Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 22, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 000-19319 | |
Entity Registrant Name | VERTEX PHARMACEUTICALS INC / MA | |
Entity Incorporation, State or Country Code | MA | |
Entity Tax Identification Number | 04-3039129 | |
Entity Address, Address Line One | 50 Northern Avenue | |
Entity Address, City or Town | Boston | |
Entity Address, State or Province | MA | |
Entity Address, Postal Zip Code | 02210 | |
City Area Code | 617 | |
Local Phone Number | 341-6100 | |
Title of 12(b) Security | Common Stock, $0.01 Par Value Per Share | |
Trading Symbol | VRTX | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 258,865,671 | |
Entity Central Index Key | 0000875320 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues: | ||
Revenues | $ 1,724,305 | $ 1,515,107 |
Costs and expenses: | ||
Cost of sales | 192,329 | 162,497 |
Research and development expenses | 455,973 | 448,528 |
Sales, general and administrative expenses | 192,077 | 182,258 |
Change in fair value of contingent consideration | (3,900) | 1,600 |
Total costs and expenses | 836,479 | 794,883 |
Income from operations | 887,826 | 720,224 |
Interest income | 1,465 | 12,576 |
Interest expense | (15,678) | (14,136) |
Other expense, net | (52,653) | (61,130) |
Income before provision for income taxes | 820,960 | 657,534 |
Provision for income taxes | 167,822 | 54,781 |
Net income | $ 653,138 | $ 602,753 |
Net income per common share: | ||
Basic (in dollars per share) | $ 2.52 | $ 2.32 |
Diluted (in dollars per share) | $ 2.49 | $ 2.29 |
Shares used in per share calculations: | ||
Basic (in shares) | 259,369 | 259,815 |
Diluted (in shares) | 261,916 | 263,515 |
Product revenues, net | ||
Revenues: | ||
Revenues | $ 1,723,305 | $ 1,515,107 |
Other revenues | ||
Revenues: | ||
Revenues | $ 1,000 | $ 0 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 653,138 | $ 602,753 |
Other comprehensive income: | ||
Unrealized holding losses on marketable securities, net | (218) | (764) |
Unrealized gains on foreign currency forward contracts, net of tax of $(9.3) million and $(5.0) million, respectively | 33,966 | 18,782 |
Foreign currency translation adjustment | 1,430 | (2,662) |
Total other comprehensive income | 35,178 | 15,356 |
Comprehensive income | $ 688,316 | $ 618,109 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Unrealized gains on foreign currency forward contracts, tax | $ (9.3) | $ (5) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 6,304,330 | $ 5,988,187 |
Marketable securities | 619,638 | 670,710 |
Accounts receivable, net | 977,551 | 885,352 |
Inventories | 298,863 | 280,777 |
Prepaid expenses and other current assets | 338,925 | 308,353 |
Total current assets | 8,539,307 | 8,133,379 |
Property and equipment, net | 986,123 | 958,534 |
Goodwill | 1,002,158 | 1,002,158 |
Intangible assets | 400,000 | 400,000 |
Deferred tax assets | 815,890 | 882,779 |
Operating lease assets | 322,319 | 325,564 |
Other assets | 49,262 | 49,394 |
Total assets | 12,115,059 | 11,751,808 |
Current liabilities: | ||
Accounts payable | 127,839 | 155,139 |
Accrued expenses | 1,532,037 | 1,404,971 |
Other current liabilities | 284,174 | 317,423 |
Total current liabilities | 1,944,050 | 1,877,533 |
Long-term finance lease liabilities | 530,330 | 539,042 |
Long-term operating lease liabilities | 368,467 | 350,463 |
Long-term contingent consideration | 185,700 | 189,600 |
Other long-term liabilities | 106,258 | 108,355 |
Total liabilities | 3,134,805 | 3,064,993 |
Commitments and contingencies | 0 | 0 |
Shareholders’ equity: | ||
Preferred stock, $0.01 par value; 1,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock, $0.01 par value; 500,000 shares authorized, 258,829 and 259,890 shares issued and outstanding, respectively | 2,588 | 2,599 |
Additional paid-in capital | 7,499,161 | 7,894,027 |
Accumulated other comprehensive loss | (33,302) | (68,480) |
Retained earnings | 1,511,807 | 858,669 |
Total shareholders’ equity | 8,980,254 | 8,686,815 |
Total liabilities and shareholders’ equity | $ 12,115,059 | $ 11,751,808 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 258,829,000 | 259,890,000 |
Common stock, shares outstanding (in shares) | 258,829,000 | 259,890,000 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) |
Beginning balance (in shares) at Dec. 31, 2019 | 258,993 | ||||
Beginning balance at Dec. 31, 2019 | $ 6,085,244 | $ 2,589 | $ 7,937,606 | $ (1,973) | $ (1,852,978) |
Increase (Decrease) in Stockholders' Equity | |||||
Other comprehensive income, net of tax | 15,356 | 15,356 | |||
Net income | 602,753 | 602,753 | |||
Repurchases of common stock (in shares) | (1,404) | ||||
Repurchase of common stock | (300,026) | $ (14) | (300,012) | ||
Common stock withheld for employee tax obligations (in shares) | (575) | ||||
Common stock withheld for employee tax obligations | (136,167) | $ (6) | (136,161) | ||
Issuance of common stock under benefit plans (in shares) | 2,065 | ||||
Issuance of common stock under benefit plans | 77,594 | $ 22 | 77,572 | ||
Stock-based compensation expense | 116,900 | 116,900 | |||
Ending balance (in shares) at Mar. 31, 2020 | 259,079 | ||||
Ending balance at Mar. 31, 2020 | 6,461,654 | $ 2,591 | 7,695,905 | 13,383 | (1,250,225) |
Beginning balance (in shares) at Dec. 31, 2020 | 259,890 | ||||
Beginning balance at Dec. 31, 2020 | 8,686,815 | $ 2,599 | 7,894,027 | (68,480) | 858,669 |
Increase (Decrease) in Stockholders' Equity | |||||
Other comprehensive income, net of tax | 35,178 | 35,178 | |||
Net income | 653,138 | 653,138 | |||
Repurchases of common stock (in shares) | (1,989) | ||||
Repurchase of common stock | (424,952) | $ (20) | (424,932) | ||
Common stock withheld for employee tax obligations (in shares) | (472) | ||||
Common stock withheld for employee tax obligations | (102,140) | $ (5) | (102,135) | ||
Issuance of common stock under benefit plans (in shares) | 1,400 | ||||
Issuance of common stock under benefit plans | 15,178 | $ 14 | 15,164 | ||
Stock-based compensation expense | 117,037 | 117,037 | |||
Ending balance (in shares) at Mar. 31, 2021 | 258,829 | ||||
Ending balance at Mar. 31, 2021 | $ 8,980,254 | $ 2,588 | $ 7,499,161 | $ (33,302) | $ 1,511,807 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities: | ||
Net income | $ 653,138 | $ 602,753 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Stock-based compensation expense | 115,174 | 115,706 |
Depreciation expense | 28,834 | 26,821 |
(Decrease) increase in fair value of contingent consideration | (3,900) | 1,600 |
Deferred income taxes | 57,043 | 36,705 |
Losses on equity securities | 52,295 | 44,870 |
Other non-cash items, net | 2,332 | 9,668 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (98,373) | (223,672) |
Inventories | (22,785) | (27,450) |
Prepaid expenses and other assets | (13,319) | 2,790 |
Accounts payable | (10,644) | 14,285 |
Accrued expenses | 152,983 | 153,814 |
Other liabilities | 8,277 | 57,808 |
Net cash provided by operating activities | 921,055 | 815,698 |
Cash flows from investing activities: | ||
Purchases of available-for-sale debt securities | (121,455) | (75,265) |
Maturities of available-for-sale debt securities | 118,072 | 60,145 |
Sale of equity securities | 0 | 72,036 |
Purchases of property and equipment | (70,926) | (19,450) |
Investment in equity securities | 0 | (5,800) |
Net cash (used in) provided by investing activities | (74,309) | 31,666 |
Cash flows from financing activities: | ||
Issuances of common stock under benefit plans | 15,559 | 79,597 |
Repurchases of common stock | (424,952) | (300,026) |
Payments in connection with common stock withheld for employee tax obligations | (102,140) | (136,167) |
Payments on finance leases | (12,233) | (10,287) |
Proceeds from finance leases | 3,632 | 5,833 |
Other financing activities | 1,480 | 1,620 |
Net cash used in financing activities | (518,654) | (359,430) |
Effect of changes in exchange rates on cash | (4,030) | (6,651) |
Net increase in cash, cash equivalents and restricted cash | 324,062 | 481,283 |
Cash, cash equivalents and restricted cash—beginning of period | 5,988,845 | 3,120,681 |
Cash, cash equivalents and restricted cash—end of period | 6,312,907 | 3,601,964 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 14,534 | 13,771 |
Cash paid for income taxes | $ 10,691 | $ 5,845 |
Basis of Presentation and Accou
Basis of Presentation and Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Accounting Policies | 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 (“U.S. GAAP”). The condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated. The Company operates in one segment, pharmaceuticals. The Company has reclassified certain items from the prior year’s condensed consolidated financial statements to conform to the current year’s presentation. Certain information and footnote disclosures normally included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “2020 Annual Report on Form 10-K”) have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations for the interim periods ended March 31, 2021 and 2020. 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, 2020, which are contained in the Company’s 2020 Annual Report on Form 10-K. Use of Estimates The preparation of condensed consolidated financial statements in accordance with U.S. 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. 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. Recently Adopted and Issued Accounting Standards Income Taxes In 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) (“ASU 2019-12”), which simplifies the accounting for income taxes. ASU 2019-12 became effective on January 1, 2021. The adoption of ASU 2019-12 did not have a significant impact on the Company’s condensed consolidated financial statements. For a discussion of other recent accounting pronouncements please refer to Note A, “Nature of Business and Accounting Policies,” in the Company’s 2020 Annual Report on Form 10-K. Summary of Significant Accounting Policies The Company’s significant accounting policies are described in Note A, “Nature of Business and Accounting Policies,” in its 2020 Annual Report on Form 10-K. