Vertex Pharmaceuticals
VERTEX PHARMACEUTICALS INC / MA (Form: 8-K, Received: 04/27/2016 16:17:22)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 26, 2016

VERTEX PHARMACEUTICALS INCORPORATED
(Exact name of registrant as specified in its charter)



MASSACHUSETTS
(State or other jurisdiction of incorporation)
000-19319
(Commission File Number)
04-3039129
(IRS Employer Identification No.)


50 Northern Avenue
Boston, Massachusetts 02210
(Address of principal executive offices) (Zip Code)

(617) 341-6100
(Registrant's telephone number, including area code)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.02.  Results of Operations and Financial Condition.
     
On April 27, 2016 , we issued a press release in which we reported our consolidated financial results for the three months ended March 31, 2016 . A copy of that press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference.

The information set forth in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 5.03    Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On April 26, 2016, we amended Article II, Section 8 of our Amended and Restated By-laws to implement proxy access. As amended, Article II, Section 8 permits an eligible shareholder, or a group of up to 20 shareholders, owning 3% or more of our outstanding common stock continuously for at least three years to nominate and include in our proxy materials director nominees constituting up to the greater of (i) 20% of our Board of Directors or (ii) two directors, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the Bylaws. This summary of the amendment is qualified by reference to the full text of the amendment, a copy of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit          Description of Document

3.1        Amendment to Amended and Restated By-laws
99.1        Press Release, dated April 27, 2016






SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

 
VERTEX PHARMACEUTICALS INCORPORATED
 
(Registrant)
 
 
Date: April 27, 2016
/s/ Michael J. LaCascia
 
Michael J. LaCascia
Senior Vice President and General Counsel
 
 



