  • Vertex and its partner CRISPR Therapeutics provided new clinical data at the European Hematology Association (EHA) Congress from the two ongoing Phase 1/2 studies of the investigational CRISPR/Cas9 gene-editing therapy CTX001 in patients with transfusion-dependent beta thalassemia (TDT) and in patients with severe sickle cell disease (SCD). Data from two TDT patients demonstrated clinical proof-of-concept for CTX001 in this disease, and longer duration data from one SCD patient showed a durable effect on HbF levels and the patient was free of vaso-occlusive crises. Screening, enrollment and mobilization in these studies is ongoing; conditioning and dosing have been resumed following temporary COVID-19-related pauses in both studies. Vertex and CRISPR Therapeutics expect to report data from additional patients in the second half of 2020.

Alpha-1 Antitrypsin (AAT) Deficiency:

  • Vertex is evaluating multiple compounds with the potential to correct the misfolding of Z-AAT protein in the liver, in order to increase the levels of functional AAT in the blood. Misfolded Z-AAT protein is the root cause of AAT deficiency.
  • Enrollment and dosing have been re-initiated at some but not all sites following a temporary COVID-19-related pause in a Phase 2 proof-of-concept study designed to evaluate the levels of circulating, functional AAT protein after treatment with VX-814.
  • A Phase 2 proof-of-concept study for a second Z-AAT corrector, VX-864, was initiated in July.

APOL1-mediated Kidney Diseases:

  • Vertex is evaluating the potential for inhibitors of APOL1 function to reduce proteinuria in people with serious kidney diseases, including focal segmental glomerulosclerosis (FSGS).
  • Enrollment is underway at multiple clinical trial sites in a Phase 2 proof-of-concept study designed to evaluate the reduction in proteinuria in people with APOL1-mediated FSGS after treatment with VX-147.

Type 1 Diabetes (T1D):

  • Vertex is developing a cell therapy designed to replace insulin-producing islet cells in people with T1D. Two opportunities exist for the transplant of these functional islets into patients: 1) transplantation of islet cells alone, using immunosuppression to protect the implanted cells and 2) implantation of the islet cells inside a novel immunoprotective device.
  • Vertex plans to submit an Investigational New Drug (IND) application to the U.S. FDA for the islet cells alone program in late 2020 to support evaluation of this potential therapy in patients with T1D.

Non-GAAP Financial Measures

In this press release, Vertex's financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. In particular, non-GAAP financial results and guidance exclude from Vertex's pre-tax income (i) stock-based compensation expense, (ii) revenues and expenses related to collaboration agreements, (iii) gains or losses related to the fair value of the company's strategic investments, (iv) acquisition-related costs and (v) other adjustments. The company's non-GAAP financial results also exclude from its provision for income taxes the estimated tax impact related to its non-GAAP adjustments to pre-tax income described above and certain discrete items. These results are provided as a complement to results provided in accordance with GAAP because management believes these non-GAAP financial measures help indicate underlying trends in the company's business, are important in comparing current results with prior period results and provide additional information regarding the company's financial position. Management also uses these non-GAAP financial measures to establish budgets and operational goals that are communicated internally and externally and to manage the company's business and to evaluate its performance. The company adjusts, where appropriate, for both revenues and expenses in order to reflect the company's operations. The company provides guidance regarding product revenues in accordance with GAAP and provides guidance regarding combined research and development and sales, general, and administrative expenses on both a GAAP and non-GAAP basis. The company also provides guidance regarding its anticipated income taxes as a percentage of pre-tax income on a non-GAAP basis. The guidance regarding GAAP research and development expenses and sales, general and administrative expenses does not include estimates associated with any potential future business development activities. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached financial information.