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Disaggregation of Revenue Revenues by Product Product revenues, net consisted of the following: Three Months Ended March 31, 2021 2020 (in thousands) TRIKAFTA/KAFTRIO $ 1,193,217 $ 895,233 SYMDEKO/SYMKEVI 125,049 173,159 ORKAMBI 218,697 234,138 KALYDECO 186,342 212,577 Total product revenues, net $ 1,723,305 $ 1,515,107 Product Revenues by Geographic Location Total net product revenues by geographic region, based on the location of the customer, consisted of the following: Three Months Ended March 31, 2021 2020 (in thousands) United States $ 1,253,433 $ 1,187,588 Outside of the United States Europe 404,969 257,391 Other 64,903 70,128 Total product revenues outside of the United States 469,872 327,519 Total product revenues, net $ 1,723,305 $ 1,515,107 Contract Liabilities The Company had contract liabilities of $181.2 million and $191.5 million as of March 31, 2021 and December 31, 2020, respectively, related to annual contracts with government-owned and supported customers in international markets that limit the amount of annual reimbursement the Company can receive. Upon exceeding the annual reimbursement amount, products are provided free of charge, which is a material right. These contracts include upfront payments and fees. The Company defers a portion of the consideration received for shipments made up to the annual reimbursement limit as a portion of “Other current liabilities.” The deferred amount is recognized as revenue when the free products are shipped. The Company’s product revenue contracts include performance obligations that are one year or less. The Company’s contract liabilities at the end of each fiscal year relate to contracts with annual reimbursement limits in international markets in which the annual period associated with the contract is not the same as the Company’s fiscal year. In these markets, the Company recognizes revenues related to performance obligations satisfied in previous years; however, these revenues do not relate to any performance obligations that were satisfied more than 12 months prior to the beginning of the current year. |
Collaborative Arrangements
Collaborative Arrangements | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Collaborative Arrangements | Collaborative Arrangements The Company has entered into numerous agreements pursuant to which it collaborates with third parties on research, development and commercialization programs, including in-license and out-license agreements. The Company’s in-license and out-license agreements that had a significant impact on its financial statements for the three months ended March 31, 2021 and 2020, or were new or otherwise revised during the three months ended March 31, 2021, are described below. Additional in-license and out-license agreements were described in Note B, “Collaborative Arrangements,” of the Company’s 2020 Annual Report on Form 10-K. In-license Agreements The Company has entered into a number of license agreements in order to advance and obtain access to technologies and services related to its research and early-development activities. The Company is generally required to make an upfront payment upon execution of the license agreement; development, regulatory and commercialization milestones payments upon the achievement of certain product research, development and commercialization objectives; and royalty payments on future sales, if any, of commercial products resulting from the collaboration. Pursuant to the terms of its in-license agreements, the Company’s collaborators typically lead the discovery efforts and the Company leads all preclinical, development and commercialization activities associated with the advancement of any drug candidates and funds all expenses. The Company typically can terminate its in-license agreements by providing advance notice to its collaborators; the required length of notice is dependent on whether any product developed under the license agreement has received marketing approval. The Company’s license agreements may be terminated by either party for a material breach by the other, subject to notice and cure provisions. Unless earlier terminated, these license agreements generally remain in effect until the date on which the royalty term and all payment obligations with respect to all products in all countries have expired. CRISPR Therapeutics AG - CRISPR-Cas9 Gene-editing Therapies In 2015, the Company entered into a strategic collaboration, option and license agreement (the “CRISPR Agreement”) with CRISPR Therapeutics AG and its affiliates (“CRISPR”) to collaborate on the discovery and development of potential new treatments aimed at the underlying genetic causes of human diseases using CRISPR-Cas9 gene-editing technology. The Company had the exclusive right to license certain targets. In 2019, the Company elected to exclusively license three targets, including cystic fibrosis, pursuant to the CRISPR Agreement. For each of the three targets that the Company elected to license, CRISPR has the potential to receive up to an additional $410.0 million in development, regulatory and commercial milestones as well as royalties on net product sales. In 2017, the Company entered into a joint development and commercialization agreement with CRISPR pursuant to the terms of the CRISPR Agreement (the “Original CTX001 JDCA”), under which the Company and CRISPR are co-developing and preparing to co-commercialize CTX001 for the treatment of hemoglobinopathies, including treatments for sickle cell disease and beta thalassemia. The Company concluded that the Original CTX001 JDCA is a cost-sharing arrangement, which results in the net impact of the arrangement being recorded in “Research and development expenses” in its condensed consolidated statements of operations. During the three months ended March 31, 2021 and 2020, the net expense related to the Original CTX001 JDCA was $20.0 million and $9.3 million, respectively. In April 2021, the Company and CRISPR amended and restated the Original CTX001 JDCA (the “A&R JDCA”), pursuant to which the parties agreed to, among other things, (a) adjust the governance structure for the collaboration and adjust the responsibilities of each party thereunder; (b) adjust the allocation of net profits and net losses between the parties; and (c) exclusively license (subject to CRISPR’s reserved rights to conduct certain activities) certain intellectual property rights to the Company relating to the products that may be researched, developed, manufactured and commercialized under such agreement. The closing of the transaction contemplated under the A&R JDCA is subject to certain conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and any other required antitrust clearance. After the effective date of the closing of the transaction (the “Effective Date”), the Company will lead global development, manufacturing and commercialization of CTX001, with support from CRISPR. Subject to the terms and conditions of the A&R JDCA, the Company will have the right to conduct all research, development, manufacturing and commercialization activities relating to the product candidates and products under the A&R JDCA (including CTX001) throughout the world subject to CRISPR’s reserved right to conduct certain activities. In connection with the closing of the transaction contemplated by the A&R JDCA, the Company will pay a $900.0 million upfront payment to CRISPR and an additional one-time $200.0 million milestone payment upon receipt of the first marketing approval of CTX001 from the U.S. Food or Drug Administration or the European Commission. The Company and CRISPR will continue to share equally all net profits and net losses incurred under the A&R JDCA through June 30, 2021, subject to adjustment based on the timing of antitrust clearance. Beginning July 1, 2021 (or the first day of the calendar quarter in which antitrust clearance occurs), with respect to CTX001, the net profits and net losses incurred pursuant to the A&R JDCA will be allocated 60% to the Company and 40% to CRISPR, while all other product candidate and products will continue to have net profits and net losses shared equally. The Company expects to record the $900.0 million upfront payment to “Research and development expenses” upon closing of the transaction contemplated by the A&R JDCA. Out-license Agreements The Company has entered into licensing agreements pursuant to which it has out-licensed rights to certain drug candidates to third-party collaborators. Pursuant to these out-license agreements, the Company’s collaborators become responsible for all costs related to the continued development of such drug candidates and obtain development and commercialization rights to these drug candidates. Depending on the terms of the agreements, the Company’s collaborators may be required to make upfront payments, milestone payments upon the achievement of certain product research and development objectives an d may also be required to pay royalties on future sales, if any, of commercial products resulting from the collaboration. The termination provisions associated with these collaborations are generally the same as those described above related to the Company’s in-license agreements. None of the Company’s out-license agreements had a significant impact on the Company’s condensed consolidated statement of operations during the three months ended March 31, 2021 and 2020. Cystic Fibrosis Foundation |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per ShareBasic net income per common share is based upon the weighted-average number of common shares outstanding during the period. Diluted net income per common share utilizing the treasury-stock method 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 per common share for the periods ended: Three Months Ended March 31, 2021 2020 (in thousands, except per share amounts) Net income $ 653,138 $ 602,753 Basic weighted-average common shares outstanding 259,369 259,815 Effect of potentially dilutive securities: Stock options 1,263 1,868 Restricted stock units (including PSUs) 1,276 1,801 Employee stock purchase program 8 31 Diluted weighted-average common shares outstanding 261,916 263,515 Basic net income per common share $ 2.52 $ 2.32 Diluted net income per common share $ 2.49 $ 2.29 The Company did not include the securities in the following table in the computation of the net income per common share because the effect would have been anti-dilutive during each period: Three Months Ended March 31, 2021 2020 (in thousands) Stock options 356 879 Unvested