AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 4/6 · 18/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Successive marketed CF medicines, disclosed product differentiation and subsequent uptake with higher realized net prices support an established intangible-assets advantage. This does not depend on margins alone; comparative superiority and market share remain unverified.
durability · 2/4 · Product renewal supports persistence, but no product-specific protection schedule or competitor assessment establishes a long remaining runway. Intellectual-property limitations and potential therapeutic displacement keep durability mixed.
customer dependency · 2/4 · Continued CF demand and uptake across geographies indicate clinical and commercial relevance indirectly. They do not establish individual patient retention, indispensable treatment status or measured switching friction; access depends materially on payors.
erosion resilience · 2/4 · New CF product uptake and realized pricing demonstrate some ability to renew the franchise. Experienced reimbursement delays, government pricing constraints and untested exposure to superior alternatives limit demonstrated resilience. Generic displacement risks are not treated as realized losses.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Vertex explicitly attributes part of both second-quarter and first-half 2026 U.S. growth to higher realized CF net prices alongside patient demand. This is observed pricing evidence, although the price contribution is unquantified and does not establish similar power for every product.
retention · 2/4 · Continued demand, ALYFTREK uptake and international CF performance support ongoing demand indirectly. New initiations and product transitions prevent identification of existing-patient retention; no retention rate is inferred.
margin resilience · 2/4 · First-half revenue rose 10% while cost of sales rose 14% and SG&A rose 31%, indicating cost pressure despite stronger cash generation. Flat total expenses also reflect the absence of the prior-year impairment, so they do not establish exceptional underlying margin resilience.
contractual freedom · 1/4 · Government control of international pricing, dependence on payor reimbursement and increased statutory discounts materially constrain price-setting freedom. Current IRA negotiation exclusions for CF medicines and CASGEVY provide partial protection rather than unrestricted pricing.
Predictability74
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 3.41
- Positive FCF years (%)
- 80.00
- FCF margin volatility (pp)
- 17.42
Financial strength—
Missing required inputs: debtFcfGrade, netDebtEbitGrade. Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 100.00
- Interest coverage (x)
- 313.78
- Current ratio (x)
- 2.90
Capital allocation—
Missing required inputs: operatingReturn. Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year average dilution (%)
- -0.05
- 3-year average SBC / revenue (%)
- 5.98
- cashConversionGrade
- 0.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · First-half 2026 operating cash flow of $2.55 billion covered capital expenditure and repurchases, cash increased and shares outstanding declined. Against this, the $5 billion Alpine acquisition, $379 million VX-264 impairment, substantial lease commitments and approximately $10 billion Crinetics agreement create material allocation risk. The $4.5 billion term-loan facility was undrawn; acquisition returns and repurchase value creation are not established.
incentive alignment · 2/4 · Actual outstanding performance-based awards, multiyear clinical and regulatory goals and a certified milestone-based payout demonstrate incentive mechanisms. Undisclosed targets, discretionary performance-rating adjustments and missing executive ownership details limit confidence that rewards consistently track durable shareholder returns. Proposed plan terms are excluded.
execution · 3/4 · ALYFTREK commercialization and uptake, increased CASGEVY treatment activity, the JOURNAVX launch and stronger operating cash generation demonstrate execution through operating outcomes. The assessment is indirect as to management's individual contribution; the VX-264 impairment shows that pipeline execution is not uniformly successful.
governance · 2/4 · Independent committee composition, regular independent-director sessions and separated chair and CEO roles with a lead independent director provide concrete oversight structures. A 25% special-meeting threshold and limited evidence of oversight effectiveness leave shareholder accountability mixed rather than exceptional.
Evidence
•Cystic Fibrosis. We continued to build upon our leadership in CF with the launch of our fifth medicine, ALYFTREK, which brings important benefits for patients in terms of meaningful improvements in CFTR protein function, efficacy in more mutations, and once-daily dosing, and continued expansion to lower age groups and new geographies.