 

 

Vertex Pharmaceuticals Incorporated

Second-Quarter Results

Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2020

 

2019

 

2020

 

2019

Revenues:

 

 

   

 

   

 

   

 

  

Product revenues, net

 

$

1,524,485

 

 

$

940,380

 

 

$

3,039,592

 

 

$

1,797,633

 

Collaboration and royalty revenues

 

 

 

 

 

913

 

 

 

 

 

 

2,095

 

Total revenues

 

 

1,524,485

 

 

 

941,293

 

 

 

3,039,592

 

 

 

1,799,728

 

Costs and expenses:

 

 

   

 

   

 

   

 

  

Cost of sales

 

 

184,520

 

 

 

135,740

 

 

 

347,017

 

 

 

230,832

 

Research and development expenses

 

 

420,928

 

 

 

379,091

 

 

 

869,456

 

 

 

718,581

 

Sales, general and administrative expenses

 

 

191,804

 

 

 

156,502

 

 

 

374,062

 

 

 

303,547

 

Change in fair value of contingent consideration

 

 

9,200

 

 

 

 

 

 

10,800

 

 

 

 

Total costs and expenses

 

 

806,452

 

 

 

671,333

 

 

 

1,601,335

 

 

 

1,252,960

 

Income from operations

 

 

718,033

 

 

 

269,960

 

 

 

1,438,257

 

 

 

546,768

 

Interest income

 

 

4,243

 

 

 

18,076

 

 

 

16,819

 

 

 

33,691

 

Interest expense

 

 

(13,871

)

 

 

(14,837

)

 

 

(28,007

)

 

 

(29,705

)

Other income, net (1)

 

 

116,365

 

 

 

53,939

 

 

 

55,235

 

 

 

96,549

 

Income before (benefit from) provision for income taxes

 

 

824,770

 

 

 

327,138

 

 

 

1,482,304

 

 

 

647,303

 

(Benefit from) provision for income taxes

 

 

(12,500

)

 

 

59,711

 

 

 

42,281

 

 

 

111,245

 

Net income

 

$

837,270

 

 

$

267,427

 

 

$

1,440,023

 

 

$

536,058

 

 

 

 

   

 

   

 

   

 

  

Net income per common share:

 

 

   

 

   

 

   

 

  

Basic

 

$

3.22

 

 

$

1.04

 

 

$

5.54

 

 

$

2.09

 

Diluted

 

$

3.18

 

 

$

1.03

 

 

$

5.46

 

 

$

2.06

 

Shares used in per share calculations:

 

 

   

 

   

 

   

 

  

Basic

 

 

259,637

 

 

 

256,154

 

 

 

260,013

 

 

 

255,941

 

Diluted

 

 

263,403

 

 

 

259,822

 

 

 

263,746

 

 

 

260,015

 

 

 

               

Reconciliation of GAAP to Non-GAAP Net Income

Second-Quarter Results

(in thousands, except per share amounts)

(unaudited)

               

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2020

 

2019

 

2020

 

2019

GAAP net income

 

$

837,270

 

 

$

267,427

 

 

$

1,440,023

 

 

$

536,058

 

Stock-based compensation expense

 

 

117,189

 

 

 

89,687

 

 

 

232,895

 

 

 

183,478

 

Increase in fair value of strategic investments (1)

 

 

(109,986

)

 

 

(56,527

)

 

 

(65,116

)

 

 

(100,078

)

Increase in fair value of contingent consideration (2)

 

 

9,200

 

 

 

 

 

 

10,800

 

 

 

 

Collaborative revenues and expenses (3)

 

 

27,000

 

 

 

52,158

 

 

 

63,250

 

 

 

58,509

 

Acquisition-related costs (4)

 

 

2,456

 

 

 

1,231

 

 

 

5,339

 

 

 

1,231

 

Total non-GAAP adjustments to pre-tax income

 

 

45,859

 

 

 

86,549

 

 

 

247,168

 

 

 

143,140

 

Tax adjustments (5)

 

 

(196,325

)

 

 

(26,710

)

 

 

(325,933

)

 

 

(56,102

)

Non-GAAP net income

 

$

686,804

 

 

$

327,266

 

 

$

1,361,258

 

 

$

623,096

 

 

 

 

   

 

   

 

   

 

  

Net income per diluted common share:

 

 

   

 

   

 

   

 

  

GAAP

 

$

3.18

 

 

$

1.03

 

 

$

5.46

 

 

