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Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2012	Jul. 27, 2012
Document and Entity Information
Entity Registrant Name	VERTEX PHARMACEUTICALS INC / MA
Entity Central Index Key	0000875320
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		215,807,482
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Revenues:
Product revenues, net	$ 373,273	$ 74,535	$ 748,648	$ 74,535
Royalty revenues	33,480	10,010	72,461	16,071
Collaborative revenues	11,552	29,879	35,933	97,480
Total revenues	418,305	114,424	857,042	188,086
Costs and expenses:
Cost of product revenues (Note 4)	104,549	5,404	130,467	5,404
Royalty expenses	9,874	3,902	23,167	6,568
Research and development expenses	196,544	173,604	392,915	332,216
Sales, general and administrative expenses	117,514	96,663	228,660	168,186
Restructuring expense	594	741	954	1,501
Total costs and expenses	429,075	280,314	776,163	513,875
Income (loss) from operations	(10,770)	(165,890)	80,879	(325,789)
Interest income	560	202	924	1,604
Interest expense	(4,195)	(6,962)	(8,300)	(18,963)
Change in fair value of derivative instruments		(2,220)		(7,818)
Income (loss) before provision for income taxes	(14,405)	(174,870)	73,503	(350,966)
Provision for income taxes	20,063	24,448	20,095	24,448
Net income (loss)	(34,468)	(199,318)	53,408	(375,414)
Net income (loss) attributable to noncontrolling interest (Alios)	30,463	(25,249)	26,749	(25,249)
Net income (loss) attributable to Vertex	$ (64,931)	$ (174,069)	$ 26,659	$ (350,165)
Net income (loss) per share attributable to Vertex common shareholders:
Basic (in dollars per share)	$ (0.31)	$ (0.85)	$ 0.13	$ (1.72)
Diluted (in dollars per share)	$ (0.31)	$ (0.85)	$ 0.12	$ (1.72)
Shares used in per share calculations:
Basic (in shares)	211,344	204,413	209,681	203,377
Diluted (in shares)	211,344	204,413	212,957	203,377

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Comprehensive income (loss)	$ (34,513)	$ (199,392)	$ 53,788	$ (375,054)
Comprehensive income (loss) attributable to noncontrolling interest (Alios)	30,463	(25,249)	26,749	(25,249)
Comprehensive income (loss) attributable to Vertex	$ (64,976)	$ (174,143)	$ 27,039	$ (349,805)

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the reporting entity. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, but excludes any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 8, 9, 10, 11, 12, 13, 14
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 30
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph A5
-Appendix A

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6920043&loc=d3e557-108580

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Net Income
-URI http://asc.fasb.org/extlink&oid=6518256

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Other Comprehensive Income
-URI http://asc.fasb.org/extlink&oid=6519514

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 220
-SubTopic 10
-Section 45
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6920043&loc=d3e540-108580

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Comprehensive Income
-URI http://asc.fasb.org/extlink&oid=6508144

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Accounting Research Bulletin (ARB)
-Number 51
-Paragraph 38
-Subparagraph c(3)
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to noncontrolling interests, if any. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References + Details

- Definition

The change in equity [net assets] of a business enterprise during a period from transactions and other events and circumstances from non-owner sources which are attributable to the economic entity, including both controlling (parent) and noncontrolling interests. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, including any and all transactions which are directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent.

+ References + Details

Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands

Jun. 30, 2012

Dec. 31, 2011

Current assets:

Cash and cash equivalents

$ 454,061

$ 475,320

Marketable securities, available for sale

769,273

493,602

Restricted cash and cash equivalents (Alios)

^[1]

56,024

51,878

Accounts receivable, net

185,618

183,135

Inventories

87,805

112,430

Prepaid expenses and other current assets

^[1]

40,524

14,889

Total current assets

1,593,305

1,331,254

Restricted cash

34,090

Property and equipment, net

^[1]

272,561

133,176

Intangible assets

^[1]

663,500

Goodwill

^[1]

30,992

Other assets

^[1]

10,408

11,268

Total assets

2,604,856

2,204,280

Current liabilities:

Accounts payable

^[1]

59,352

74,642

Accrued expenses and other current liabilities

^[1]

271,464

252,299

Accrued interest

^[1]

3,363

Deferred revenues, current portion

27,296

45,037

Accrued restructuring expense, current portion

4,681

4,932

Other liabilities, current portion

13,353

Income taxes payable (Alios)

^[1]

201

12,075

Total current liabilities

379,710

392,348

Deferred revenues, excluding current portion

110,072

118,095

Accrued restructuring expense, excluding current portion

20,149

21,381

Convertible senior subordinated notes (due 2015)

400,000

Deferred tax liability

^[1]

263,017

243,707

Construction financing obligation

160,291

55,950

Other liabilities, excluding current portion

^[1]

28,010

7,287

Total liabilities

1,361,249

1,238,768

Commitments and contingencies:

Redeemable noncontrolling interest (Alios)

^[1]

37,914

37,036

Shareholders' equity:

Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued and outstanding at June 30, 2012 and December 31, 2011

Common stock, $0.01 par value; 300,000,000 shares authorized; 215,434,666 and 209,303,995 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively

2,133

2,072

Additional paid-in capital

4,424,489

4,200,659

Accumulated other comprehensive loss

(673)

(1,053)

Accumulated deficit

(3,388,176)

(3,414,835)

Total Vertex shareholders' equity

1,037,773

786,843

Noncontrolling interest (Alios)

^[1]

167,920

141,633

Total shareholders' equity

1,205,693

928,476

Total liabilities and shareholders' equity

$ 2,604,856

$ 2,204,280

[1]

Amounts include the assets and liabilities of Vertex's variable interest entity ("VIE"), Alios BioPharma, Inc. ("Alios"). Vertex's interests and obligations with respect to the VIE's assets and liabilities are limited to those accorded to Vertex in its agreement with Alios. See Note C, "Collaborative Arrangements," to these condensed consolidated financial statements for amounts.

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2012	Dec. 31, 2011
Condensed Consolidated Balance Sheets
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	215,434,666	209,303,995
Common stock, shares outstanding	215,434,666	209,303,995

Condensed Consolidated Statements of Shareholders' Equity and Noncontrolling Interest - USD ($) $ in Thousands	Total	Total Vertex Shareholders' Equity	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Noncontrolling Interest (Alios)	Redeemable Noncontrolling Interest (Alios)
Balance at Dec. 31, 2010	$ 503,973	$ 503,973	$ 2,016	$ 3,947,433	$ (1,067)	$ (3,444,409)
Balance (in shares) at Dec. 31, 2010			203,523
Increase (Decrease) in Stockholders' Equity
Unrealized holding gains on marketable securities	1	1			1
Foreign currency translation adjustment	359	359			359
Net income (loss)	(375,414)	(350,165)				(350,165)	$ (25,249)
Issuances of common stock:
Benefit plans	93,087	93,087	$ 39	93,048
Benefit plans (in shares)			3,950
Stock-based compensation expense	60,294	60,294		60,294
Alios noncontrolling interest upon consolidation	130,581						130,581	$ 36,299
Balance at Jun. 30, 2011	412,881	307,549	$ 2,055	4,100,775	(707)	(3,794,574)	105,332	36,299
Balance (in shares) at Jun. 30, 2011			207,473
Balance at Dec. 31, 2011	928,476	786,843	$ 2,072	4,200,659	(1,053)	(3,414,835)	141,633	37,036
Balance (in shares) at Dec. 31, 2011			209,304
Increase (Decrease) in Stockholders' Equity
Unrealized holding gains on marketable securities	255	255			255
Foreign currency translation adjustment	125	125			125
Net income (loss)	53,408	26,659				26,659	26,749
Issuances of common stock:
Benefit plans	163,477	163,332	$ 61	163,271			145
Benefit plans (in shares)			6,131
Stock-based compensation expense	59,616	59,345		59,345			271
Tax benefit from equity compensation	1,214	1,214		1,214
Change in liquidation value of redeemable noncontrolling interest	(878)						(878)	878
Balance at Jun. 30, 2012	$ 1,205,693	$ 1,037,773	$ 2,133	$ 4,424,489	$ (673)	$ (3,388,176)	$ 167,920	$ 37,914
Balance (in shares) at Jun. 30, 2012			215,435

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net income (loss)	$ 53,408	$ (375,414)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization expense	17,225	17,567
Stock-based compensation expense	59,067	59,758
Other non-cash based compensation expense	5,469	4,408
Secured notes (due 2012) discount amortization expense		9,187
Change in fair value of derivative instruments		7,818
Deferred income taxes	19,310	9,330
Write-down of inventories to net realizable value	78,000
Other non-cash items, net	130	(223)
Changes in operating assets and liabilities, excluding the effect of the acquisition of a variable interest entity (Alios):
Accounts receivable, net	(2,483)	(83,714)
Inventories	(34,288)	(52,086)
Prepaid expenses and other current assets	(28,179)	(8,692)
Accounts payable	(15,313)	30,147
Accrued expenses and other liabilities	9,310	995
Excess tax benefit from share-based payment arrangements	(1,214)
Accrued restructuring expense	(1,483)	(1,390)
Accrued interest		(112)
Income taxes payable (Alios)	(11,874)	15,212
Deferred revenues	(25,764)	(35,614)
Net cash provided by (used in) operating activities	121,321	(402,823)
Cash flows from investing activities:
Purchases of marketable securities	(777,604)	(135,109)
Sales and maturities of marketable securities	502,188	788,029
Payment for acquisition of a variable interest entity (Alios)		(60,000)
Expenditures for property and equipment	(21,698)	(15,281)
Increase in restricted cash		(24)
Decrease (increase) in restricted cash and cash equivalents (Alios)	(4,146)	1,477
Increase in other assets	(485)	(350)
Net cash provided by (used in) investing activities	(301,745)	578,742
Cash flows from financing activities:
Excess tax benefit from share-based payment arrangements	1,214
Issuances of common stock from employee benefit plans	158,003	88,673
Payments to redeem a portion of secured notes (due 2012)		(50,000)
Net cash provided by financing activities	159,217	38,673
Effect of changes in exchange rates on cash	(52)	406
Net increase (decrease) in cash and cash equivalents	(21,259)	214,998
Cash and cash equivalents-beginning of period	475,320	243,197
Cash and cash equivalents-end of period	454,061	458,195
Supplemental disclosure of cash flow information:
Cash paid for interest	6,700	6,812
Capitalization of construction in-process related to financing lease transactions	104,341	$ 9,887
Assets acquired under capital lease	$ 29,072

Basis of Presentation and Accounting Policies

6 Months Ended

Jun. 30, 2012

Basis of Presentation and Accounting Policies

Basis of Presentation and Accounting Policies

A. Basis of Presentation and Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared by Vertex Pharmaceuticals Incorporated ("Vertex" or the "Company") in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The condensed consolidated financial statements reflect the operations of (i) the Company, (ii) its wholly-owned subsidiaries and (iii) Alios BioPharma, Inc. ("Alios"), a collaborator that is a variable interest entity (a "VIE") for which the Company is deemed under applicable accounting guidance to be the primary beneficiary. All material intercompany balances and transactions have been eliminated. The Company operates in one segment, pharmaceuticals.

Certain information and footnote disclosures normally included in the Company's annual financial statements have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments (including accruals) necessary for a fair presentation of the financial position and results of operations for the interim periods ended June 30, 2012 and 2011.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full fiscal year. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2011, which are contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2011 that was filed with the Securities and Exchange Commission (the "SEC") on February 22, 2012 (the "2011 Annual Report on Form 10-K").

Use of Estimates and Summary of Significant Accounting Policies

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the amounts of revenues and expenses during the reported periods. Significant estimates in these condensed consolidated financial statements have been made in connection with the calculation of revenues, inventories, research and development expenses, stock-based compensation expense, restructuring expense, the fair value of intangible assets, noncontrolling interest (Alios), income tax provision, derivative instruments and debt securities. The Company bases its estimates on historical experience and various other assumptions, including in certain circumstances future projections, that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.

The Company's significant accounting policies are described in Note A, "Nature of Business and Accounting Policies," in the 2011 Annual Report on Form 10-K.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements please refer to Note A, "Nature of Business and Accounting Policies—Recent Accounting Pronouncements," in the 2011 Annual Report on Form 10-K, as supplemented below. The Company did not adopt any new accounting pronouncements during the six months ended June 30, 2012 that had a material effect on the Company's condensed consolidated financial statements.

In the first quarter of 2012, the Company retrospectively adopted amended guidance issued in June 2011 by the Financial Accounting Standards Board ("FASB") that resulted in two separate, but consecutive, statements of operations and comprehensive income (loss) that affected the presentation of the Company's condensed consolidated financial statements.

In July 2012, the FASB issued amended guidance applicable to annual impairment tests of indefinite-lived intangible assets. The FASB added an optional qualitative assessment for determining whether an indefinite-lived intangible asset is impaired. Prior to this guidance, companies were required to perform an annual impairment test that included a calculation of the fair value of the asset and a comparison of that fair value with its carrying value. If the carrying value exceeded the fair value, an impairment was recorded. The amended guidance allows a company the option to perform a qualitative assessment, considering both negative and positive evidence, regarding the potential impairment of the indefinite-lived intangible asset. If, based on the qualitative analysis, the company determines that it is more likely than not that the fair value of such an asset exceeds its carrying value, the company would be permitted to conclude that the indefinite-lived intangible asset was not impaired without a quantitative calculation of the fair value of the asset. Otherwise, the company would perform the quantitative calculation of the fair value and the comparison with the carrying value. This amended guidance will be effective for annual impairment tests performed by the Company for fiscal years beginning on January 1, 2013 and early adoption is permitted.