restricted stock units (including PSUs) 712 430 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following fair value hierarchy is used to classify assets and liabilities based on observable inputs and unobservable inputs used in order to determine the fair value of the Company’s financial 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. The Company maintains strategic investments separately from the investment policy that governs its other cash, cash equivalents and marketable securities as described in Note F, “Marketable Securities and Equity Investments.” Additionally, the Company utilizes foreign currency forward contracts intended to mitigate the effect of changes in foreign exchange rates on its condensed consolidated statement of operations. During the three months ended March 31, 2021 and 2020, the Company did not record any other-than-temporary impairment charges related to its financial assets. The following tables set forth the Company’s financial assets and liabilities subject to fair value measurements by level within the fair value hierarchy (and does not include $2.4 billion and $2.8 billion of cash as of March 31, 2021 and December 31, 2020, respectively): As of March 31, 2021 As of December 31, 2020 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 (in thousands) Financial instruments carried at fair value (asset positions): Cash equivalents: Money market funds $ 3,890,303 $ 3,890,303 $ — $ — $ 3,141,053 $ 3,141,053 $ — $ — Marketable securities: Corporate equity securities 143,486 143,486 — — 195,781 15,650 180,131 — Government-sponsored enterprise securities 62,362 62,362 — — 80,063 80,063 — — Corporate debt securities 155,716 — 155,716 — 231,598 — 231,598 — Commercial paper 258,074 — 258,074 — 163,268 — 163,268 — Prepaid expenses and other current assets: Foreign currency forward contracts 7,039 — 7,039 — — — — — Other assets: Foreign currency forward contracts 1,944 — 1,944 — — — — — Total financial assets $ 4,518,924 $ 4,096,151 $ 422,773 $ — $ 3,811,763 $ 3,236,766 $ 574,997 $ — Financial instruments carried at fair value (liability positions): Other current liabilities: Foreign currency forward contracts $ (28,743) $ — $ (28,743) $ — $ (59,184) $ — $ (59,184) $ — Long-term contingent consideration (185,700) — — (185,700) (189,600) — — (189,600) Other long-term liabilities: Foreign currency forward contracts (433) — (433) — (4,283) — (4,283) — Total financial liabilities $ (214,876) $ — $ (29,176) $ (185,700) $ (253,067) $ — $ (63,467) $ (189,600) Please refer to Note F, “Marketable Securities and Equity Investments,” for the carrying amount and related unrealized gains (losses) by type of investment. Fair Value of Corporate Equity Securities The Company classifies its investments in publicly traded corporate equity securities as “Marketable securities” on its condensed consolidated balance sheets. Generally, the Company’s investments in the common stock of these publicly traded companies are valued based on Level 1 inputs because they have readily determinable fair values. However, certain of the Company’s investments in publicly traded companies have been or continue to be valued based on Level 2 inputs due to transfer restrictions associated with these investments. Please refer to Note F, “Marketable Securities and Equity Investments,” for further information on these investments. Fair Value of Contingent Consideration In 2019, the Company acquired Exonics Therapeutics, Inc. (“Exonics”), a privately-held company focused on creating transformative gene-editing therapies to repair mutations that cause DMD and other severe neuromuscular diseases, including DM1. The Company’s Level 3 contingent consideration liabilities are related to $678.3 million of development and regulatory milestones potentially payable to Exonics’ former equity holders. The Company bases its estimates of the probability of achieving the milestones relevant to the fair value of contingent payments on industry data attributable to rare diseases. The discount rates used in the valuation model for contingent payments, which were between 0.6% and 2.4% as of March 31, 2021, represent a measure of credit risk and market risk associated with settling the liabilities. Significant judgment is used in determining the appropriateness of these assumptions at each reporting period. Due to the uncertainties associated with development and commercialization of drug candidates in the pharmaceutical industry and the effects of changes in other assumptions including discount rates, the Company expects its estimates regarding the fair value of contingent consideration to change in the future, resulting in adjustments to the fair value of the Company’s contingent consideration liabilities, and the effect of any such adjustments could be material. The following table represents a rollforward of the fair value of the Company’s contingent consideration liabilities: Three Months Ended March 31, 2021 (in thousands) Balance at December 31, 2020 $ 189,600 Decrease in fair value of contingent payments (3,900) Balance at March 31, 2021 $ 185,700 |
Marketable Securities and Equit
Marketable Securities and Equity Investments | 3 Months Ended |
Mar. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Marketable Securities and Equity Investments | Marketable Securities and Equity Investments A summary of the Company’s cash equivalents and marketable securities, which are recorded at fair value (and do not include $2.4 billion and $2.8 billion of cash as of March 31, 2021 and December 31, 2020, respectively), is shown below: As of March 31, 2021 As of December 31, 2020 Amortized Cost Gross Gross Fair Value Amortized Cost Gross Gross Fair Value (in thousands) Cash equivalents: Money market funds $ 3,890,303 $ — $ — $ 3,890,303 $ 3,141,053 $ — $ — $ 3,141,053 Total cash equivalents $ 3,890,303 $ — $ — $ 3,890,303 $ 3,141,053 $ — $ — $ 3,141,053 Marketable securities: Government-sponsored enterprise securities $ 62,332 $ 30 $ — $ 62,362 $ 80,046 $ 17 $ — $ 80,063 Corporate debt securities 155,636 126 (46) 155,716 231,263 377 (42) 231,598 Commercial paper 258,068 27 (21) 258,074 163,286 19 (37) 163,268 Total marketable debt securities 476,036 183 (67) 476,152 474,595 413 (79) 474,929 Corporate equity securities 51,427 92,059 — 143,486 51,427 144,354 — 195,781 Total marketable securities $ 527,463 $ 92,242 $ (67) $ 619,638 $ 526,022 $ 144,767 $ (79) $ 670,710 Available-for-sale debt securities were classified on the Company's condensed consolidated balance sheets at fair value as follows: As of March 31, 2021 As of December 31, 2020 (in thousands) Cash and cash equivalents $ 3,890,303 $ 3,141,053 Marketable securities 476,152 474,929 Total $ 4,366,455 $ 3,615,982 Available-for-sale debt securities by contractual maturity were as follows: As of March 31, 2021 As of December 31, 2020 (in thousands) Matures within one year $ 4,358,433 $ 3,526,185 Matures after one year through five years 8,022 89,797 Total $ 4,366,455 $ 3,615,982 The Company has a limited number of available-for-sale debt securities in insignificant loss positions as of March 31, 2021, which it does not intend to sell and has concluded it will not be required to sell before recovery of the amortized costs for the investments at maturity. The Company did not record any charges for other-than-temporary declines in the fair value of available-for-sale debt securities or gross realized gains or losses in the three months ended March 31, 2021 and 2020. The Company records changes in the fair value of its investments in corporate equity securities to “Other expense, net” on its condensed consolidated statements of operations. During the three months ended March 31, 2021 and 2020, the Company’s net unrealized losses on corporate equity securities held at the conclusion of each period were as follows: Three Months Ended March 31, 2021 2020 (in thousands) Net unrealized losses $ (52,295) $ (39,440) During the three months ended March 31, 2020, the Company received proceeds of $72.0 million related to the sale of the common stock of publicly traded companies, which had a total original weighted-average cost basis of $26.7 million. There were no sales of the common stock of publicly traded companies during the three months ended March 31, 2021. As of March 31, 2021, the carrying value of the Company’s equity investments without readily determinable fair values, which are recorded in “Other assets” on its condensed consolidated balance sheets, was $20.8 million. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The following table summarizes the changes in accumulated other comprehensive income (loss) by component: Foreign Currency Translation Adjustment Unrealized Holding Gains (Losses), Net of Tax Total On Available-For-Sale Debt Securities On Foreign Currency Forward Contracts (in thousands) Balance at December 31, 2020 $ (15,678) $ 334 $ (53,136) $ (68,480) Other comprehensive income (loss) before reclassifications 1,430 (218) 21,019 22,231 Amounts reclassified from accumulated other comprehensive income (loss) — — 12,947 12,947 Net current period other comprehensive income (loss) 1,430 (218) 33,966 35,178 Balance at March 31, 2021 $ (14,248) $ 116 $ (19,170) $ (33,302) Balance at December 31, 2019 $ (895) $ 503 $ (1,581) $ (1,973) Other comprehensive (loss) income before reclassifications (2,662) (764) 25,772 22,346 Amounts reclassified from accumulated other comprehensive income (loss) — — (6,990) (6,990) Net current period other comprehensive (loss) income (2,662) (764) 18,782 15,356 Balance at March 31, 2020 $ (3,557) $ (261) $ 17,201 $ 13,383 |
Hedging
