Announced positive data from ~~Parion Sciences, Inc., or Parion,~~two Phase 3 clinical trials evaluating the triple combination of VX-445, tezacaftor and ivacaftor in ~~2015. In October 2017, we announced the results of a Phase 2 28-day clinical trial evaluating VX-371 + hypertonic saline versus hypertonic saline alone in 142~~F508del/Min patients ~~with CF~~and F508del homozygous patients 12 years of age ~~and older who are homozygous~~or older.

Obtained approval for SYMDEKO in Australia for certain patients 12 years of age or older.

Obtained approval for ORKAMBI in the ~~F508del mutation and were already receiving ORKAMBI and continued~~European Union for children 2 to ~~receive ORKAMBI throughout the clinical trial. The clinical trial did not meet its primary efficacy endpoint. In patients being treated with ORKAMBI, the addition~~5 years of hypertonic saline resulted in a decrease of 0.1 percentage points ppFEV1 at day 28. In patients being treated with ORKAMBI, the addition of VX-371 + hypertonic saline resulted in an increase of 0.1 percentage points ppFEV1 at day 28. Safety data from the clinical trial showed that the addition of VX-371, with or without hypertonic saline, was generally well tolerated in patients already receiving ORKAMBI, and the safety profile was consistent with that observed in prior clinical trials of VX-371 monotherapy. Based on the results of this clinical trial, we recognized an impairment charge related to Parion’s pulmonary ENaC platform in third quarter of 2017 and deconsolidated Parion as a VIE, effective September 30, 2017.age.

~~A Phase 2 clinical trial of VX-371 monotherapy in patients with primary ciliary dyskinesia (PCD) is ongoing.~~

3332

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~~Research~~

Initiated Phase 2 dose-ranging clinical trial to evaluate the potentiator VX-561 as a potential once-daily monotherapy.

Obtained approval for KALYDECO in the United States for infants 6 to <12 months of age.

Initiated Phase 2 clinical trial evaluating the potential once-daily triple combination of VX-121 (an additional next-generation corrector) with VX-561 and ~~Development~~ tezacaftor.

~~We are engaged~~Expanding Pipeline

Obtained Fast Track Designation for VX-814, our first small molecule alpha-1 antitrypsin deficiency corrector.

Announced with CRISPR Therapeutics that the first patient has been treated with CTX001 in a ~~number~~Phase 1/2 clinical trial of ~~other research~~patients with transfusion-dependent beta thalassemia.

Announced with CRISPR Therapeutics that first patient has been enrolled in a Phase 1/2 clinical trial of patients with sickle cell disease.

Obtained Fast Track designation for CTX001 for both transfusion-dependent beta thalassemia and mid- and early-stage development programs, including VX-150 for pain and VX-210 for acute spinal cord injury. We have also entered into third-party collaborations, pursuant to which we are engaged in the discovery and development of nucleic acid-based therapies for a variety of diseases, including CF. sickle cell disease.

Research

We plan to continue investing in our research programs and fostering scientific innovation in order to identify and develop transformative medicines. Our current internal research programs include programs targeting cystic fibrosis, ~~adrenoleukodystrophy, alpha-1 antritrypsin deficiency,~~pain, beta thalassemia, sickle cell disease, alpha-1 antitrypsin and ~~polycystic kidney disease.~~focal segmental glomerulosclerosis. We believe that pursuing research in diverse areas allows us to balance the risks inherent in drug development and may provide drug candidates that will form our pipeline in future years. To supplement our internal research programs, we collaborate with biopharmaceutical and technology companies, leading academic research institutions, government laboratories, foundations and other organizations as needed to advance research in our areas of therapeutic interest and to access technologies needed to execute on our strategy.

Drug Discovery and Development

Discovery and development of a new pharmaceutical product is a difficult and lengthy process that requires significant financial resources along with extensive technical and regulatory ~~expertise and can take 10 to 15 years or more.~~expertise. Potential drug candidates are subjected to rigorous evaluations, driven in part by stringent regulatory considerations, designed to generate information concerning efficacy, ~~side-effects,~~side effects, proper dosage levels and a variety of other physical and chemical characteristics that are important in determining whether a drug candidate should be approved for marketing as a pharmaceutical product. Most chemical compounds that are investigated as potential drug candidates never progress into development, and most drug candidates that do advance into development never receive marketing approval. Because our investments in drug candidates are subject to considerable risks, we closely monitor the results of our discovery, research, clinical trials and nonclinical studies and frequently evaluate our drug development programs in light of new data and scientific, business and commercial insights, with the objective of balancing risk and potential. This process can result in abrupt changes in focus and priorities as new information becomes available and as we gain additional understanding of our ongoing programs and potential new programs, as well as those of our competitors.

If we believe that data from a completed registration program support approval of a drug candidate, we submit an NDA to the FDA requesting approval to market the drug candidate in the United States and seek analogous approvals from comparable regulatory authorities in ~~foreign jurisdictions.~~jurisdictions outside the United States. To obtain approval, we must, among other things, demonstrate with evidence gathered in nonclinical studies and well-controlled clinical trials that the drug candidate is safe and effective for the disease it is intended to treat and that the manufacturing facilities, processes and controls for the manufacture of the drug candidate are adequate. The FDA and ~~foreign~~ex-U.S. regulatory authorities have substantial discretion in deciding whether or not a drug candidate should be granted approval based on the benefits and risks of the drug candidate in the treatment of a particular disease, and could delay, limit or deny regulatory approval. If regulatory delays are significant or regulatory approval is limited or denied altogether, our financial results and the commercial prospects for the drug candidate involved will be harmed.