Product Revenues, Net

6 Months Ended

Jun. 30, 2012

Product Revenues, Net

Product Revenues, Net

B. Product Revenues, Net

The Company sells its products principally to a limited number of major wholesalers, as well as selected regional wholesalers and specialty pharmacy providers (collectively, its "Distributors"), that subsequently resell the products to patients and health care providers. The Company recognizes net revenues from product sales upon delivery as long as (i) there is persuasive evidence that an arrangement exists between the Company and the Distributor, (ii) collectibility is reasonably assured and (iii) the price is fixed or determinable.

The Company has written contracts with its Distributors and delivery occurs when a shipment of a product is received. The Company evaluates the creditworthiness of each of its Distributors to determine whether revenues can be recognized upon delivery, subject to satisfaction of the other requirements, or whether recognition is required to be delayed until receipt of payment. In order to conclude that the price is fixed or determinable, the Company must be able to (i) calculate its gross product revenues from sales to Distributors and (ii) reasonably estimate its net product revenues. The Company calculates gross product revenues based on the wholesale acquisition cost that the Company charges its Distributors. The Company estimates its net product revenues by deducting from its gross product revenues (a) trade allowances, such as invoice discounts for prompt payment and distributor fees, (b) estimated government and private payor rebates, chargebacks and discounts, such as Medicaid reimbursements, (c) reserves for expected product returns and (d) estimated costs of incentives offered to certain indirect customers, including patients.

        Trade Allowances:    The Company generally provides invoice discounts on product sales to its Distributors for prompt payment and pays fees for distribution services, such as fees for certain data that Distributors provide to the Company. The payment terms for sales to Distributors generally include a 2% discount for payment within 30 days. The Company expects that, based on its experience, its Distributors will earn these discounts and fees, and deducts the full amount of these discounts and fees from its gross product revenues and accounts receivable at the time such revenues are recognized.

        Rebates, Chargebacks and Discounts:    The Company contracts with Medicaid, other government agencies and various private organizations (collectively, its "Third-party Payors") so that products will be eligible for purchase by, or partial or full reimbursement from, such Third-party Payors. The Company estimates the rebates, chargebacks and discounts it will provide to Third-party Payors and deducts these estimated amounts from its gross product revenues at the time the revenues are recognized. For each product, the Company estimates the aggregate rebates, chargebacks and discounts that it will provide to Third-party Payors based upon (i) the Company's contracts with these Third-party Payors, (ii) the government-mandated discounts applicable to government-funded programs and (iii) information obtained from the Company's Distributors and other third parties regarding the payor mix for such product.

        Product Returns:    The Company estimates the amount of each product that will be returned and deducts these estimated amounts from its gross revenues at the time the revenues are recognized. The Company's Distributors have the right to return unopened unprescribed packages beginning six months prior to the labeled expiration date and ending twelve months after the labeled expiration date. Based on the inventory levels held by its Distributors and its distribution model, the Company believes that returns of its products will be minimal.

        Other Incentives:    Other incentives that the Company offers to indirect customers include co-pay mitigation rebates provided by the Company to commercially insured patients who have coverage and who reside in states that permit co-pay mitigation programs. The Company's co-pay mitigation program is intended to reduce each participating patient's portion of the financial responsibility for a product's purchase price to a specified dollar amount. Based upon the terms of the Company's co-pay mitigation programs, the Company estimates average co-pay mitigation amounts for each of its products in order to establish its accruals for co-pay mitigation rebates and deducts these estimated amounts from its gross product revenues at the later of the date (i) the revenues are recognized or (ii) the incentive is offered. The Company's co-pay mitigation rebates are subject to expiration.

The following table summarizes activity in each of the product revenue allowance and reserve categories described above during the six months ended June 30, 2012:

	Trade Allowances			Rebates, Chargebacks and Discounts			Product Returns			Other Incentives			Total

	(in thousands)
Balance at December 31, 2011	$	11,162		$	52,659		$	340		$	5,202		$	69,363
Provision related to current period sales		31,619			105,562			486			11,015			148,682
Adjustments related to prior period sales		—			3,225			—			73			3,298
Credits/payments made		(36,763	)		(81,650	)		(255	)		(12,534	)		(131,202	)

Balance at June 30, 2012	$	6,018		$	79,796		$	571		$	3,756		$	90,141

Collaborative Arrangements

6 Months Ended

Jun. 30, 2012

Collaborative Arrangements

Collaborative Arrangements

C. Collaborative Arrangements

Janssen Pharmaceutica, N.V.

In 2006, the Company entered into a collaboration agreement with Janssen Pharmaceutica, N.V. ("Janssen") for the development, manufacture and commercialization of telaprevir, which Janssen began marketing under the brand name INCIVO™ in certain of its territories in September 2011. Under the collaboration agreement, Janssen agreed to be responsible for 50% of the drug development costs incurred under the development program for the parties' territories (North America for the Company, and the rest of the world, other than certain countries in Asia, for Janssen) and has exclusive rights to commercialize telaprevir in its territories including Europe, South America, the Middle East, Africa and Australia.

Janssen pays the Company a tiered royalty averaging in the mid-20% range as a percentage of net sales of INCIVO in Janssen's territories. Janssen is required under the agreement to use diligent efforts to maximize net sales of INCIVO in its territories through its commercial marketing, pricing and contracting strategies. In addition, Janssen is responsible for certain third-party royalties on net sales of INCIVO in its territories.

Janssen made a $165.0 million up-front license payment to the Company in 2006. The up-front license payment is being amortized over the Company's estimated period of performance under the collaboration agreement. As of June 30, 2012, there were $49.7 million in deferred revenues related to this up-front license payment that the Company expects to recognize over the remaining estimated period of performance.

Under the collaboration agreement, Janssen agreed to make contingent milestone payments for successful development, approval and launch of telaprevir as a product in its territories. At the inception of the agreement, the Company determined that all of these contingent milestones were substantive and would result in revenues in the period in which the milestone was achieved. The Company has earned $350.0 million of these contingent milestone payments, including a $50.0 million milestone payment earned in the first quarter of 2011 in connection with the European Medicines Agency's acceptance of the marketing authorization application for INCIVO. The Company does not expect to receive any further milestone payments under this agreement.

Under the Janssen collaboration agreement, each party incurs internal and external reimbursable expenses related to the telaprevir development program and is reimbursed by the other party for 50% of these expenses. The Company recognizes the full amount of the reimbursable costs it incurs as research and development expenses on its condensed consolidated statements of operations. The Company recognizes the amounts that Janssen is obligated to pay the Company with respect to reimbursable expenses, net of reimbursable expenses incurred by Janssen, as collaborative revenues. In the three and six months ended June 30, 2012 and 2011, Janssen incurred more reimbursable costs than the Company, and the net amounts payable by the Company to reimburse Janssen were recorded as a reduction of collaborative revenues.

Each of the parties is responsible for drug supply in its territories. In the three and six months ended June 30, 2011 and the three months ended March 31, 2012, the Company provided Janssen certain services through the Company's third-party manufacturing network for telaprevir. Reimbursements from Janssen for these manufacturing services were recorded as collaborative revenues.

Janssen may terminate the collaboration agreement upon the later of (i) one year's advance notice and (ii) such period as may be required to assign and transfer to the Company specified filings and approvals. The agreement also may be terminated by either party for a material breach by the other, subject to notice and cure provisions. Unless earlier terminated, the agreement will continue in effect until the expiration of Janssen's royalty obligations, which expire on a country-by-country basis with the last-to-expire patent covering telaprevir. In the European Union, the Company has a patent covering the composition-of-matter of telaprevir that expires in 2021 and expects to obtain extensions to the term of this patent through 2026.

During the three and six months ended June 30, 2012 and 2011, the Company recognized the following revenues attributable to the Janssen collaboration:

	Three Months Ended June 30,						Six Months Ended June 30,

	2012			2011			2012			2011
	(in thousands)
Royalty revenues	$	27,970		$	2,549		$	60,854		$	2,549

Collaborative revenues:
Amortized portion of up-front payment	$	3,107		$	3,107		$	6,214		$	6,214
Milestone revenues		—			—			—			50,000
Net payment for telaprevir development costs		(927	)		(3,108	)		(2,066	)		(4,253	)
Reimbursement for manufacturing services		—			9,059			4,449			13,213

Total collaborative revenues attributable to the Janssen collaboration	$	2,180		$	9,058		$	8,597		$	65,174

Total revenues attributable to the Janssen collaboration	$	30,150		$	11,607		$	69,451		$	67,723

Mitsubishi Tanabe Pharma Corporation

The Company has a collaboration agreement (the "MTPC Agreement") with Mitsubishi Tanabe Pharma Corporation ("Mitsubishi Tanabe") pursuant to which Mitsubishi Tanabe has a fully-paid license to manufacture and commercialize TELAVIC™ (the brand name under which Mitsubishi Tanabe is marketing telaprevir) in Japan and other specified countries in Asia. In September 2011, Mitsubishi Tanabe obtained approval to market TELAVIC in Japan.

The parties entered into the MTPC Agreement in 2004 and amended it in 2009. Pursuant to the MTPC Agreement, Mitsubishi Tanabe provided financial and other support for the development and commercialization of telaprevir, made a $105.0 million payment in connection with the 2009 amendment of the collaboration agreement and made a $65.0 million commercial milestone payment in the fourth quarter of 2011 related to the commercialization of TELAVIC in Japan. There are no further milestone payments under this collaboration agreement. Mitsubishi Tanabe is responsible for its own development and manufacturing costs in its territory.

Mitsubishi Tanabe may terminate the MTPC Agreement at any time without cause upon 60 days' prior written notice to the Company. The MTPC Agreement also may be terminated by either party for a material breach by the other, subject to notice and cure provisions. Unless earlier terminated, the MTPC Agreement will continue in effect until the expiration of the last-to-expire patent covering telaprevir in Mitsubishi Tanabe's territories. In Japan, the Company has a patent covering the composition-of-matter of telaprevir that expires in 2021.

The $105.0 million payment that the Company received in the third quarter of 2009 in connection with the amendment is a nonrefundable, up-front license fee, and revenues related to the 2009 payment were recognized on a straight-line basis over the period of performance of the Company's obligations under the amended agreement. In connection with the amendment to the MTPC Agreement, the Company supplied manufacturing services to Mitsubishi Tanabe, until April 2012, through the Company's third-party manufacturing network for telaprevir. The final $3.2 million in deferred revenues related to the 2009 up-front license payment was recognized in April 2012.

During the three and six months ended June 30, 2012 and 2011, the Company recognized the following collaborative revenues attributable to the Mitsubishi Tanabe collaboration:

	Three Months Ended June 30,				Six Months Ended June 30,

	2012		2011		2012		2011
	(in thousands)
Amortized portion of up-front payments	$	3,186	$	9,558	$	12,744	$	19,116
Milestone revenues		—		182		485		1,394
Payments for manufacturing services		1,659		5,133		5,650		5,848

Total collaborative revenues attributable to the Mitsubishi Tanabe collaboration	$	4,845	$	14,873	$	18,879	$	26,358

Cystic Fibrosis Foundation Therapeutics Incorporated

In April 2011, the Company entered into an amendment (the "April 2011 Amendment") to its existing collaboration agreement with Cystic Fibrosis Foundation Therapeutics Incorporated ("CFFT") pursuant to which CFFT agreed to provide financial support for (i) development activities for VX-661, a corrector compound discovered under the collaboration, and (ii) additional research and development activities directed at discovering new corrector compounds.

The Company entered into the original collaboration agreement with CFFT in 2004 and amended it several times to, among other things, provide partial funding for its cystic fibrosis drug discovery and development efforts. In 2006, the Company received a $1.5 million milestone payment from CFFT. There are no additional milestones payable by CFFT to the Company pursuant to the collaboration agreement, as amended. Under the April 2011 Amendment, CFFT agreed to provide the Company with up to $75.0 million in funding over approximately five years for corrector-compound research and development activities. The Company retains the right to develop and commercialize KALYDECO™ (ivacaftor), VX-809, VX-661 and any other compounds discovered during the course of the research collaboration with CFFT. The Company recognized collaborative revenues from this collaboration of $4.5 million and $8.5 million, respectively, during the three and six months ended June 30, 2012 and $5.9 million during both the three and six months ended June 30, 2011.

In the original agreement, as amended prior to the April 2011 Amendment, the Company agreed to pay CFFT tiered royalties calculated as a percentage, ranging from single digits to sub-teens, of annual net sales of any approved drugs discovered during the research term that ended in 2008, including KALYDECO, VX-809 and VX-661. The April 2011 Amendment provides for a tiered royalty in the same range on net sales of corrector compounds discovered during the research term that began in 2011. The Company also is obligated to make two one-time commercial milestone payments upon achievement of certain sales levels for a potentiator compound such as KALYDECO and two one-time commercial milestone payments upon achievement of certain sales levels for a corrector compound such as VX-809 or VX-661. The Company began marketing KALYDECO in the United States in January 2012 and received approval to begin marketing KALYDECO in the European Union in July 2012.

The Company has royalty obligations to CFFT for each compound commercialized pursuant to this collaboration until the expiration of patents covering that compound. The Company has patents in the United States and European Union covering the composition-of-matter of ivacaftor that expire in 2027 and 2025, respectively, subject to potential patent life extensions. CFFT may terminate its funding obligations under the collaboration, as amended, in certain circumstances, in which case there will be a proportional adjustment to the royalty rates and commercial milestone payments for certain corrector compounds. The collaboration also may be terminated by either party for a material breach by the other, subject to notice and cure provisions.

Alios BioPharma, Inc.

