Vertex(US:VRTX)2025-08-05 20:02Part I. Financial Information Item 1. Financial Statements Unaudited condensed consolidated financial statements for Q2 and H1 2025 and 2024 show a significant net income increase in 2025, driven by the absence of a large 2024 AIPR&D expense, with growing assets and equity Condensed Consolidated Statements of Income (Loss) Q2 2025 net income of $1.03 billion contrasts sharply with a $3.59 billion net loss in Q2 2024, primarily due to the non-recurrence of a $4.4 billion AIPR&D expense Consolidated Income Statement Highlights (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $2,964.7 | $2,645.6 | 12.1% | $5,734.9 | $5,336.2 | 7.5% | | Income (Loss) from Operations | $1,151.1 | $(3,514.7) | N/M | $1,781.2 | $(2,375.2) | N/M | | Net Income (Loss) | $1,032.9 | $(3,593.6) | N/M | $1,679.2 | $(2,494.0) | N/M | | Diluted EPS | $3.99 | $(13.92) | N/M | $6.48 | $(9.66) | N/M | - The significant net loss in Q2 and H1 2024 was primarily driven by a $4.4 billion Acquired In-Process R&D (AIPR&D) expense from the acquisition of Alpine Immune Sciences1037 Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $24.04 billion from $22.53 billion at year-end 2024, with cash and equivalents at $12.03 billion and shareholders' equity growing to $17.18 billion Balance Sheet Summary (in millions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,972.2 | $4,569.6 | | Total current assets | $10,427.9 | $9,596.4 | | Total assets | $24,036.7 | $22,533.2 | | Total current liabilities | $4,138.4 | $3,564.6 | | Total liabilities | $6,861.3 | $6,123.6 | | Total shareholders' equity | $17,175.4 | $16,409.6 | Condensed Consolidated Statements of Cash Flows H1 2025 operating cash flow generated $1.89 billion, a significant improvement from $2.45 billion cash used in H1 2024 due to acquisition expenses, with financing activities using $1.03 billion for share repurchases Cash Flow Summary - Six Months Ended June 30 (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,892.0 | $(2,447.0) | | Net cash used in investing activities | $(540.3) | $(2,600.1) | | Net cash used in financing activities | $(1,029.6) | $(716.1) | | Net increase (decrease) in cash | $409.8 | $(5,781.3) | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies and significant financial events, including the $5.0 billion Alpine acquisition's $4.4 billion AIPR&D charge in 2024, a $379.0 million intangible asset impairment in Q1 2025, and $4.6 billion remaining share repurchase authorization - The acquisition of Alpine Immune Sciences on May 20, 2024, for approximately $5.0 billion in cash was accounted for as an asset acquisition, leading to a $4.4 billion charge to Acquired in-process research and development (AIPR&D) in Q2 20243637 - In Q1 2025, the company recorded a full intangible asset impairment charge of $379.0 million after concluding that its VX-264 clinical program for type 1 diabetes will not advance further78 - As of June 30, 2025, Vertex had a total of $4.6 billion remaining authorization under its share repurchase programs8182 - A disagreement exists with a third party regarding the royalty rate for ALYFTREK, with Vertex believing the rate is 4% while the third party claims it should be in the high-single digits, requiring discussions to resolve the matter100102 Product Revenues, Net - Six Months Ended June 30 (in millions) | Product | 2025 | 2024 | | :--- | :--- | :--- | | TRIKAFTA/KAFTRIO | $5,086.6 | $4,932.8 | | ALYFTREK | $210.7 | — | | Other product revenues | $406.9 | $403.4 | | Total | $5,704.2 | $5,336.2 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2025 net product revenue growth to $2.9 billion, driven by strong demand and new launches, pipeline progress, the significant impact of the 2024 Alpine acquisition on expenses, and a strong liquidity position with $12.0 billion in cash and marketable securities Overview and Business Updates Vertex, a global biotechnology company with seven approved medicines, provides updates on expanded reimbursement for ALYFTREK and CASGEVY, strong initial uptake for JOURNAVX with over 110,000 prescriptions, and pipeline advancements for zimislecel, povetacicept, and suzetrigine, while discontinuing the VX-993 acute pain program - The company has seven approved medicines, including five for Cystic Fibrosis (CF), one for Sickle Cell Disease (SCD) and Beta Thalassemia (TDT), and one for acute pain116 - Since its launch in March, the new acute pain drug JOURNAVX has had over 110,000 prescriptions written and filled, with covered access for nearly 150 million individuals in the U.S125 - Pipeline progress includes plans for global regulatory submissions for