Regulatory Compliance

Our marketing of pharmaceutical products is subject to extensive and complex laws and regulations. We have a corporate compliance program designed to actively identify, prevent and mitigate risk through the implementation of compliance policies and systems and through the promotion of a culture of compliance. Among other laws, regulations and standards, we are subject to various U.S. federal and state laws, and comparable laws in other jurisdictions, pertaining to health care fraud and abuse, including anti-kickback and false claims laws, and laws prohibiting the promotion of drugs for unapproved or off-

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label uses. Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive or pay any remuneration to induce the referral of business, including the purchase or prescription of a particular drug that is reimbursed by a state or federal program. False claims laws prohibit anyone from knowingly or willfully presenting for payment to third-party payors, including Medicare and Medicaid, claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. We are subject to laws and regulations that regulate the sales and marketing practices of pharmaceutical manufacturers, as well as laws such as the U.S. Foreign Corrupt Practices Act, which govern our international business practices with respect to payments to government officials. We expect to continue to devote substantial resources to maintain, administer and expand these compliance programs globally.

Reimbursement

Sales of our products depend, to a large degree, on the extent to which our products are reimbursed by third-party payors, such as government health programs, commercial insurance and managed health care organizations. We dedicate substantial management and other resources in order to obtain and maintain appropriate levels of reimbursement for our products from third-party payors, including governmental organizations in the United States and ex-U.S. markets.

In the United States, we have worked successfully with third party payors in order to promptly obtain appropriate levels of reimbursement for our CF medicines and as such, more than 95% of patients across the U.S. have access to our medicines. We continue to engage in discussions with numerous commercial insurers and managed health care organizations, along with government health programs that are typically managed by authorities in the individual states, to ensure that payors recognize the significant benefits that our medicines provide by treating the underlying cause of cystic fibrosis and continue to provide access to our current medicines.

In Europe and other ex-U.S. markets, we seek government reimbursement for our medicines on a country-by-country basis. This is necessary for each new medicine, as well as label expansions for our current medicines in most countries. We successfully obtained reimbursement for KALYDECO in each significant ex-U.S. market within two years of approval. We are experiencing significant challenges in obtaining reimbursement for ORKAMBI in certain ex-U.S. markets. Specifically, we have been discussing potential reimbursement for ORKAMBI in England and France, which represent significant potential markets for our CF medicines, since its approval in 2015. In other ex-U.S. markets, including Australia, Denmark, Germany, Ireland, Sweden and Italy, we have reached pricing and reimbursement agreements for ORKAMBI. In some of these countries we have innovative reimbursement arrangements that provide a pathway to access and rapid reimbursement for certain future CF medicines, including arrangements in Ireland, Denmark and Australia. SYMKEVI, which was approved in the European Union in the fourth quarter of 2018, is available in certain European countries, including Germany, Denmark and Ireland.

Collaboration Arrangements and Strategic Investments

In-License Agreements

We have entered into collaborations with biotechnology and pharmaceutical companies in order to acquire rights or to license drug candidates or technologies that enhance our pipeline and/or our research capabilities. Over the last several years, we entered into collaboration agreements with:

CRISPR Therapeutics AG and its affiliates, or CRISPR, pursuant to which we are collaborating on the discovery and development of potential new treatments aimed at the underlying genetic causes of human diseases using CRISPR-Cas9 ~~gene editing~~gene-editing technology;

~~Parion,~~Arbor Biotechnologies, Inc., or Arbor, pursuant to which we are ~~developing ENaC inhibitors for~~collaborating on the ~~treatment~~discovery of ~~pulmonary diseases;~~novel proteins, including DNA endonucleases, to advance the development of new gene-editing therapies; and

Moderna Therapeutics, Inc., or Moderna, pursuant to which we are seeking to identify and develop messenger ribonucleic acid, or mRNA therapeutics for the treatment of ~~CF; and~~

~~BioAxone Biosciences, Inc., or BioAxone, pursuant to which we are evaluating VX-210 as a potential treatment for patients who have spinal cord injuries.~~CF.

Generally, when we in-license a technology or drug candidate, we make upfront payments to the collaborator, assume the costs of the program and agree to make contingent payments, which could consist of milestone, royalty and option payments. Depending on many factors, including the structure of the collaboration, the significance of the drug candidate that we license to the collaborator’s operations and the other activities in which our collaborators are engaged, the accounting for these transactions can vary significantly.

For example, the upfront payments and expenses incurred in connection with our CRISPR and Moderna collaborations are being expensed as research expenses because ~~(i)~~ the collaboration represents a small portion of ~~the overall business~~each of these ~~collaborators and (ii) the licenses associated with these collaborations do not represent a business pursuant to the consolidation accounting guidance. CRISPR’s~~collaborator’s overall business. CRISPR and Moderna’s activities unrelated to our collaborations have no effect on our consolidated financial statements. Parion and BioAxone have historically been accounted for as variable interest entities, or VIEs, that were included in our consolidated financial statements due to (i) the significance