License and Collaboration Agreement

On June 13, 2011, the Company entered into a license and collaboration agreement (the "Alios Agreement") with Alios, a privately-held biotechnology company. The Company and Alios are collaborating on the research, development and commercialization of two HCV nucleotide analogues discovered by Alios, ALS-2158 and ALS-2200, which are designed to act on the HCV polymerase. Alios and the Company began clinical development of these two HCV nucleotide analogues in December 2011. The Company is responsible for all costs related to development and commercialization of the compounds incurred after the effective date of the Alios Agreement, and manufacturing costs for the supply of ALS-2158 and ALS-2200 used after the effective date, and is providing funding to Alios to conduct the Phase 1 clinical trials for ALS-2158 and ALS-2200 and a research program directed to the discovery of additional HCV nucleotide analogues that act on the HCV polymerase.

Under the terms of the Alios Agreement, the Company received exclusive worldwide rights to ALS-2158 and ALS-2200, and has the option to select additional compounds discovered in the research program. The Company paid Alios a $60.0 million up-front payment, and Alios is eligible to receive research and development milestone payments of up to $715.0 million if two compounds are approved and commercialized. As of June 30, 2012, Alios had received $35.0 million of these research and development milestones. Alios also is eligible to receive commercial milestone payments of up to $750.0 million, as well as tiered royalties on net sales of approved drugs.

The Company may terminate the Alios Agreement (i) upon 30 days' notice to Alios if the Company ceases development after both ALS-2158 and ALS-2200 have experienced a technical failure and/or (ii) upon 60 days' notice to Alios at any time after the Company completes specified Phase 2a clinical trials. The Alios Agreement also may be terminated by either party for a material breach by the other, and by Alios for the Company's inactivity or if the Company challenges certain Alios patents, in each case subject to notice and cure provisions. Unless earlier terminated, the Alios Agreement will continue in effect until the expiration of the Company's royalty obligations, which expire on a country-by-country basis on the later of (a) the date the last-to-expire patent covering a licensed product expires or (b) ten years after the first commercial sale in the country.

Alios is continuing to operate as a separate entity, is engaged in other programs directed at developing novel drugs that are not covered by the Alios Agreement and maintains ownership of the underlying patent rights that are licensed to the Company pursuant to the Alios Agreement. Under applicable accounting guidance, the Company has determined that Alios is a VIE, that Alios is a business and that the Company is Alios' primary beneficiary. The Company based these determinations on, among other factors, the significance to Alios of the two licensed compounds and on the Company's power, through the joint steering committee for the licensed compounds established under the Alios Agreement, to direct the activities that most significantly affect the economic performance of Alios.

Accordingly, the Company consolidated Alios' statements of operations and financial condition with the Company's consolidated financial statements beginning on June 13, 2011. However, the Company's interests in Alios are limited to those accorded to the Company in the Alios Agreement. In particular, the Company did not acquire any equity interest in Alios, any interest in Alios' cash and cash equivalents or any control over Alios' activities that do not relate to the Alios Agreement. Alios does not have any right to the Company's assets except as provided in the Alios Agreement.

The initial consolidation of a VIE that is determined to be a business is accounted for as a business combination. As a result, as of June 13, 2011 the Company recorded all of Alios' assets and liabilities at fair value on the Company's condensed consolidated balance sheet. The Company continues to consolidate Alios' financial statements by (A) eliminating all intercompany balances and transactions and (B) allocating the noncontrolling interest in Alios between redeemable noncontrolling interest (Alios) and noncontrolling interest (Alios) on the Company's condensed consolidated balance sheet and reflecting net income (loss) attributable to noncontrolling interest (Alios) in the Company's condensed consolidated statement of operations.

Intangible Assets and Goodwill

As of June 30, 2012 and December 31, 2011, the Company had $250.6 million of intangible assets and $4.9 million of goodwill related to Alios. The Company tests Alios' intangible assets and goodwill for impairment on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstance suggest that impairment may exist. In connection with each annual impairment assessment and any interim impairment assessment, the Company compares the fair value of the asset as of the date of the assessment with the carrying value of the asset on the Company's condensed consolidated balance sheet. No impairment has been found with respect to these intangible assets or goodwill since the effective date of the collaboration.

Noncontrolling Interest (Alios)

The Company records noncontrolling interest (Alios) on two lines on its condensed consolidated balance sheets. The noncontrolling interest (Alios) is reflected on two separate lines because Alios has both common shareholders and preferred shareholders that are entitled to redemption rights in certain circumstances. The Company records net income (loss) attributable to noncontrolling interest (Alios) on its condensed consolidated statements of operations, reflecting Alios' net income (loss) for the reporting period, adjusted for changes in the fair value of contingent milestone and royalty payments, which are evaluated each reporting period. A summary of net income (loss) attributable to noncontrolling interest (Alios) for the three and six months ended June 30, 2012 and 2011 is as follows:

	Three Months Ended June 30,						Six Months Ended June 30,

	2012			2011			2012			2011
	(in thousands)
Loss before provision for income taxes	$	(4,467	)	$	(801	)	$	(9,491	)	$	(801	)
Change in fair value of contingent milestone and royalty payments		56,170			—			55,200			—
Provision for income taxes		(21,240	)		(24,448	)		(18,960	)		(24,448	)

Net income (loss) attributable to noncontrolling interest (Alios)	$	30,463		$	(25,249	)	$	26,749		$	(25,249	)

The Company uses present-value models to determine the estimated fair value of the potential contingent milestone and royalty payments, based on assumptions regarding the probability of achieving the relevant milestones, estimates regarding the time to develop the Alios HCV nucleotide analogues, estimates of future cash flows from potential product sales and assumptions regarding the appropriate discount rates. In the three and six months ended June 30, 2012, the fair value of contingent milestone and royalty payments increased by $56.2 million and $55.2 million, respectively, primarily because the Company received positive clinical data from a Phase 1 clinical trial evaluating ALS-2200, which increased the probability that Alios will earn future payments from the Company under the Alios Agreement. If the Alios HCV nucleotide analogues continue to advance in clinical development, the Company expects it will record additional increases in the fair value of the contingent milestone and royalty payments in future periods. Any such increase will reduce net income attributable to Vertex in the period of adjustment, and any such reduction may be material.

Alios Balance Sheet Information

The following table summarizes items related to Alios included in the Company's condensed consolidated balance sheets as of June 30, 2012 and December 31, 2011:

	As of June 30, 2012		As of December 31, 2011

	(in thousands)
Restricted cash and cash equivalents (Alios)	$	56,024	$	51,878
Prepaid expenses and other current assets		1,952		2,299
Property and equipment, net		1,820		1,925
Intangible assets		250,600		250,600
Goodwill		4,890		4,890
Other assets		145		133
Accounts payable		1,686		4,132
Accrued expenses and other current liabilities		5,647		4,291
Accrued interest		13		13
Income taxes payable (Alios)		201		12,075
Deferred tax liability		135,431		116,121
Other liabilities		762		1,030
Redeemable noncontrolling interest (Alios)		37,914		37,036
Noncontrolling interest (Alios)		167,920		141,633

The Company has recorded Alios' cash and cash equivalents as restricted cash and cash equivalents (Alios) because (i) the Company does not have any interest in or control over Alios' cash and cash equivalents and (ii) the Alios Agreement does not provide for these assets to be used for the development of the assets that the Company licensed from Alios pursuant to the collaboration. Assets recorded as a result of consolidating Alios' financial condition into the Company's condensed consolidated balance sheets do not represent additional assets that could be used to satisfy claims against the Company's general assets.

Research and Development Funding

The Company's collaborators funded portions of the Company's research and development programs related to specific drugs, drug candidates and research targets, including telaprevir, VX-661 and research directed toward identifying additional corrector compounds for the treatment of cystic fibrosis. The Company's collaborative revenues, including amortization of up-front license fees and milestone revenues, were $11.6 million and $29.9 million in the three months ended June 30, 2012 and 2011, respectively, and $35.9 million and $97.5 million in the six months ended June 30, 2012 and 2011, respectively. The Company's research and development expenses allocated to programs in which a collaborator funded at least a portion of the research and development expenses were approximately $30 million and $40 million in the three months ended June 30, 2012 and 2011, respectively, and approximately $66 million and $64 million in the six months ended June 30, 2012 and 2011, respectively.

Acquisition of ViroChem Pharma Inc.

6 Months Ended

Jun. 30, 2012

Acquisition of ViroChem Pharma Inc.

Acquisition of ViroChem Pharma Inc.

D. Acquisition of ViroChem Pharma Inc.

On March 12, 2009, the Company acquired 100% of the outstanding equity of ViroChem Pharma Inc. ("ViroChem"), a privately-held biotechnology company based in Canada. As of June 30, 2012 and December 31, 2011, the Company reflected on its condensed consolidated balance sheets $412.9 million of intangible assets related to VX-222, a non-nucleoside HCV polymerase inhibitor that it added to its HCV drug development portfolio when the Company acquired ViroChem. The Company's condensed consolidated balance sheets as of June 30, 2012 and December 31, 2011 also reflected goodwill of $26.1 million related to the ViroChem acquisition. Goodwill and VX-222 are tested for impairment on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstance suggest that impairment may exist. No impairment has been found with respect to goodwill or VX-222 since the acquisition date.

A deferred tax liability related to ViroChem of $127.6 million recorded as of June 30, 2012 and December 31, 2011 primarily relates to the tax effect of future amortization or impairments associated with VX-222, which are not deductible for tax purposes.

Earnings Per Share

6 Months Ended

Jun. 30, 2012

Earnings Per Share

Earnings Per Share

E. Earnings Per Share

Basic and diluted net income per share attributable to Vertex common shareholders are presented in conformity with the two-class method required for participating securities. Under the two-class method, earnings are allocated to (i) Vertex common shares, excluding shares of restricted stock that have been issued but have not yet vested, and (ii) participating securities, based on their respective weighted-average shares outstanding for the period. Shares of unvested restricted stock have the non-forfeitable right to receive dividends on an equal basis with other outstanding common stock. As a result, these unvested shares of restricted stock are considered participating securities that must be included in the calculation of basic and diluted net income per share attributable to Vertex common shareholders using the two-class method. Potentially dilutive shares result from the assumed exercise of outstanding stock options (the proceeds of which are then assumed to have been used to repurchase outstanding stock using the treasury stock method) and the assumed conversion of convertible notes.

Basic net loss per share attributable to Vertex common shareholders is based upon the weighted-average number of common shares outstanding during the period, excluding restricted stock that has been issued but is not yet vested. Diluted net loss per share attributable to Vertex common shareholders is based upon the weighted-average number of common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period when the effect is dilutive.

The following table sets forth the computation of basic and diluted net income (loss) per share for the three and six months ended June 30, 2012 and 2011:

	Three Months Ended June 30,						Six Months Ended June 30,

	2012			2011			2012			2011
	(in thousands, except per share amounts)
Basic net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$	(64,931	)	$	(174,069	)	$	26,659		$	(350,165	)
Less: Undistributed earnings allocated to participating securities		—			—			(260	)		—

Net income (loss) attributable to Vertex common shareholders—basic	$	(64,931	)	$	(174,069	)	$	26,399		$	(350,165	)
Basic weighted-average common shares outstanding		211,344			204,413			209,681			203,377
Basic net income (loss) attributable to Vertex per common share	$	(0.31	)	$	(0.85	)	$	0.13		$	(1.72	)
Diluted net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$	(64,931	)	$	(174,069	)	$	26,659		$	(350,165	)
Less: Undistributed earnings allocated to participating securities		—			—			(256	)		—

Net income (loss) attributable to Vertex common shareholders—diluted	$	(64,931	)	$	(174,069	)	$	26,403		$	(350,165	)
Weighted-average shares used to compute basic net income (loss) per common share		211,344			204,413			209,681			203,377
Effect of potentially dilutive securities:
Stock options		—			—			3,188			—
Other		—			—			88			—

Weighted-average shares used to compute diluted net income (loss) per common share		211,344			204,413			212,957			203,377
Diluted net income (loss) attributable to Vertex per common share	$	(0.31	)	$	(0.85	)	$	0.12		$	(1.72	)

The Company did not include the securities described in the following table in the computation of the net income (loss) attributable to Vertex per common share calculations because the effect would have been anti-dilutive during each such period:

	Three Months Ended June 30,				Six Months Ended June 30,

	2012		2011		2012		2011
	(in thousands)
Stock options		18,771		20,589		10,624		20,589
Convertible senior subordinated notes		8,192		8,192		8,192		8,192
Unvested restricted stock and restricted stock units		2,087		1,971		8		1,971

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2012

Fair Value of Financial Instruments

Fair Value of Financial Instruments

F. Fair Value of Financial Instruments

The fair value of the Company's financial assets and liabilities reflects the Company's estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company's assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level

1:  Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level

2:  Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.

Level

3:  Unobservable inputs based on the Company's assessment of the assumptions that market participants would use in pricing the asset or liability.

The Company's investment strategy is focused on capital preservation. The Company invests in instruments that meet the credit quality standards outlined in the Company's investment policy. This policy also limits the amount of credit exposure to any one issue or type of instrument. As of June 30, 2012, the Company's investments were in a money market fund, short-term U.S. Treasury securities and short-term government-sponsored enterprise securities, corporate debt securities and commercial paper.

As of June 30, 2012, all of the Company's financial assets that were subject to fair value measurements were valued using observable inputs. The Company's financial assets valued based on Level 1 inputs consisted of a money market fund, U.S. Treasury securities and government-sponsored enterprise securities. The Company's financial assets valued based on Level 2 inputs consisted of corporate debt securities and commercial paper, which consist of investments in highly-rated investment-grade corporations. During the three and six months ended June 30, 2012 and 2011, the Company did not record an other-than-temporary impairment charge related to its financial assets. The Company's noncontrolling interest (Alios) includes the fair value of the contingent milestone and royalty payments, which is valued based on Level 3 inputs. Please refer to Note C, "Collaborative Arrangements," for further information.