Proxy summary: marketed products, cystic fibrosis · Filed 02/04/2026
total revenues increased 11% and 9%, as compared to the second quarter and first half of 2025, respectively, primarily due to continued strong patient demand, including from new initiations of ALYFTREK, and higher realized net prices in CF, and contributions from CASGEVY and JOURNAVX.
MD&A: U.S. revenue growth, patient demand and realized CF pricing · Filed 04/08/2026
total revenues increased 14% and 12%, as compared to the second quarter and first half of 2025, respectively, primarily due to strong CF performance across multiple geographies, including ALYFTREK uptake, increased CASGEVY product revenues, and favorable impacts from foreign exchange.
MD&A: international CF performance and product uptake · Filed 04/08/2026
Our success depends, in significant part, on our ability to obtain, maintain, and enforce patents and intellectual property rights such as trademarks and copyrights that protect our products, product candidates, and technologies.
Risk factors: dependence on patents and intellectual property · Filed 13/02/2026
Since inception, our ALYFTREK net product revenues total $837.8 million.
Legal matters and contingencies: cumulative ALYFTREK revenue · Filed 13/02/2026
Since inception, our ALYFTREK net product revenues total $1.8 billion.
Legal matters and contingencies: cumulative ALYFTREK revenue · Filed 04/08/2026
The development of new or improved treatment options could eliminate the use of our medicines or may limit the utility and application of ongoing clinical trials for our product candidates.
Competition: potential displacement by improved treatments · Filed 13/02/2026
We may fail to obtain, defend or otherwise preserve patent and other intellectual property rights, including certain forms of regulatory exclusivity, and our current intellectual property rights or protections and those we obtain in the future may not be broad enough or sufficient to protect our commercial interests in all countries where we conduct business.
Risk factors: limitations of patents and regulatory exclusivity · Filed 13/02/2026
In most markets outside of the U.S., the pricing and reimbursement medicines is subject to governmental control and governments are making greater efforts to reduce drug prices and limit drug spending.
Pricing and reimbursement: government control outside the U.S. · Filed 13/02/2026
We have experienced challenges in obtaining timely reimbursement for our products in various countries outside the U.S., and our future revenues depend on maintaining such reimbursement.
Pricing and reimbursement: experienced international reimbursement delays · Filed 13/02/2026
Nevertheless, other elements of the IRA may have a material impact on our business, including the redesign of the Part D benefit and the Manufacturer Discount Program, which requires manufacturers to take on more of the beneficiary cost previously subsidized by the federal government through the application of increased drug discounts.
Pricing regulation: increased manufacturer discounts under the IRA · Filed 13/02/2026
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.
Manufacturing: reliance on global third-party supply network · Filed 04/08/2026
Certain drugs, including our CF medicines and CASGEVY, currently are excluded from the IRA negotiation program.
Pricing regulation: current IRA negotiation exclusions · Filed 13/02/2026
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: dependence of product sales on third-party payors · Filed 04/08/2026
1,277.5 1,116.5 14% 2,488.5 2,223.2 12% Total revenues $3,333.9 $2,964.7 12% $6,320.8 $5,734.9 10% In the second quarter and first half of 2026, our U.S.
MD&A: quarterly and first-half total revenue comparisons · Filed 04/08/2026
28 Table of Contents Operating Costs and Expenses Three Months Ended June 30, Six Months Ended June 30, 2026 2025 Change 2026 2025 Change (in millions, except percentages) Cost of sales $489.2 $407.5 20% $882.0 $770.5 14% Research and development expenses 993.8 978.4 2% 1,955.4 1,958.1 —% Acquired in-process research and development expenses 21.4 2.2 ** 21.9 22.0 ** Selling, general and administrative expenses 582.2 424.6 37% 1,075.9 821.0 31% Intangible asset impairment charge — — ** — 379.0 ** Change in fair value of contingent consideration 0.4 0.9 ** 0.6 3.1 ** Total costs and expenses $2,087.0 $1,813.6 15% $3,935.8 $3,953.7 —% ** 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.
