Vertex(US:VRTX)2025-05-06 20:04Part I. Financial Information Financial Statements This section presents Vertex Pharmaceuticals' unaudited condensed consolidated financial statements for the quarter ended March 31, 2025, including income, balance sheet, and cash flow statements Condensed Consolidated Statements of Income Vertex reported increased total revenues for Q1 2025, but net income significantly decreased due to an intangible asset impairment charge and higher operating expenses Q1 2025 vs Q1 2024 Income Statement Highlights (in millions, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | $2,770.2 | $2,690.6 | | Total Costs and Expenses | $2,140.1 | $1,551.1 | | Intangible asset impairment charge | $379.0 | $— | | Income from Operations | $630.1 | $1,139.5 | | Net Income | $646.3 | $1,099.6 | | Diluted EPS | $2.49 | $4.21 | Condensed Consolidated Balance Sheets As of March 31, 2025, Vertex's balance sheet showed a slight increase in total assets and shareholders' equity compared to year-end 2024 Balance Sheet Summary (in millions) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,674.7 | $4,569.6 | | Total current assets | $10,008.8 | $9,596.4 | | Total Assets | $22,880.5 | $22,533.2 | | Total current liabilities | $3,783.2 | $3,564.6 | | Total Liabilities | $6,384.2 | $6,123.6 | | Total Shareholders' Equity | $16,496.3 | $16,409.6 | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities decreased in Q1 2025, while net cash used in financing activities increased due to higher stock repurchases Cash Flow Summary for Three Months Ended March 31 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $818.9 | $1,306.6 | | Net cash used in investing activities | $(55.8) | $(2,136.4) | | Net cash used in financing activities | $(680.4) | $(357.5) | | Net (decrease) in cash | $113.2 | $(1,202.9) | Notes to Condensed Consolidated Financial Statements The notes provide detailed disclosures on accounting policies, collaboration agreements, intangible assets, and segment information, including a significant impairment charge - Acquired in-process research and development (AIPR&D) expenses were $19.8 million in Q1 2025, down from $76.8 million in Q1 2024. The prior year period included a $75.0 million milestone payment to Entrada Therapeutics3645 - A full intangible asset impairment charge of $379.0 million was recorded in Q1 2025 for the VX-264 clinical program in type 1 diabetes (T1D) after Phase 1/2 trial results led to the discontinuation of its development74158 Q1 2025 Product Revenues (in millions) | Product | Q1 2025 Revenue | | :--- | :--- | | TRIKAFTA/KAFTRIO | $2,535.5 | | ALYFTREK | $53.9 | | Other product revenues | $170.8 | | Total product revenues, net | $2,760.2 | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial performance, business updates, and strategic outlook, including growth drivers, new product launches, and pipeline progress Overview and Business Updates Vertex highlights its global biotechnology position, recent FDA approvals for ALYFTREK and JOURNAVX, and progress in its diversified clinical pipeline - The FDA approved ALYFTREK for CF in December 2024 and JOURNAVX for acute pain in January 2025, expanding the company's commercial portfolio108110 - For CASGEVY, over 65 authorized treatment centers have been activated globally, and reimbursement agreements are in place with NHS England and in the UAE115 - The development of VX-264 for Type 1 Diabetes was discontinued after Phase 1/2 results did not meet the efficacy endpoint124 - Enrollment is expected to complete in Q2 2025 for the pivotal Phase 1/2/3 trial of zimislecel for T1D, with marketing applications planned for 2026124 Results of Operations Total revenues for Q1 2025 grew, but operating income fell significantly due to an intangible asset impairment charge and increased operating expenses Q1 2025 vs Q1 2024 Operating Results (in millions) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $2,770.2 | $2,690.6 | 3% | | R&D Expenses | $979.7 | $789.1 | 24% | | SG&A Expenses | $396.4 | $342.7 | 16% | | Intangible Asset Impairment | $379.0 | $— | N/A | | Income from Operations | $630.1 | $1,139.5 | (45)% | - The 30% increase in development expenses to $773.6 million was driven by investments in multiple mid- and late-stage clinical programs, including povetacicept, the T1D study of VX-880, and next-generation pain candidates153 - SG&A expenses rose 16% primarily due to increased commercial investment to support the U.S. launch of JOURNAVX156 Liquidity and Capital Resources Vertex maintained strong liquidity with $11.36 billion in cash and marketable securities, and expects sufficient funds for future operations Financial Position (in millions) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total cash, cash equivalents and marketable securities | $11,357.7 | $11,223.8 | | Total working capital | $6,225.6 | $6,031.8 | - During Q1 2025, the company repurchased 0.9 million shares for $416.9 million. As of March 31, 2025, $964.4 million remained authorized under the share repurchase program77176 - The company maintains a $500.0 million unsecured revolving credit facility, which was undrawn as of March 31, 2025173 Quantitative and Qualitative Disclosures About Market Risk This section incorporates by reference market risk disclosures from the 2024 Annual Report on Form 10-K, reporting no material changes for the quarter - The company refers to its 2024 Annual Report on Form 10-K for disclosures regarding market risk, indicating no material changes during the quarter178 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level179 - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls180 Part II. Other Information Legal Proceedings The company reports that it is not currently subject to any material legal proceedings - As of the filing date, Vertex is not involved in any material legal proceedings181 Risk Factors This section states that there have been no material changes from the risk factors previously disclosed in the 2024 Annual Report on Form 10-K - No material changes to the risk factors disclosed in the 2024 Annual Report on Form 10-K have occurred182 Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity under its authorized program during the first quarter of 2025 Q1 2025 Share Repurchases | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 533,000 | $419.45 | | Feb 2025 | 213,006 | $471.35 | | Mar 2025 | 186,504 | $498.08 | | Total | 932,510 | $447.03 | - As of March 31, 2025, approximately $964.4 million remained available for future repurchases under the current program187 Other Information The company discloses the adoption of Rule 10b5-1 trading plans by two executive officers during the first quarter of 2025 - Two executive officers, Amit Sachdev (EVP, Chief Patient and External Affairs Officer) and Jonathan Biller (EVP, Chief Legal Officer), adopted Rule 10b5-1 trading plans in February 2025190 Exhibits This section lists the exhibits filed with the Form 10-Q, including an employment agreement, CEO and CFO certifications, and XBRL data files