The following table sets forth the Company's financial assets (excluding Alios' cash equivalents) subject to fair value measurements as of June 30, 2012:

	Fair Value Measurements as of June 30, 2012

			Fair Value Hierarchy
	Total		Level 1		Level 2		Level 3
	(in thousands)
Financial assets carried at fair value:
Cash equivalents:
Money market funds	$	149,094	$	149,094	$	—	$	—
U.S. Treasury securities		181,221		181,221		—		—
Marketable securities:
U.S. Treasury securities		114,055		114,055		—		—
Government-sponsored enterprise securities		371,158		371,158		—		—
Commercial paper		229,435		—		229,435		—
Corporate debt securities		54,625		—		54,625		—
Restricted cash		34,090		34,090		—		—

Total	$	1,133,678	$	849,618	$	284,060	$	—

Alios' cash equivalents of $53.3 million as of June 30, 2012 consisted of money market funds, which are valued based on Level 1 inputs.

As of June 30, 2012, the Company had $400.0 million in aggregate principal amount of 3.35% convertible senior subordinated notes due 2015 (the "2015 Notes") on its condensed consolidated balance sheet. At June 30, 2012, these 2015 Notes had a fair value of approximately $488 million, based on Level 2 inputs.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 133
-Paragraph 44A, 44B
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15C, 15D
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15A
-Subparagraph a-d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 15B
-Subparagraph a, b
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 107
-Paragraph 3, 10, 14, 15
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 157
-Paragraph 32, 33, 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 159
-Paragraph 17-22, 27, 28
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19207-110258

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13537-108611

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 28
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13433-108611

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 825
-SubTopic 10
-Section 50
-Paragraph 16
-URI http://asc.fasb.org/extlink&oid=6947722&loc=d3e13504-108611

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 820
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=6925170&loc=d3e19296-110258

+ Details

Marketable Securities

6 Months Ended

Jun. 30, 2012

Marketable Securities

Marketable Securities

G. Marketable Securities

A summary of the Company's cash, cash equivalents and marketable securities is shown below:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

	(in thousands)
As of June 30, 2012
Cash and cash equivalents:
Cash and money market funds	$	272,840	$	—	$	—		$	272,840
U.S. Treasury securities		181,234		—		(13	)		181,221

Total cash and cash equivalents	$	454,074	$	—	$	(13	)	$	454,061

Marketable securities:
U.S. Treasury securities (due within 1 year)	$	114,060	$	2	$	(7	)	$	114,055
Government-sponsored enterprise securities (due within 1 year)		371,170		15		(27	)		371,158
Commercial paper (due within 1 year)		229,243		192		—			229,435
Corporate debt securities (due within 1 year)		54,641		—		(16	)		54,625

Total marketable securities	$	769,114	$	209	$	(50	)	$	769,273

Total cash, cash equivalents and marketable securities	$	1,223,188	$	209	$	(63	)	$	1,223,334

As of December 31, 2011
Cash and cash equivalents:
Cash and money market funds	$	362,035	$	—	$	—		$	362,035
Government-sponsored enterprise securities		113,302		—		(17	)		113,285

Total cash and cash equivalents	$	475,337	$	—	$	(17	)	$	475,320

Marketable securities:
U.S. Treasury securities (due within 1 year)	$	22,105	$	2	$	—		$	22,107
Government-sponsored enterprise securities (due within 1 year)		471,589		8		(102	)		471,495

Total marketable securities	$	493,694	$	10	$	(102	)	$	493,602

Total cash, cash equivalents and marketable securities	$	969,031	$	10	$	(119	)	$	968,922

Alios' $56.0 million and $51.9 million of cash and money market funds as of June 30, 2012 and December 31, 2011, respectively, recorded on the Company's condensed consolidated balance sheets in "Restricted cash and cash equivalents (Alios)," are not included in the above table.

Inventories

6 Months Ended

Jun. 30, 2012

Inventories

Inventories

H. Inventories

The following table sets forth the Company's inventories as of June 30, 2012 and December 31, 2011:

	As of June 30, 2012		As of December 31, 2011

	(in thousands)
Raw materials	$	5,075	$	32,213
Work-in-process		59,223		47,010
Finished goods		23,507		33,207

Total	$	87,805	$	112,430

The Company's inventories as of June 30, 2012 consisted of INCIVEK™ and KALYDECO inventory costs and as of December 31, 2011 consisted solely of INCIVEK inventory costs. The Company began capitalizing inventory costs for KALYDECO on January 1, 2012.

The Company values its inventories at the lower of cost or market. The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess and obsolete inventories to their net realizable value in the period in which the impairment is first identified.

The field of treatment of HCV infection is highly competitive and characterized by rapid technological advances. In the second quarter of 2012, the Company recorded within cost of product revenues a $78.0 million lower of cost or market charge for excess and obsolete INCIVEK inventories, which included an accrual for estimated expenses related to the Company's non-cancelable purchase commitments. The charge and corresponding inventory write-down were based on the Company's analysis of its INCIVEK inventory levels as of June 30, 2012 in relation to its commercial outlook for INCIVEK. As part of the analysis, the Company considered, among other factors, (i) recent decreases in demand for INCIVEK and the Company's expectation that demand will decrease further in the second half of 2012, (ii) the potential development by the Company and its competitors of other drugs and combination treatments for HCV infection, (iii) positive results released in the second quarter of 2012 from Phase 2 clinical trials of drug candidates being developed by its competitors and (iv) the recent initiation by the Company's competitors of a number of additional Phase 2 and Phase 3 clinical trials of drug candidates for the treatment of HCV infection.

Fan Pier Leases

6 Months Ended

Jun. 30, 2012

Fan Pier Leases

Fan Pier Leases

I. Fan Pier Leases

On May 5, 2011, the Company entered into two leases, pursuant to which the Company agreed to lease approximately 1.1 million square feet of office and laboratory space in two buildings (the "Buildings") to be built at Fan Pier in Boston, Massachusetts (the "Fan Pier Leases"). The Company expects to commence lease payments in late 2013 or early 2014, and to make payments for the period ending 15 years from the commencement date. The Company has an option to extend the term of the Fan Pier Leases for an additional ten years.

Because the Company is involved in the construction project, including having responsibility to pay for a portion of the costs of tenant improvements and structural elements of the Buildings, the Company is deemed for accounting purposes to be the owner of the Buildings during the construction period. Accordingly, the Company has recorded, as of June 30, 2012 and December 31, 2011, $159.0 million and $54.7 million, respectively, of project construction costs incurred by the landlord as an asset and a corresponding financing obligation in "Property and equipment, net" and "Construction financing obligation," respectively, on the Company's condensed consolidated balance sheets.

The Company bifurcates its future lease payments pursuant to the Fan Pier Leases into (i) a portion that is allocated to the Buildings and (ii) a portion that is allocated to the land on which the Buildings are being constructed. Although the Company will not begin making lease payments pursuant to the Fan Pier Leases until the Company occupies the Buildings, the portion of the lease obligations allocated to the land is treated for accounting purposes as an operating lease that commenced in the second quarter of 2011. During the three and six months ended June 30, 2012, the Company recorded $1.7 million and $3.3 million, respectively, in expense related to this operating lease. During the three and six months ended June 30, 2011, the Company recorded $0.6 million in expense related to this operating lease.

Once the construction of the Buildings is completed, the Company will evaluate the Fan Pier Leases in order to determine whether or not the leases meet the criteria for "sale-leaseback" treatment. If the Fan Pier Leases meet the "sale-leaseback" criteria, the Company will remove the asset and the related liability from its condensed consolidated balance sheet and treat the Fan Pier Leases as either operating or capital leases based on the Company's assessment of the accounting guidance. The Company expects that upon completion of construction of the Buildings the Fan Pier Leases will not meet the "sale-leaseback" criteria. If the Fan Pier Leases do not meet "sale-leaseback" criteria, the Company will treat the Fan Pier Leases as a financing obligation and the asset will be depreciated over its estimated useful life.

Convertible Senior Subordinated Notes due 2015

6 Months Ended

Jun. 30, 2012

Convertible Senior Subordinated Notes due 2015

Convertible Senior Subordinated Notes due 2015

J. Convertible Senior Subordinated Notes due 2015

In September 2010, the Company completed an offering of $400.0 million in aggregate principal amount of 2015 Notes. This offering resulted in $391.6 million of net proceeds to the Company. The underwriting discount of $8.0 million and other expenses of $0.4 million were recorded as debt issuance costs and are included in other assets on the Company's condensed consolidated balance sheets. The 2015 Notes were issued pursuant to and are governed by the terms of an indenture (as supplemented, the "Indenture").

The 2015 Notes are convertible at any time, at the option of the holder, into common stock at a price equal to approximately $48.83 per share, or 20.4794 shares of common stock per $1,000 principal amount of the 2015 Notes, subject to adjustment. The 2015 Notes bear interest at the rate of 3.35% per annum, and the Company is required to make semi-annual interest payments on the outstanding principal balance of the 2015 Notes on April 1 and October 1 of each year. The 2015 Notes mature on October 1, 2015.

Prior to October 1, 2013, if the closing price of the Company's common stock has exceeded 130% of the then applicable conversion price for at least 20 trading days within a period of 30 consecutive trading days, the Company may redeem the 2015 Notes at its option, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2015 Notes to be redeemed. If the Company elects to redeem the 2015 Notes prior to October 1, 2013, or the holder elects to convert the 2015 Notes into shares of the Company's common stock after receiving notice of such redemption, the Company will be obligated to make an additional payment, payable in cash or, subject to certain conditions, shares of the Company's common stock, so that the Company's total interest payments on the 2015 Notes being redeemed and such additional payment shall equal three years of interest. On or after October 1, 2013, the Company may redeem the 2015 Notes at its option, in whole or in part, at the redemption prices stated in the Indenture plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Holders may require the Company to repurchase some or all of their 2015 Notes upon the occurrence of certain fundamental changes of Vertex, as set forth in the Indenture, at 100% of the principal amount of the 2015 Notes to be repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the repurchase date.

If a fundamental change occurs that is also a specific type of change of control under the Indenture, the Company will pay a make-whole premium upon the conversion of the 2015 Notes in connection with any such transaction by increasing the applicable conversion rate on such 2015 Notes. The make-whole premium will be in addition to, and not in substitution for, any cash, securities or other assets otherwise due to holders of the 2015 Notes upon conversion. The make-whole premium will be determined by reference to the Indenture and is based on the date on which the fundamental change becomes effective and the price paid, or deemed to be paid, per share of the Company's common stock in the transaction constituting the fundamental change, subject to adjustment.

Based on the Company's evaluation of the 2015 Notes, the Company determined that the 2015 Notes contain a single embedded derivative. This embedded derivative relates to potential penalty interest payments that could be imposed on the Company for a failure to comply with its securities reporting obligations pursuant to the 2015 Notes. This embedded derivative required bifurcation because it was not clearly and closely related to the host instrument. The Company has determined that the value of this embedded derivative was nominal as of September 28, 2010, the issue date of the 2015 Notes, December 31, 2011, and June 30, 2012.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References + Details

Stock-based Compensation Expense

6 Months Ended

Jun. 30, 2012

Stock-based Compensation Expense

Stock-based Compensation Expense

K. Stock-based Compensation Expense

The Company issues stock options, restricted stock and restricted stock units with service conditions, which are generally the vesting periods of the awards. The Company also has issued, to certain members of senior management, restricted stock and restricted stock units that vest upon the earlier of the satisfaction of (i) a performance condition or (ii) a service condition, and stock options that vest upon the earlier of the satisfaction of (a) performance conditions or (b) a service condition. In addition, the Company issues shares pursuant to an employee stock purchase plan ("ESPP").

The effect of stock-based compensation expense during the three and six months ended June 30, 2012 and 2011 was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,

	2012			2011			2012			2011
	(in thousands)
Stock-based compensation expense by type of award:
Stock options	$	22,683		$	23,903		$	40,905		$	43,527
Restricted stock and restricted stock units		7,253			6,835			14,539			13,665
ESPP share issuances		1,742			1,523			4,172			3,102
Less stock-based compensation expense capitalized to inventories		(299	)		(382	)		(549	)		(536	)

Total stock-based compensation expense included in costs and expenses	$	31,379		$	31,879		$	59,067		$	59,758

Stock-based compensation expense by line item:
Research and development expenses	$	19,777		$	20,453		$	36,981		$	39,002
Sales, general and administrative expenses		11,602			11,426			22,086			20,756

Total stock-based compensation expense included in costs and expenses	$	31,379		$	31,879		$	59,067		$	59,758

The Company capitalized $0.3 million and $0.5 million, respectively, of stock-based compensation expense to inventories, in the three and six months ended June 30, 2012 and $0.4 million and $0.5 million, respectively, of stock-based compensation expense to inventories, in the three and six months ended June 30, 2011. All of this stock-based compensation expense was attributable to employees who supported the Company's manufacturing operations for the Company's products.