MD&A: operating costs, expenses and cost-of-sales composition · Filed 04/08/2026
6 Table of Contents VERTEX PHARMACEUTICALS INCORPORATED Condensed Consolidated Statements of Cash Flows (unaudited; in millions) Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net income $2,131.2 $1,679.2 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation expense 336.6 333.4 Depreciation and amortization expense 112.4 100.1 Intangible asset impairment charge — 379.0 Deferred income taxes (135.0) (305.4) Other non-cash items, net (21.4) 106.6 Changes in operating assets and liabilities: Accounts receivable (100.4) (188.0) Inventories (125.4) (315.7) Prepaid expenses and other assets 122.0 (104.5) Accounts payable (31.1) 33.8 Accrued expenses 293.0 214.7 Other liabilities (28.4) (41.2) Net cash provided by operating activities 2,553.5 1,892.0 Cash flows from investing activities: Purchases of available-for-sale debt securities (4,864.1) (3,820.6) Sales and maturities of available-for-sale debt securities 4,558.2 3,476.3 Purchases of property and equipment (245.6) (186.4) Proceeds related to convertible note 75.5 — Other investing activities (1.7) (9.6) Net cash used in investing activities (477.7) (540.3) Cash flows from financing activities: Issuances of common stock under benefit plans 74.7 65.8 Repurchases of common stock (806.4) (817.9) Payments in connection with common stock withheld for employee tax obligations (232.8) (276.4) Other financing activities (1.0) (1.1) Net cash used in financing activities (965.5) (1,029.6) Effect of changes in exchange rates on cash (44.0) 87.7 Net increase in cash, cash equivalents and restricted cash 1,066.3 409.8 Cash, cash equivalents and restricted cash—beginning of period 5,087.8 4,572.2 Cash, cash equivalents and restricted cash—end of period $6,154.1 $4,982.0 Supplemental disclosure of cash flow information: Cash paid for income taxes $501.5 $697.7 Cash paid for interest $6.3 $6.2 The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed consolidated statements of cash flows: first-half 2026 and 2025 · Filed 04/08/2026
5 Table of Contents VERTEX PHARMACEUTICALS INCORPORATED Condensed Consolidated Statements of Shareholders’ Equity (unaudited; in millions) Three Months Ended Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Shareholders’ Equity Shares Amount Balance at March 31, 2025 257.0 $2.6 $6,172.5 $68.1 $10,253.1 $16,496.3 Other comprehensive loss, net of tax — — — (169.2) — (169.2) Net income — — — — 1,032.9 1,032.9 Repurchases of common stock (0.9) — (397.3) — — (397.3) Common stock withheld for employee tax obligations — — (5.9) — — (5.9) Issuance of common stock under benefit plans 0.2 — 47.4 — — 47.4 Stock-based compensation expense — — 171.2 — — 171.2 Balance at June 30, 2025 256.3 $2.6 $5,987.9 $(101.1) $11,286.0 $17,175.4 Balance at March 31, 2026 254.2 $2.5 $4,743.2 $24.8 $14,591.4 $19,361.9 Other comprehensive income, net of tax — — — 23.7 — 23.7 Net income — — — — 1,099.8 1,099.8 Repurchases of common stock (1.1) — (457.7) — — (457.7) Common stock withheld for employee tax obligations — — (4.3) — — (4.3) Issuance of common stock under benefit plans 0.2 — 50.6 — — 50.6 Stock-based compensation expense — — 173.9 — — 173.9 Balance at June 30, 2026 253.3 $2.5 $4,505.7 $48.5 $15,691.2 $20,247.9 Six Months Ended Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Shareholders’ Equity Shares Amount Balance at December 31, 2024 256.9 $2.6 $6,672.4 $127.8 $9,606.8 $16,409.6 Other comprehensive loss, net of tax — — — (228.9) — (228.9) Net income — — — — 1,679.2 1,679.2 Repurchases of common stock (1.8) — (814.2) — — (814.2) Common stock withheld for employee tax obligations (0.6) — (276.4) — — (276.4) Issuance of common stock under benefit plans 1.8 — 65.9 — — 65.9 Stock-based compensation expense — — 340.2 — — 340.2 Balance at June 30, 2025 256.3 $2.6 $5,987.9 $(101.1) $11,286.0 $17,175.4 Balance at December 31, 2025 254.0 $2.5 $5,119.2 $(15.9) $13,560.0 $18,665.8 Other comprehensive income, net of tax — — — 64.4 — 64.4 Net income — — — — 2,131.2 2,131.2 Repurchases of common stock (1.8) — (802.2) — — (802.2) Common stock withheld for employee tax obligations (0.5) — (232.8) — — (232.8) Issuance of common stock under benefit plans 1.6 — 77.7 — — 77.7 Stock-based compensation expense — — 343.8 — — 343.8 Balance at June 30, 2026 253.3 $2.5 $4,505.7 $48.5 $15,691.2 $20,247.9 The accompanying notes are an integral part of these condensed consolidated financial statements.