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financial statements. In contrast certain of our collaborators, including BioAxone Biosciences, Inc., or BioAxone, have historically been accounted for as variable interest entities, or VIEs, and historically have been included in our consolidated financial statements due to: (i) the significance of the respective licensed programs to ~~Parion and BioAxone~~our collaborator as a whole, (ii) our power to control the significant activities of the entities under each collaboration, and (iii) our obligation to absorb losses and right to receive benefits that potentially could behave been significant. ~~As of September 30, 2017,~~In 2018, we determined that the above conditions were no longer satisfied with respect to Parion following a determination that the fair value of the ENaC inhibitors licensed from Parion had declined significantly based on the results of a Phase 2 clinical trial of VX-371 that did not meet its primary efficacy endpoint.BioAxone. As a result, we ~~no longer account for Parion as a VIE and have~~ deconsolidated ~~Parion~~BioAxone from our consolidated financial ~~statements as of September 30, 2017. BioAxone continues to be accounted for as a VIE and remains included in our consolidated financial statements as of September 30, 2017.~~statements.

~~Collaborators~~A collaborator that we account for as a VIE may engage in activities unrelated to our collaboration. The revenues and expenses unrelated to the programs we in-license from our VIEs have historically been immaterial to our consolidated financial statements. ~~With respect to each of Parion, prior to its deconsolidation as of September 30, 2017, and BioAxone, the~~The activities unrelated to our collaboration ~~have represented approximately 2% of~~were not material to our ~~total revenues and total expenses on an annual basis.~~financial statements during the periods that we consolidated BioAxone. As a result of the deconsolidation, ~~of Parion,~~ we do not expect ~~these amounts~~ to ~~decrease~~have similar items for 2019 based on our current collaborations. In periods in ~~future periods. For any~~which we have consolidated VIEs, we ~~evaluate~~have evaluated the fair value of the contingent payments payable by us on a quarterly basis. Changes in the fair value of these contingent future payments ~~affect~~affected net income attributable to Vertex on a dollar-for-dollar basis, with increases in the fair value of contingent payments payable by us to a VIE resulting in a decrease in net income attributable to Vertex (or an increase in net loss attributable to Vertex) and decreases in the fair value of contingent payments payable by us to a VIE resulting in an increase in net income attributable to Vertex (or decrease in net loss attributable to Vertex). For additional information regarding our VIEs see Note C, “Collaborative Arrangements and Acquisitions,” and our critical accounting policies in our 2018 Annual Report on Form 10-K.

Out-License Agreements

We also have out-licensed internally developed programs to collaborators who are leading the development of these programs. These ~~outlicense~~out-license arrangements include our collaboration agreements with:

Janssen Pharmaceuticals, Inc., or Janssen which is evaluating pimodivir in Phase 3 clinical trials for the treatment of influenza; and

Merck KGaA, Darmstadt, Germany, which ~~is advancing four~~licensed oncology research and development ~~programs; and~~

~~Janssen Pharmaceuticals, Inc., which is developing JNJ-3872 (formerly VX-787) for the treatment of influenza.~~programs from us in early 2017.

Pursuant to these out-licensing arrangements, our collaborators are responsible for the research, development and commercialization costs associated with these programs, and we are entitled to receive contingent milestone and/or royalty payments. As a result, we do not expect to incur significant expenses in connection with these programs and have the potential for future collaborative ~~and/or~~and royalty revenues resulting from these programs.

Strategic Investments

~~Regulatory Compliance~~

~~Our marketing~~In connection with our business development activities, we have periodically made equity investments in our collaborators. As of ~~pharmaceutical products is subject~~March 31, 2019 and December 31, 2018, we held strategic equity investments in CRISPR and Moderna, both public companies, and certain private companies, and we may make additional strategic equity investments in the future. While we invest the majority of our cash, cash equivalents and marketable securities in instruments that meet specific credit quality standards and limit our exposure to ~~extensive~~any one issue or type of instrument, our strategic investments are maintained and ~~complex laws~~managed separately from our other cash, cash equivalents and ~~regulations. We have a corporate compliance program designed~~marketable securities. Any changes in the fair value of equity investments with readily determinable fair values (including publicly traded securities such as CRISPR and Moderna) are recorded to ~~actively identify, prevent and mitigate risk through the implementation~~other income (expense), net in our condensed consolidated statement of ~~compliance policies and systems, and through the promotion of a culture of compliance. Among other laws, regulations and standards,~~operations. For equity investments without readily determinable fair values (including private equity investments), each reporting period we are ~~subject~~required to ~~various U.S. federal~~re-evaluate the carrying value of the investment, which may result in other income (expense).

In the first quarter of 2019 and ~~state laws,~~2018 we recorded within other income (expense), unrealized gains of $43.6 million and ~~comparable foreign laws pertaining~~$95.5 million, respectively, related to ~~health care fraud and abuse, including anti-kickback and false claims statutes, and laws prohibiting~~increases in the promotion of drugs for unapproved or off-label uses. Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive or pay any remuneration to induce the referral of business, including the purchase or prescription of a particular drug. False claims laws prohibit anyone from presenting for payment to third-party payors, including Medicare and Medicaid, claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. We expect to continue to devote substantial resources to maintain, administer and expand these compliance programs globally.