Hedging | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Hedging | Hedging Foreign currency forward contracts - Designated as hedging instruments The Company maintains a hedging program intended to mitigate the effect of changes in foreign exchange rates for a portion of the Company’s forecasted product revenues denominated in certain foreign currencies. The program includes foreign currency forward contracts that are designated as cash flow hedges under U.S. GAAP having contractual durations from one The Company formally documents the relationship between foreign currency forward contracts (hedging instruments) and forecasted product revenues (hedged items), as well as the Company’s risk management objective and strategy for undertaking various hedging activities, which includes matching all foreign currency forward contracts that are designated as cash flow hedges to forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the foreign currency forward contracts are highly effective in offsetting changes in cash flows of hedged items on a prospective and retrospective basis. If the Company were to determine that a (i) foreign currency forward contract is not highly effective as a cash flow hedge, (ii) foreign currency forward contract has ceased to be a highly effective hedge or (iii) forecasted transaction is no longer probable of occurring, the Company would discontinue hedge accounting treatment prospectively. The Company measures effectiveness based on the change in fair value of the forward contracts and the fair value of the hypothetical foreign currency forward contracts with terms that match the critical terms of the risk being hedged. As of March 31, 2021, all hedges were determined to be highly effective. The Company considers the impact of its counterparties’ credit risk on the fair value of the foreign currency forward contracts. As of March 31, 2021 and December 31, 2020, credit risk did not change the fair value of the Company’s foreign currency forward contracts. The following table summarizes the notional amount in U.S. dollars of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges under U.S. GAAP: As of March 31, 2021 As of December 31, 2020 Foreign Currency (in thousands) Euro $ 892,995 $ 745,099 British pound sterling 250,528 160,427 Australian dollar 100,733 99,922 Canadian dollar 80,122 86,468 Total foreign currency forward contracts $ 1,324,378 $ 1,091,916 Foreign currency forward contracts - Not designated as hedging instruments The Company also enters into foreign currency forward contracts with contractual maturities of less than one month, which are designed to mitigate the effect of changes in foreign exchange rates on monetary assets and liabilities, including intercompany balances. These contracts are not designated as hedging instruments under U.S. GAAP. The Company recognizes realized gains and losses for such contracts in “Other expense, net” in its condensed consolidated statements of operations each period. As of March 31, 2021, the notional amount of the Company’s outstanding foreign currency forward contracts where hedge accounting under U.S. GAAP is not applied was $386.7 million. During the three months ended March 31, 2021 and 2020, the Company recognized the following related to foreign currency forward contacts in its condensed consolidated statements of operations: Three Months Ended March 31, 2021 2020 (in thousands) Designated as hedging instruments - Reclassified from AOCI Product revenues, net $ (16,518) $ 8,922 Not designated as hedging instruments Other expense, net $ (7,997) $ (16,229) Total reported in the Condensed Consolidated Statement of Operations Product revenues, net $ 1,723,305 $ 1,515,107 Other expense, net $ (52,653) $ (61,130) The following table summarizes the fair value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges under U.S. GAAP included on its condensed consolidated balance sheets: As of March 31, 2021 Assets Liabilities Classification Fair Value Classification Fair Value (in thousands) Prepaid expenses and other current assets $ 7,039 Other current liabilities $ (28,743) Other assets 1,944 Other long-term liabilities (433) Total assets $ 8,983 Total liabilities $ (29,176) As of December 31, 2020 Assets Liabilities Classification Fair Value Classification Fair Value (in thousands) Prepaid expenses and other current assets $ — Other current liabilities $ (59,184) Other assets — Other long-term liabilities (4,283) Total assets $ — Total liabilities $ (63,467) As of March 31, 2021, the Company expects the amounts that are related to foreign exchange forward contracts designated as cash flow hedges under U.S. GAAP recorded in “Prepaid expenses and other current assets” and “Other current liabilities” to be reclassified to earnings within twelve months. The following table summarizes the potential effect of offsetting derivatives by type of financial instrument designated as cash flow hedges under U.S. GAAP on the Company’s condensed consolidated balance sheets: As of March 31, 2021 Gross Amounts Recognized Gross Amounts Offset Gross Amounts Presented Gross Amounts Not Offset Legal Offset Foreign currency forward contracts (in thousands) Total assets $ 8,983 $ — $ 8,983 $ (8,983) $ — Total liabilities (29,176) — (29,176) 8,983 (20,193) As of December 31, 2020 Gross Amounts Recognized Gross Amounts Offset Gross Amounts Presented Gross Amounts Not Offset Legal Offset Foreign currency forward contracts (in thousands) Total assets $ — $ — $ — $ — $ — Total liabilities (63,467) — (63,467) — (63,467) |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consisted of the following: As of March 31, 2021 As of December 31, 2020 (in thousands) Raw materials $ 44,921 $ 46,232 Work-in-process 170,721 161,324 Finished goods 83,221 73,221 Total $ 298,863 $ 280,777 |
Stock-based Compensation Expens
Stock-based Compensation Expense and Share Repurchase Programs | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation Expense and Share Repurchase Programs | Stock-based Compensation Expense and Share Repurchase Programs Stock-based compensation expense During the three months ended March 31, 2021 and 2020, the Company recognized the following stock-based compensation expense: Three Months Ended March 31, 2021 2020 (in thousands) Stock-based compensation expense by type of award: Restricted stock units (including PSUs) and restricted stock $ 100,826 $ 97,149 Stock options 10,596 17,266 ESPP share issuances 5,615 2,485 Stock-based compensation expense related to inventories (1,863) (1,194) Total stock-based compensation expense included in costs and expenses $ 115,174 $ 115,706 Stock-based compensation expense by line item: Cost of sales $ 1,431 $ 1,361 Research and development expenses 72,802 72,687 Sales, general and administrative expenses 40,941 41,658 Total stock-based compensation expense included in costs and expenses 115,174 115,706 Income tax effect (31,251) (64,246) Total stock-based compensation expense, net of tax $ 83,923 $ 51,460 Share repurchase programs In 2019, the Company’s Board of Directors approved a share repurchase program (the “2019 Share Repurchase Program”), pursuant to which the Company repurchased $500.0 million of its common stock in 2019 and 2020. During the three months ended March 31, 2020, the Company repurchased 1,403,868 shares of its common stock under the 2019 Share Repurchase Program for an aggregate of $300.0 million. In November 2020, the Company’s Board of Directors approved a new share repurchase program (the “2020 Share Repurchase Program”), pursuant to which the Company was authorized to repurchase up to $500.0 million of its common stock by December 31, 2022. During the three months ended March 31, 2021, the Company repurchased 1,988,941 shares of its common stock under the 2020 Share Repurchase Program for an aggregate of $424.9 million. As of March 31, 2021, the Company had repurchased the entire $500.0 million it was authorized to repurchase of its common stock under the 2020 Share Repurchase Program. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company is subject to U.S. federal, state, and foreign income taxes. For the three months ended March 31, 2021 and 2020, the Company recorded provisions for income taxes of $167.8 million and $54.8 million, respectively. The Company’s effective tax rate of 20% for the three months ended March 31, 2021 was lower than the U.S. statutory rate primarily due to excess tax benefits related to stock-based compensation. The Company’s effective tax rate of 8% for the three months ended March 31, 2020 was lower than the U.S. statutory rate primarily due to a discrete benefit related to the write-off of a long-term intercompany receivable and excess tax benefits related to stock-based compensation. On a periodic basis, the Company reassesses any valuation allowances that it maintains on its deferred tax assets, weighing positive and negative evidence to assess the recoverability of the deferred tax assets. As of December 31, 2020, the Company maintained a valuation allowance of $213.8 million related primarily to U.S. state and foreign tax attributes. As part of the Tax Cut and Jobs Act of 2017, the Company is subject to a territorial tax system in which the requirement is to establish an accounting policy in providing for tax on Global Intangible Low Taxed Income (“GILTI”) earned by certain foreign subsidiaries. The Company has elected to treat the impact of GILTI as a current tax expense in its provision for income taxes. The Company has reviewed the tax positions taken, or to be taken, in its tax returns for all tax years currently open to examination by a taxing authority. Unrecognized tax benefits represent the aggregate tax effect of differences between tax return positions and the benefits recognized in the consolidated financial statements. As of March 31, 2021 and December 31, 2020, the Company had $81.8 million and $75.8 million, respectively, of net unrecognized tax benefits, which would affect the Company’s tax rate if recognized. The Company does not expect that its unrecognized tax benefits will materially change within the next twelve months. The Company accrues interest and penalties related to unrecognized tax benefits as a component of its provision for income taxes. The Company did not recognize any material interest or penalties related to uncertain tax positions during the three months ended March 31, 2021 and 2020. As of March 31, 2021, foreign earnings, which were not significant, have been retained by foreign subsidiaries for indefinite reinvestment. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company could be subject to withholding taxes payable to the various foreign countries. 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 U.S. or any other major taxing jurisdiction for years before 2011, except where the Company has net operating losses or tax credit carryforwards that originate before 2011. The Company has various income tax audits ongoing at any time throughout the world. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Revolving Credit Facilities The Company and certain of its subsidiaries have entered into two credit agreements (the “Credit Agreements”) with Bank of America, N.A., as administrative agent and the lenders referred to therein (the “Lenders”). The Credit Agreements were not drawn upon at closing and the Company has not drawn upon them to date. Amounts drawn pursuant to the Credit Agreements, if any, will be used for general corporate purposes. Any amounts borrowed under the Credit Agreements will bear interest, at the Company’s option, at either a base rate or a Eurocurrency rate, in each case plus an applicable margin based on the Company’s consolidated leverage ratio (the ratio of the Company’s total consolidated funded indebtedness to the Company’s consolidated EBITDA for the most recently completed four fiscal quarter period). In September 2019, the Company and certain of its subsidiaries entered into a $500.0 million unsecured revolving facility (the “2019 Credit Agreement”) with the Lenders, which matures on September 17, 2024. Under the 2019 Credit Agreement, the applicable margins on base rate loans range from 0.125% to 0.500% and the applicable margins on Eurocurrency loans range from 1.125% to 1.500%. The 2019 Credit Agreement provides a sublimit of $50.0 million for letters of credit. In September 2020, the Company and certain of its subsidiaries entered into a $2.0 billion unsecured revolving facility (the “2020 Credit Agreement”) with the Lenders, which matures on September 18, 2022. Under the 2020 Credit Agreement, the applicable margins on base rate loans range from 0.500% to 0.875% and the applicable margins on Eurocurrency loans range from 1.500% to 1.875%. The 2020 Credit Agreement does not support letters of credit. Subject to satisfaction of certain conditions, the Company may request that the borrowing capacity for each of the Credit Agreements be increased by an additional $500.0 million. Any amounts borrowed pursuant to the Credit Agreements are guaranteed by certain of the Company’s existing and future domestic subsidiaries, subject to certain exceptions. The Credit Agreements contain customary representations and warranties and affirmative and negative covenants, including financial covenants to maintain (x) subject to certain limited exceptions, a consolidated leverage ratio of 3.50 to 1.00, subject to an increase to 4.00 to 1.00 following a material acquisition and (y) a consolidated interest coverage ratio of 2.50 to 1.00, in each case measured on a quarterly basis. As of March 31, 2021, the Company was in compliance with the covenants described above. The Credit Agreements also contain customary events of default. In the case of a continuing event of default, the administrative agent would be entitled to exercise various remedies, including the acceleration of amounts due under outstanding loans. Direct costs related to the Credit Agreements, which were not material to the Company’s financial statements, were deferred and recorded over the term of the Credit Agreements. Guaranties and Indemnifications 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. Other 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 March 31, 2021 or December 31, 2020. |
Additional Cash Flow Informatio
Additional Cash Flow Information | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Additional Cash Flow Information | Additional Cash Flow Information The cash, cash equivalents and restricted cash at the beginning and ending of each period presented in the Company’s condensed consolidated statements of cash flows consisted of the following: Three Months Ended March 31, 2021 2020 Beginning of period End of period Beginning of period End of period (in thousands) Cash and cash equivalents $ 5,988,187 $ 6,304,330 $ 3,109,322 $ 3,593,412 Prepaid expenses and other current assets 658 8,577 8,004 8,552 Other assets — — 3,355 — Cash, cash equivalents and restricted cash per condensed consolidated statement of cash flows $ 5,988,845 $ 6,312,907 $ 3,120,681 $ 3,601,964 |
Basis of Presentation and Acc_2
Basis of Presentation and Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 (“U.S. GAAP”). The condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All material intercompany balances and transactions have been eliminated. The Company operates in one segment, pharmaceuticals. The Company has reclassified certain items from the prior year’s condensed consolidated financial statements to conform to the current year’s presentation. Certain information and footnote disclosures normally included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (the “2020 Annual Report on Form 10-K”) have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations for the interim periods ended March 31, 2021 and 2020. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in accordance with U.S. 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. 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. |
Recently Adopted and Issued Accounting Standards | Recently Adopted and Issued Accounting Standards Income Taxes In 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) (“ASU 2019-12”), which simplifies the accounting for income taxes. ASU 2019-12 became effective on January 1, 2021. The adoption of ASU 2019-12 did not have a significant impact on the Company’s condensed consolidated financial statements. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Revenue | Product revenues, net consisted of the following: Three Months Ended March 31, 2021 2020 (in thousands) TRIKAFTA/KAFTRIO $ 1,193,217 $ 895,233 SYMDEKO/SYMKEVI 125,049 173,159 ORKAMBI 218,697 234,138 KALYDECO 186,342 212,577 Total product revenues, net $ 1,723,305 $ 1,515,107 Total net product revenues by geographic region, based on the location of the customer, consisted of the following: Three Months Ended March 31, 2021 2020 (in thousands) United States $ 1,253,433 $ 1,187,588 Outside of the United States Europe 404,969 257,391 Other 64,903 70,128 Total product revenues outside of the United States 469,872 327,519 Total product revenues, net $ 1,723,305 $ 1,515,107 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of basic and diluted net income per common share for the periods ended: Three Months Ended March 31, 2021 2020 (in thousands, except per share amounts) Net income $ 653,138 $ 602,753 Basic weighted-average common shares outstanding 259,369 259,815 Effect of potentially dilutive securities: Stock options 1,263 1,868 Restricted stock units (including PSUs) 1,276 1,801 Employee stock purchase program 8 31 Diluted weighted-average common shares outstanding 261,916 263,515 Basic net income per common share $ 2.52 $ 2.32 Diluted net income per common share $ 2.49 $ 2.29 |
Schedule of Potential Gross Common Equivalent Shares | The Company did not include the securities in the following table in the computation of the net income per common share because the effect would have been anti-dilutive during each period: Three Months Ended March 31, 2021 2020 (in thousands) Stock options 356 879 Unvested restricted stock units (including PSUs) 712 430 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets Subject to Fair Value Measurements (Excluding Vie Cash and Cash Equivalents, Which are Recorded as Restricted Cash and Cash Equivalents (Vie)) | The following tables set forth the Company’s financial assets and liabilities subject to fair value measurements by level within the fair value hierarchy (and does not include $2.4 billion and $2.8 billion of cash as of March 31, 2021 and December 31, 2020, respectively): As of March 31, 2021 As of December 31, 2020 Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 (in thousands) Financial instruments carried at fair value (asset positions): Cash equivalents: Money market funds $ 3,890,303 $ 3,890,303 $ — $ — $ 3,141,053 $ 3,141,053 $ — $ — Marketable securities: Corporate equity securities 143,486 143,486 — — 195,781 15,650 180,131 — Government-sponsored enterprise securities 62,362 62,362 — — 80,063 80,063 — — Corporate debt securities 155,716 — 155,716 — 231,598 — 231,598 — Commercial paper 258,074 — 258,074 — 163,268 — 163,268 — Prepaid expenses and other current assets: Foreign currency forward contracts 7,039 — 7,039 — — — — — Other assets: Foreign currency forward contracts 1,944 — 1,944 — — — — — Total financial assets $ 4,518,924 $ 4,096,151 $ 422,773 $ — $ 3,811,763 $ 3,236,766 $ 574,997 $ — Financial instruments carried at fair value (liability positions): Other current liabilities: Foreign currency forward contracts $ (28,743) $ — $ (28,743) $ — $ (59,184) $ — $ (59,184) $ — Long-term contingent consideration (185,700) — — (185,700) (189,600) — — (189,600) Other long-term liabilities: Foreign currency forward contracts (433) — (433) — (4,283) — (4,283) — Total financial liabilities $ (214,876) $ — $ (29,176) $ (185,700) $ (253,067) $ — $ (63,467) $ (189,600) |
Schedule of Fair Value of Our Contingent Consideration Liabilities | The following table represents a rollforward of the fair value of the Company’s contingent consideration liabilities: Three Months Ended March 31, 2021 (in thousands) Balance at December 31, 2020 $ 189,600 Decrease in fair value of contingent payments (3,900) Balance at March 31, 2021 $ 185,700 |
Marketable Securities and Equ_2
Marketable Securities and Equity Investments (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Cash Equivalents and Marketable Securities | A summary of the Company’s cash equivalents and marketable securities, which are recorded at fair value (and do not include $2.4 billion and $2.8 billion of cash as of March 31, 2021 and December 31, 2020, respectively), is shown below: As of March 31, 2021 As of December 31, 2020 Amortized Cost Gross Gross Fair Value Amortized Cost Gross Gross Fair Value (in thousands) Cash equivalents: Money market funds $ 3,890,303 $ — $ — $ 3,890,303 $ 3,141,053 $ — $ — $ 3,141,053 Total cash equivalents $ 3,890,303 $ — $ — $ 3,890,303 $ 3,141,053 $ — $ — $ 3,141,053 Marketable securities: Government-sponsored enterprise securities $ 62,332 $ 30 $ — $ 62,362 $ 80,046 $ 17 $ — $ 80,063 Corporate debt securities 155,636 126 (46) 155,716 231,263 377 (42) 231,598 Commercial paper 258,068 27 (21) 258,074 163,286 19 (37) 163,268 Total marketable debt securities 476,036 183 (67) 476,152 474,595 413 (79) 474,929 Corporate equity securities 51,427 92,059 — 143,486 51,427 144,354 — 195,781 Total marketable securities $ 527,463 $ 92,242 $ (67) $ 619,638 $ 526,022 $ 144,767 $ (79) $ 670,710 Available-for-sale debt securities were classified on the Company's condensed consolidated balance sheets at fair value as follows: As of March 31, 2021 As of December 31, 2020 (in thousands) Cash and cash equivalents $ 3,890,303 $ 3,141,053 Marketable securities 476,152 474,929 Total $ 4,366,455 $ 3,615,982 Available-for-sale debt securities by contractual maturity were as follows: As of March 31, 2021 As of December 31, 2020 (in thousands) Matures within one year $ 4,358,433 $ 3,526,185 Matures after one year through five years 8,022 89,797 Total $ 4,366,455 $ 3,615,982 |