Condensed consolidated statements of shareholders' equity · Filed 04/08/2026
Acquisitions In 2024, we acquired Alpine for approximately $5.0 billion.
Strategic transactions: completed Alpine acquisition · Filed 13/02/2026
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.
MD&A: full VX-264 intangible asset impairment · Filed 04/08/2026
Cash, Cash Equivalents and Restricted Cash Presented in Condensed Consolidated Statements of Cash Flows The cash, cash equivalents and restricted cash at the beginning and end of each period presented in our condensed consolidated statements of cash flows consisted of the following: Six Months Ended June 30, 2026 2025 Beginning of period End of period Beginning of period End of period (in millions) Cash and cash equivalents $5,084.8 $6,143.5 $4,569.6 $4,972.2 Prepaid expenses and other current assets 3.0 10.6 2.6 9.8 Cash, cash equivalents and restricted cash per condensed consolidated statement of cash flows $5,087.8 $6,154.1 $4,572.2 $4,982.0 O.Subsequent Events Crinetics Acquisition On July 6, 2026, we entered into an agreement and plan of merger to acquire (the “Crinetics Acquisition”) all of the issued and outstanding shares of common stock of Crinetics Pharmaceuticals, Inc., a publicly traded biotechnology company focused on discovering, developing, and commercializing novel therapeutics for endocrine diseases and endocrine-related tumors, for $85.00 per share in cash, for a total equity value of approximately $10.0 billion.
Subsequent events: agreement to acquire Crinetics · Filed 04/08/2026
Term Loan Credit Agreement On July 30, 2026, we entered into a term loan credit agreement (the “2026 Term Loan”) with the lenders and issuing banks party thereto and Bank of America, N.A., as administrative agent, which provides for a $4.5 billion senior unsecured delayed draw term loan A facility.
Subsequent events: delayed draw term-loan facility · Filed 04/08/2026
We have not drawn upon the 2026 Term Loan to date.
Subsequent events: term loan undrawn as disclosed · Filed 04/08/2026
Also, as of February 27, 2026, there were outstanding an aggregate of 2,609,521 unvested restricted stock units and 1,061,262 unvested performance-based restricted stock units (assuming maximum performance) granted under the 2013 Plan and no unvested shares of restricted stock and restricted stock units granted under the Amended and Restated 2006 Stock and Option Plan (the “2006 Plan”).
Equity compensation: outstanding RSUs and performance-based RSUs · Filed 02/04/2026
The non-financial goals contained in our three-year PSU awards for 2024, 2025 and 2026 are based on multiple clinical and regulatory milestones and are not disclosed for competitive reasons and because the relevant performance periods are ongoing.
Compensation discussion: ongoing three-year PSU performance goals · Filed 02/04/2026
In May 2025, the MDCC certified achievement of all three performance milestones resulting in a maximum (200%) payout and 37,622 PSUs earned under the award.
