--- ticker: VRTX company: Vertex Pharmaceuticals Inc. filing_type: 10-K year_current: 2025 year_prior: 2024 risks_added: 1 risks_removed: 0 risks_modified: 16 risks_unchanged: 42 source: SEC EDGAR url: https://riskdiff.com/vrtx/2025-vs-2024/ markdown_url: https://riskdiff.com/vrtx/2025-vs-2024/index.md generated: 2026-05-10 --- # Vertex Pharmaceuticals Inc.: 10-K Risk Factor Changes 2025 vs 2024 > Source: U.S. Securities and Exchange Commission (EDGAR) > Generated: 2026-05-10 > All data extracted directly from official filings. No hallucinated content. > **[AI-Generated Summary]** The paragraph below was produced by a language > model and may contain errors. All other content on this page is deterministically > extracted from the original SEC filing. > Vertex Pharmaceuticals added one new risk factor in 2025 focused on third-party relationship dependencies, reflecting heightened concerns about operational reliance on external partners. The company substantively modified 16 risk factors, including notable changes to disclosures on tax rate fluctuations, manufacturing and supply chain challenges, and forward-looking statements. The overall risk factor structure remained largely stable with 42 risks unchanged and no risks completely removed. --- ## Summary | Status | Count | |--------|-------| | New risks added | 1 | | Risks removed | 0 | | Risks modified | 16 | | Unchanged | 42 | --- ## New in Current Filing: We rely on third parties to carry out our operations. Failure to maintain our third-party relationships or challenges at or with these third parties could materially harm our business. Our business depends on relationships with third parties for a variety of functions, including activities critical to supply and manufacturing, commercialization, research and development, and technology. Failure by these parties to meet their contractual, regulatory, or other obligations, or any disruption in the relationship between Vertex and these third parties, could have an adverse effect on our business. Furthermore, these third parties are subject to their own unique operational and financial risks that are out of our control. When one of our third parties encounters financial, operational, or other difficulties, our business and results of operations could be negatively affected. 59 59 59 --- ## Modified: SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS **Key changes:** - Reworded sentence: "Such statements may relate to: •our expectations regarding the amount of, timing of, and trends with respect to our financial performance, including revenues, costs and expenses, and other gains and losses; •our expectations regarding clinical trials, including expectations for patient enrollment, development timelines, the expected timing of data from our ongoing and planned clinical trials, and regulatory authority filings and other submissions for our therapies; •our beliefs, expectations, and plans with respect to the commercial launches of CASGEVY for the treatment of SCD and TDT, ALYFTREK for the treatment of CF, and JOURNAVX for the treatment of moderate-to-severe acute pain; •our ability to maintain and obtain adequate reimbursement for our products and product candidates, our ability to launch, commercialize and market our products or any of our other therapies for which we obtain regulatory approval, and our ability to obtain label expansions for existing therapies; •our expectations regarding our ability to continue to grow our CF business by increasing the number of people with CF eligible and able to receive our medicines and providing improved treatment options for people who are already eligible for one of our medicines; •the data that will be generated by ongoing and planned clinical trials and the ability to use that data to advance compounds, continue development, support regulatory filings, or accelerate regulatory approval, including our plans to share data in 2025 from the ongoing clinical trial of VX-522 in patients with CF and from Part B of the ongoing clinical trial evaluating VX-264 in patients with T1D, and our plans to file for accelerated regulatory approvals based on interim analyses from the AMPLITUDE study in AMKD and the RAINIER study in IgAN; •our beliefs that ALYFTREK will provide additional clinical benefits to eligible people with CF, regarding the durable efficacy and effectiveness of CASGEVY as one-time functional cure for people with SCD and TDT, and regarding the clinical benefits of JOURNAVX without the evidence of the limitations of other available therapies; •our beliefs regarding the support provided by clinical trials and preclinical and nonclinical studies of our therapies for further investigation, clinical trials or potential use as a treatment; •our plans to continue investing in our research and development programs, including anticipated timelines for our programs, and our strategy to develop our pipeline programs, alone or with third party-collaborators; •our beliefs regarding the approximate patient populations for the disease areas on which we focus; •the potential benefits and therapeutic scope of our acquisitions and collaborations, including our acquisition of Alpine and its lead asset, povetacicept, its potential to become a pipeline-in-a-product, and our