The following table sets forth the Company's unrecognized stock-based compensation expense, net of estimated forfeitures, as of June 30, 2012 by type of award and the weighted-average period over which that expense is expected to be recognized:

	As of June 30, 2012

	Unrecognized Expense Net of Estimated Forfeitures		Weighted-average Recognition Period
	(in thousands)		(in years)
Type of award:
Stock options	$	152,789		2.78
Restricted stock and restricted stock units		53,914		2.59
ESPP share issuances		2,298		0.51

The following table summarizes information about stock options outstanding and exercisable at June 30, 2012:

	Options Outstanding						Options Exercisable

Range of Exercise Prices	Number Outstanding		Weighted-average Remaining Contractual Life		Weighted-average Exercise Price		Number Exercisable		Weighted-average Exercise Price
	(in thousands)		(in years)		(per share)		(in thousands)		(per share)
$9.07–$20.00		1,273		3.27	$	15.57		1,273	$	15.57
$20.01–$30.00		1,484		6.79		29.22		1,035		28.99
$30.01–$40.00		13,413		7.42		36.11		6,815		35.09
$40.01–$50.00		345		8.81		44.28		51		44.59
$50.01–$60.00		2,191		9.11		53.14		591		54.73
$60.01–$64.30		65		9.89		63.10		—		n/a

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64, 65, A240
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 93-6
-Paragraph 53
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 14

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 50
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 718
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-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 10
-Section 50
-Paragraph 4
-URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 718
-SubTopic 40
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929

+ Details

September 2009 Financial Transactions

6 Months Ended

Jun. 30, 2012

September 2009 Financial Transactions

September 2009 Financial Transactions

L. September 2009 Financial Transactions

2012 Notes

In September 2009, the Company sold $155.0 million in aggregate of secured notes due 2012 (the "2012 Notes") for an aggregate of $122.2 million pursuant to a note purchase agreement with Olmsted Park S.A. (the "Purchaser"). The 2012 Notes were scheduled to mature on October 31, 2012, subject to earlier mandatory redemption to the extent that specified milestone events set forth in the Company's collaboration with Janssen occurred prior to October 31, 2012. In February 2011, the Company received a milestone payment of $50.0 million and subsequently redeemed $50.0 million of 2012 Notes pursuant to their terms. The remaining $105.0 million of 2012 Notes were redeemed on October 31, 2011, with the proceeds of milestone payments received from Janssen in October 2011. The 2012 Notes contained an embedded derivative related to the potential mandatory redemption or early repayment of the 2012 Notes at the face amount prior to their maturity date. The fair value of this embedded derivative was evaluated quarterly, with changes in the fair value of the embedded derivative resulting in a corresponding loss or gain. The Company recorded quarterly interest expense related to the 2012 Notes using the effective interest rate method.

Sale of Contingent Milestone Payments

In September 2009, the Company entered into two purchase agreements with the Purchaser pursuant to which the Company sold its rights to an aggregate of $95.0 million in contingent milestone payments under the Janssen agreement related to the launch of telaprevir in the European Union, for nonrefundable payments totaling $32.8 million. The Purchaser received the $95.0 million in milestone payments from Janssen in the fourth quarter of 2011. The Company determined that this sale of a future revenue stream should be accounted for as a liability. The fair value of the rights sold to the Purchaser pursuant to the purchase agreements was evaluated each reporting period until the payments were received in the fourth quarter of 2011, with changes in the fair value of the derivative instruments based on the probability of achieving the milestones, the timing of achieving the milestones or discount rates resulting in a corresponding gain or loss.

Expenses Related to September 2009 Financial Transactions

The table below sets forth the total expenses related to the September 2009 financial transactions for the three and six months ended June 30, 2012 and 2011:

	Three Months Ended June 30,					Six Months Ended June 30,

	2012		2011			2012		2011
	(in thousands)
Expenses and Losses (Gains):
Interest expense related to 2012 Notes	$	—	$	2,863		$	—	$	10,797
Change in fair value of embedded derivative related to 2012 Notes		—		(18	)		—		(1,514	)
Change in fair value of free-standing derivatives related to the sale of milestone payments		—		2,238			—		9,332

Total September 2009 financial transaction expenses	$	—	$	5,083		$	—	$	18,615

Sale of HIV Protease Inhibitor Royalty Stream

6 Months Ended

Jun. 30, 2012

Sale of HIV Protease Inhibitor Royalty Stream

Sale of HIV Protease Inhibitor Royalty Stream

M. Sale of HIV Protease Inhibitor Royalty Stream

In 2008, the Company sold to a third party its rights to receive royalty payments from GlaxoSmithKline plc, net of royalty amounts to be earned by and due to a third party, for a one-time cash payment of $160.0 million. These royalty payments relate to net sales of HIV protease inhibitors, which had been developed pursuant to a collaboration agreement between the Company and GlaxoSmithKline plc. As of June 30, 2012, the Company had $87.7 million in deferred revenues related to the one-time cash payment, which it is recognizing over the life of the collaboration agreement with GlaxoSmithKline plc based on the units-of-revenue method. In addition, the Company continues to recognize royalty revenues equal to the amount of the third-party subroyalty and an offsetting royalty expense for the third-party subroyalty payment.

Credit Agreement

6 Months Ended

Jun. 30, 2012

Credit Agreement

Credit Agreement

N. Credit Agreement

In January 2011, the Company entered into a credit agreement with Bank of America, N.A., as administrative agent and lender. The credit agreement provided for a $100.0 million revolving credit facility that was unsecured. The Company did not borrow any amount under the credit agreement during its term, which expired on July 6, 2012.

Income Taxes

6 Months Ended

Jun. 30, 2012

Income Taxes

Income Taxes

O. Income Taxes

For the three months ended June 30, 2012, the Company recorded a benefit from income taxes attributable to Vertex of $1.2 million. For the six months ended June 30, 2012, the Company recorded a provision for income taxes attributable to Vertex of $1.1 million. These were due to state income taxes.

For the three and six months ended June 30, 2012, the Company recorded a provision for income taxes attributable to noncontrolling interest (Alios) of $21.2 million and $19.0 million, respectively. For the three and six months ended June 30, 2011, the Company recorded a provision for income taxes attributable to noncontrolling interest (Alios) of $24.4 million related to the estimated income tax effect on Alios of Vertex's $60.0 million up-front payment to Alios. The Company has no liability for taxes payable by Alios. As such, the portion of the income tax provision related to Alios has been allocated to noncontrolling interest (Alios). As of June 30, 2012, Alios had income taxes payable of $0.2 million and a deferred tax liability of $135.4 million reflected on the condensed consolidated balance sheet. As of December 31, 2011, Alios had income taxes payable of $12.1 million and a deferred tax liability of $116.1 million reflected on the Company's condensed consolidated balance sheet.

As of June 30, 2012 and December 31, 2011, the Company had no material unrecognized tax benefits and no adjustments to liabilities or operations were required. The Company does not expect that its unrecognized tax benefits will materially increase within the next twelve months. The Company did not recognize any material interest or penalties related to uncertain tax positions as of June 30, 2012 and December 31, 2011.

The Company was profitable in 2011 and the six months ended June 30, 2012, but continues to maintain a valuation allowance on its net operating losses and other deferred tax assets because of its extended history of annual losses. The Company's U.S. federal net operating loss carryforwards totaled approximately $2.7 billion as of December 31, 2011. On a quarterly basis, the Company reassesses the valuation allowance for deferred income tax assets. The Company would consider reversing a significant portion of the valuation allowance upon assessment of certain factors, including (i) a demonstration of sustained profitability and (ii) the support of internal financial forecasts demonstrating the utilization of the net operating loss carryforwards prior to their expiration. If the Company determines that the reversal of all or a portion of the valuation allowance is appropriate, a significant benefit could be recognized against its income tax provision in the period of the reversal.

The Company files U.S. federal income tax returns and income tax returns in various state, local and foreign jurisdictions. The Company is no longer subject to any tax assessment from an income tax examination in the United States before 2007 and any other major taxing jurisdiction for years before 2005, except where the Company has net operating losses or tax credit carryforwards that originated before 2005. The Company currently is under examination by Revenue Quebec for the year ended March 11, 2009 and the year ended December 31, 2007. No adjustments have been reported. The Company is not under examination by any other jurisdictions for any tax year.

The Company intends to reinvest the total amount of its unremitted earnings in the local international jurisdiction or to repatriate the earnings only when tax-effective. As such, the Company has not provided for U.S. federal income taxes on the unremitted earnings of its international subsidiaries. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company would be subject to U.S. federal income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries. Determination of the amount of the unrecognized deferred U.S. federal income tax liability is not practical due to the complexity associated with this hypothetical calculation; however, unrecognized foreign tax credits would be available to reduce some portion of the U.S. federal income tax liability.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Regulation S-X (SX)
-Number 210
-Section 08
-Paragraph h
-Article 4

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 136, 172
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 109
-Paragraph 43, 44, 45, 46, 47, 48, 49
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08.(h))
-URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319

+ Details

Restructuring Expense

6 Months Ended

Jun. 30, 2012

Restructuring Expense

Restructuring Expense

P. Restructuring Expense

In June 2003, Vertex adopted a plan to restructure its operations to coincide with its increasing internal emphasis on advancing drug candidates through clinical development to commercialization. The restructuring was designed to re-balance the Company's relative investments in research and development to better support the Company's long-term strategy. At that time, the restructuring plan included a workforce reduction, write-offs of certain assets and a decision not to occupy approximately 290,000 square feet of specialized laboratory and office space in Cambridge, Massachusetts under lease to Vertex (the "Kendall Square Lease"). The Kendall Square Lease commenced in January 2003 and has a 15-year term. In the second quarter of 2005, the Company revised its assessment of its real estate requirements and decided to use approximately 120,000 square feet of the facility subject to the Kendall Square Lease (the "Kendall Square Facility") for its operations, beginning in 2006. The remaining rentable square footage of the Kendall Square Facility currently is subleased to third parties.

The restructuring expense incurred in the three and six months ended June 30, 2012 and 2011 relates only to the portion of the Kendall Square Facility that the Company is not occupying and does not intend to occupy for its operations. The remaining lease obligations, which are associated with the portion of the Kendall Square Facility that the Company occupies and uses for its operations, are recorded as rental expense in the period incurred.

In estimating the expense and liability under its Kendall Square Lease obligation, the Company estimated (i) the costs to be incurred to satisfy rental and build-out commitments under the lease (including operating costs), (ii) the lead-time necessary to sublease the space, (iii) the projected sublease rental rates and (iv) the anticipated durations of subleases. The Company uses a credit-adjusted risk-free rate of approximately 10% to discount the estimated cash flows. The Company reviews its estimates and assumptions on at least a quarterly basis, and intends to continue such reviews until the termination of the Kendall Square Lease, and will make whatever modifications the Company believes necessary, based on the Company's best judgment, to reflect any changed circumstances. The Company's estimates have changed in the past, and may change in the future, resulting in additional adjustments to the estimate of the liability. Changes to the Company's estimate of the liability are recorded as additional restructuring expense (credit). In addition, because the Company's estimate of the liability includes the application of a discount rate to reflect the time-value of money, the Company records imputed interest costs related to the liability each quarter. These costs are included in restructuring expense on the Company's condensed consolidated statements of operations.

In each period, the Company records lease restructuring expense attributable to imputed interest related to the restructuring liability. In certain periods, the restructuring expense also reflects the revision of certain key estimates and assumptions about building operating expenses and sublease income. The activities related to the restructuring liability for the three and six months ended June 30, 2012 and 2011 were as follows:

	Three Months Ended June 30,						Six Months Ended June 30,

	2012			2011			2012			2011
	(in thousands)
Liability, beginning of the period	$	25,473		$	28,814		$	26,313		$	29,595
Cash payments		(3,725	)		(3,737	)		(7,411	)		(7,473	)
Cash received from subleases		2,488			2,387			4,974			4,582
Restructuring expense		594			741			954			1,501

Liability, end of the period	$	24,830		$	28,205		$	24,830		$	28,205

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

+ References + Details

Contingencies

6 Months Ended

Jun. 30, 2012

Contingencies

Contingencies

Q. Contingencies

The Company has certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a reserve for contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. There were no material contingent liabilities accrued as of June 30, 2012 or December 31, 2011.

Guarantees

6 Months Ended

Jun. 30, 2012

Guarantees

Guarantees

R. Guarantees

As permitted under Massachusetts law, the Company's Articles of Organization and By-laws provide that the Company will indemnify certain of its officers and directors for certain claims asserted against them in connection with their service as an officer or director. The maximum potential amount of future payments that the Company could be required to make under these indemnification provisions is unlimited. However, the Company has purchased directors' and officers' liability insurance policies that could reduce its monetary exposure and enable it to recover a portion of any future amounts paid. No indemnification claims currently are outstanding, and the Company believes the estimated fair value of these indemnification arrangements is minimal.

The Company customarily agrees in the ordinary course of its business to indemnification provisions in agreements with clinical trial investigators and sites in its drug development programs, sponsored research agreements with academic and not-for-profit institutions, various comparable agreements involving parties performing services for the Company and its real estate leases. The Company also customarily agrees to certain indemnification provisions in its drug discovery, development and commercialization collaboration agreements. With respect to the Company's clinical trials and sponsored research agreements, these indemnification provisions typically apply to any claim asserted against the investigator or the investigator's institution relating to personal injury or property damage, violations of law or certain breaches of the Company's contractual obligations arising out of the research or clinical testing of the Company's compounds or drug candidates. With respect to lease agreements, the indemnification provisions typically apply to claims asserted against the landlord relating to personal injury or property damage caused by the Company, to violations of law by the Company or to certain breaches of the Company's contractual obligations. The indemnification provisions appearing in the Company's collaboration agreements are similar to those for the other agreements discussed above, but in addition provide some limited indemnification for its collaborator in the event of third-party claims alleging infringement of intellectual property rights. In each of the cases above, the indemnification obligation generally survives the termination of the agreement for some extended period, although the Company believes the obligation typically has the most relevance during the contract term and for a short period of time thereafter. The maximum potential amount of future payments that the Company could be required to make under these provisions is generally unlimited. The Company has purchased insurance policies covering personal injury, property damage and general liability that reduce its exposure for indemnification and would enable it in many cases to recover all or a portion of any future amounts paid. The Company has never paid any material amounts to defend lawsuits or settle claims related to these indemnification provisions. Accordingly, the Company believes the estimated fair value of these indemnification arrangements is minimal.