EXHIBIT 3.1

Amendment
to
By-Laws of Vertex Pharmaceuticals Incorporated

A new Article II Section 8 is hereby inserted, as follows:
Section 8.     Proxy Access for Director Nominations .
(a) Information to be Included in the Corporation’s Proxy Materials . Whenever the Board of Directors solicits proxies with respect to the election of directors at an annual meeting of stockholders (following the 2016 annual meeting of stockholders), subject to the provisions of this Section 8, the Corporation shall include in its proxy statement for such annual meeting, in addition to any persons nominated for election by the Board of Directors or a committee appointed by the Board of Directors, the name, together with the Required Information (as defined below), of any person to be nominated for election to the Board of Directors by a stockholder pursuant to Section 2 of this Article II (a “Stockholder Nominee”) if (i) the stockholder of record who intends to make the nomination qualifies as, or is acting on behalf of, an Eligible Stockholder (as defined in Section 8(c) of this Article II), (ii) the Eligible Stockholder expressly elects, in a written statement accompanying the notice required by Section 2 of this Article II (a “Nomination Notice”), to have its Stockholder Nominee included in the Corporation’s proxy materials pursuant to this Section 8 and (iii) all of the other requirements set forth in this Section 8 and in Section 2 of this Article II are satisfied. For purposes of this Section 8, the “Required Information” that the Corporation will include in its proxy statement is (A) the information provided to the Clerk of the Corporation concerning the Stockholder Nominee and the Eligible Stockholder that is required to be disclosed in the Corporation’s proxy statement pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder, and (B) if the Eligible Stockholder so elects, a Supporting Statement (as defined in Section 8(g) of this Article II). For the avoidance of doubt, nothing in this Section 8 shall limit the Corporation’s ability to solicit against any Stockholder Nominee or include in its proxy materials the Corporation’s own statements or other information relating to any Eligible Stockholder or Stockholder Nominee, including any information provided to the Corporation pursuant to this Section 8. Subject to the provisions of this Section 8, the name of any Stockholder Nominee included in the Corporation’s proxy statement for an annual meeting of stockholders shall also be set forth on the form of proxy distributed by the Corporation in connection with such annual meeting.
(b) Permitted Number of Stockholder Nominees . The maximum number of Stockholder Nominees that will be included in the Corporation’s proxy materials with respect to an annual meeting of stockholders shall not exceed the greater of (i) two or (ii) 20% of the number of directors in office as of the last day on which a Nomination Notice may be delivered pursuant to Section 2 of this Article II (the “Final Proxy Access Date”) or, if such amount is not a whole number, the closest whole number below 20% (such greater number, as it may be adjusted pursuant to this Section 8(b)), the “Permitted Number”). In the event that one or more vacancies for any reason occurs on the Board of Directors after the Final Proxy Access Date but before the date of the annual meeting and the Board of Directors resolves to reduce the size of the Board of Directors in connection therewith, the Permitted Number shall be calculated based on the number of directors in office as so reduced. In addition, the Permitted Number shall be reduced by (i) the number of individuals who will be included in the Corporation’s proxy materials as nominees recommended by the Board of Directors pursuant to an agreement, arrangement or other understanding with a stockholder or group of stockholders (other than any such agreement, arrangement or understanding entered into in connection with an acquisition of stock from the Corporation by such stockholder or group of stockholders), together with the number of directors in office as of the Final Proxy Access Date who were either elected by the Board of Directors to fill a vacancy pursuant to such an agreement, arrangement or other understanding, or included in the Corporation’s proxy materials as nominees recommended by the Board of Directors pursuant to such an agreement, arrangement or other understanding for any of the two preceding annual meetings of stockholders, and whose remaining terms extend beyond the upcoming annual meeting, and (ii) the number of directors in office as of the Final Proxy Access Date who were included in the Corporation’s proxy materials as Stockholder Nominees for any of the two preceding annual meetings of stockholders (including any persons counted as Stockholder Nominees pursuant to the immediately succeeding sentence) and whose remaining terms extend beyond the upcoming annual meeting. For purposes of determining when the Permitted Number has been reached, any individual requested by an Eligible Stockholder to be included in the Corporation’s proxy materials pursuant to this Section 8 whose nomination is subsequently withdrawn or whom the Board of Directors decides to nominate for election to the Board of Directors shall be counted as one of the Stockholder Nominees. Any Eligible Stockholder requesting that more than one Stockholder Nominee be included in the Corporation’s proxy materials pursuant to this Section 8 shall rank such Stockholder Nominees based on the order in which the Eligible Stockholder desires such Stockholder Nominees to be selected for inclusion in the Corporation’s proxy materials in the event that the total number of Stockholder Nominees requested by Eligible Stockholders to be included in the Corporation’s proxy materials pursuant to this Section 8 exceeds the Permitted Number. In the event that the number of Stockholder Nominees requested by Eligible Stockholders to be included in the Corporation’s proxy materials pursuant to this Section 8 exceeds the Permitted Number, the highest ranking Stockholder Nominee who meets the requirements of this Section 8 from each Eligible Stockholder will be selected for inclusion in the Corporation’s proxy materials until the Permitted Number is reached, going in order of the amount (largest to smallest) of shares of stock of the Corporation each Eligible Stockholder disclosed as owned in its Nomination Notice. If the Permitted Number is not reached after the highest ranking Stockholder Nominee who meets the requirements of this Section 8 from each Eligible Stockholder has been selected, then the next highest ranking Stockholder Nominee who meets the requirements of this Section 8 from each Eligible Stockholder will be selected for inclusion in the Corporation’s proxy materials, and this process will continue as many times as necessary, following the same order each time, until the Permitted Number is reached. Notwithstanding anything to the contrary contained in this Section 8, the Corporation shall not be required to include any Stockholder Nominees in its proxy materials pursuant to this Section 8 for any meeting of stockholders for which the Corporation receives a Nomination Notice (whether or not subsequently withdrawn) and the stockholder by whom or on whose behalf the nomination is to be made does not expressly elect, in a written statement accompanying the Nomination Notice, to have its Stockholder Nominee included in the Corporation’s proxy materials pursuant to this Section 8.
(c) Eligible Stockholder . An “Eligible Stockholder” is a stockholder or a group of no more than 20 stockholders (counting as one stockholder, for this purpose, any two or more funds that are part of the same Qualifying Fund Group (as defined below)) that (i) has Owned (as defined in Section 8(d) of this Article II) continuously for at least three years (the “Minimum Holding Period”) a number of shares of stock of the Corporation that represents at least three percent of the voting power of the outstanding shares of stock as of the date the Nomination Notice is delivered to or mailed and received by the Clerk of the Corporation in accordance with Section 2 of this Article II (the “Required Shares”) and (ii) continues to Own the Required Shares through the date of the annual meeting. A “Qualifying Fund Group” is any two or more funds that are (A) under common management and investment control, (B) under common management and funded primarily by the same employer or (C) a “group of investment companies” as such term is defined in Section 12(d)(1)(G)(ii) of the Investment Company Act of 1940, as amended. Whenever the Eligible Stockholder consists of a group of stockholders (including a group of funds that are part of the same Qualifying Fund Group), (1) each provision in this Section 8 that requires the Eligible Stockholder to provide any written statements, representations, undertakings, agreements or other instruments or to meet any other conditions shall be deemed to require each stockholder (including each individual fund within a Qualifying Fund Group) that is a member of such group to provide such statements, representations, undertakings, agreements or other instruments and to meet such other conditions (except that the members of such group may aggregate the shares that each member has Owned continuously for the Minimum Holding Period in order to meet the three percent Ownership requirement of the “Required Shares” definition) and (2) a breach of any obligation, agreement or representation under this Section 8 by any member of such group shall be deemed a breach by the Eligible Stockholder. No person may be a member of more than one group of stockholders constituting an Eligible Stockholder with respect to any annual meeting.
(d) Definition of Ownership . For purposes of this Section 8, a stockholder shall be deemed to “Own” only those outstanding shares of stock of the Corporation as to which the stockholder possesses both (i) the full voting and investment rights pertaining to the shares and (ii) the full economic interest in (including the opportunity for profit from and risk of loss on) such shares; provided that the number of shares calculated in accordance with clauses (i) and (ii) shall not include any shares (A) sold by such stockholder or any of its affiliates in any transaction that has not been settled or closed, (B) borrowed by such stockholder or any of its affiliates for any purposes or purchased by such stockholder or any of its affiliates pursuant to an agreement to resell, or (C) subject to any option, warrant, forward contract, swap, contract of sale, or other derivative or similar instrument or agreement entered into by such stockholder or any of its affiliates, whether any such instrument or agreement is to be settled with shares or with cash based on the notional amount or value of shares of outstanding capital stock of the Corporation, in any such case which instrument or agreement has, or is intended to have, the purpose or effect of (1) reducing in any manner, to any extent or at any time in the future, such stockholder’s or its affiliates’ full right to vote or direct the voting of any such shares or (2) hedging, offsetting or altering to any degree any gain or loss realized or realizable from maintaining the full economic ownership of such shares by such stockholder or affiliate. For purposes of this Section 8, a beneficial owner shall be considered a “stockholder” and shall “Own” shares held in the name of a nominee or other intermediary so long as such person retains the right to instruct how the shares are voted with respect to the election of directors and possesses the full economic interest in the shares. A stockholder’s Ownership of shares shall be deemed to continue during any period in which (i) the stockholder has loaned such shares, provided that the stockholder has the power to recall such loaned shares on five business days’ notice and includes with its Nomination Notice an agreement that it (A) will promptly recall such loaned shares upon being notified that any of its Stockholder Nominees will be included in the Corporation’s proxy materials and (B) will continue to hold such shares through the date of the annual meeting, or (ii) the stockholder has delegated any voting power by means of a proxy, power of attorney or other instrument or arrangement that is revocable at any time by the stockholder. The terms “Owned,” “Owning” and other variations of the word “Own” shall have correlative meanings. Whether outstanding shares of stock of the Corporation are “Owned” for these purposes shall be determined by the Board of Directors. For purposes of this Section 8, the term “affiliate” or “affiliates” shall have the meaning ascribed thereto under the General Rules and Regulations under the Exchange Act.