$

2.06

 

Non-GAAP

 

$

2.61

 

 

$

1.26

 

 

$

5.16

 

 

$

2.40

 

Shares used in diluted per share calculations:

 

 

   

 

   

 

   

 

  

GAAP and Non-GAAP

 

 

263,403

 

 

 

259,822

 

 

 

263,746

 

 

 

260,015

 

 

 

               

Reconciliation of GAAP to Non-GAAP Revenues and Expenses

Second-Quarter Results

(in thousands)

(unaudited)

               

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2020

 

2019

 

2020

 

2019

GAAP total revenues

 

$

1,524,485

 

 

$

941,293

 

 

$

3,039,592

 

 

$

1,799,728

 

Collaborative revenues

 

 

 

 

 

(17

)

 

 

 

 

 

(158

)

Non-GAAP total revenues

 

$

1,524,485

 

 

$

941,276

 

 

$

3,039,592

 

 

$

1,799,570

 

 

 

 

   

 

   

 

   

 

  

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2020

 

2019

 

2020

 

2019

GAAP cost of sales

 

$

184,520

 

 

$

135,740

 

 

$

347,017

 

 

$

230,832

 

Stock-based compensation expense

 

 

(1,387

)

 

 

(1,503

)

 

 

(2,748

)

 

 

(2,841

)

Non-GAAP cost of sales

 

$

183,133

 

 

$

134,237

 

 

$

344,269

 

 

$

227,991

 

 

 

 

   

 

   

 

   

 

  

GAAP research and development expenses

 

$

420,928

 

 

$

379,091

 

 

$

869,456

 

 

$

718,581

 

Stock-based compensation expense

 

 

(70,275

)

 

 

(55,632

)

 

 

(142,962

)

 

 

(115,347

)

Collaborative expenses (3)

 

 

(27,000

)

 

 

(52,175

)

 

 

(63,250

)

 

 

(58,667

)

Acquisition-related costs (4)

 

 

(2,208

)

 

 

 

 

 

(4,886

)

 

 

 

Non-GAAP research and development expenses

 

$

321,445

 

 

$

271,284

 

 

$

658,358

 

 

$

544,567

 

 

 

 

   

 

   

 

   

 

  

GAAP sales, general and administrative expenses

 

$

191,804

 

 

$

156,502

 

 

$

374,062

 

 

$

303,547

 

Stock-based compensation expense

 

 

(45,527

)

 

 

(32,552

)

 

 

(87,185

)

 

 

(65,290

)

Acquisition-related costs (4)

 

 

(248

)

 

 

(1,231

)

 

 

(453

)

 

 

(1,231

)

Non-GAAP sales, general and administrative expenses

 

$

146,029

 

 

$

122,719

 

 

$

286,424

 

 

$

237,026

 

 

 

 

   

 

   

 

   

 

  

Combined non-GAAP R&D and SG&A expenses

 

$

467,474

 

 

$

394,003

 

 

$

944,782

 

 

$

781,593

 

 

 

 

   

 

   

 

   

 

  

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2020

 

2019

 

2020

 

2019

GAAP other income, net

 

$

116,365

 

 

$

53,939

 

 

$

55,235

 

 

$

96,549

 

Increase in fair value of strategic investments (1)

 

 

(109,986

)

 

 

(56,527

)

 

 

(65,116

)

 

 

(100,078

)

Non-GAAP other income (expense), net

 

$

6,379

 

 

$

(2,588

)

 

$

(9,881

)

 

$

(3,529

)

 

 

 

   

 

   

 

   

 

  

GAAP (benefit from) provision for income taxes

 

$

(12,500

)

 

$

59,711

 

 

$

42,281

 

 

$

111,245

 

Tax adjustments (5)

 

 

196,325

 

 

 

26,710

 

 

 

325,933

 

 

 

56,102

 

Non-GAAP provision for income taxes (6)

 

$

183,825

 

 

$

86,421

 

 

$

368,214

 

 

$

167,347

 

     

 

     

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

     

 

 

June 30, 2020

 

December 31, 2019

Assets

 

 