~~Reimbursement~~

~~Sales~~fair value of our ~~products depend,~~strategic investments, which were included in our net income attributable to ~~a large degree, on~~Vertex. To the extent to which our products are covered by third-party payors, such as government health programs, commercial insurance and managed health care organizations. We dedicate substantial management and other resources in order to obtain and maintain appropriate levels of reimbursement for our products from third-party payors, including governmental organizations in the United States and ex-U.S. markets. In the United States,that we continue to ~~engage~~hold strategic investments, particularly strategic investments in ~~discussions with numerous commercial insurers and managed health care organizations, along with government health programs that are typically managed by authorities~~publicly traded companies, we will record other income (expense) related to these strategic investments on a quarterly basis. Due to the high volatility of stocks in the ~~individual states. In Europe~~biotechnology industry, we expect the value of these strategic investments to fluctuate and ~~other ex-U.S. markets, we are working~~that the increases or decreases in the fair value of these strategic investments will continue to ~~obtain government reimbursement for ORKAMBI~~have material impacts on our net income (expense) and our profitability on a country-by-country basis, because in many foreign countries patients are unable to access prescription pharmaceutical products that are not reimbursed by their governments. To date, we have reached a pricing and reimbursement agreement for ORKAMBI with several European countries, including Germany, Ireland and Italy, and remain in negotiations with several others. Consistent with our experience with KALYDECO when it was first approved, we expect reimbursement discussions in ex-U.S. markets may take a significant period of time.quarterly and/or annual basis.

~~Table of Contents~~

~~Recent Transaction~~

~~Concert Pharmaceuticals~~

In July 2017, we acquired certain CF assets, including VX-561, from Concert, pursuant to an agreement that we entered into in March 2017. VX-561 is an investigational CFTR potentiator that has the potential to be used as part of future once-daily combination regimens of CFTR modulators that treat the underlying cause of CF. Pursuant to the agreement, in the third quarter of 2017, we paid Concert $160.0 million in cash for all worldwide development and commercialization rights to VX-561. If VX-561 is approved as part of a combination regimen to treat CF, Concert could receive up to an additional $90.0 million in milestones based on regulatory approval in the U.S. and reimbursement in the UK, Germany or France. In the third quarter of 2017, we recorded the $160.0 million payment as a research and development expense.

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RESULTS OF OPERATIONS


	Three Months Ended September 30,						Increase/(Decrease)					Nine Months Ended September 30,					Increase/(Decrease)				Three Months Ended March 31,					Increase/(Decrease)
	2017			2016			$			%		2017		2016			$		%		2019		2018			$			%
	(in thousands)											(in thousands)									(in thousands)
Revenues	$	578,165		$	413,783		$	164,382		40	%	$	1,837,018	$	1,243,471		$	593,547	48	%	$	858,435	$	640,799		$	217,636		34	%
Operating costs and expenses	904,208			432,510			471,698			109	%	1,839,512		1,273,175			566,337		44	%	581,627		511,898			69,729			14	%
Other items, net	223,091			(20,114		)	243,205			n/a		165,294		(115,293		)	280,587		n/a
Net (loss) income attributable to Vertex	$	(102,952	)	$	(38,841	)	$	(64,111	)	n/a		$	162,800	$	(144,997	)	$	307,797	n/a
Other non-operating income, net																					43,357		68,703			(25,346		)	**
Provision for (benefit from) income taxes																					51,534		(12,659		)	**			**
Net income attributable to Vertex																					$	268,631	$	210,263		$	58,368		28	%

Net income per diluted share attributable to Vertex common shareholders																					$	1.03	$	0.81
Diluted shares used in per share calculations																					260,175		258,526
																										** Not meaningful



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30, 2017~~MARCH 31, 2019
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO



Massachusetts	04-3039129
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
50 Northern Avenue, Boston, Massachusetts	02210
(Address of principal executive offices)	(Zip Code)



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o

Emerging growth company o	~~(Do not check if a smaller reporting company)~~



Common Stock, par value $0.01 per share	~~252,902,848~~256,121,360
Class	Outstanding at ~~October 20, 2017~~April 24, 2019



		Page
Part I. Financial Information
Item 1.	Financial Statements	2
	Condensed Consolidated Financial Statements (unaudited)	2
	Condensed Consolidated Statements of Operations - Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018	2
	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ - Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018	3
	Condensed Consolidated Balance Sheets - ~~September 30, 2017~~March 31, 2019 and December 31, ~~2016~~2018	4
	Condensed Consolidated Statements of Shareholders' Equity and Noncontrolling Interest - ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018	5
	Condensed Consolidated Statements of Cash Flows - ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2019 and ~~2016~~2018	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4442
Item 4.	Controls and Procedures	4443
Part II. Other Information
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4745
Item 6.	Exhibits	4746
Signatures		4847