Compensation discussion: certified milestones and earned PSU payout · Filed 02/04/2026
Overall, the MDCC increased our company rating by 6.75 points for these positive additional accomplishments, which was offset by a three-point reduction related to challenges associated with three programs.
Compensation discussion: discretionary company-rating adjustments · Filed 02/04/2026
We delivered increased revenue from CASGEVY and drove more patient initiations, cell collections, and infusions.
Proxy summary: CASGEVY revenue and treatment activity · Filed 02/04/2026
launch of JOURNAVX, a first-in- class, non-opioid, oral pain signal inhibitor.
Proxy summary: JOURNAVX commercial launch · Filed 02/04/2026
Our independent directors meet in executive session without management at each regularly scheduled board meeting.
Corporate governance: independent-director executive sessions · Filed 02/04/2026
Each of the board committees is composed of independent directors.
Corporate governance: independent board committees · Filed 02/04/2026
Currently, the board believes it is in the best interests of the company and our shareholders for the roles of Chair of the board and CEO to be separated, supported by a Lead Independent Director who has oversight responsibilities.
Corporate governance: separated chair and CEO roles and lead independent director · Filed 02/04/2026
•A written consent process is unnecessary given the ability of shareholders holding 25% or more of our outstanding shares to call special meetings of shareholders and, further, a written consent process does not promote transparent decision-making and could disenfranchise shareholders.
Written-consent proposal response: 25% special-meeting threshold · Filed 02/04/2026
F-34 VERTEX PHARMACEUTICALS INCORPORATED Notes to Consolidated Financial Statements (Continued) Our leases are included on our consolidated balance sheets as follows: As of December 31, 2025 2024 (in millions) Operating leases Operating lease assets $1,562.7 $1,356.8 Total operating lease assets $1,562.7 $1,356.8 Other current liabilities $77.3 $87.1 Long-term operating lease liabilities 1,846.5 1,544.4 Total operating lease liabilities $1,923.8 $1,631.5 Finance leases Property and equipment, net $81.5 $57.9 Total finance lease assets $81.5 $57.9 Other current liabilities $5.5 $5.2 Other long-term liabilities 106.7 112.8 Total finance lease liabilities $112.2 $118.0 Maturities of our finance and operating lease liabilities as of December 31, 2025 were as follows: Year Operating Leases Finance Leases Total (in millions) 2026 $155.2 $10.5 $165.7 2027 196.9 11.8 208.7 2028 193.3 12.2 205.5 2029 139.9 12.5 152.4 2030 197.8 12.8 210.6 Thereafter 2,316.4 118.3 2,434.7 Total lease payments 3,199.5 178.1 3,377.6 Less: tenant allowance (220.8) — (220.8) Less: amount representing interest (1,054.9) (65.9) (1,120.8) Present value of lease liabilities $1,923.8 $112.2 $2,036.0 F-35 VERTEX PHARMACEUTICALS INCORPORATED Notes to Consolidated Financial Statements (Continued) The weighted-average remaining lease terms and discount rates related to our leases were as follows: As of December 31, 2025 2024 Weighted-average remaining lease term (in years) Operating leases 15.17 15.58 Finance leases 21.94 22.17 Weighted-average discount rate Operating leases 4.75% 4.61% Finance leases 4.51% 4.58% Supplemental cash flow information related to our leases was as follows: Year ended December 31, 2025 2024 2023 (in millions) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $183.2 $113.5 $62.8 Operating cash flows from finance leases $5.6 $25.7 $38.4 Financing cash flows from finance leases $5.4 $33.6 $44.9 Right-of-use assets obtained in exchange for lease obligations Operating leases $311.0 $1,120.9 $2.4 The majority of right-of-use assets obtained in exchange for lease obligations in 2025 and 2024 are described above.
Lease notes: liabilities and future contractual payments · Filed 13/02/2026