(e) Information to be Included with a Nomination Notice . In addition to containing the information, representations and other documents required to be set forth in a Nomination Notice pursuant to Section 2 of this Article II, in order for a Stockholder Nominee to be eligible for inclusion in the Corporation’s proxy materials pursuant to this Section 8, the Nomination Notice must also set forth or be accompanied by the following:
(i) A written statement by the Eligible Stockholder setting forth and certifying as to the number of shares of stock it Owns and has Owned continuously for the Minimum Holding Period;
(ii) one or more written statements from the record holder of the Required Shares (and from each intermediary through which the Required Shares are or have been held during the Minimum Holding Period) verifying that, as of a date within seven calendar days prior to the date the Nomination Notice is delivered to or mailed and received by the Clerk of the Corporation in accordance with Section 2 of this Article II, the Eligible Stockholder Owns, and has Owned continuously for the Minimum Holding Period, the Required Shares, and the Eligible Stockholder’s agreement to provide, within five business days following the later of the record date for the determination of stockholders certified to vote at the annual meeting and the date notice of the record date is first publicly disclosed, one or more written statements from the record holder and such intermediaries verifying the Eligible Stockholder’s continuous Ownership of the Required Shares through the record date;
(iii) a copy of the Schedule 14N that has been or is concurrently being filed with the Securities and Exchange Commission as required by Rule 14a-18 under the Exchange Act;
(iv) a representation and agreement that the Eligible Stockholder (A) will continue to hold the Required Shares through the date of the annual meeting, (B) acquired the Required Shares in the ordinary course of business and not with the intent to change or influence control of the Corporation, and does not presently have such intent, (C) has not nominated and will not nominate for election to the Board of Directors at the annual meeting any person whom it has not requested be included in the Corporation’s proxy materials pursuant to this Section 8, (D) has not engaged and will not engage in, and has not and will not be a “participant” in another person’s, “solicitation” within the meaning of Rule 14a-1(l) under the Exchange Act in support of the election of any individual as a director at the annual meeting other than its Stockholder Nominee(s) or a nominee of the Board of Directors, (E) has not distributed and will not distribute to any stockholder of the Corporation any form of proxy for the annual meeting other than the form distributed by the Corporation, (F) has complied and will comply with all laws and regulations applicable to solicitations and the use, if any, of soliciting material in connection with the annual meeting and (G) has provided and will provide facts, statements and other information in all communications with the Corporation and its stockholders that are or will be true and correct in all material respects and do not and will not omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;
(v) an undertaking that the Eligible Stockholder agrees to (A) assume all liability stemming from any legal or regulatory violation arising out of the Eligible Stockholder’s communications with the stockholders of the Corporation or out of the information provided to the Corporation by or on behalf of the Eligible Stockholder, (B) indemnify and hold harmless the Corporation and each of its directors, officers and employees individually against any liability, loss or damages in connection with any threatened or pending action, suit or proceeding, whether legal, administrative or investigative, against the Corporation or any of its directors, officers or employees arising out of any nomination of any person for election to the Board of Directors submitted by or on behalf of the Eligible Stockholder or any solicitation or other activity in connection therewith, and (C) file with the Securities and Exchange Commission any solicitation or other communication with the stockholders of the Corporation relating to the meeting at which its Stockholder Nominee(s) will be nominated, regardless of whether any such filing is required under Regulation 14A of the Exchange Act or whether any exemption from filing is available for such solicitation or other communication under Regulation 14A of the Exchange Act;
(vi) a written representation and agreement from each Stockholder Nominee that such Stockholder Nominee (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such Stockholder Nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation in such representation and agreement or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with such person’s nomination or service or action as a director that has not been disclosed to the Corporation in such representation and agreement, (C) would be in compliance, if elected as a director of the Corporation, and will comply with the Corporation’s code of business conduct and ethics, corporate governance guidelines, stock ownership and trading policies and guidelines and any other policies or guidelines of the Corporation applicable to directors and (D) will make such other acknowledgments, enter into such agreements and provide such information as the Board of Directors requires of all directors, including promptly submitting all completed and signed questionnaires required of the Corporation’s directors;
(vii) if the Eligible Stockholder consists of a group of stockholders, the designation by all group members of one member of the group that is authorized to receive communications, notices and inquiries from the Corporation and to act on behalf of all members of the group with respect to all matters relating to the request under this Section 8 (including withdrawal of the nomination); and
(viii) if two or more funds that are part of the same Qualifying Fund Group are intended to be counted as one stockholder for purposes of qualifying as an Eligible Stockholder, documentation reasonably satisfactory to the Corporation that demonstrates that the funds are part of the same Qualifying Fund Group.
(f) Additional Required Information . In addition to the information required pursuant to Section 8(e) of this Article II or any other provision of these By-Laws, the Corporation may require (i) any proposed Stockholder Nominee requested to be included in the Corporation’s proxy materials to furnish any other information (A) that may reasonably be requested by the Corporation to determine whether the Stockholder Nominee would be independent under the Independence Standards (as defined in Section 8(i) of this Article II), (B) that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such Stockholder Nominee or (C) that may reasonably be requested by the Corporation to determine the eligibility of such Stockholder Nominee to be included in the Corporation’s proxy materials pursuant to this Section 8 or to serve as a director of the Corporation, and (ii) any Eligible Stockholder to furnish any other information that may reasonably be requested by the Corporation to verify the Eligible Stockholder’s continuous ownership of the Required Shares for the Minimum Holding Period and through the date of the annual meeting.
(g) Supporting Statement . The Eligible Stockholder may, at its option, provide to the Clerk of the Corporation, at the time the Nomination Notice is provided, a written statement, not to exceed 500 words, in support of its Stockholder Nominee(s)’ candidacy (a “Supporting Statement”). Only one Supporting Statement may be submitted by an Eligible Stockholder (including any group of stockholders together constituting an Eligible Stockholder) in support of its Stockholder Nominee(s). Notwithstanding anything to the contrary contained in this Section 8, the Corporation may omit from its proxy materials any information or Supporting Statement (or portion thereof) that it, in good faith, believes would violate any applicable law, rule or regulation.
(h) Correction of Defects; Updates and Supplements . In the event that any information or communications provided by or on behalf of an Eligible Stockholder or a Stockholder Nominee to the Corporation or its stockholders ceases to be true and correct in all material respects or omits to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading, such Eligible Stockholder or Stockholder Nominee, as the case may be, shall promptly notify the Clerk of the Corporation of any such defect and of the information that is required to correct any such defect. Without limiting the forgoing, an Eligible Stockholder must provide immediate notice to the Corporation if the Eligible Stockholder ceases to Own any of the Required Shares prior to the date of the annual meeting. For the avoidance of doubt, no notification, update or supplement provided pursuant to this Section 8(h) shall be deemed to cure any defect in any previously provided information or communications or limit the remedies available to the Corporation relating to any such defect (including the right to omit a Stockholder Nominee from its proxy materials pursuant to this Section 8).
(i) Stockholder Nominee Eligibility . Notwithstanding anything to the contrary contained in this Section 8, the Corporation shall not be required to include in its proxy materials, pursuant to this Section 8, a Stockholder Nominee (i) who would not be an independent director under the rules and listing standards of the United States securities exchanges upon which the capital stock of the Corporation is listed or traded, any applicable rules of the Securities and Exchange Commission, or any publicly disclosed standards used by the Board of Directors in determining and disclosing the independence of the Corporation’s directors (collectively, the “Independence Standards”), (ii) whose election as a member of the Board of Directors would cause the Corporation to be in violation of these By-Laws, the Articles of Organization, the rules and listing standards of the United States securities exchanges upon which the capital stock of the Corporation is listed or traded, or any applicable law, rule or regulation, (iii) who is or has been, within the past three years, an officer or director of a competitor, as defined in Section 8 of the Clayton Antitrust Act of 1914, (iv) who is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or has been convicted in such a criminal proceeding within the past 10 years, (v) who is subject to any order of the type specified in Rule 506(d) of Regulation D promulgated under the Securities Act of 1933, as amended, or (vi) who shall have provided any information to the Corporation or its stockholders that was untrue in any material respect or that omitted to state a material fact necessary to make the statements made, in light of the circumstances in which they were made, not misleading.
(j) Omission and Removal of Stockholder Nominees . Notwithstanding anything to the contrary set forth herein, if (i) a Stockholder Nominee and/or the applicable Eligible Stockholder breaches any of its representations, agreements or undertakings or fails to comply with any of its obligations under this Section 8 or Section 2 of this Article II, or (ii) a Stockholder Nominee otherwise becomes ineligible for inclusion in the Corporation’s proxy materials pursuant to this Section 8 or dies, becomes disabled or otherwise becomes ineligible or unavailable for election at the annual meeting, in each case as determined by the Board of Directors or the presiding officer of the annual meeting, then (A) the Corporation may omit or, to the extent feasible, remove the information concerning such Stockholder Nominee and the related Supporting Statement from its proxy materials and otherwise communicate to its stockholders that such Stockholder Nominee will not be eligible for election at the annual meeting and, (B) the Corporation shall not be required to include in its proxy materials any successor or replacement nominee proposed by the applicable Eligible Stockholder or any other Eligible Stockholder.
(k) Restrictions on Re-Nominations . Any Stockholder Nominee who is included in the Corporation’s proxy materials for a particular annual meeting of stockholders but either (i) withdraws from or becomes ineligible or unavailable for election at the annual meeting, or (ii) does not receive at least 10% of the votes cast in favor of such Stockholder Nominee’s election, will be ineligible to be included in the Corporation’s proxy materials pursuant to this Section 8 for the next two annual meetings of stockholders.
(l) General . This Section 8 provides the exclusive method for a stockholder to include nominees for election to the Board of Directors in the Corporation’s proxy materials.