	September 30,			December 31,			March 31,			December 31,
	2017			2016			2019			2018
Assets
Current assets:
Cash and cash equivalents	$	1,384,966		$	1,183,945		$	2,893,885		$	2,650,134
Marketable securities, available for sale	427,282			250,612
Restricted cash and cash equivalents (VIE)	1,803			47,762
Marketable securities							584,150			518,108
Accounts receivable, net	263,493			201,083			438,297			409,688
Inventories	98,192			77,604			136,698			124,360
Prepaid expenses and other current assets	152,238			70,534			130,009			140,819
Total current assets	2,327,974			1,831,540			4,183,039			3,843,109
Property and equipment, net	759,978			698,362			742,559			812,005
Intangible assets	29,000			284,340
Goodwill	50,384			50,384			50,384			50,384
Cost method investments	20,447			20,276
Deferred tax assets							1,467,518			1,499,672
Operating lease assets							60,573			—
Other assets	10,542			11,885			39,041			40,728
Total assets	$	3,198,325		$	2,896,787		$	6,543,114		$	6,245,898
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	77,138		$	61,451		$	82,262		$	110,987
Accrued expenses	378,554			315,249			532,745			604,495
Deferred revenues, current portion	13,003			6,005
Accrued restructuring expenses, current portion	4,205			6,047
Capital lease obligations, current portion	19,881			19,426
Customer deposits	190,272			73,416
Credit facility	—			300,000
Other liabilities, current portion	27,686			10,943
Early access sales accrual							382,703			354,404
Other current liabilities							108,758			50,406
Total current liabilities	710,739			792,537			1,106,468			1,120,292
Deferred revenues, excluding current portion	2,917			6,632
Accrued restructuring expenses, excluding current portion	146			1,907
Capital lease obligations, excluding current portion	20,259			34,976
Deferred tax liability	10,682			134,063
Construction financing lease obligation, excluding current portion	547,051			486,359
Advance from collaborator	77,258			73,423
Other liabilities, excluding current portion	26,029			28,699
Long-term finance lease liabilities							560,381			581,550
Long-term operating lease liabilities							63,484			—
Long-term advance from collaborator							83,471			82,573
Other long-term liabilities							5,997			26,280
Total liabilities	1,395,081			1,558,596			1,819,801			1,810,695
Commitments and contingencies							—			—
Shareholders’ equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued and outstanding	—			—
Common stock, $0.01 par value; 500,000,000 shares authorized; 252,683,346 and 248,300,517 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	2,500			2,450
Preferred stock, $0.01 par value; 1,000 shares authorized; none issued and outstanding							—			—
Common stock, $0.01 par value; 500,000 shares authorized, 256,351 and 255,172 shares issued and outstanding, respectively							2,561			2,546
Additional paid-in capital	7,034,113			6,506,795			7,475,909			7,421,476
Accumulated other comprehensive (loss) income	(25,129		)	21,173
Accumulated other comprehensive income							6,000			659
Accumulated deficit	(5,220,407		)	(5,373,836		)	(2,761,157		)	(2,989,478		)
Total Vertex shareholders’ equity	1,791,077			1,156,582
Noncontrolling interest	12,167			181,609
Total shareholders’ equity	1,803,244			1,338,191			4,723,313			4,435,203
Total liabilities and shareholders’ equity	$	3,198,325		$	2,896,787		$	6,543,114		$	6,245,898



	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income			Accumulated Deficit			Total Vertex Shareholders’ Equity			Noncontrolling Interest			Total Shareholders’ Equity
	Shares	Amount		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income			Accumulated Deficit			Total Vertex Shareholders’ Equity			Noncontrolling Interest			Total Shareholders’ Equity
Balance at December 31, 2015	246,307	$	2,427	$	6,197,500	$	1,824		$	(5,261,784	)	$	939,967		$	153,661		$	1,093,628
Other comprehensive loss, net of tax	—	—		—		(5,669		)	—			(5,669		)	—			(5,669		)
Net (loss) income	—	—		—		—			(144,997		)	(144,997		)	33,207			(111,790		)
Issuance of common stock under benefit plans	1,722	19		50,875		—			—			50,894			—			50,894
Stock-based compensation expense	—	—		181,351		—			—			181,351			(73		)	181,278
Balance at September 30, 2016	248,029	$	2,446	$	6,429,726	$	(3,845	)	$	(5,406,781	)	$	1,021,546		$	186,795		$	1,208,341

Balance at December 31, 2016	248,301	$	2,450	$	6,506,795	$	21,173		$	(5,373,836	)	$	1,156,582		$	181,609		$	1,338,191
Cumulative effect adjustment for adoption of new accounting guidance	—	—		9,371					(9,371		)	—			—			—
Other comprehensive loss, net of tax	—	—		—		(46,302		)	—			(46,302		)	—			(46,302		)
Net income (loss)	—	—		—		—			162,800			162,800			(173,350		)	(10,550		)
Issuance of common stock under benefit plans	4,382	50		298,956		—			—			299,006			33			299,039
Stock-based compensation expense	—	—		218,991		—			—			218,991			—			218,991
VIE noncontrolling interest upon deconsolidation	—	—		—		—			—			—			3,910			3,910
Other	—	—		—		—			—			—			(35		)	(35		)
Balance at September 30, 2017	252,683	$	2,500	$	7,034,113	$	(25,129	)	$	(5,220,407	)	$	1,791,077		$	12,167		$	1,803,244



	Balance as of						Balance as of
	December 31, 2018 ^			Adjustments			January 1, 2019
Assets	(in thousands)
Prepaid expenses and other current assets	$	140,819		$	(2,930	)	$	137,889
Property and equipment, net	812,005			(53,920		)	758,085
Deferred tax assets	1,499,672			11,236			1,510,908
Operating lease assets	—			61,674			61,674
Total assets	$	6,245,898		$	16,060		$	6,261,958
Liabilities and Shareholders’ Equity
Capital lease obligations, current portion	$	9,817		$	(9,817	)	$	—
Other current liabilities	40,589			34,304			74,893
Capital lease obligations, excluding current portion	19,658			(19,658		)	—
Construction financing lease obligation, excluding current portion	561,892			(561,892		)	—
Long-term finance lease liabilities	—			569,487			569,487
Long-term operating lease liabilities	—			64,849			64,849
Other long-term liabilities	26,280			(20,903		)	5,377
Accumulated deficit	(2,989,478		)	(40,310		)	(3,029,788		)
Total liabilities and shareholders’ equity	$	6,245,898		$	16,060		$	6,261,958
^ As reported in the Company’s 2018 Annual Report on Form 10-K.