The Company entered into an underwriting agreement with Merrill Lynch, Pierce, Fenner & Smith Incorporated dated September 23, 2010 (the "Underwriting Agreement"), relating to the public offering and sale of the 2015 Notes. The Underwriting Agreement requires the Company to indemnify the underwriter against any loss it may suffer by reason of the Company's breach of any representation or warranty relating to the public offering, the Company's failure to perform certain covenants in the Underwriting Agreement, the inclusion of any untrue statement of material fact in the prospectus used in connection with the offering, the omission of any material fact needed to make those materials not misleading and any actions taken by the Company or its representatives in connection with the offering. The representations, warranties, covenants and indemnification provisions in the Underwriting Agreement are of a type customary in agreements of this sort. The Company believes the estimated fair value of this indemnification arrangement is minimal.

Basis of Presentation and Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2012

Basis of Presentation and Accounting Policies

Basis of Presentation

Basis of Presentation

Use of Estimates and Summary of Significant Accounting Policies

Use of Estimates and Summary of Significant Accounting Policies

The Company's significant accounting policies are described in Note A, "Nature of Business and Accounting Policies," in the 2011 Annual Report on Form 10-K.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Product Revenues, Net (Tables)

6 Months Ended

Jun. 30, 2012

Product Revenues, Net

Schedule of product revenues allowances and reserve categories

	Trade Allowances			Rebates, Chargebacks and Discounts			Product Returns			Other Incentives			Total

	(in thousands)
Balance at December 31, 2011	$	11,162		$	52,659		$	340		$	5,202		$	69,363
Provision related to current period sales		31,619			105,562			486			11,015			148,682
Adjustments related to prior period sales		—			3,225			—			73			3,298
Credits/payments made		(36,763	)		(81,650	)		(255	)		(12,534	)		(131,202	)

Balance at June 30, 2012	$	6,018		$	79,796		$	571		$	3,756		$	90,141

Collaborative Arrangements (Tables)

6 Months Ended

Jun. 30, 2012

Collaborative Arrangements

	Three Months Ended June 30,						Six Months Ended June 30,

	2012			2011			2012			2011
	(in thousands)
Royalty revenues	$	27,970		$	2,549		$	60,854		$	2,549

Collaborative revenues:
Amortized portion of up-front payment	$	3,107		$	3,107		$	6,214		$	6,214
Milestone revenues		—			—			—			50,000
Net payment for telaprevir development costs		(927	)		(3,108	)		(2,066	)		(4,253	)
Reimbursement for manufacturing services		—			9,059			4,449			13,213

Total collaborative revenues attributable to the Janssen collaboration	$	2,180		$	9,058		$	8,597		$	65,174

Total revenues attributable to the Janssen collaboration	$	30,150		$	11,607		$	69,451		$	67,723

	Three Months Ended June 30,				Six Months Ended June 30,

	2012		2011		2012		2011
	(in thousands)
Amortized portion of up-front payments	$	3,186	$	9,558	$	12,744	$	19,116
Milestone revenues		—		182		485		1,394
Payments for manufacturing services		1,659		5,133		5,650		5,848

Total collaborative revenues attributable to the Mitsubishi Tanabe collaboration	$	4,845	$	14,873	$	18,879	$	26,358

Summary of activity related to net income (loss) attributable to noncontrolling interest (Alios)

	Three Months Ended June 30,						Six Months Ended June 30,

	2012			2011			2012			2011
	(in thousands)
Loss before provision for income taxes	$	(4,467	)	$	(801	)	$	(9,491	)	$	(801	)
Change in fair value of contingent milestone and royalty payments		56,170			—			55,200			—
Provision for income taxes		(21,240	)		(24,448	)		(18,960	)		(24,448	)

Net income (loss) attributable to noncontrolling interest (Alios)	$	30,463		$	(25,249	)	$	26,749		$	(25,249	)

Summary of Alios' items included in the Company's consolidated balance sheets

	As of June 30, 2012		As of December 31, 2011

	(in thousands)
Restricted cash and cash equivalents (Alios)	$	56,024	$	51,878
Prepaid expenses and other current assets		1,952		2,299
Property and equipment, net		1,820		1,925
Intangible assets		250,600		250,600
Goodwill		4,890		4,890
Other assets		145		133
Accounts payable		1,686		4,132
Accrued expenses and other current liabilities		5,647		4,291
Accrued interest		13		13
Income taxes payable (Alios)		201		12,075
Deferred tax liability		135,431		116,121
Other liabilities		762		1,030
Redeemable noncontrolling interest (Alios)		37,914		37,036
Noncontrolling interest (Alios)		167,920		141,633

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2012

Earnings Per Share

Calculation of net income (loss) per basic and diluted share

	Three Months Ended June 30,						Six Months Ended June 30,

	2012			2011			2012			2011
	(in thousands, except per share amounts)
Basic net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$	(64,931	)	$	(174,069	)	$	26,659		$	(350,165	)
Less: Undistributed earnings allocated to participating securities		—			—			(260	)		—

Net income (loss) attributable to Vertex common shareholders—basic	$	(64,931	)	$	(174,069	)	$	26,399		$	(350,165	)
Basic weighted-average common shares outstanding		211,344			204,413			209,681			203,377
Basic net income (loss) attributable to Vertex per common share	$	(0.31	)	$	(0.85	)	$	0.13		$	(1.72	)
Diluted net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$	(64,931	)	$	(174,069	)	$	26,659		$	(350,165	)
Less: Undistributed earnings allocated to participating securities		—			—			(256	)		—

Net income (loss) attributable to Vertex common shareholders—diluted	$	(64,931	)	$	(174,069	)	$	26,403		$	(350,165	)
Weighted-average shares used to compute basic net income (loss) per common share		211,344			204,413			209,681			203,377
Effect of potentially dilutive securities:
Stock options		—			—			3,188			—
Other		—			—			88			—

Weighted-average shares used to compute diluted net income (loss) per common share		211,344			204,413			212,957			203,377
Diluted net income (loss) attributable to Vertex per common share	$	(0.31	)	$	(0.85	)	$	0.12		$	(1.72	)

Potential gross common equivalent shares

	Three Months Ended June 30,				Six Months Ended June 30,

	2012		2011		2012		2011
	(in thousands)
Stock options		18,771		20,589		10,624		20,589
Convertible senior subordinated notes		8,192		8,192		8,192		8,192
Unvested restricted stock and restricted stock units		2,087		1,971		8		1,971

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value of Financial Instruments

Financial assets subject to fair value measurements (excluding restricted cash and cash equivalents (Alios))

	Fair Value Measurements as of June 30, 2012

			Fair Value Hierarchy
	Total		Level 1		Level 2		Level 3
	(in thousands)
Financial assets carried at fair value:
Cash equivalents:
Money market funds	$	149,094	$	149,094	$	—	$	—
U.S. Treasury securities		181,221		181,221		—		—
Marketable securities:
U.S. Treasury securities		114,055		114,055		—		—
Government-sponsored enterprise securities		371,158		371,158		—		—
Commercial paper		229,435		—		229,435		—
Corporate debt securities		54,625		—		54,625		—
Restricted cash		34,090		34,090		—		—

Total	$	1,133,678	$	849,618	$	284,060	$	—

Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2012

Marketable Securities

Summary of cash, cash equivalents and marketable securities

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

	(in thousands)
As of June 30, 2012
Cash and cash equivalents:
Cash and money market funds	$	272,840	$	—	$	—		$	272,840
U.S. Treasury securities		181,234		—		(13	)		181,221

Total cash and cash equivalents	$	454,074	$	—	$	(13	)	$	454,061

Marketable securities:
U.S. Treasury securities (due within 1 year)	$	114,060	$	2	$	(7	)	$	114,055
Government-sponsored enterprise securities (due within 1 year)		371,170		15		(27	)		371,158
Commercial paper (due within 1 year)		229,243		192		—			229,435
Corporate debt securities (due within 1 year)		54,641		—		(16	)		54,625

Total marketable securities	$	769,114	$	209	$	(50	)	$	769,273

Total cash, cash equivalents and marketable securities	$	1,223,188	$	209	$	(63	)	$	1,223,334

As of December 31, 2011
Cash and cash equivalents:
Cash and money market funds	$	362,035	$	—	$	—		$	362,035
Government-sponsored enterprise securities		113,302		—		(17	)		113,285

Total cash and cash equivalents	$	475,337	$	—	$	(17	)	$	475,320

Marketable securities:
U.S. Treasury securities (due within 1 year)	$	22,105	$	2	$	—		$	22,107
Government-sponsored enterprise securities (due within 1 year)		471,589		8		(102	)		471,495

Total marketable securities	$	493,694	$	10	$	(102	)	$	493,602

Total cash, cash equivalents and marketable securities	$	969,031	$	10	$	(119	)	$	968,922

Inventories (Tables)

6 Months Ended

Jun. 30, 2012

Inventories

Inventories

	As of June 30, 2012		As of December 31, 2011

	(in thousands)
Raw materials	$	5,075	$	32,213
Work-in-process		59,223		47,010
Finished goods		23,507		33,207

Total	$	87,805	$	112,430

Stock-based Compensation Expense (Tables)

6 Months Ended

Jun. 30, 2012

Stock-based Compensation Expense

Stock-based compensation expense by award type and line item

	Three Months Ended June 30,						Six Months Ended June 30,

	2012			2011			2012			2011
	(in thousands)
Stock-based compensation expense by type of award:
Stock options	$	22,683		$	23,903		$	40,905		$	43,527
Restricted stock and restricted stock units		7,253			6,835			14,539			13,665
ESPP share issuances		1,742			1,523			4,172			3,102
Less stock-based compensation expense capitalized to inventories		(299	)		(382	)		(549	)		(536	)

Total stock-based compensation expense included in costs and expenses	$	31,379		$	31,879		$	59,067		$	59,758

Stock-based compensation expense by line item:
Research and development expenses	$	19,777		$	20,453		$	36,981		$	39,002
Sales, general and administrative expenses		11,602			11,426			22,086			20,756

Total stock-based compensation expense included in costs and expenses	$	31,379		$	31,879		$	59,067		$	59,758

Unrecognized stock-based compensation expense, net of estimated forfeitures

	As of June 30, 2012

	Unrecognized Expense Net of Estimated Forfeitures		Weighted-average Recognition Period
	(in thousands)		(in years)
Type of award:
Stock options	$	152,789		2.78
Restricted stock and restricted stock units		53,914		2.59
ESPP share issuances		2,298		0.51

Stock options outstanding and exercisable

	Options Outstanding						Options Exercisable

Range of Exercise Prices	Number Outstanding		Weighted-average Remaining Contractual Life		Weighted-average Exercise Price		Number Exercisable		Weighted-average Exercise Price
	(in thousands)		(in years)		(per share)		(in thousands)		(per share)
$9.07–$20.00		1,273		3.27	$	15.57		1,273	$	15.57
$20.01–$30.00		1,484		6.79		29.22		1,035		28.99
$30.01–$40.00		13,413		7.42		36.11		6,815		35.09
$40.01–$50.00		345		8.81		44.28		51		44.59
$50.01–$60.00		2,191		9.11		53.14		591		54.73
$60.01–$64.30		65		9.89		63.10		—		n/a

September 2009 Financial Transactions (Tables)

6 Months Ended

Jun. 30, 2012

September 2009 Financial Transactions

	Three Months Ended June 30,					Six Months Ended June 30,

	2012		2011			2012		2011
	(in thousands)
Expenses and Losses (Gains):
Interest expense related to 2012 Notes	$	—	$	2,863		$	—	$	10,797
Change in fair value of embedded derivative related to 2012 Notes		—		(18	)		—		(1,514	)
Change in fair value of free-standing derivatives related to the sale of milestone payments		—		2,238			—		9,332

Total September 2009 financial transaction expenses	$	—	$	5,083		$	—	$	18,615

Restructuring Expense (Tables)

6 Months Ended

Jun. 30, 2012

Restructuring Expense

	Three Months Ended June 30,						Six Months Ended June 30,

	2012			2011			2012			2011
	(in thousands)
Liability, beginning of the period	$	25,473		$	28,814		$	26,313		$	29,595
Cash payments		(3,725	)		(3,737	)		(7,411	)		(7,473	)
Cash received from subleases		2,488			2,387			4,974			4,582
Restructuring expense		594			741			954			1,501

Liability, end of the period	$	24,830		$	28,205		$	24,830		$	28,205

Basis of Presentation and Accounting Policies (Details)	6 Months Ended
Basis of Presentation and Accounting Policies (Details)	Jun. 30, 2012 segment
Basis of Presentation and Accounting Policies
Number of operating segments	1

Product Revenues, Net (Details) $ in Thousands	6 Months Ended
Product Revenues, Net (Details) $ in Thousands	Jun. 30, 2012 USD ($) M
Product revenues, net
Discount rate for payments made within 30 days (as a percent)	2.00%
Period prior to the labeled expiration date in which distributors have right to return unopened, unprescribed product (in months) \| M	6
Period after the labeled expiration date in which distributors have right to return unopened, unprescribed product (in months) \| M	12
Activity related to product revenues allowances and reserve categories
Balance at the beginning of the period	$ 69,363
Provision related to current period sales	148,682
Adjustments related to prior period sales	3,298
Credits/payments made	(131,202)
Balance at the end of the period	90,141
Trade Allowances
Activity related to product revenues allowances and reserve categories
Balance at the beginning of the period	11,162
Provision related to current period sales	31,619
Credits/payments made	(36,763)
Balance at the end of the period	6,018
Rebates, Chargebacks and Discounts
Activity related to product revenues allowances and reserve categories
Balance at the beginning of the period	52,659
Provision related to current period sales	105,562
Adjustments related to prior period sales	3,225
Credits/payments made	(81,650)
Balance at the end of the period	79,796
Product Returns
Activity related to product revenues allowances and reserve categories
Balance at the beginning of the period	340
Provision related to current period sales	486
Credits/payments made	(255)
Balance at the end of the period	571
Other Incentives
Activity related to product revenues allowances and reserve categories
Balance at the beginning of the period	5,202
Provision related to current period sales	11,015
Adjustments related to prior period sales	73
Credits/payments made	(12,534)
Balance at the end of the period	$ 3,756