expectations regarding the Zai collaboration; •our expectations regarding the lower royalty burden for ALYFTREK; •our plans to expand, strengthen, and invest in our global supply chains and manufacturing infrastructure and capabilities, including for biologic and cell and gene therapies; •potential business development activities, including the identification of potential collaborative partners or acquisition targets; •our ability to expand and protect our intellectual property portfolio and otherwise maintain exclusive rights to products; •the establishment, development and maintenance of collaborative relationships, including potential milestone payments or other obligations; •potential fluctuations in foreign currency exchange rates and the effectiveness of our foreign currency management program; •our expectations regarding the amount of cash to generated by operations, our cash balance and expected generation and interest income; 64 64 64 •our expectations regarding our provision for or benefit from income taxes and the utilization of our deferred tax assets; •our ability to use our research programs to identify and develop new product candidates to address serious diseases and significant unmet medical needs; •the effectiveness of our governance, plans and strategy with respect to managing cybersecurity risks and other threats to our information technology systems; •our ability to attract and retain skilled personnel; •our expectations involving governmental cost containment and other regulatory efforts; •our expectations surrounding the competitive landscape facing our products and product candidates; and •our liquidity and our expectations regarding the possibility of raising additional capital." **Prior (2024):** This Annual Report on Form 10-K, including the descriptions of our Business set forth in Part I, Item 1, our Risk Factors set forth in Part I, Item 1A, and our Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in Part II, Item 7, contains forward-looking statements. Forward-looking statements are not purely historical and may be accompanied by words such as "anticipates," "may," "forecasts," "expects," "intends," "plans," "potentially," "believes," "seeks," "estimates," and other words and terms of similar meaning. Such statements may relate to: •our expectations regarding the amount of, timing of, and trends with respect to our financial performance, including revenues, costs and expenses, and other gains and losses; •our expectations regarding clinical trials, including expectations for patient enrollment, development timelines, the expected timing of data from our ongoing and planned clinical trials, and regulatory authority filings and other submissions for our therapies; •our ability to maintain and obtain adequate reimbursement for our products and product candidates, our ability to launch, commercialize and market our products or any of our other therapies for which we obtain regulatory approval, including CASGEVY, and our ability to obtain label expansions for existing therapies; •our expectations regarding our ability to continue to grow our CF business by increasing the number of people with CF eligible and able to receive our medicines and providing improved treatment options for people who are already eligible for one of our medicines; 60 60 60 •the data that will be generated by ongoing and planned clinical trials and the ability to use that data to advance compounds, continue development or support regulatory filings, including from the multiple ascending dose portion of the Phase 1/2 clinical trial of VX-522, the durable efficacy and effectiveness of CASGEVY as one-time functional cure for people with SCD and TDT, and the benefit risk profile supporting VX-548 as a transformative option for acute pain as compared to existing agents, and that our triple combinations of vanzacaftor/tezacaftor/deutivacaftor will provide additional clinical benefits to people with CF who have at least one mutation in their CFTR; •our beliefs and plans with respect to the potential near-term launch of our triple combinations of vanzacaftor/tezacaftor/deutivacaftor for treatment of CF and for VX-548 for the treatment of acute pain; •our beliefs regarding the support provided by clinical trials and preclinical and nonclinical studies of our therapies for further investigation, clinical trials or potential use as a treatment; •our plans to continue investing in our research and development programs, including anticipated timelines for our programs, and our strategy to develop our pipeline programs, alone or with third party-collaborators; •our beliefs regarding the approximate patient populations for the disease areas on which we focus; •the potential benefits and therapeutic scope of our acquisitions and collaborations, including our acquisition of ViaCyte and its potential to accelerate development of our stem-cell based T1D programs, and our collaboration with CRISPR for their gene-editing technology to accelerate the development of our hypoimmune cell therapies for T1D; •potential business development activities, including the identification of potential collaborative partners or acquisition targets; •the establishment, development and maintenance of collaborative relationships, including potential