1




Vertex Reports First Quarter 2016 Financial Results

-First quarter 2016 cystic fibrosis product revenues of $394 million ; $223 million for ORKAMBI ® (lumacaftor/ivacaftor) and $171 million for KALYDECO ® (ivacaftor)-

-Provides 2016 guidance for ORKAMBI product revenues of $1.0 to $1.1 billion; increases 2016 guidance for KALYDECO product revenues to $685 to $705 million-

-Provides update on approved CF medicines and pipeline of investigational medicines-

BOSTON -- Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today reported consolidated financial results for the quarter ended March 31, 2016 and provided an update on its approved CF medicines and other investigational medicines. Vertex also provided financial guidance for 2016 ORKAMBI ® net revenues and increased its prior guidance for 2016 KALYDECO ® net revenues. Key financial results include:

 
Three Months Ended March 31,
 
 
 
2016
 
2015
 
% Change
 
(in millions, except per share and percentage data)
ORKAMBI product revenues, net
$
223

 
$

 
N/A

KALYDECO product revenues, net
$
171

 
$
130

 
31
 %
TOTAL CF product revenues, net
$
394

 
$
130

 
202
 %
 
 
 
 
 
 
 
 
GAAP net loss
$
(42
)
 
$
(199
)
 
(79
)%
GAAP net loss per share
$
(0.17
)
 
$
(0.83
)
 
(80
)%
Non-GAAP net income (loss)
$
22

 
$
(148
)
 
N/A

Non-GAAP net income (loss) per share
$
0.09

 
$
(0.62
)
 
N/A


"2016 marks an important transition for Vertex following the launch of ORKAMBI. With recent approvals and label expansions, there are now approximately 27,000 people with CF eligible to take ORKAMBI or KALYDECO. The number of CF patients eligible for and initiating treatment is driving significant revenue growth for a second straight year, and we expect this trend to continue in 2017 and beyond," said Jeffrey Leiden, M.D., Ph.D., Chairman, President and Chief Executive Officer of Vertex. “In addition, we believe our portfolio of approved and pipeline medicines has the potential to treat the vast majority of people with CF. We remain focused on investing to create transformative future medicines and generating continued earnings growth in the years ahead.”
  


1



CF Medicines and Pipeline Update
Vertex today provided the following updates for ORKAMBI, KALYDECO and the company’s progress toward developing new medicines with the goal of treating all people with CF:

ORKAMBI
Additional Regulatory Approvals Support Expansion Efforts: During the first quarter of 2016, Vertex received regulatory approval for ORKAMBI for the treatment of people with CF ages 12 and older who have two copies of the F508del mutation in Canada and Australia, where together there are approximately 2,500 people who are eligible for treatment with ORKAMBI. Vertex has now begun the reimbursement approval process in these countries.

Supplemental New Drug Application in Children Ages 6 to 11: In late March 2016, Vertex submitted a supplemental New Drug Application (sNDA) to the FDA for the approval of ORKAMBI for treatment of children with CF ages 6 to 11 who have two copies of the F508del mutation. The submission included a request for Priority Review, which if granted would shorten the FDA's anticipated review time from 10 to six months. There are approximately 2,400 children ages 6 to 11 who have two copies of the F508del mutation in the U.S.