  

 

 

Cash, cash equivalents and marketable securities

 

$

5,450,769

 

$

3,808,294

Accounts receivable, net

 

 

791,768

 

 

633,518

Inventories

 

 

219,218

 

 

167,502

Property and equipment, net

 

 

728,357

 

 

745,080

Goodwill and intangible assets

 

 

1,402,158

 

 

1,402,158

Deferred tax assets

 

 

1,214,968

 

 

1,190,815

Other assets

 

 

409,129

 

 

371,098

Total assets

 

$

10,216,367

 

$

8,318,465

 

 

 

  

 

 

Liabilities and Shareholders' Equity

 

 

  

 

 

Accounts payable and accrued expenses

 

$

1,646,858

 

$

1,204,522

Finance lease liabilities

 

 

562,474

 

 

577,371

Contingent consideration

 

 

187,300

 

 

176,500

Other liabilities

 

 

300,493

 

 

274,828

Shareholders' equity

 

 

7,519,242

 

 

6,085,244

Total liabilities and shareholders' equity

 

$

10,216,367

 

$

8,318,465

 

 

 

  

 

 

Common shares outstanding

 

 

260,124

 

 

258,993

 

 

               

Supplemental Income Tax Information

(in thousands, except percentages)

(unaudited)

               

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2020

 

2019

 

2020

 

2019

Components of provision for (benefit from) income taxes related to:

         

 

   

 

  

 

 

 

   

 

   

 

   

 

  

Cash paid or accrued for income taxes

 

$

38,226

 

 

$

5,214

 

 

$

47,596

 

 

$

9,992

 

Benefits from income taxes due to discrete tax items (5)

 

 

(187,000

)

 

 

 

 

 

(237,355

)

 

 

 

Provision for income taxes offset by net operating losses and credits (6)

 

 

136,274

 

 

 

54,497

 

 

 

232,040

 

 

 

101,253

 

GAAP (benefit from) provision for income taxes (6)

 

$

(12,500

)

 

$

59,711

 

 

$

42,281

 

 

$

111,245

 

 

 

 

   

 

   

 

   

 

  

Cash paid or accrued for income taxes

 

$

38,226

 

 

$

5,214

 

 

$

47,596

 

 

$

9,992

 

Adjustments to pre-tax income

 

 

9,325

 

 

 

26,710

 

 

 

88,578

 

 

 

56,102

 

Provision for income taxes offset by net operating losses and credits (6)

 

 

136,274

 

 

 

54,497

 

 

 

232,040

 

 

 

101,253

 

Non-GAAP provision for income taxes (6)

 

$

183,825

 

 

$

86,421

 

 

$

368,214

 

 

$

167,347

 

 

 

 

   

 

   

 

   

 

  

 

 

 

   

 

   

 

   

 

  

Effective tax rate reconciliation:

 

 

   

 

   

 

   

 

  

GAAP effective tax rate

 

 

(2

)%

 

 

18

%

 

 

3

%

 

 

17

%

Impact of GAAP to Non-GAAP adjustments

 

 

23

%

 

 

3

%

 

 

18

%

 

 

4

%

Non-GAAP effective tax rate

 

 

21

%

 

 

21

%

 

 

21

%

 

 

21

%

 

Notes and Explanations

1: "Other income, net" includes gains and losses related to changes in the fair value of the company's strategic investments.

2: During the three and six months ended June 30, 2020, the increase in the fair value of the contingent consideration relates to potential payments to Exonics' former equity holders.

3: "Collaborative revenues and expenses" in the three and six months ended June 30, 2020 and 2019 primarily related to collaborative upfront and milestone payments.

4: "Acquisition-related costs" in the three and six months ended June 30, 2020 related to costs associated with the company's acquisitions of Semma and Exonics. There were no comparable amounts during the three and six months ended June 30, 2019.