Schedule of Company's Net Unrealized Gains on Corporate Equity Securities | During the three months ended March 31, 2021 and 2020, the Company’s net unrealized losses on corporate equity securities held at the conclusion of each period were as follows: Three Months Ended March 31, 2021 2020 (in thousands) Net unrealized losses $ (52,295) $ (39,440) |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table summarizes the changes in accumulated other comprehensive income (loss) by component: Foreign Currency Translation Adjustment Unrealized Holding Gains (Losses), Net of Tax Total On Available-For-Sale Debt Securities On Foreign Currency Forward Contracts (in thousands) Balance at December 31, 2020 $ (15,678) $ 334 $ (53,136) $ (68,480) Other comprehensive income (loss) before reclassifications 1,430 (218) 21,019 22,231 Amounts reclassified from accumulated other comprehensive income (loss) — — 12,947 12,947 Net current period other comprehensive income (loss) 1,430 (218) 33,966 35,178 Balance at March 31, 2021 $ (14,248) $ 116 $ (19,170) $ (33,302) Balance at December 31, 2019 $ (895) $ 503 $ (1,581) $ (1,973) Other comprehensive (loss) income before reclassifications (2,662) (764) 25,772 22,346 Amounts reclassified from accumulated other comprehensive income (loss) — — (6,990) (6,990) Net current period other comprehensive (loss) income (2,662) (764) 18,782 15,356 Balance at March 31, 2020 $ (3,557) $ (261) $ 17,201 $ 13,383 |
Hedging (Tables)
Hedging (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Cash Flow Hedging Instruments | The following table summarizes the notional amount in U.S. dollars of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges under U.S. GAAP: As of March 31, 2021 As of December 31, 2020 Foreign Currency (in thousands) Euro $ 892,995 $ 745,099 British pound sterling 250,528 160,427 Australian dollar 100,733 99,922 Canadian dollar 80,122 86,468 Total foreign currency forward contracts $ 1,324,378 $ 1,091,916 |
Schedule of Foreign Exchange Contracts, Condensed Consolidated Statements of Operations | During the three months ended March 31, 2021 and 2020, the Company recognized the following related to foreign currency forward contacts in its condensed consolidated statements of operations: Three Months Ended March 31, 2021 2020 (in thousands) Designated as hedging instruments - Reclassified from AOCI Product revenues, net $ (16,518) $ 8,922 Not designated as hedging instruments Other expense, net $ (7,997) $ (16,229) Total reported in the Condensed Consolidated Statement of Operations Product revenues, net $ 1,723,305 $ 1,515,107 Other expense, net $ (52,653) $ (61,130) |
Schedule of Foreign Exchange Contracts | The following table summarizes the fair value of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges under U.S. GAAP included on its condensed consolidated balance sheets: As of March 31, 2021 Assets Liabilities Classification Fair Value Classification Fair Value (in thousands) Prepaid expenses and other current assets $ 7,039 Other current liabilities $ (28,743) Other assets 1,944 Other long-term liabilities (433) Total assets $ 8,983 Total liabilities $ (29,176) As of December 31, 2020 Assets Liabilities Classification Fair Value Classification Fair Value (in thousands) Prepaid expenses and other current assets $ — Other current liabilities $ (59,184) Other assets — Other long-term liabilities (4,283) Total assets $ — Total liabilities $ (63,467) |
Schedule of Offsetting Liabilities | The following table summarizes the potential effect of offsetting derivatives by type of financial instrument designated as cash flow hedges under U.S. GAAP on the Company’s condensed consolidated balance sheets: As of March 31, 2021 Gross Amounts Recognized Gross Amounts Offset Gross Amounts Presented Gross Amounts Not Offset Legal Offset Foreign currency forward contracts (in thousands) Total assets $ 8,983 $ — $ 8,983 $ (8,983) $ — Total liabilities (29,176) — (29,176) 8,983 (20,193) As of December 31, 2020 Gross Amounts Recognized Gross Amounts Offset Gross Amounts Presented Gross Amounts Not Offset Legal Offset Foreign currency forward contracts (in thousands) Total assets $ — $ — $ — $ — $ — Total liabilities (63,467) — (63,467) — (63,467) |
Schedule of Offsetting Assets | The following table summarizes the potential effect of offsetting derivatives by type of financial instrument designated as cash flow hedges under U.S. GAAP on the Company’s condensed consolidated balance sheets: As of March 31, 2021 Gross Amounts Recognized Gross Amounts Offset Gross Amounts Presented Gross Amounts Not Offset Legal Offset Foreign currency forward contracts (in thousands) Total assets $ 8,983 $ — $ 8,983 $ (8,983) $ — Total liabilities (29,176) — (29,176) 8,983 (20,193) As of December 31, 2020 Gross Amounts Recognized Gross Amounts Offset Gross Amounts Presented Gross Amounts Not Offset Legal Offset Foreign currency forward contracts (in thousands) Total assets $ — $ — $ — $ — $ — Total liabilities (63,467) — (63,467) — (63,467) |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories by Type | Inventories consisted of the following: As of March 31, 2021 As of December 31, 2020 (in thousands) Raw materials $ 44,921 $ 46,232 Work-in-process 170,721 161,324 Finished goods 83,221 73,221 Total $ 298,863 $ 280,777 |
Stock-based Compensation Expe_2
Stock-based Compensation Expense and Share Repurchase Programs (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Stock-based Compensation Expense by Line Item | During the three months ended March 31, 2021 and 2020, the Company recognized the following stock-based compensation expense: Three Months Ended March 31, 2021 2020 (in thousands) Stock-based compensation expense by type of award: Restricted stock units (including PSUs) and restricted stock $ 100,826 $ 97,149 Stock options 10,596 17,266 ESPP share issuances 5,615 2,485 Stock-based compensation expense related to inventories (1,863) (1,194) Total stock-based compensation expense included in costs and expenses $ 115,174 $ 115,706 Stock-based compensation expense by line item: Cost of sales $ 1,431 $ 1,361 Research and development expenses 72,802 72,687 Sales, general and administrative expenses 40,941 41,658 Total stock-based compensation expense included in costs and expenses 115,174 115,706 Income tax effect (31,251) (64,246) Total stock-based compensation expense, net of tax $ 83,923 $ 51,460 |
Additional Cash Flow Informat_2
Additional Cash Flow Information (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Condensed Cash Flow Statement | The cash, cash equivalents and restricted cash at the beginning and ending of each period presented in the Company’s condensed consolidated statements of cash flows consisted of the following: Three Months Ended March 31, 2021 2020 Beginning of period End of period Beginning of period End of period (in thousands) Cash and cash equivalents $ 5,988,187 $ 6,304,330 $ 3,109,322 $ 3,593,412 Prepaid expenses and other current assets 658 8,577 8,004 8,552 Other assets — — 3,355 — Cash, cash equivalents and restricted cash per condensed consolidated statement of cash flows $ 5,988,845 $ 6,312,907 $ 3,120,681 $ 3,601,964 |
Basis of Presentation and Acc_3
Basis of Presentation and Accounting Policies (Details) | 3 Months Ended |
Mar. 31, 2021segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 1,724,305 | $ 1,515,107 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,253,433 | 1,187,588 |
Europe | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 404,969 | 257,391 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 64,903 | 70,128 |
Total product revenues outside of the United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 469,872 | 327,519 |
Product revenues, net | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,723,305 | 1,515,107 |
TRIKAFTA/KAFTRIO | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 1,193,217 | 895,233 |
SYMDEKO/SYMKEVI | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 125,049 | 173,159 |
ORKAMBI | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 218,697 | 234,138 |
KALYDECO | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 186,342 | $ 212,577 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | Mar. 31, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Contract liabilities | $ 181.2 | $ 191.5 |
Collaborative Arrangements (Det
Collaborative Arrangements (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Apr. 30, 2021USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($)target | Apr. 16, 2021 | |
CRISPR Therapeutics | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Collaborative arrangement, right to exclusively license, number of targets | target | 3 | ||||
Collaborative arrangement, development and regulatory potential milestone payments maximum | $ 410,000,000 | ||||
CTX001 Co-Co | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Collaborative arrangement research and development expenses | $ 20,000,000 | $ 9,300,000 | |||
CRISPR A&R JDCA | Subsequent Event | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Collaborative arrangement, development and regulatory potential milestone payments maximum | $ 200,000,000 | ||||
Up-front payment | $ 900,000,000 | ||||
Allocation of net profits and net losses, percent | 60.00% | ||||
CRISPR A&R JDCA | CRISPR | Subsequent Event | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Allocation of net profits and net losses, percent | 40.00% |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Computation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Net income | $ 653,138 | $ 602,753 |
Basic weighted-average common shares outstanding (in shares) | 259,369 | 259,815 |
Effect of potentially dilutive securities: | ||