Vertex has submitted data from an open label Phase 3 clinical safety study of ORKAMBI in children ages 6 to 11 who have two copies of the F508del mutation for presentation at the 39th European Cystic Fibrosis Society Conference (ECFS), June 8 - 11 in Basel, Switzerland.

Enrollment Complete in Phase 3 Study of Children Ages 6 to 11: Vertex has completed enrollment in a six-month Phase 3 efficacy study evaluating ORKAMBI in approximately 200 children ages 6

2



to 11 who have two copies of the F508del mutation. Pending data from the study, Vertex plans to submit a Marketing Authorization Application (MAA) variation in Europe in the first half of 2017 for approval of ORKAMBI for use in this age group. There are approximately 3,400 children ages 6 to 11 who have two copies of the F508del mutation in the European Union.

KALYDECO
Study in Children Under Two Years of Age: Vertex has initiated a Phase 3 clinical study of KALYDECO in children under 2 years of age to evaluate the effect of KALYDECO on markers of CF in young children. The study will utilize a weight-based dose of KALYDECO granules that can be mixed in soft foods or liquids. The study will enroll infants with one of the 10 mutations for which KALYDECO is currently approved.

Regulatory Filing for Patients with Residual Function Mutations: In October 2015, Vertex submitted an sNDA for approval of KALYDECO for treatment of people with CF ages 2 and older who have one of 23 residual function mutations. The company is in ongoing discussions with the FDA regarding a Complete Response Letter it received in February 2016. There are approximately 1,500 people ages 2 and older in the U.S. who have one of the 23 residual function mutations included in the sNDA.

Pipeline of Investigational Medicines for CF
VX-661 - Broad Phase 3 program ongoing in multiple groups of people with CF
Vertex provided the following updates on the Phase 3 studies of the investigational combination of VX-661 and ivacaftor in multiple different groups of people with CF who have at least one copy of the F508del mutation:

3



Enrollment in the study in people with two copies of the F508del mutation is expected to be complete in mid-2016, and data from this Phase 3 study are expected in early 2017.

Enrollment is ongoing in the Phase 3 study of VX-661 in combination with ivacaftor in patients with one copy of the F508del mutation and a second mutation that results in a gating defect. Vertex plans to complete enrollment of this study in late 2016 or early 2017.

Vertex has revised its enrollment target for the Phase 3 study of VX-661 in combination with ivacaftor in patients with one copy of the F508del mutation and a second mutation that results in residual CFTR function. The original expectation was for up to 300 patients to enroll in this study. Vertex now plans to enroll approximately 200 patients. Enrollment is expected to be complete in the second half of 2016.

Enrollment is complete in Part A of the study in people with one copy of the F508del mutation and a second mutation that results in minimal CFTR function. An interim futility analysis of efficacy data from Part A of this study is expected to be completed in the third quarter of 2016.

In addition to evaluating the efficacy of the combination regimen, these Phase 3 studies will also provide safety data on the combination of VX-661 and ivacaftor to support the planned development of a triple combination regimen that includes a next-generation corrector in combination with VX-661 and ivacaftor.

VX-371 - Enrollment ongoing in Phase 2 study of VX-371 in combination with ORKAMBI
Vertex today announced data from an exploratory Phase 2, 14-day study of its inhaled epithelial sodium channel (ENaC) inhibitor, VX-371 (P-1037), being developed in collaboration with Parion

4



Sciences. The study dosed 142 people ages 12 and older with a confirmed diagnosis of CF. There was no restriction based on CFTR mutation. 136 people completed the study. Patients were not using any CFTR modulator therapy immediately before or during the study. The primary endpoint of the study was safety compared to placebo. Secondary endpoints evaluated the effect on mean absolute forced expiratory volume in one second (FEV 1 ) and patient-reported respiratory symptoms as reported in the CF questionnaire-revised (CFQ-R). The study met its primary safety endpoint, and safety data from the study showed that VX-371 was generally well tolerated. There were no statistically significant changes in FEV 1 or CFQ-R for those who received VX-371.

The clinical safety data announced today provide support for the company's ongoing placebo-controlled Phase 2a study evaluating VX-371 in combination with ORKAMBI, both with and without the addition of hypertonic saline. This study is expected to enroll approximately 150 people with CF ages 12 and older who have two copies of the F508del mutation. The primary endpoints of the Phase 2a study are safety and mean absolute change from baseline in FEV 1 at day 28 compared to placebo.

In vitro, VX-371 showed a meaningful change in cilia beat frequency when VX-371 was used in combination with ORKAMBI in human bronchial epithelial cells with two copies of the F508del mutation, but did not show a meaningful change in cilia beat frequency when VX-371 was used alone.

Next-Generation Correctors - Phase 1 studies in healthy volunteers progressing as planned
In the fourth quarter of 2015, Vertex initiated clinical development of two next-generation correctors known as VX-152 and VX-440. Both VX-152 and VX-440 are being evaluated alone and as part of a triple combination with VX-661 and ivacaftor in ongoing Phase 1 studies in healthy volunteers.


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Pending successful completion of the Phase 1 studies of VX-152 and VX-440, the company expects to begin Phase 2 proof-of-concept studies in combination with VX-661 and ivacaftor in the second half of 2016.

CRISPR Collaboration - Gene editing collaboration focused on discovering potential treatments to address the mutations and genes known to cause and contribute to CF
In October 2015, Vertex entered into a strategic research collaboration with CRISPR Therapeutics focused on the use of CRISPR's gene editing technology, known as CRISPR-Cas9, to discover and develop potential new treatments aimed at the underlying genetic causes of human disease. The collaboration will evaluate the use of CRISPR-Cas9 across multiple diseases where targets have been validated through human genetics. As part of the collaboration, Vertex and CRISPR will evaluate the use of CRISPR-Cas9 to potentially correct the mutations in the CFTR gene known to result in the defective protein that causes CF and to edit other genes that contribute to the disease.

Other Research and Development Programs
Beyond CF, Vertex is advancing research and development programs focused on the treatment of key mechanisms in serious diseases. The company today provided the following updates to its pipeline programs:

Oncology
VX-970: VX-970 is an inhibitor of ATR, a critical regulator of the DNA damage repair system. Vertex presented data from a Phase 1 trial of VX-970 in combination with cisplatin in patients with advanced solid tumors at the Annual Association for Cancer Research (AACR) meeting on April 17, 2016.