zimislecel (T1D) in 2026 and a potential accelerated approval filing for povetacicept (IgAN) in the first half of 2026131140 - The company will not advance VX-993 in acute pain based on Phase 2 results but will prioritize suzetrigine for diabetic peripheral neuropathy, expecting to complete enrollment in two Phase 3 trials by the end of 2026129134 Results of Operations Total revenues for Q2 2025 increased 12% to $2.96 billion, driven by an 11% rise in net product revenues, with U.S. revenues growing 13% due to higher pricing and demand, while operating expenses were significantly lower due to the non-recurrence of the $4.4 billion AIPR&D charge from the Alpine acquisition, and R&D expenses for H1 2025 rose 12% to $1.96 billion, reflecting investment in the advancing pipeline, and SG&A expenses increased 15% in H1 2025 to support the launch of JOURNAVX Q2 2025 vs Q2 2024 Revenue Breakdown (in millions) | Product | Q2 2025 | Q2 2024 | YoY Change | | :--- | :--- | :--- | :--- | | TRIKAFTA/KAFTRIO | $2,551.1 | $2,449.2 | 4% | | ALYFTREK | $156.8 | — | N/M | | Other product revenues | $236.1 | $196.4 | 20% | | Product revenues, net | $2,944.0 | $2,645.6 | 11% | - R&D expenses increased 12% in H1 2025 to $1.96 billion, driven by advancing mid- and late-stage clinical programs, including those for povetacicept, CF, T1D, and pain159162165 - SG&A expenses rose 14% in Q2 2025 primarily due to increased commercial investment to support the U.S. launch of JOURNAVX168 - The effective tax rate for H1 2025 was 16.6%, compared to (18.1)% in H1 2024, with the 2024 rate distorted by the non-deductible $4.4 billion AIPR&D expense from the Alpine acquisition85176 Liquidity and Capital Resources Vertex ended Q2 2025 with a strong liquidity position, holding $12.0 billion in cash, cash equivalents, and marketable securities, up from $11.2 billion at year-end 2024, driven by $1.9 billion in cash from operations in H1 2025, partially offset by $1.0 billion used for financing activities, mainly share repurchases Financial Position (in billions) | Metric | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total cash, cash equivalents & marketable securities | $12.0 | $11.2 | | Total working capital | $6.3 | $6.0 | - Cash from operating activities was $1.9 billion in H1 2025, compared to a use of $2.4 billion in H1 2024, which was impacted by the Alpine acquisition179180 - Financing activities in H1 2025 used $1.0 billion, primarily for share repurchases and payments related to employee stock plans182 - Significant future capital requirements include operating expenses, income taxes, royalties, lease obligations, and potential milestone payments from business development activities188 Quantitative and Qualitative Disclosures About Market Risk This section incorporates by reference the disclosures about market risk from the company's 2024 Annual Report on Form 10-K, with no new information provided - The company refers to its 2024 Annual Report on Form 10-K for information regarding quantitative and qualitative disclosures about market risk, indicating no material changes during the quarter190 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes to the company's internal control over financial reporting during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective191 - No material changes occurred in the company's internal control over financial reporting during the second quarter of 2025192 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 subject to any material legal proceedings193 Risk Factors This section states that there have been no material changes from the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2024 Annual Report on Form 10-K194 Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity during Q2 2025, with 868,730 shares repurchased at an average price of $454.12 per share under its publicly announced programs Share Repurchases - Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 211,469 | $485.93 | | May 2025 | 350,138 | $441.09 | | June 2025 | 307,123 | $447.07 | | Total Q2 | 868,730 | $454.12 | - As of June 30, 2025, the approximate dollar value of shares that may yet be purchased under the company's plans or programs is $4.57 billion199 Other Information The company discloses the adoption of Rule 10b5-1 trading plans by two individuals during Q2 2025: EVP & CFO Charles F. Wagner, Jr. and Director Sangeeta Bhatia - During Q2 2025, EVP & CFO Charles F. Wagner, Jr. and Director Sangeeta Bhatia adopted Rule 10b5-1 trading plans for the sale of company securities200201 Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications under the Sarbanes-Oxley Act and XBRL data files