	Trade Allowances			Rebates, Chargebacks and Discounts			Product Returns			Other Incentives			Total
	(in thousands)
Balance at December 31, 2016	$	2,568		$	81,927		$	3,492		$	1,214		$	89,201
Provision related to current period sales	18,776			118,592			3,603			12,238			153,209
Adjustments related to prior period sales	(188		)	(4,327		)	(13		)	(355		)	(4,883		)
Credits/payments made	(18,409		)	(97,393		)	(1,809		)	(10,021		)	(127,632		)
Balance at September 30, 2017	$	2,747		$	98,799		$	5,273		$	3,076		$	109,895



	September 30, 2017		December 31, 2016
	(in thousands)
Parion	$	—	$	238,800
BioAxone	18,900		18,000



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.



	Fair Value Measurements as of September 30, 2017
				Fair Value Hierarchy
	Total			Level 1		Level 2			Level 3
	(in thousands)
Financial instruments carried at fair value (asset position):
Cash equivalents:
Money market funds	$	466,702		$	466,702	$	—		$	—
Government-sponsored enterprise securities	14,979			14,979		—			—
Corporate debt securities	4,488			—		4,488			—
Commercial paper	14,608			—		14,608			—
Marketable securities:
Corporate equity securities	56,944			56,944		—			—
Corporate debt securities	295,171			—		295,171			—
Commercial paper	75,167			—		75,167			—
Prepaid and other current assets:
Foreign currency forward contracts	42			—		42			—
Other assets:
Foreign currency forward contracts	8			—		8			—
Total financial assets	$	928,109		$	538,625	$	389,484		$	—
Financial instruments carried at fair value (liability position):
Other liabilities, current portion:
Foreign currency forward contracts	$	(13,897	)	$	—	$	(13,897	)	$	—
Other liabilities, excluding current portion:
Foreign currency forward contracts	(977		)	—		(977		)	—
Total financial liabilities	$	(14,874	)	$	—	$	(14,874	)	$	—


	Fair Value Measurements as of December 31, 2016										Fair Value Measurements as of March 31, 2019
				Fair Value Hierarchy										Fair Value Hierarchy
	Total			Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3
	(in thousands)										(in thousands)
Financial instruments carried at fair value (asset position):
Financial instruments carried at fair value (asset positions):
Cash equivalents:
Money market funds	$	280,560		$	280,560	$	—		$	—	$	1,354,656		$	1,354,656	$	—		$	—
U.S. Treasury securities											5,996			5,996		—			—
Government-sponsored enterprise securities											11,786			11,786		—			—
Corporate debt securities											4,519			—		4,519			—
Commercial paper											35,955			—		35,955			—
Marketable securities:
Corporate equity securities											210,874			192,207		18,667			—
Government-sponsored enterprise securities	15,508			15,508		—			—		15,181			15,181		—			—
Corporate equity securities	64,560			64,560		—			—
Corporate debt securities											231,572			—		231,572			—
Commercial paper	59,404			—		59,404			—		126,523			—		126,523			—
Corporate debt securities	111,140			—		111,140			—
Prepaid and other current assets:
Prepaid expenses and other current assets:
Foreign currency forward contracts	14,407			—		14,407			—		19,210			—		19,210			—
Other assets:
Foreign currency forward contracts	1,186			$	—	1,186			$	—	973			—		973			—
Total financial assets	$	546,765		$	360,628	$	186,137		$	—	$	2,017,245		$	1,579,826	$	437,419		$	—
Financial instruments carried at fair value (liability position):
Other liabilities, current portion:
Financial instruments carried at fair value (liability positions):
Other current liabilities:
Foreign currency forward contracts											$	(310	)	$	—	$	(310	)	$	—
Other long-term liabilities:
Foreign currency forward contracts	$	(144	)	$	—	$	(144	)	$	—	(68		)	—		(68		)	—
Total financial liabilities	$	(144	)	$	—	$	(144	)	$	—	$	(378	)	$	—	$	(378	)	$	—



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
As of September 30, 2017
Cash and cash equivalents:
Cash and money market funds	$	1,350,891	$	—	$	—		$	1,350,891
Government-sponsored enterprise securities	14,979		—		—			14,979
Commercial paper	14,610		—		(2		)	14,608
Corporate debt securities	4,488		—		—			4,488
Total cash and cash equivalents	$	1,384,968	$	—	$	(2	)	$	1,384,966
Marketable securities:
Corporate equity securities	43,213		13,731		—			56,944
Commercial paper (matures within 1 year)	75,186		1		(20		)	75,167
Corporate debt securities (matures within 1 year)	235,679		8		(106		)	235,581
Corporate debt securities (matures after 1 year)	59,651		—		(61		)	59,590
Total marketable securities	$	413,729	$	13,740	$	(187	)	$	427,282
Total cash, cash equivalents and marketable securities	$	1,798,697	$	13,740	$	(189	)	$	1,812,248