Employee stock purchase program (in shares) | 8 | 31 |
Diluted weighted-average common shares outstanding (in shares) | 261,916 | 263,515 |
Basic net income per common share (in dollars per share) | $ 2.52 | $ 2.32 |
Diluted net income per common share (in dollars per share) | $ 2.49 | $ 2.29 |
Stock options | ||
Effect of potentially dilutive securities: | ||
Share-based payment arrangements (in shares) | 1,263 | 1,868 |
Restricted stock units (including PSUs) | ||
Effect of potentially dilutive securities: | ||
Share-based payment arrangements (in shares) | 1,276 | 1,801 |
Earnings Per Share - Anti-dilut
Earnings Per Share - Anti-dilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 356 | 879 |
Restricted stock units (including PSUs) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 712 | 430 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) $ in Millions | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash | $ 2,400 | $ 2,800 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Remaining milestone payment | $ 678.3 | |
Level 3 | Minimum | Discount Rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration, measurement input (as a percent) | 0.006 | |
Level 3 | Maximum | Discount Rate | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration, measurement input (as a percent) | 0.024 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities Subject to Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Financial instruments carried at fair value (liability positions): | ||
Long-term contingent consideration | $ (185,700) | $ (189,600) |
Recurring Basis | ||
Financial instruments carried at fair value (asset positions): | ||
Derivative asset current, foreign currency forward contracts | 7,039 | 0 |
Derivative asset noncurrent, foreign currency forward contracts | 1,944 | 0 |
Total financial assets | 4,518,924 | 3,811,763 |
Financial instruments carried at fair value (liability positions): | ||
Derivative liability current, foreign currency forward contracts | (28,743) | (59,184) |
Long-term contingent consideration | (185,700) | (189,600) |
Derivative liability noncurrent, foreign currency forward contracts | (433) | (4,283) |
Total financial liabilities | (214,876) | (253,067) |
Recurring Basis | Level 1 | ||
Financial instruments carried at fair value (asset positions): | ||
Derivative asset current, foreign currency forward contracts | 0 | 0 |
Derivative asset noncurrent, foreign currency forward contracts | 0 | 0 |
Total financial assets | 4,096,151 | 3,236,766 |
Financial instruments carried at fair value (liability positions): | ||
Derivative liability current, foreign currency forward contracts | 0 | 0 |
Long-term contingent consideration | 0 | 0 |
Derivative liability noncurrent, foreign currency forward contracts | 0 | 0 |
Total financial liabilities | 0 | 0 |
Recurring Basis | Level 2 | ||
Financial instruments carried at fair value (asset positions): | ||
Derivative asset current, foreign currency forward contracts | 7,039 | 0 |
Derivative asset noncurrent, foreign currency forward contracts | 1,944 | 0 |
Total financial assets | 422,773 | 574,997 |
Financial instruments carried at fair value (liability positions): | ||
Derivative liability current, foreign currency forward contracts | (28,743) | (59,184) |
Long-term contingent consideration | 0 | 0 |
Derivative liability noncurrent, foreign currency forward contracts | (433) | (4,283) |
Total financial liabilities | (29,176) | (63,467) |
Recurring Basis | Level 3 | ||
Financial instruments carried at fair value (asset positions): | ||
Derivative asset current, foreign currency forward contracts | 0 | 0 |
Derivative asset noncurrent, foreign currency forward contracts | 0 | 0 |
Total financial assets | 0 | 0 |
Financial instruments carried at fair value (liability positions): | ||
Derivative liability current, foreign currency forward contracts | 0 | 0 |
Long-term contingent consideration | (185,700) | (189,600) |
Derivative liability noncurrent, foreign currency forward contracts | 0 | 0 |
Total financial liabilities | (185,700) | (189,600) |
Recurring Basis | Money market funds | ||
Financial instruments carried at fair value (asset positions): | ||
Cash and cash equivalents | 3,890,303 | 3,141,053 |
Recurring Basis | Money market funds | Level 1 | ||
Financial instruments carried at fair value (asset positions): | ||
Cash and cash equivalents | 3,890,303 | 3,141,053 |
Recurring Basis | Money market funds | Level 2 | ||
Financial instruments carried at fair value (asset positions): | ||
Cash and cash equivalents | 0 | 0 |
Recurring Basis | Money market funds | Level 3 | ||
Financial instruments carried at fair value (asset positions): | ||
Cash and cash equivalents | 0 | 0 |
Recurring Basis | Corporate equity securities | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 143,486 | 195,781 |
Recurring Basis | Corporate equity securities | Level 1 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 143,486 | 15,650 |
Recurring Basis | Corporate equity securities | Level 2 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 0 | 180,131 |
Recurring Basis | Corporate equity securities | Level 3 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 0 | 0 |
Recurring Basis | Government-sponsored enterprise securities | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 62,362 | 80,063 |
Recurring Basis | Government-sponsored enterprise securities | Level 1 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 62,362 | 80,063 |
Recurring Basis | Government-sponsored enterprise securities | Level 2 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 0 | 0 |
Recurring Basis | Government-sponsored enterprise securities | Level 3 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 0 | 0 |
Recurring Basis | Corporate debt securities | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 155,716 | 231,598 |
Recurring Basis | Corporate debt securities | Level 1 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 0 | 0 |
Recurring Basis | Corporate debt securities | Level 2 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 155,716 | 231,598 |
Recurring Basis | Corporate debt securities | Level 3 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 0 | 0 |
Recurring Basis | Commercial paper | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 258,074 | 163,268 |
Recurring Basis | Commercial paper | Level 1 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 0 | 0 |
Recurring Basis | Commercial paper | Level 2 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | 258,074 | 163,268 |
Recurring Basis | Commercial paper | Level 3 | ||
Financial instruments carried at fair value (asset positions): | ||
Marketable securities | $ 0 | $ 0 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Contingent Consideration Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at December 31, 2020 | $ 189,600 | |
Decrease in fair value of contingent payments | (3,900) | $ 1,600 |
Balance at March 31, 2021 | $ 185,700 |
Marketable Securities and Equ_3
Marketable Securities and Equity Investments - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Summary of cash, cash equivalents and marketable securities | |||
Cash | $ 2,400,000,000 | $ 2,800,000,000 | |
Other-than-temporary declines in fair value of available-for-sale debt securities | 0 | $ 0 | |
Net unrealized losses | (52,295,000) | (39,440,000) | |
Weighted-average cost basis | 51,427,000 | $ 51,427,000 | |
Other Assets | |||
Summary of cash, cash equivalents and marketable securities | |||
Equity securities without readily determinable fair value, amount | 20,800,000 | ||
Publicly Traded Companies Sale | |||
Summary of cash, cash equivalents and marketable securities | |||
Proceeds received | $ 0 | 72,000,000 | |
Weighted-average cost basis | $ 26,700,000 |
Marketable Securities and Equ_4
Marketable Securities and Equity Investments - Summary of Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Total marketable debt securities | ||
Fair Value | $ 4,366,455 | $ 3,615,982 |
Corporate equity securities | ||
Amortized Cost | 51,427 | 51,427 |
Gross Unrealized Gains | 92,059 | 144,354 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 143,486 | 195,781 |
Amortized Cost | 527,463 | 526,022 |
Gross Unrealized Gains | 92,242 | 144,767 |
Gross Unrealized Losses | (67) | (79) |
Fair Value | 619,638 | 670,710 |
Cash equivalents | ||
Total marketable debt securities | ||
Amortized Cost | 3,890,303 | 3,141,053 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 3,890,303 | 3,141,053 |
Cash equivalents | Money market funds | ||
Total marketable debt securities | ||
Amortized Cost | 3,890,303 | 3,141,053 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 3,890,303 | 3,141,053 |
Marketable securities | ||
Total marketable debt securities | ||
Amortized Cost | 476,036 | 474,595 |
Gross Unrealized Gains | 183 | 413 |
Gross Unrealized Losses | (67) | (79) |
Fair Value | 476,152 | 474,929 |
Marketable securities | Government-sponsored enterprise securities | ||
Total marketable debt securities | ||
Amortized Cost | 62,332 | 80,046 |
Gross Unrealized Gains | 30 | 17 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 62,362 | 80,063 |
Marketable securities | Corporate debt securities | ||
Total marketable debt securities | ||
Amortized Cost | 155,636 | 231,263 |
Gross Unrealized Gains | 126 | 377 |
Gross Unrealized Losses | (46) | (42) |
Fair Value | 155,716 | 231,598 |
Marketable securities | Commercial paper | ||
Total marketable debt securities | ||
Amortized Cost | 258,068 | 163,286 |
Gross Unrealized Gains | 27 | 19 |
Gross Unrealized Losses | (21) | (37) |
Fair Value | $ 258,074 | $ 163,268 |
Marketable Securities and Equ_5
Marketable Securities and Equity Investments - Available-for-Sale Debt Securities at Fair Value (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities | $ 4,366,455 | $ 3,615,982 |
Cash and cash equivalents | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities | 3,890,303 | 3,141,053 |
Marketable securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Debt securities | $ 476,152 | $ 474,929 |
Marketable Securities and Equ_6
Marketable Securities and Equity Investments - Available-for-Sale Debt Securities by Contractual Maturity (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Investments, Debt and Equity Securities [Abstract] | ||
Matures within one year | $ 4,358,433 | $ 3,526,185 |