Collaborative Arrangements (Details)
$ in Thousands

1 Months Ended

3 Months Ended

6 Months Ended

12 Months Ended

Apr. 30, 2012

USD ($)

Jun. 30, 2011

USD ($)

analogues

lines

Apr. 30, 2011

USD ($)

payments

Jun. 30, 2006

Jun. 30, 2012

USD ($)

lines

Jun. 30, 2011

USD ($)

lines

Mar. 31, 2011

USD ($)

Sep. 30, 2009

USD ($)

Jun. 30, 2012

USD ($)

lines

Jun. 30, 2011

USD ($)

lines

Dec. 31, 2011

USD ($)

Dec. 31, 2006

USD ($)

Collaborative Arrangements

Research and development expense associated with collaborative programs

$ 30,000

$ 40,000

$ 66,000

$ 64,000

Collaborative revenues recognized

Royalty revenues

33,480

10,010

72,461

16,071

Collaborative revenues

Total collaborative revenues attributable to the collaboration

11,552

29,879

35,933

97,480

Total revenues

418,305

114,424

857,042

188,086

Collaborative revenues

11,552

29,879

35,933

97,480

Research and development expenses

196,544

173,604

392,915

332,216

Deferred tax liability

^[1]

263,017

$ 243,707

Noncontrolling Interest (Alios)

Provision for income taxes

(20,063)

(24,448)

(20,095)

(24,448)

Net income (loss) attributable to noncontrolling interest (Alios)

30,463

(25,249)

26,749

(25,249)

Restricted cash and cash equivalents (Alios)

^[1]

56,024

51,878

Prepaid expenses and other current assets

^[1]

40,524

14,889

Property and equipment, net

^[1]

272,561

133,176

Intangible assets

^[1]

663,500

Goodwill

^[1]

30,992

Other assets

^[1]

10,408

11,268

Accounts payable

^[1]

59,352

74,642

Accrued expenses and other current liabilities

^[1]

271,464

252,299

Accrued interest

^[1]

3,363

Income taxes payable (Alios)

^[1]

201

12,075

Deferred tax liability

^[1]

263,017

243,707

Other liabilities, excluding current portion

^[1]

28,010

7,287

Redeemable noncontrolling interest (Alios)

^[1]

37,914

37,036

Noncontrolling interest (Alios)

^[1]

167,920

$ 167,920

141,633

Janssen Pharmaceutica, N.V.

Schedule of Collaborative Arrangements

Drug development costs to be paid by collaborator (as a percent)

50.00%

Tiered royalty average range, as a percentage of net sales in the Janssen territories

mid-20% range

Up-front license payment

$ 165,000

Deferred revenue remaining related to up-front license payment

49,700

$ 49,700

Total contingent milestone payments earned

350,000

Milestone payment earned pursuant to the collaborative agreement

$ 50,000

Notice period required to terminate without cause (in years) | Y

Collaborative revenues recognized

Royalty revenues

27,970

2,549

60,854

2,549

Collaborative revenues

Amortized portion of up-front payment

3,107

6,214

Milestone revenues

50,000

Net payment for telaprevir development costs

(927)

(3,108)

(2,066)

(4,253)

Payments for manufacturing services

9,059

4,449

13,213

Total collaborative revenues attributable to the collaboration

2,180

9,058

8,597

65,174

Total revenues

30,150

11,607

69,451

67,723

Collaborative revenues

2,180

9,058

8,597

65,174

Noncontrolling Interest (Alios)

Milestone revenues

50,000

Mitsubishi Tanabe Pharma Corporation

Schedule of Collaborative Arrangements

License fee paid upon amendment of agreement

$ 105,000

Notice period required to terminate without cause (in days) | D

Collaborative revenues

Amortized portion of up-front payment

3,186

9,558

12,744

19,116

Milestone revenues

182

485

1,394

Payments for manufacturing services

1,659

5,133

5,650

5,848

Total collaborative revenues attributable to the collaboration

4,845

14,873

18,879

26,358

Recognized revenues from the up-front payment

$ 3,200

Milestone payment received

65,000

Collaborative revenues

4,845

14,873

18,879

26,358

Noncontrolling Interest (Alios)

Milestone revenues

182

485

1,394

Cystic Fibrosis Foundation Therapeutics Incorporated

Collaborative revenues

Total collaborative revenues attributable to the collaboration

4,500

5,900

8,500

5,900

Collaborative funding

$ 75,000

Number of years over which funding will be made | Y

Milestone payment received

$ 1,500

Collaborative revenues

4,500

$ 5,900

8,500

$ 5,900

Number of commercial milestone payments for achievement of certain sales levels for potentiator compound such as KALYDECO | payments

Number of commercial milestone payments for achievement of certain sales levels for corrector compound such as VX-809 or VX-661 | payments

Alios BioPharma, Inc

Collaborative revenues

Milestone revenues

35,000

Number of nucleotide analogues discovered by acquiree | analogues

Research and development milestone payments, maximum

$ 715,000

Commercial milestone payments, maximum

$ 750,000

Notice period for termination of contract due to technical failure (in days) | D

Notice period for termination of contract after completion of clinical trials (in days) | D

Latest expiration period for royalty obligation after first commercial sale in country unless contract is terminated earlier (in years) | Y

Up-front payment

60,000

Deferred tax liability

$ 135,431

116,121

Noncontrolling Interest (Alios)

Number of lines on balance sheet where noncontrolling interest is reported | lines

Milestone revenues

$ 35,000

Loss before provision for income taxes

$ (4,467)

$ (801)

(9,491)

$ (801)

Change in fair value of contingent milestone and royalty payments

56,170

55,200

Provision for income taxes

(21,240)

(24,448)

(18,960)

(24,448)

Net income (loss) attributable to noncontrolling interest (Alios)

30,463

$ (25,249)

26,749

$ (25,249)

Restricted cash and cash equivalents (Alios)

56,024

51,878

Prepaid expenses and other current assets

1,952

2,299

Property and equipment, net

1,820

1,925

Intangible assets

250,600

Goodwill

4,890

Other assets

145

133

Accounts payable

1,686

4,132

Accrued expenses and other current liabilities

5,647

4,291

Accrued interest

Income taxes payable (Alios)

201

12,075

Deferred tax liability

135,431

116,121

Other liabilities, excluding current portion

762

1,030

Redeemable noncontrolling interest (Alios)

37,914

37,036

Noncontrolling interest (Alios)

$ 167,920

$ 141,633

[1]

Acquisition of ViroChem Pharma Inc. (Details) - USD ($)
$ in Thousands

Jun. 30, 2012

Dec. 31, 2011

Mar. 12, 2009

Business Acquisition

Intangible assets

^[1]

$ 663,500

Goodwill

^[1]

30,992

Deferred tax liability

^[1]

263,017

243,707

ViroChem

Business Acquisition

Percent of voting interest acquired in ViroChem

100.00%

Goodwill

26,100

Deferred tax liability

127,600

ViroChem | VX-222

Business Acquisition

Intangible assets

$ 412,900

[1]

- Definition

Represents the noncurrent portion of deferred tax liabilities, which result from applying the applicable tax rate to net taxable temporary differences pertaining to each jurisdiction to which the entity is obligated to pay income tax. A noncurrent taxable temporary difference is a difference between the tax basis and the carrying amount of a noncurrent asset or liability in the financial statements prepared in accordance with generally accepted accounting principles. In a classified statement of financial position, an enterprise separates deferred tax liabilities and assets into a current amount and a noncurrent amount. Deferred tax liabilities and assets are classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, are classified according to the expected reversal date of the temporary difference.

+ References + Details

- Definition

Carrying amount as of the balance sheet date, which is the cumulative amount paid and (if applicable) the fair value of any noncontrolling interest in the acquiree, adjusted for any amortization recognized prior to the adoption of any changes in generally accepted accounting principles (as applicable) and for any impairment charges, in excess of the fair value of net assets acquired in one or more business combination transactions.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 45
-Subparagraph e
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 43
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 68
-Subparagraph l
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 45
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6388280&loc=d3e13770-109266

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 350
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6905597&loc=d3e13816-109267

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 72
-Subparagraph d
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 142
-Paragraph 45
-Subparagraph e
-Clause 1
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 141R
-Paragraph 34
-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

+ Details

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Basic net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$ (64,931)	$ (174,069)	$ 26,659	$ (350,165)
Less: Undistributed earnings allocated to participating securities			(260)
Net income (loss) attributable to Vertex common shareholders-basic	$ (64,931)	$ (174,069)	$ 26,399	$ (350,165)
Basic weighted-average common shares outstanding	211,344	204,413	209,681	203,377
Basic net income (loss) attributable to Vertex per common share (in dollars per share)	$ (0.31)	$ (0.85)	$ 0.13	$ (1.72)
Diluted net income (loss) attributable to Vertex per common share calculation:
Net income (loss) attributable to Vertex common shareholders	$ (64,931)	$ (174,069)	$ 26,659	$ (350,165)
Less: Undistributed earnings allocated to participating securities			(256)
Net income (loss) attributable to Vertex common shareholders-diluted	$ (64,931)	$ (174,069)	$ 26,403	$ (350,165)
Weighted-average shares used to compute basic net income (loss) per common share	211,344	204,413	209,681	203,377
Effect of potentially dilutive securities:
Stock Options (in shares)			3,188
Other (in shares)			88
Weighted-average shares used to compute diluted net income (loss) per common share	211,344	204,413	212,957	203,377
Diluted net income (loss) attributable to Vertex per common share (in dollars per share)	$ (0.31)	$ (0.85)	$ 0.12	$ (1.72)
Stock options.
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share (in shares)	18,771	20,589	10,624	20,589
Convertible senior subordinated notes.
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share (in shares)	8,192	8,192	8,192	8,192
Unvested restricted stock and restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share (in shares)	2,087	1,971	8	1,971

Fair Value of Financial Instruments (Details) $ in Thousands	Jun. 30, 2012 USD ($)
Financial assets carried at fair value:
Cash equivalents (Alios)	$ 53,300
Recurring basis \| Total
Financial assets carried at fair value:
Restricted cash	34,090
Total	1,133,678
Recurring basis \| Total \| Money market funds
Financial assets carried at fair value:
Cash equivalents:	149,094
Recurring basis \| Total \| U.S. Treasury securities (due within 1 year)
Financial assets carried at fair value:
Cash equivalents:	181,221
Marketable securities:	114,055
Recurring basis \| Total \| Government-sponsored enterprise securities (due within 1 year)
Financial assets carried at fair value:
Marketable securities:	371,158
Recurring basis \| Total \| Commercial paper
Financial assets carried at fair value:
Marketable securities:	229,435
Recurring basis \| Total \| Corporate debt securities
Financial assets carried at fair value:
Marketable securities:	54,625
Recurring basis \| Level 1
Financial assets carried at fair value:
Restricted cash	34,090
Total	849,618
Recurring basis \| Level 1 \| Money market funds
Financial assets carried at fair value:
Cash equivalents:	149,094
Recurring basis \| Level 1 \| U.S. Treasury securities (due within 1 year)
Financial assets carried at fair value:
Cash equivalents:	181,221
Marketable securities:	114,055
Recurring basis \| Level 1 \| Government-sponsored enterprise securities (due within 1 year)
Financial assets carried at fair value:
Marketable securities:	371,158
Recurring basis \| Level 2
Financial assets carried at fair value:
Total	284,060
Recurring basis \| Level 2 \| Commercial paper
Financial assets carried at fair value:
Marketable securities:	229,435
Recurring basis \| Level 2 \| Corporate debt securities
Financial assets carried at fair value:
Marketable securities:	$ 54,625

Fair Value of Financial Instruments (Details 2) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Sep. 30, 2010	Jun. 30, 2012	Dec. 31, 2011
Debt Offerings, Fair Value Disclosure
Convertible senior subordinated notes (due 2015)		$ 400,000	$ 400,000
Convertible Senior Subordinated Notes 3.35 Percent Due 2015
Debt Offerings, Fair Value Disclosure
Convertible senior subordinated notes (due 2015)	$ 400,000	$ 400,000
Interest rate (as a percent)	3.35%	3.35%
Fair value of convertible senior subordinated notes		$ 488,000

Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2012	Dec. 31, 2011
Summary of cash, cash equivalents and marketable securities
Fair Value	$ 1,223,334	$ 968,922
Amortized Cost	1,223,188	969,031
Gross Unrealized Gains	209	10
Gross Unrealized Losses	(63)	(119)
Total cash and cash equivalents
Summary of cash, cash equivalents and marketable securities
Amortized Cost	454,074	475,337
Gross Unrealized Losses	(13)	(17)
Fair Value	454,061	475,320
Cash and money market funds
Summary of cash, cash equivalents and marketable securities
Amortized Cost	272,840	362,035
Fair Value	272,840	362,035
U.S. Treasury securities
Summary of cash, cash equivalents and marketable securities
Amortized Cost	181,234
Gross Unrealized Losses	(13)
Fair Value	181,221
Government-sponsored enterprise securities
Summary of cash, cash equivalents and marketable securities
Amortized Cost		113,302
Gross Unrealized Losses		(17)
Fair Value		113,285
Total marketable securities
Summary of cash, cash equivalents and marketable securities
Amortized Cost	769,114	493,694
Gross Unrealized Gains	209	10
Gross Unrealized Losses	(50)	(102)
Fair Value	769,273	493,602
U.S. Treasury securities (due within 1 year)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	114,060	22,105
Gross Unrealized Gains	2	2
Gross Unrealized Losses	(7)
Fair Value	114,055	22,107
Government-sponsored enterprise securities (due within 1 year)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	371,170	471,589
Gross Unrealized Gains	15	8
Gross Unrealized Losses	(27)	(102)
Fair Value	371,158	$ 471,495
Commercial paper (due within 1 year)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	229,243
Gross Unrealized Gains	192
Fair Value	229,435
Corporate debt securities (due within 1 year)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	54,641
Gross Unrealized Losses	(16)
Fair Value	$ 54,625

Marketable Securities (Details 2) - USD ($)
$ in Thousands

Jun. 30, 2012

Dec. 31, 2011

Marketable Securities

Restricted cash and cash equivalents (Alios)

^[1]

$ 56,024

$ 51,878

[1]

Inventories (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Inventories
Raw materials	$ 5,075	$ 5,075	$ 32,213
Work in process	59,223	59,223	47,010
Finished goods	23,507	23,507	33,207
Total	87,805	87,805	$ 112,430
Cost of product revenues related to INCIVEK inventory reserves	$ 78,000	$ 78,000

- Definition

Charge to cost of goods sold that represents the reduction of the carrying amount of inventory, generally attributable to obsolescence or market conditions.