milestone payments or other obligations; •our ability to expand and protect our intellectual property portfolio and otherwise maintain exclusive rights to products; •potential fluctuations in foreign currency exchange rates and the effectiveness of our foreign currency management program; •our expectations regarding the amount of cash to generated by operations, our cash balance and expected generation and interest income; •our expectations regarding our provision for or benefit from income taxes and the utilization of our deferred tax assets; •our ability to use our research programs to identify and develop new product candidates to address serious diseases and significant unmet medical needs; •the effectiveness of our governance, plans and strategy with respect to managing cybersecurity risks and other threats to our information technology systems; •our plans to expand, strengthen, and invest in our global supply chains and manufacturing infrastructure and capabilities, including for cell and gene therapies; •our ability to attract and retain skilled personnel; •our expectations involving governmental cost containment and other regulatory efforts; •our expectations surrounding the competitive landscape facing our products and product candidates; and •our liquidity and our expectations regarding the possibility of raising additional capital. Forward-looking statements are subject to certain risks, uncertainties, or other factors that are difficult to predict and could cause actual events or results to differ materially from those indicated in any such statements. These risks, uncertainties, and other factors include, but are not limited to, those described in our Risk Factors, set forth in Part I, Item 1A, and elsewhere in this report and those described from time to time in our future reports filed with the Securities and Exchange Commission. Any such forward-looking statements are made on the basis of our views and assumptions as of the date of the filing and are not estimates of future performance. Except as required by law, we undertake no obligation to publicly update any forward-looking statements. The reader is cautioned not to place undue reliance on any such statements. 61 61 61 **Current (2025):** This Annual Report on Form 10-K, including the descriptions of our Business set forth in Part I, Item 1, our Risk Factors set forth in Part I, Item 1A, and our Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in Part II, Item 7, contains forward-looking statements. Forward-looking statements are not purely historical and may be accompanied by words such as "anticipates," "may," "forecasts," "expects," "intends," "plans," "potentially," "believes," "seeks," "estimates," and other words and terms of similar meaning. Such statements may relate to: •our expectations regarding the amount of, timing of, and trends with respect to our financial performance, including revenues, costs and expenses, and other gains and losses; •our expectations regarding clinical trials, including expectations for patient enrollment, development timelines, the expected timing of data from our ongoing and planned clinical trials, and regulatory authority filings and other submissions for our therapies; •our beliefs, expectations, and plans with respect to the commercial launches of CASGEVY for the treatment of SCD and TDT, ALYFTREK for the treatment of CF, and JOURNAVX for the treatment of moderate-to-severe acute pain; •our ability to maintain and obtain adequate reimbursement for our products and product candidates, our ability to launch, commercialize and market our products or any of our other therapies for which we obtain regulatory approval, and our ability to obtain label expansions for existing therapies; •our expectations regarding our ability to continue to grow our CF business by increasing the number of people with CF eligible and able to receive our medicines and providing improved treatment options for people who are already eligible for one of our medicines; •the data that will be generated by ongoing and planned clinical trials and the ability to use that data to advance compounds, continue development, support regulatory filings, or accelerate regulatory approval, including our plans to share data in 2025 from the ongoing clinical trial of VX-522 in patients with CF and from Part B of the ongoing clinical trial evaluating VX-264 in patients with T1D, and our plans to file for accelerated regulatory approvals based on interim analyses from the AMPLITUDE study in AMKD and the RAINIER study in IgAN; •our beliefs that ALYFTREK will provide additional clinical benefits to eligible people with CF, regarding the durable efficacy and effectiveness of CASGEVY as one-time functional cure for people with SCD and TDT, and regarding the clinical benefits of JOURNAVX without the evidence of the limitations of other available therapies; •our beliefs regarding the support provided by clinical trials and preclinical and nonclinical studies of our therapies for further investigation, clinical trials or potential use as a treatment; •our plans to continue investing in our research and development programs, including anticipated timelines for our programs, and our strategy to develop our pipeline programs, alone or with third