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Vertex is currently conducting two Phase 1/2 studies that are enrolling specific cohorts of triple-negative breast cancer patients and non-small cell lung cancer patients. In these studies, VX-970 is being dosed in combination with commonly used DNA-damaging repair therapies.

Vertex has also entered into two cooperative research and development agreements (CRADAs) with the National Cancer Institute to support evaluation of VX-970 across other types of cancers. The CRADA enables NCI to conduct multiple clinical studies that will evaluate treatment with VX-970 in people with small cell lung, head and neck, bladder, ovarian and other cancers.

Pain
VX-150: Vertex is developing VX-150 as a potential medicine for the treatment of pain. VX-150 is designed to block pain signaling through inhibition of a sodium channel known as NaV 1.8. In the first quarter of 2016, Vertex initiated a six-week crossover Phase 2 proof-of-concept study of VX-150 in approximately 100 people with symptomatic osteoarthritis of the knee. Vertex expects to complete enrollment of this study in the second half of 2016.


Acute Spinal Cord Injury
VX-210: In the first quarter of 2016, Vertex initiated a randomized, double-blind, placebo controlled Phase 2b/3 study to evaluate the efficacy and safety of VX-210 in patients with certain acute cervical spinal cord injuries. Vertex is developing VX-210 as a potential medicine for acute spinal cord injury. VX-210 is designed to inhibit a protein known as Rho that blocks neural regeneration after injury.
 
First Quarter 2016 Financial Highlights
Revenues:

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Net product revenues from ORKAMBI were $223.1 million . ORKAMBI was launched in the U.S. in July 2015.
Net product revenues from KALYDECO were $170.5 million , compared to $130.2 million for the first quarter of 2015 .
Expenses:
Non-GAAP research and development (R&D) expenses were $222.0 million compared to $177.2 million for the first quarter of 2015 . The increase was primarily driven by increased investment to progress our portfolio of CF medicines. GAAP R&D expenses, including stock-based compensation expense, were $255.9 million compared to $215.6 million for the first quarter of 2015 .
Non-GAAP sales, general and administrative (SG&A) expenses were $83.7 million compared to $69.1 million for the first quarter of 2015 . The increase was primarily driven by increased investment to support the global launch of ORKAMBI. GAAP SG&A expenses, including stock-based compensation expense, were $105.2 million compared to $85.9 million for the first quarter of 2015 .
Net Income (Loss) Attributable to Vertex:
Non-GAAP net income was $22.4 million , or $0.09 per diluted share, compared to a non-GAAP net loss of $148.4 million , or $0.62 per diluted share, for the first quarter of 2015 . The GAAP net loss , including stock-based compensation expense, was $41.6 million , or $0.17 per diluted share, compared to Vertex's GAAP net loss of $198.6 million , or $0.83 per diluted share, for the first quarter of 2015 .
Cash Position:
As of March 31, 2016 , Vertex had $1.03 billion in cash, cash equivalents and marketable securities compared to $1.04 billion in cash, cash equivalents and marketable securities as of December 31, 2015 .
As of March 31, 2016 , Vertex had $300 million outstanding from a credit agreement, repayable by the end of the third quarter of 2017. The agreement allows for the facility to increase to up to $500 million.
2016 Financial Guidance:

8



Vertex today provided 2016 revenue guidance for ORKAMBI and increased 2016 revenue guidance for KALYDECO. The company also reiterated guidance for its 2016 combined non-GAAP R&D and SG&A expenses. The guidance is summarized below:
ORKAMBI: The company anticipates total 2016 product revenues for ORKAMBI of $1.0 to $1.1 billion. This guidance is based on the company's understanding of treatment patterns from the launch of ORKAMBI to date, including:
Uptake: Approximately 65% of the 8,500 eligible patients in the U.S. have initiated treatment as of March 31, 2016. Vertex continues to expect the vast majority of eligible patients ages 12 and older in the U.S. will initiate treatment by the end of 2016.
Persistence: Of the patients who have started on treatment, approximately 15% discontinued treatment within the first three months of initiation. The company projects that the proportion of all patients who initiate and remain on treatment will stabilize at approximately 70% to 80%.
Compliance: The overall compliance rate, which reflects the number of pills actually taken by a patient in a given month, is expected to be between 70% to 80%.
2016 ORKAMBI guidance also reflects potential revenues from the anticipated approval of ORKAMBI in the U.S. for the treatment of people ages 6 to 11 who have two copies of the F508del mutation in the second half of 2016 and revenues from sales of ORKAMBI outside the U.S., primarily in Germany.

KALYDECO: Vertex today increased its guidance for 2016 revenues of KALYDECO. The company now expects product revenues of $685 to $705 million. The prior range, provided on January 10, 2016, was for KALYDECO product revenues of $670 to $690 million for 2016.
The change in KALYDECO guidance reflects:
A continued increase in the number of patients initiating treatment with KALYDECO globally
A reduced impact from the VX-661 Phase 3 program
2016 guidance for KALYDECO currently excludes any revenues related to the potential approval of KALYDECO for people in the U.S.who have residual function mutations.

9



.

Operating Expenses, Excluding Cost of Revenues (Combined Non-GAAP R&D and SG&A Expenses): Vertex continues to expect that its combined non-GAAP R&D and SG&A expenses in 2016 will be in the range of $1.18 to $1.23 billion . Vertex's expected non-GAAP R&D and SG&A expenses exclude stock-based compensation expense and certain other expenses.
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 exclude stock-based compensation expense, costs and credits related to the relocation of the company's corporate headquarters and hepatitis C-related revenues and costs and other adjustments. 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. A reconciliation of the GAAP financial results to non-GAAP financial results is included in the attached financial information.