Matures after one year through five years | 8,022 | 89,797 |
Total | $ 4,366,455 | $ 3,615,982 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | $ 8,686,815 | $ 6,085,244 |
Other comprehensive income (loss) before reclassifications | 22,231 | 22,346 |
Amounts reclassified from accumulated other comprehensive income (loss) | 12,947 | (6,990) |
Total other comprehensive income | 35,178 | 15,356 |
Ending balance | 8,980,254 | 6,461,654 |
Foreign Currency Translation Adjustment | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (15,678) | (895) |
Other comprehensive income (loss) before reclassifications | 1,430 | (2,662) |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Total other comprehensive income | 1,430 | (2,662) |
Ending balance | (14,248) | (3,557) |
On Available-For-Sale Debt Securities | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | 334 | 503 |
Other comprehensive income (loss) before reclassifications | (218) | (764) |
Amounts reclassified from accumulated other comprehensive income (loss) | 0 | 0 |
Total other comprehensive income | (218) | (764) |
Ending balance | 116 | (261) |
On Foreign Currency Forward Contracts | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (53,136) | (1,581) |
Other comprehensive income (loss) before reclassifications | 21,019 | 25,772 |
Amounts reclassified from accumulated other comprehensive income (loss) | 12,947 | (6,990) |
Total other comprehensive income | 33,966 | 18,782 |
Ending balance | (19,170) | 17,201 |
Total | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance | (68,480) | (1,973) |
Total other comprehensive income | 35,178 | 15,356 |
Ending balance | $ (33,302) | $ 13,383 |
Hedging - Additional Informatio
Hedging - Additional Information (Details) - Foreign Currency Forward Contracts | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Not Designated as Hedging Instrument | |
Derivative [Line Items] | |
Derivative term | 1 month |
Cash Flow Hedging | Not Designated as Hedging Instrument | |
Derivative [Line Items] | |
Notional amount of foreign currency forward contract | $ 386,700,000 |
Cash Flow Hedging | Minimum | |
Derivative [Line Items] | |
Derivative term | 1 month |
Cash Flow Hedging | Maximum | |
Derivative [Line Items] | |
Derivative term | 18 months |
Hedging - Notional Amount (Deta
Hedging - Notional Amount (Details) - Foreign Currency Forward Contracts - Designated as Hedging Instruments - Cash Flow Hedging - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Derivative [Line Items] | ||
Notional amount of foreign currency forward contract | $ 1,324,378 | $ 1,091,916 |
Euro | ||
Derivative [Line Items] | ||
Notional amount of foreign currency forward contract | 892,995 | 745,099 |
British pound sterling | ||
Derivative [Line Items] | ||
Notional amount of foreign currency forward contract | 250,528 | 160,427 |
Australian dollar | ||
Derivative [Line Items] | ||
Notional amount of foreign currency forward contract | 100,733 | 99,922 |
Canadian dollar | ||
Derivative [Line Items] | ||
Notional amount of foreign currency forward contract | $ 80,122 | $ 86,468 |
Hedging - Cash Flow Hedging Ins
Hedging - Cash Flow Hedging Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Revenues | $ 1,724,305 | $ 1,515,107 |
Other expense, net | (52,653) | (61,130) |
On Foreign Currency Forward Contracts | Reclassification out of Accumulated Other Comprehensive Income | Foreign Currency Forward Contracts | Not designated as hedging instruments | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Other expense, net | (7,997) | (16,229) |
Product revenues, net | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Revenues | 1,723,305 | 1,515,107 |
Product revenues, net | On Foreign Currency Forward Contracts | Reclassification out of Accumulated Other Comprehensive Income | Foreign Currency Forward Contracts | Designated as hedging instruments | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Revenues | $ (16,518) | $ 8,922 |
Hedging - Derivative Fair Value
Hedging - Derivative Fair Value (Details) - Designated as Hedging Instruments - Foreign Currency Forward Contracts - Cash Flow Hedging - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Derivative [Line Items] | ||
Total assets | $ 8,983 | $ 0 |
Total liabilities | (29,176) | (63,467) |
Prepaid expenses and other current assets | ||
Derivative [Line Items] | ||
Total assets | 7,039 | 0 |
Other assets | ||
Derivative [Line Items] | ||
Total assets | 1,944 | 0 |
Other current liabilities | ||
Derivative [Line Items] | ||
Total liabilities | (28,743) | (59,184) |
Other long-term liabilities | ||
Derivative [Line Items] | ||
Total liabilities | $ (433) | $ (4,283) |
Hedging - Offsetting Derivative
Hedging - Offsetting Derivatives (Details) - Cash Flow Hedging - Designated as Hedging Instruments - Foreign Currency Forward Contracts - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Offsetting Derivative Assets [Abstract] | ||
Gross Amounts Recognized | $ 8,983 | $ 0 |
Gross Amounts Offset | 0 | 0 |
Gross Amounts Presented | 8,983 | 0 |
Gross Amounts Not Offset | (8,983) | 0 |
Legal Offset | 0 | 0 |
Offsetting Derivative Liabilities [Abstract] | ||
Gross Amounts Recognized | (29,176) | (63,467) |
Gross Amounts Offset | 0 | 0 |
Gross Amounts Presented | (29,176) | (63,467) |
Gross Amounts Not Offset | 8,983 | 0 |
Legal Offset | $ (20,193) | $ (63,467) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 44,921 | $ 46,232 |
Work-in-process | 170,721 | 161,324 |
Finished goods | 83,221 | 73,221 |
Total | $ 298,863 | $ 280,777 |
Stock-based Compensation Expe_3
Stock-based Compensation Expense and Share Repurchase Programs - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Stock-based compensation expense: | ||
Total stock-based compensation expense included in costs and expenses | $ 115,174 | $ 115,706 |
Stock-based compensation expense related to inventories | (1,863) | (1,194) |
Total stock-based compensation expense included in costs and expenses | 115,174 | 115,706 |
Income tax effect | (31,251) | (64,246) |
Total stock-based compensation expense, net of tax | 83,923 | 51,460 |
Cost of sales | ||
Stock-based compensation expense: | ||
Total stock-based compensation expense included in costs and expenses | 1,431 | 1,361 |
Research and development expenses | ||
Stock-based compensation expense: | ||
Total stock-based compensation expense included in costs and expenses | 72,802 | 72,687 |
Sales, general and administrative expenses | ||
Stock-based compensation expense: | ||
Total stock-based compensation expense included in costs and expenses | 40,941 | 41,658 |
Restricted stock units (including PSUs) | ||
Stock-based compensation expense: | ||
Total stock-based compensation expense included in costs and expenses | 100,826 | 97,149 |
Stock options | ||
Stock-based compensation expense: | ||
Total stock-based compensation expense included in costs and expenses | 10,596 | 17,266 |
ESPP share issuances | ||
Stock-based compensation expense: | ||
Total stock-based compensation expense included in costs and expenses | $ 5,615 | $ 2,485 |
Stock-based Compensation Expe_4
Stock-based Compensation Expense and Share Repurchase Programs - Additional Information (Details) - USD ($) | 3 Months Ended | ||||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | Nov. 30, 2020 | Dec. 31, 2019 | |
Equity, Class of Treasury Stock [Line Items] | |||||
Amount of shares repurchased | $ 424,952,000 | $ 300,026,000 | |||
Share Repurchase Program 2019 | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Number of shares authorized to be repurchased | $ 500,000,000 | $ 500,000,000 | |||
Shares repurchased (in shares) | 1,403,868 | ||||
Amount of shares repurchased | $ 300,000,000 | ||||
Share Repurchase Program 2020 | |||||
Equity, Class of Treasury Stock [Line Items] | |||||
Number of shares authorized to be repurchased | $ 500,000,000 | ||||
Shares repurchased (in shares) | 1,988,941 | ||||
Amount of shares repurchased | $ 424,900,000 | ||||
Cumulative value of shares repurchased | $ 500,000,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Provision for income taxes | $ 167,822 | $ 54,781 | |
Effective tax rate | 20.00% | 8.00% | |
Deferred tax assets, valuation allowance | $ 213,800 | ||
Net unrecognized tax benefits which would affect the tax rate if recognized | $ 81,800 | $ 75,800 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 1 Months Ended | 3 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Mar. 31, 2021USD ($)credit_agreement | Dec. 31, 2020USD ($) | |
Line of Credit Facility [Line Items] | ||||
Number of credit agreements | credit_agreement | 2 | |||
Indemnification claims | $ 0 | |||
Contingent liabilities | 0 | $ 0 | ||
Revolving Credit Facility | ||||
Line of Credit Facility [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 2,000,000,000 | $ 500,000,000 | ||
Line of credit facility additional borrowing capacity | $ 500,000,000 | |||
Debt covenant, consolidated leverage ratio | 3.50 | |||
Debt covenant, increase in consolidated leverage ratio | 4 | |||
Debt covenant, interest coverage ratio | 2.50 | |||
Revolving Credit Facility | Base Rate | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 0.50% | 0.125% | ||
Revolving Credit Facility | Base Rate | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 0.875% | 0.50% | ||
Revolving Credit Facility | Eurodollar | Minimum | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 1.50% | 1.125% | ||
Revolving Credit Facility | Eurodollar | Maximum | ||||
Line of Credit Facility [Line Items] | ||||
Basis spread on variable rate (as a percent) | 1.875% | 1.50% | ||
Letters of Credit | ||||
Line of Credit Facility [Line Items] | ||||
Line of credit facility, maximum borrowing capacity | $ 50,000,000 |
Additional Cash Flow Informat_3
Additional Cash Flow Information (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Cash and cash equivalents | $ 6,304,330 | $ 5,988,187 | $ 3,593,412 | $ 3,109,322 |
Cash, cash equivalents and restricted cash per condensed consolidated statement of cash flows | 6,312,907 | 5,988,845 | 3,601,964 | 3,120,681 |
Prepaid expenses and other current assets | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Restricted cash and cash equivalents | 8,577 | 658 | 8,552 | 8,004 |
Other assets | ||||
Restricted Cash and Cash Equivalents Items [Line Items] | ||||
Restricted cash and cash equivalents | $ 0 | $ 0 | $ 0 | $ 3,355 |