party-collaborators; •our beliefs regarding the approximate patient populations for the disease areas on which we focus; •the potential benefits and therapeutic scope of our acquisitions and collaborations, including our acquisition of Alpine and its lead asset, povetacicept, its potential to become a pipeline-in-a-product, and our expectations regarding the Zai collaboration; •our expectations regarding the lower royalty burden for ALYFTREK; •our plans to expand, strengthen, and invest in our global supply chains and manufacturing infrastructure and capabilities, including for biologic and cell and gene therapies; •potential business development activities, including the identification of potential collaborative partners or acquisition targets; •our ability to expand and protect our intellectual property portfolio and otherwise maintain exclusive rights to products; •the establishment, development and maintenance of collaborative relationships, including potential milestone payments or other obligations; •potential fluctuations in foreign currency exchange rates and the effectiveness of our foreign currency management program; •our expectations regarding the amount of cash to generated by operations, our cash balance and expected generation and interest income; 64 64 64 •our expectations regarding our provision for or benefit from income taxes and the utilization of our deferred tax assets; •our ability to use our research programs to identify and develop new product candidates to address serious diseases and significant unmet medical needs; •the effectiveness of our governance, plans and strategy with respect to managing cybersecurity risks and other threats to our information technology systems; •our ability to attract and retain skilled personnel; •our expectations involving governmental cost containment and other regulatory efforts; •our expectations surrounding the competitive landscape facing our products and product candidates; and •our liquidity and our expectations regarding the possibility of raising additional capital. Forward-looking statements are subject to certain risks, uncertainties, or other factors that are difficult to predict and could cause actual events or results to differ materially from those indicated in any such statements. These risks, uncertainties, and other factors include, but are not limited to, those described in our Risk Factors, set forth in Part I, Item 1A, and elsewhere in this report and those described from time to time in our future reports filed with the Securities and Exchange Commission. Any such forward-looking statements are made on the basis of our views and assumptions as of the date of the filing and are not estimates of future performance. Except as required by law, we undertake no obligation to publicly update any forward-looking statements. The reader is cautioned not to place undue reliance on any such statements. --- ## Modified: Our effective tax rate fluctuates, and changes in tax laws, regulations and treaties, unfavorable resolution to the tax positions we have taken or exposure to additional income tax liabilities could have a material impact on our future taxable income. **Key changes:** - Reworded sentence: "Various jurisdictions in which the group operates, including the U.K." **Prior (2024):** Our effective tax rate is derived from a combination of applicable tax rates in the various places that we operate globally. Our effective tax rate may be different than experienced in the past due to numerous factors, including changes in the mix of our profitability from country to country, tax authority examinations/audits of our tax filings, adjustments to the value of our uncertain tax positions, changes in accounting for income taxes, and changes in tax laws or modifications of treaties in various jurisdictions. Any of these factors could cause us to experience an effective tax rate that is significantly different from previous periods or our current expectations. On December 12, 2022, E.U. member states reached an agreement to implement the minimum tax component ("Pillar Two") of the Organization for Economic Co-operation and Development's (the "OECD's"), global international tax reform initiative with effective dates of January 1, 2024 and 2025. On July 17, 2023, the OECD published Administrative Guidance proposing certain safe harbors that effectively extend certain effective dates to January 1, 2027. E.U. member states need to adopt this Administrative Guidance in their local Pillar Two legislation for such safe harbors to apply. In addition, the U.K. has independently released draft legislation to introduce the OECD's Pillar Two reforms into U.K. law. We are continuing to evaluate the potential impact on future periods of the Pillar Two guidance, pending legislative adoption by individual countries, including those in which we do business. We are subject to ongoing tax audits in various jurisdictions, and local tax authorities may disagree with certain positions we have taken and assess additional taxes. We regularly assess the probable outcomes of these audits to determine the appropriateness of our tax provision, and we have established contingency reserves for material tax exposures. However, there can be no assurance that we will accurately