+ References + Details

Fan Pier Leases (Details) area in Millions, $ in Millions	1 Months Ended	3 Months Ended		6 Months Ended
Fan Pier Leases (Details) area in Millions, $ in Millions	May 31, 2011 leases buildings area	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 USD ($) Y	Jun. 30, 2011 USD ($)	Dec. 31, 2011 USD ($)
Fan Pier Leases
Number of leases \| leases	2
Area of leased property (in square feet) \| area	1.1
Number of buildings under lease agreement \| buildings	2
Initial term of lease agreement (in years) \| Y				15
Optional term of lease agreement (in years) \| Y				10
Project construction costs incurred by landlord \| $		$ 159.0		$ 159.0		$ 54.7
Rent expense related to land operating lease \| $		$ 1.7	$ 0.6	$ 3.3	$ 0.6

Convertible Senior Subordinated Notes due 2015 (Details)	1 Months Ended	6 Months Ended
	Sep. 30, 2010 USD ($) shares Y D $ / shares	Jun. 30, 2012 USD ($)	Dec. 31, 2011 USD ($)
Convertible Senior Subordinated Notes and Collaborator Loan
Convertible senior subordinated notes		$ 400,000,000	$ 400,000,000
Convertible Senior Subordinated Notes 3.35 Percent Due 2015
Convertible Senior Subordinated Notes and Collaborator Loan
Convertible senior subordinated notes	$ 400,000,000	$ 400,000,000
Interest rate (as a percent)	3.35%	3.35%
Net proceeds from convertible debt offering	$ 391,600,000
Underwriting discount	8,000,000
Debt issuance costs	$ 400,000
Conversion price (in dollars per share) \| $ / shares	$ 48.83
Original conversion rate, number of shares to be issued per $1000 of principal \| shares	20.4794
Convertible debt principal amount, basis for exchange	$ 1,000
Percent closing price needs to exceed the conversion price for at least 20 trading days within 30 consecutive trading days for provisional redemption	130.00%
Minimum number of days within 30 consecutive trading days the closing price needs to exceed the conversion price for provisional redemption \| D	20
Total consecutive trading days during which the closing price must exceed the conversion price for at least 20 trading days for provisional redemption \| D	30
Percentage of principal amount used in computation of provisional redemption price	100.00%
Total interest payments on notes being provisionally redeemed equal to interest for specified number of years \| Y	3

Stock-based Compensation Expense (Details) $ in Thousands	3 Months Ended		6 Months Ended
Stock-based Compensation Expense (Details) $ in Thousands	Jun. 30, 2012 USD ($)	Jun. 30, 2011 USD ($)	Jun. 30, 2012 USD ($) Y	Jun. 30, 2011 USD ($)
Stock-based compensation expense:
Less stock-based compensation expense capitalized to inventories	$ (299)	$ (382)	$ (549)	$ (536)
Total stock-based compensation expense included in costs and expenses	31,379	31,879	59,067	59,758
Stock options
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	22,683	23,903	40,905	43,527
Type of award:
Unrecognized Expense, Net of Estimated Forfeitures	152,789		$ 152,789
Weighted-average Recognition Period (in years) \| Y			2.78
Restricted stock and restricted stock units
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	7,253	6,835	$ 14,539	13,665
Type of award:
Unrecognized Expense, Net of Estimated Forfeitures	53,914		$ 53,914
Weighted-average Recognition Period (in years) \| Y			2.59
ESPP share issuances
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	1,742	1,523	$ 4,172	3,102
Type of award:
Unrecognized Expense, Net of Estimated Forfeitures	2,298		$ 2,298
Weighted-average Recognition Period (in years) \| Y			0.51
Research and development expenses
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	19,777	20,453	$ 36,981	39,002
Sales, general and administrative expenses
Stock-based compensation expense:
Total stock-based compensation expense included in costs and expenses	$ 11,602	$ 11,426	$ 22,086	$ 20,756

Stock-based Compensation Expense (Details 2) shares in Thousands	6 Months Ended
	Jun. 30, 2012 Y $ / shares shares
Range of Exercise Prices, $9.07-$20.00
Stock options outstanding and exercisable
Exercise price, low end of range (in dollars per share)	$ 9.07
Exercise price, high end of range (in dollars per share)	$ 20.00
Exercise price range, options outstanding (in shares) \| shares	1,273
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| Y	3.27
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 15.57
Exercise price range, options exercisable (in shares) \| shares	1,273
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 15.57
Range of Exercise Prices, $20.01-$30.00
Stock options outstanding and exercisable
Exercise price, low end of range (in dollars per share)	20.01
Exercise price, high end of range (in dollars per share)	$ 30.00
Exercise price range, options outstanding (in shares) \| shares	1,484
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| Y	6.79
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 29.22
Exercise price range, options exercisable (in shares) \| shares	1,035
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 28.99
Range of Exercise Prices, $30.01-$40.00
Stock options outstanding and exercisable
Exercise price, low end of range (in dollars per share)	30.01
Exercise price, high end of range (in dollars per share)	$ 40.00
Exercise price range, options outstanding (in shares) \| shares	13,413
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| Y	7.42
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 36.11
Exercise price range, options exercisable (in shares) \| shares	6,815
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 35.09
Range of Exercise Prices, $40.01-$50.00
Stock options outstanding and exercisable
Exercise price, low end of range (in dollars per share)	40.01
Exercise price, high end of range (in dollars per share)	$ 50.00
Exercise price range, options outstanding (in shares) \| shares	345
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| Y	8.81
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 44.28
Exercise price range, options exercisable (in shares) \| shares	51
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 44.59
Range of Exercise Prices, $50.01-$60.00
Stock options outstanding and exercisable
Exercise price, low end of range (in dollars per share)	50.01
Exercise price, high end of range (in dollars per share)	$ 60.00
Exercise price range, options outstanding (in shares) \| shares	2,191
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| Y	9.11
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 53.14
Exercise price range, options exercisable (in shares) \| shares	591
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 54.73
Range of Exercise Prices, $60.01-$64.30
Stock options outstanding and exercisable
Exercise price, low end of range (in dollars per share)	60.01
Exercise price, high end of range (in dollars per share)	$ 64.30
Exercise price range, options outstanding (in shares) \| shares	65
Exercise price range, options outstanding, weighted-average remaining contractual life (in years) \| Y	9.89
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 63.10

September 2009 Financial Transactions (Details) $ in Thousands	1 Months Ended			3 Months Ended		6 Months Ended	12 Months Ended
	Oct. 31, 2011 USD ($)	Feb. 28, 2011 USD ($)	Sep. 30, 2009 USD ($) agreements	Jun. 30, 2011 USD ($)	Mar. 31, 2011 USD ($)	Jun. 30, 2011 USD ($)	Dec. 31, 2011 USD ($)
2012 Notes
Face amount of 2012 Notes			$ 155,000
Proceeds from issuance of 2012 Notes			$ 122,200
Proceeds from milestone payment		$ 50,000
Portion of 2012 Notes redeemed upon achievement of certain approval milestone pursuant to the Janssen collaboration					$ 50,000
Milestone payment redeemed in the fourth quarter of 2011	$ 105,000
Sale of Contingent Milestone Payments
Number of purchase agreements entered into related to sale of contingent launch milestone payments pursuant to the Janssen collaboration \| agreements			2
Proceeds from sale of potential contingent launch milestone payments pursuant to the Janssen collaboration			$ 32,800
Value of potential contingent launch milestone payments sold pursuant to the Janssen collaboration			$ 95,000
Third party's proceeds from the milestone payments from Janssen in the fourth quarter of 2011							$ 95,000
Expenses and Losses (Gains):
Interest expense related to 2012 Notes				$ 2,863		$ 10,797
Change in fair value of embedded derivative related to 2012 Notes				(18)		(1,514)
Change in fair value of free-standing derivatives related to the sale of milestone payments				2,238		9,332
Total September 2009 financial transaction expenses				$ 5,083		$ 18,615

Sale of HIV Protease Inhibitor Royalty Stream (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2008	Jun. 30, 2012
Sale of HIV Protease Inhibitor Royalty Stream
Gross proceeds from sale of royalty rights receivable from GlaxoSmithKline	$ 160.0
Deferred revenues related to the one-time cash payment agreement with GlaxoSmithKline		$ 87.7

Credit Agreement (Details) $ in Millions	Jan. 31, 2011 USD ($)
Bank of America
Line of credit facility
Revolving credit facility	$ 100.0

Income Taxes (Details) - USD ($)
$ in Thousands

3 Months Ended

6 Months Ended

Jun. 30, 2012

Jun. 30, 2011

Jun. 30, 2012

Jun. 30, 2011

Dec. 31, 2011

Schedule of Collaborative Arrangements

Provision for income taxes

$ 20,063

$ 24,448

$ 20,095

$ 24,448

Income taxes payable (Alios)

^[1]

201

$ 12,075

Deferred tax liability

^[1]

263,017

243,707

U.S. federal net operating loss carryforwards

2,700,000

Alios BioPharma, Inc

Schedule of Collaborative Arrangements

Provision for income taxes

21,240

$ 24,448

18,960

$ 24,448

Income taxes payable (Alios)

201

12,075

Deferred tax liability

135,431

116,121

Up-front payment

$ 60,000

Vertex

Schedule of Collaborative Arrangements

Provision for income taxes

$ (1,200)

$ 1,100

[1]

- Definition

+ References + Details

Restructuring Expense (Details) - Kendall Square Facility	1 Months Ended		12 Months Ended
	Jun. 30, 2003 area	Jan. 31, 2003 Y	Dec. 31, 2006 area	Dec. 31, 2003
Kendall Square Lease
Leased area (in square feet)	290,000
Lease term (in years) \| Y		15
Occupied leased area (in square feet)			120,000
Discount rate, lease restructuring liability (as a percent)				10.00%

Restructuring Expense (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
Restructuring Expense (Details 2) - USD ($) $ in Thousands	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Restructuring activities
Lease restructuring liability at beginning of period	$ 25,473	$ 28,814	$ 26,313	$ 29,595
Cash payments	(3,725)	(3,737)	(7,411)	(7,473)
Cash received from subleases	2,488	2,387	4,974	4,582
Restructuring expense	594	741	954	1,501
Lease restructuring liability at end of period	$ 24,830	$ 28,205	$ 24,830	$ 28,205

Label	Element	Value
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Net of Tax	us-gaap_OtherComprehensiveIncomeUnrealizedHoldingGainLossOnSecuritiesArisingDuringPeriodNetOfTax	$ 1,000
Noncontrolling Interest, Increase from Business Combination	us-gaap_NoncontrollingInterestIncreaseFromBusinessCombination	130,581,000
Stock Issued During Period, Value, Employee Benefit Plan	us-gaap_StockIssuedDuringPeriodValueEmployeeBenefitPlan	93,087,000
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax	us-gaap_OtherComprehensiveIncomeForeignCurrencyTransactionAndTranslationAdjustmentNetOfTaxPeriodIncreaseDecrease	359,000
Adjustments to Additional Paid in Capital, Share-based Compensation, Requisite Service Period Recognition	us-gaap_AdjustmentsToAdditionalPaidInCapitalSharebasedCompensationRequisiteServicePeriodRecognitionValue	$ 60,294,000

- Definition

This element represents the amount of recognized equity-based compensation during the period, that is, the amount recognized as expense in the income statement (or as asset if compensation is capitalized). Alternate captions include the words "stock-based compensation".

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 123R
-Paragraph 64
-Subparagraph b
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+ Details

- Definition

Adjustment that results from the process of translating subsidiary financial statements and foreign equity investments into the reporting currency of the reporting entity, net of tax.

+ References

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+ Details

- Definition

Appreciation or loss in value (before reclassification adjustment) of the total of unsold securities during the period being reported on, net of tax. Reclassification adjustments include: (1) the unrealized holding gain (loss), net of tax, at the date of the transfer for a debt security from the held-to-maturity category transferred into the available-for-sale category. Also includes the unrealized gain (loss) at the date of transfer for a debt security from the available-for-sale category transferred into the held-to-maturity category; (2) the unrealized gains (losses) realized upon the sale of securities, after tax; and (3) the unrealized gains (losses) realized upon the write-down of securities, after tax.

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+ Details