10



Vertex Pharmaceuticals Incorporated
First Quarter Results
Consolidated Statements of Operations Data
(in thousands, except per share amounts)
(unaudited)
 
Three Months Ended March 31,
 
2016
 
2015
Revenues:
 
 
 
Product revenues, net
$
394,410

 
$
130,875

Royalty revenues
3,596

 
6,792

Collaborative revenues
74

 
842

Total revenues
398,080

 
138,509

Costs and expenses:
 
 
 
Cost of product revenues (Note 1)
49,789

 
9,381

Royalty expenses
860

 
2,926

Research and development expenses
255,860

 
215,599

Sales, general and administrative expenses
105,214

 
85,860

Restructuring expenses (income)
687

 
(3,272
)
Total costs and expenses
412,410

 
310,494

Loss from operations
(14,330
)
 
(171,985
)
Interest expense, net
(20,698
)
 
(21,307
)
Other income (expenses), net
4,411

 
(5,113
)
Loss from operations before provision for income taxes
(30,617
)
 
(198,405
)
Provision for income taxes
5,485

 
299

Net loss
(36,102
)
 
(198,704
)
(Income) loss attributable to noncontrolling interest
(5,529
)
 
98

Net loss attributable to Vertex
$
(41,631
)
 
$
(198,606
)
 
 
 
 
Amounts per share attributable to Vertex common shareholders:
 
 
 
Net loss:
 
 
 
Basic and diluted
$
(0.17
)
 
$
(0.83
)
Shares used in per share calculations:
 
 
 
Basic and diluted
243,831

 
239,493


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Reconciliation of GAAP to Non-GAAP Net Income/(Loss)
First Quarter Results
(in thousands, except per share amounts)
(unaudited)

 
Three Months Ended March 31,
 
2016
 
2015
GAAP loss attributable to Vertex
$
(41,631
)
 
$
(198,606
)
Stock-based compensation expense
55,472

 
57,384

Real estate restructuring costs and income (Note 2)
436

 
(3,567
)
HCV related revenues and costs (Note 3)
(1,436
)
 
(4,469
)
Other adjustments (Notes 4 and 5)
9,581

 
882

Non-GAAP net income (loss) attributable to Vertex
$
22,422

 
$
(148,376
)
 

 
 
Amounts per diluted share attributable to Vertex common shareholders:
 
 
 
GAAP
$
(0.17
)
 
$
(0.83
)
Non-GAAP
$
0.09

 
$
(0.62
)
Shares used in diluted per share calculations:
 
 
 
GAAP
243,831

 
239,493

Non-GAAP
246,680

 
239,493



12




Reconciliation of GAAP to Non-GAAP Revenues and Expenses
First Quarter Results
(in thousands)
(unaudited)

 
Three Months Ended March 31,
 
2016
 
2015
GAAP total revenues
$
398,080

 
$
138,509

HCV related revenues (Note 3)
(851
)
 
(2,869
)
Other adjustments (Note 4)
(74
)
 
(200
)
Non-GAAP total revenues
$
397,155

 
$
135,440

 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
2016
 
2015
GAAP cost of product revenues and royalty expenses
$
50,649

 
$
12,307

HCV related costs (Note 3)
(139
)
 
(1,596
)
Non-GAAP cost of product revenues and royalty expenses
$
50,510

 
$
10,711

 
 
 
 
GAAP research and development expenses
$
255,860

 
$
215,599

Stock-based compensation expense
(34,448
)
 
(38,217
)
HCV related costs (Note 3)
826

 
488

Other adjustments (Note 4)
(192
)
 
(696
)
Non-GAAP research and development expenses
$
222,046

 
$
177,174

 
 
 
 
GAAP sales, general and administrative expenses
$
105,214

 
$
85,860

Stock-based compensation expense
(21,024
)
 
(19,167
)
HCV related costs (Note 3)
32

 
2,904

Other adjustments (Note 4)
(543
)
 
(448
)
Non-GAAP sales, general and administrative expenses
$
83,679

 
$
69,149

 
 
 
 
Combined non-GAAP R&D and SG&A expenses
$
305,725

 
$
246,323

 
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
2016
 
2015
GAAP interest expense, net and other expense, net
$
(16,287
)
 
$
(26,420
)
Other adjustments (Note 4)
211

 

Non-GAAP interest expense, net and other expense, net
$
(16,076
)
 
$
(26,420
)
 
 
 
 
GAAP provision for income taxes
$
5,485

 
$
299

Other adjustments (Note 4)
(3,063
)
 
63

Non-GAAP provision for income taxes
$
2,422

 
$
362


13




Condensed Consolidated Balance Sheets Data
(in thousands)
(unaudited)

 
March 31, 2016
 
December 31, 2015
Assets
 
 
 
Cash, cash equivalents and marketable securities
$
1,025,618

 
$
1,042,462

Restricted cash and cash equivalents (VIE) (Note 5)
76,273

 
78,910

Accounts receivable, net
181,878

 
177,639

Inventories
63,200

 
57,207

Property and equipment, net
690,521

 
697,715

Intangible assets and goodwill
334,724

 
334,724

Other assets
115,692

 
109,930

      Total assets
$
2,487,906

 
$
2,498,587

 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
Other liabilities
$
397,379

 
$
426,482

Deferred tax liability
112,259

 
110,439

Accrued restructuring expense
13,935

 
15,358

Deferred revenues
23,195

 
26,010

Capital leases
56,178

 
58,468

Fan Pier lease obligation
472,940

 
473,043

Senior secured term loan
295,822

 
295,159

Shareholders' equity
1,116,198

 
1,093,628

      Total liabilities and shareholders' equity
$
2,487,906

 
$
2,498,587

 
 
 
 
Common shares outstanding
247,287

 
246,307


14



Note 1 : Cost of product revenues includes the second and final $13.9 million commercial milestone that was earned by CFFT in the first quarter of 2016 related to sales of ORKAMBI.
Note 2 : The company excludes from its non-GAAP income (loss) attributable to Vertex restructuring expense (income). In the three months ended March 31, 2016 , " Real estate restructuring costs and income " consisted of restructuring charges, related to the company's relocation from Cambridge to Boston, Massachusetts. In the three months ended March 31, 2015 , " Real estate restructuring costs and income " consisted of restructuring credits of $3.6 million primarily related to the company's relocation from Cambridge to Boston, Massachusetts.
Note 3 : In the three months ended March 31, 2016 and 2015 , " HCV related revenues and costs " included net product revenues from Incivek, royalty revenues from Incivo, HCV collaborative revenues and operating costs and expenses related to HCV.  The Company withdrew Incivek from the market in the United States in 2014.
Note 4 : In the three months ended March 31, 2016 , " Other adjustments " was primarily attributable to changes in the fair value of contingent milestone payments and royalties payable by Vertex to two variable interest entities ("VIEs"). In the three months ended March 31, 2015 , " Other adjustments " was primarily attributable to development costs associated with VX-509.
Note 5 : The company consolidates the financial statements of two of its collaborators as VIEs as of March 31, 2016 and December 31, 2015 . These VIEs are consolidated because Vertex has licensed the rights to develop the company's collaborators' most significant intellectual property assets. The company's interest and obligations with respect to these VIEs' assets and liabilities are limited to those accorded to the company in its collaboration agreements with these collaborators.  Restricted cash and cash equivalents (VIE) reflects the VIEs’ cash and cash equivalents, which Vertex does not have any interest in and which will not be used to fund the collaboration.  Each reporting period Vertex estimates the fair value of the contingent milestone payments and royalties payable by Vertex to these collaborators. Any increase in the fair value of these contingent milestone and royalty payments results in a decrease in net income attributable to Vertex (or an increase in net loss attributable to Vertex) on a dollar-for-dollar basis. The fair value of contingent milestone and royalty payments is evaluated each quarter and any change in the fair value is reflected in the company's statement of operations.