As of December 31, 2016
Cash and cash equivalents:
Cash and money market funds	$	1,183,945	$	—	$	—		$	1,183,945
Total cash and cash equivalents	$	1,183,945	$	—	$	—		$	1,183,945
Marketable securities:
Government-sponsored enterprise securities (matures within 1 year)	$	15,506	$	2	$	—		$	15,508
Corporate equity securities	43,213		21,347		—			64,560
Commercial paper (matures within 1 year)	59,331		73		—			59,404
Corporate debt securities (matures within 1 year)	111,225		—		(85		)	111,140
Total marketable securities	$	229,275	$	21,422	$	(85	)	$	250,612
Total cash, cash equivalents and marketable securities	$	1,413,220	$	21,422	$	(85	)	$	1,434,557



	As of March 31, 2019		As of December 31, 2018
	(in thousands)
Cash and cash equivalents	$	1,412,912	$	1,297,960
Marketable securities	373,276		350,785
Total	$	1,786,188	$	1,648,745



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Product revenues, net	$	549,642		$	409,689		$	1,544,252		$	1,229,750
Royalty revenues	2,231			3,835			6,643			12,713
Collaborative revenues	26,292			259			286,123			1,008
Total revenues	578,165			413,783			1,837,018			1,243,471
Costs and expenses:
Cost of product revenues	72,186			53,222			188,963			147,165
Royalty expenses	688			855			2,104			2,813
Research and development expenses	454,947			272,370			1,017,961			799,238
Sales, general and administrative expenses	120,710			106,055			361,285			322,921
Restructuring expenses, net	337			8			13,859			1,038
Intangible asset impairment charge	255,340			—			255,340			—
Total costs and expenses	904,208			432,510			1,839,512			1,273,175
Loss from operations	(326,043		)	(18,727		)	(2,494		)	(29,704		)
Interest expense, net	(13,574		)	(20,140		)	(45,003		)	(60,993		)
Other (expenses) income, net	(77,553		)	(167		)	(80,634		)	3,025
Loss before (benefit from) provision for income taxes	(417,170		)	(39,034		)	(128,131		)	(87,672		)
(Benefit from) provision for income taxes	(125,903		)	503			(117,581		)	24,118
Net loss	(291,267		)	(39,537		)	(10,550		)	(111,790		)
Loss (income) attributable to noncontrolling interest	188,315			696			173,350			(33,207		)
Net (loss) income attributable to Vertex	$	(102,952	)	$	(38,841	)	$	162,800		$	(144,997	)

Amounts per share attributable to Vertex common shareholders:
Net (loss) income:
Basic	$	(0.41	)	$	(0.16	)	$	0.66		$	(0.59	)
Diluted	$	(0.41	)	$	(0.16	)	$	0.64		$	(0.59	)
Shares used in per share calculations:
Basic	250,268			244,920			247,963			244,529
Diluted	250,268			244,920			252,095			244,529


B.	~~Product Revenues, Net~~


B.	Revenue Recognition


C.	Collaborative Arrangements and Acquisitions



	Foreign Currency Translation Adjustment			Unrealized Holding Gains (Losses) on Marketable Securities, Net of Tax			Unrealized Gains (Losses) on Foreign Currency Forward Contracts, Net of Tax			Total
	(in thousands)
Balance at December 31, 2016	$	(7,862	)	$	17,521		$	11,514		$	21,173
Other comprehensive loss before reclassifications	(11,137		)	(7,786		)	(25,981		)	(44,904		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			—			(1,398		)	(1,398		)
Net current period other comprehensive (loss) income	$	(11,137	)	$	(7,786	)	$	(27,379	)	$	(46,302	)
Balance at September 30, 2017	$	(18,999	)	$	9,735		$	(15,865	)	$	(25,129	)



				Unrealized Holding Gains (Losses), Net of Tax
	Foreign Currency Translation Adjustment			On Available-For-Sale Debt Securities			On Foreign Currency Forward Contracts			Total
	(in thousands)
Balance at December 31, 2018	$	(11,227	)	$	(536	)	$	12,422		$	659
Other comprehensive income before reclassifications	4,967			596			5,126			10,689
Amounts reclassified from accumulated other comprehensive income	—			—			(5,348		)	(5,348		)
Net current period other comprehensive income (loss)	4,967			596			(222		)	5,341
Balance at March 31, 2019	$	(6,260	)	$	60		$	12,200		$	6,000



	Foreign Currency Translation Adjustment			Unrealized Holding Gains on Marketable Securities		Unrealized Gains (Losses) on Foreign Currency Forward Contracts, Net of Tax			Total
	(in thousands)
Balance at December 31, 2015	$	(2,080	)	$	126	$	3,778		$	1,824
Other comprehensive (loss) income before reclassifications	(7,709		)	104		6,715			(890		)
Amounts reclassified from accumulated other comprehensive income (loss)	—			—		(4,779		)	(4,779		)
Net current period other comprehensive (loss) income	$	(7,709	)	$	104	$	1,936		$	(5,669	)
Balance at September 30, 2016	$	(9,789	)	$	230	$	5,714		$	(3,845	)


	As of September 30, 2017														As of March 31, 2019
	Gross Amounts Recognized			Gross Amounts Offset		Gross Amounts Presented			Gross Amounts Not Offset			Legal Offset			Gross Amounts Recognized			Gross Amounts Offset		Gross Amounts Presented			Gross Amounts Not Offset			Legal Offset
Foreign currency forward contracts	(in thousands)														(in thousands)
Total assets	$	50		$	—	$	50		$	(50	)	$	—		$	20,183		$	—	$	20,183		$	(378	)	$	19,805
Total liabilities	$	(14,874	)	$	—	$	(14,874	)	$	50		$	(14,824	)	$	(378	)	$	—	$	(378	)	$	378		$	—