5: In the three and six months ended June 30, 2020 and 2019, "Tax adjustments" primarily related to the estimated income taxes related to non-GAAP adjustments to pre-tax income including (i) stock-based compensation (including an adjustment for excess tax benefits related to stock-based compensation), (ii) increases or decreases in the fair value of the company's strategic investments and (iii) collaborative payments. In the three and six months ended June 30, 2020, "Tax adjustments" also included non-recurring discrete benefits to the company's provision for income taxes of approximately $187 million and $237 million, respectively, that the company excluded from its Non-GAAP measures.

6: The company records a provision for income taxes on its pre-tax income using an effective tax rate approximating statutory rates. The provision includes a significant non-cash charge due to the company's ability to offset its pre-tax income against previously benefited net operating losses and credits. The company expects a portion of its tax provision to represent a non-cash expense until its net operating losses and credits have been fully utilized. As of December 31, 2019, the company's federal net operating losses and credits that were available to offset future pre-tax income were approximately $3.5 billion.

About Vertex

Vertex is a global biotechnology company that invests in scientific innovation to create transformative medicines for people with serious diseases. The company has multiple approved medicines that treat the underlying cause of cystic fibrosis (CF) — a rare, life-threatening genetic disease — and has several ongoing clinical and research programs in CF. Beyond CF, Vertex has a robust pipeline of investigational small molecule medicines in other serious diseases where it has deep insight into causal human biology, including pain, alpha-1 antitrypsin deficiency and APOL1-mediated kidney diseases. In addition, Vertex has a rapidly expanding pipeline of genetic and cell therapies for diseases such as sickle cell disease, beta thalassemia, Duchenne muscular dystrophy and type 1 diabetes mellitus.

Founded in 1989 in Cambridge, Mass., Vertex's global headquarters is now located in Boston's Innovation District and its international headquarters is in London, UK. Additionally, the company has research and development sites and commercial offices in North America, Europe, Australia and Latin America. Vertex is consistently recognized as one of the industry's top places to work, including 10 consecutive years on Science magazine's Top Employers list and top five on the 2019 Best Employers for Diversity list by Forbes. For company updates and to learn more about Vertex's history of innovation, visit www.vrtx.com or follow us on Facebook, Twitter, LinkedIn, YouTube and Instagram.

Special Note Regarding Forward-Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including, without limitation, Dr. Kewalramani's statements in this press release, the information provided regarding future financial performance, the section captioned "Full-Year 2020 Financial Guidance" and statements regarding (i) regulatory filings and data submissions, (ii) anticipated regulatory approvals, including the anticipated KAFTRIO and SYMKEVI approvals, and future label expansions, and (iii) the development plan and timelines for the company's medicines, drug candidates and pipeline programs. While Vertex believes the forward-looking statements contained in this press release are accurate, these forward-looking statements represent the company's beliefs only as of the date of this press release and there are a number of risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by such forward-looking statements. Those risks and uncertainties include, among other things, that the company's expectations regarding its 2020 CF net product revenues, expenses and effective tax rates may be incorrect (including because one or more of the company's assumptions underlying its expectations may not be realized), that COVID-19 may have different or more significant impacts on the company's business or operations than the company currently expects, that data from the company's development programs may not support registration or further development of its potential medicines due to safety, efficacy or other reasons, and other risks listed under Risk Factors in Vertex's annual report and subsequent quarterly reports filed with the Securities and Exchange Commission and available through the company's website at www.vrtx.com. Vertex disclaims any obligation to update the information contained in this press release as new information becomes available.

Conference Call and Webcast

The company will host a conference call and webcast today at 5:30 p.m. ET. To access the call, please dial (866) 501-1537 (U.S.) or +1 (720) 545-0001 (International). The conference call will be webcast live and a link to the webcast can be accessed through Vertex's website at www.vrtx.com in the "Investors" section under "Events and Presentations." To ensure a timely connection, it is recommended that users register at least 15 minutes prior to the scheduled webcast. An archived webcast will be available on the company's website.

(VRTX-E)

Vertex Contacts:
Investors:
Michael Partridge, 617-341-6108
or
Zach Barber, 617-341-6470
or
Brenda Eustace, 617-341-6187

Media:
617-341-6992
mediainfo@vrtx.com

Source: Vertex Pharmaceuticals Incorporated