15



U.S. INDICATION AND IMPORTANT SAFETY INFORMATION FOR ORKAMBI ® (lumacaftor/ivacaftor) TABLETS

ORKAMBI is a combination of lumacaftor and ivacaftor indicated for the treatment of cystic fibrosis (CF) in patients age 12 years and older who are homozygous for the F508del mutation in the CFTR gene. The efficacy and safety of ORKAMBI have not been established in patients with CF other than those homozygous for the F508del mutation.

Worsening of liver function, including hepatic encephalopathy, in patients with advanced liver disease has been reported in some patients with CF while receiving ORKAMBI.

Serious adverse reactions related to elevated transaminases have been reported in patients with CF receiving ORKAMBI and, in some instances, associated with concomitant elevations in total serum bilirubin.

Respiratory events (e.g., chest discomfort, shortness of breath, and chest tightness) were observed more commonly in patients during initiation of ORKAMBI compared to those who received placebo. Clinical experience in patients with percent predicted FEV1 < 40 is limited, and additional monitoring of these patients is recommended during initiation of therapy.

Co-administration of ORKAMBI with sensitive CYP3A substrates or CYP3A substrates with a narrow therapeutic index is not recommended as ORKAMBI may reduce their effectiveness. ORKAMBI may substantially decrease hormonal contraceptive exposure, reducing their effectiveness and increasing the incidence of menstruation-associated adverse reactions. Co-administration with strong CYP3A inducers is not recommended as they may reduce the therapeutic effectiveness of ORKAMBI.

Abnormalities of the eye lens (cataracts) have been reported in pediatric patients treated with ivacaftor, a component of ORKAMBI.

The most common adverse reactions associated with ORKAMBI include shortness of breath, sore throat, nausea, diarrhea, upper respiratory tract infection, fatigue, chest tightness, increased blood creatinine phosphokinase, rash, flatulence, runny nose, and influenza.

Please see the full prescribing information for ORKAMBI.


U.S. INDICATION AND IMPORTANT SAFETY INFORMATION FOR KALYDECO ® (ivacaftor)

KALYDECO is a cystic fibrosis transmembrane conductance regulatory (CFTR) potentiator indicated for the treatment of cystic fibrosis (CF) in patients age 2 years and older who have one of the following mutations in the CFTR gene: G551D, G1244E, G1349D, G178R, G551S, S1251N, S1255P, S549N, S549R or R117H.

KALYDECO is not effective in patients with CF with 2 copies of the F508del mutation (F508del/F508del) in the CFTR gene. The safety and efficacy of KALYDECO in children with CF younger than 2 years of age have not been studied. The use of KALYDECO in children under the age of 2 years is not recommended.

High liver enzymes (transaminases; ALT and AST) have been reported in patients with CF receiving KALYDECO.


16



Use of KALYDECO with medicines that are strong CYP3A inducers substantially decreases exposure of KALYDECO and may diminish effectiveness. Therefore, co-administration is not recommended. The dose of KALYDECO must be adjusted when used concomitantly with strong and moderate CYP3A inhibitors or when used in patients with moderate or severe hepatic disease.

Cases of non-congenital lens opacities/cataracts have been reported in pediatric patients treated with KALYDECO.

The most common side effects associated with KALYDECO include headache; upper respiratory tract infection (common cold), including sore throat, nasal or sinus congestion, and runny nose; stomach (abdominal) pain; diarrhea; rash; nausea; and dizziness.

Please see the full prescribing information for KALYDECO

About Vertex
Vertex is a global biotechnology company that aims to discover, develop and commercialize innovative medicines so people with serious diseases can lead better lives. In addition to our clinical development programs focused on cystic fibrosis, Vertex has more than a dozen ongoing research programs aimed at other serious and life-threatening diseases.

Founded in 1989 in Cambridge, Mass., Vertex today has research and development sites and commercial offices in the United States, Europe, Canada and Australia. For six years in a row, Science magazine has named Vertex one of its Top Employers in the life sciences. For additional information and the latest updates from the company, please visit www.vrtx.com.

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. Leiden's statements in the second paragraph of the press release, the information provided in the section captioned "2016 Financial Guidance” and statements regarding (i) 2016 guidance for ORKAMBI and KALYDECO, (ii) the expected timing and clinical trial designs for ongoing and planned clinical studies of ORKAMBI, KALYDECO, VX-661 VX-371, VX-152, VX-440, VX-970, VX-150 and VX-210, (iii) Vertex's expectations regarding uptake, persistence and compliance with respect to ORKAMBI, (iv) the timing of regulatory applications, including sNDAs and MAAs and the status of interactions with regulatory authorities and (v) Vertex's plans to submit and/or present data at scientific conferences. 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 factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements. Those risks and uncertainties include, among other things, that the company's expectations regarding its 2016 revenues and expenses may be incorrect (including because one or more of the company's assumptions underlying its expectations may not be realized), that data from the company's development programs may not support registration or further development of its compounds due to safety, efficacy or other reasons, and other risks listed under Risk Factors in Vertex's annual report and 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.



17



Conference Call and Webcast
The company will host a conference call and webcast today at 5:00 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-GEN)

Vertex Contacts:
Investors:
Michael Partridge, 617-341-6108
or
Eric Rojas, 617-961-7205
or
Zach Barber, 617-341-6470

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





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