	Three Months Ended March 31, 2019
	(in thousands)
Operating lease cost	$	2,639
Finance lease cost
Amortization of leased assets	12,365
Interest on lease liabilities	13,449
Variable lease cost	6,762
Sublease income	(1,484		)
Net lease cost	$	33,731



	As of March 31, 2019		As of December 31, 2018 ^
	(in thousands)
Finance leases
Property and equipment, net	$	473,129	$	640,952
Total finance lease assets	$	473,129	$	640,952

Capital lease obligations, current portion	$	—	$	9,817
Other current liabilities	35,725		5,271
Capital lease obligations, excluding current portion	—		19,658
Construction financing lease obligation, excluding current portion	—		561,892
Long-term finance lease liabilities	560,381		—
Total finance lease liabilities	$	596,106	$	596,638

Operating leases
Operating lease assets	$	60,573	$	—
Total operating lease assets	$	60,573	$	—

Other current liabilities	$	7,520	$	—
Long-term operating lease liabilities	63,484		—
Total operating lease liabilities	$	71,004	$	—
^ As reported in the Company’s 2018 Annual Report on Form 10-K.



Year	Finance Leases			Operating Leases			Total
	(in thousands)
Remainder of 2019	$	61,339		$	7,331		$	68,670
2020	88,998			10,366			99,364
2021	87,365			8,658			96,023
2022	85,016			8,233			93,249
2023	84,092			8,151			92,243
Thereafter	512,804			46,212			559,016
Total lease payments	919,614			88,951			1,008,565
Less: amount representing interest	(323,508		)	(17,947		)	(341,455		)
Present value of lease liabilities	$	596,106		$	71,004		$	667,110



	Three Months Ended March 31, 2019
Weighted-average remaining lease term (in years)
Finance leases	10.45
Operating leases	10.91

Weighted-average discount rate
Finance leases	9.11	%
Operating leases	4.05	%



Year	Fan Pier Leases		San Diego Lease		Other Leases		Total Lease Commitments
	(in thousands)
2019	$	66,540	$	5,324	$	13,207	$	85,071
2020	72,589		9,127		14,270		95,986
2021	72,589		9,127		12,529		94,245
2022	72,589		9,127		12,045		93,761
2023	72,589		9,530		11,952		94,071
Thereafter	389,855		119,864		65,472		575,191
Total minimum lease payments	$	746,751	$	162,099	$	129,475	$	1,038,325



	As of September 30, 2017
	Unrecognized Expense		Weighted-average Recognition Period
	(in thousands)		(in years)
Type of award:
Stock options	$	175,298	2.60
Restricted stock and restricted stock units	$	289,008	2.64
ESPP share issuances	$	2,636	0.46



	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)
$18.93–$20.00	128	0.35	$	18.93	128	$	18.93
$20.01–$40.00	834	2.21	$	34.51	834	$	34.51
$40.01–$60.00	877	4.83	$	49.17	877	$	49.17
$60.01–$80.00	821	6.46	$	75.62	649	$	75.44
$80.01–$100.00	4,587	8.33	$	89.37	1,397	$	89.47
$100.01–$120.00	1,137	7.36	$	109.34	586	$	109.24
$120.01–$140.00	1,260	7.88	$	130.24	688	$	129.86
$140.01–$160.00	—	0.00	$	—	—	$	—
$160.01–$163.74	634	9.80	$	162.94	3	$	162.94
Total	10,278	7.22	$	91.28	5,162	$	77.92



	Three Months Ended March 31, 2019
	(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,531
Operating cash flows from finance leases	$	11,910
Financing cash flows from finance leases	$	9,385

Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	—
Finance leases	$	—



Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
July 1, 2017 to July 31, 2017	2,040	$0.01	—	—
August 1, 2017 to August 31, 2017	15,811	$0.01	—	—
September 1, 2017 to September 30, 2017	2,589	$0.01	—	—
Total	20,440	$0.01	—	—



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (2)
January 1, 2019 to January 31, 2019	70,691	$169.74	69,778	$138,000,783
February 1, 2019 to February 28, 2019	183,914	$184.86	183,366	$104,002,661
March 1, 2019 to March 31, 2019	285,909	$181.87	283,874	$52,004,541
Total	540,514	$181.30	537,018	$52,004,541



Exhibit Number	Exhibit Description
10.1	Employment Agreement, dated ~~as of September 6, 2017,~~March 28, 2019, by and between Vertex Pharmaceuticals Incorporated and ~~Tom Graney.~~Charles F. Wagner, Jr.*
10.2	Change of Control Agreement, dated as of ~~September 6, 2017,~~March 28, 2019, by and between Vertex Pharmaceuticals Incorporated and ~~Tom Graney.~~Charles F. Wagner, Jr.*
31.1	Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer and the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.LAB	XBRL Taxonomy Extension Labels
101.PRE	XBRL Taxonomy Extension Presentation
101.DEF	XBRL Taxonomy Extension Definition



	Vertex Pharmaceuticals Incorporated

~~October 30, 2017~~May 1, 2019	By:	/s/ ~~Thomas Graney~~Charles Wagner
		~~Thomas Graney~~Charles Wagner
		~~Senior~~Executive Vice President, ~~and~~ Chief Financial Officer (principal financial officer and duly authorized officer)