predict the outcomes of these disputes or other tax audits or that issues raised by tax authorities will be resolved at a financial cost that does not exceed our related reserves and the actual outcomes of these disputes and other tax audits could have a material impact on our results of operations or financial condition. **Current (2025):** Our effective tax rate is derived from a combination of applicable tax rates in the various places that we operate globally. Our effective tax rate may be different than experienced in the past due to numerous factors, including changes in the mix of our profitability from country to country, tax authority examinations/audits of our tax filings, adjustments to the value of our uncertain tax positions, changes in accounting for income taxes, and changes in tax laws or modifications of treaties in various jurisdictions. Any of these factors could cause us to experience an effective tax rate that is significantly different from previous periods or our current expectations. Various jurisdictions in which the group operates, including the U.K. and the E.U. member states have agreed to implement the minimum tax component ("Pillar Two") of the Organization for Economic Co-operation and Development's (the "OECD's"), global international tax reform initiative that aims to reform international taxation policies and ensure that multinational companies pay taxes wherever they operate and generate profits. Although aspects of Pillar Two have been 61 61 61 implemented that affect accounting periods withing our group starting on or after December 31, 2023, the full impact of this initiative on our effective tax rate will depend on the timing of implementation within each country in which we operate, the exact nature of each country's implementation legislation, guidance and regulations thereon, and their application by tax authorities either prospectively or retrospectively. We are continuing to evaluate the potential impact on future periods of the Pillar Two guidance, pending legislative adoption by individual countries, including those in which we do business. We are subject to ongoing tax audits in various jurisdictions, and local tax authorities may disagree with certain positions we have taken and assess additional taxes. We regularly assess the probable outcomes of these audits to determine the appropriateness of our tax provision, and we have established contingency reserves for material tax exposures. However, there can be no assurance that we will accurately predict the outcomes of these disputes or other tax audits or that issues raised by tax authorities will be resolved at a financial cost that does not exceed our related reserves and the actual outcomes of these disputes and other tax audits could have a material impact on our results of operations or financial condition. --- ## Modified: Risks Related to Our Operations **Key changes:** - Added sentence: "•A breakdown or breach of our information technology systems could subject us to liability or interrupt the operation of our business." - Reworded sentence: "•Failure to maintain our third-party relationships or challenges at or with these third parties could materially harm our business." **Prior (2024):** •If we fail to scale our operations to accommodate growth, our business may suffer. •A variety of risks associated with operating in foreign countries could materially adversely affect our business. •If we fail to attract and retain skilled employees, our business could be materially harmed. •A breakdown or breach of our information technology systems could subject us to liability or interrupt the operation of our business. **Current (2025):** •If we fail to scale our operations to accommodate growth, our business may suffer. •A variety of risks associated with operating in foreign countries could materially adversely affect our business. •A breakdown or breach of our information technology systems could subject us to liability or interrupt the operation of our business. •If we fail to attract and retain skilled employees, our business could be materially harmed. •Failure to maintain our third-party relationships or challenges at or with these third parties could materially harm our business. --- ## Modified: We may face manufacturing, supply, and distribution difficulties, among other challenges, delays, or interruptions, including at our third-party providers. **Key changes:** - Reworded sentence: "We also depend on third-party logistics providers to manage our shipments globally, and on approved distributors for supply, sales and marketing in certain markets." - Reworded sentence: "We also use third parties are used for packaging, warehousing, and distribution of products." - Reworded sentence: "Even with the relevant experience and expertise, manufacturers of cell and genetic therapy products often encounter difficulties in production, including difficulties with production costs and yields, quality control, and compliance with federal, state and foreign regulations." - Reworded sentence: "We may not 50 50 50 be able to agree on contractual terms with third parties as needed for manufacturing of our products." - Reworded sentence: "Supply disruptions may result from a number of factors, including shortages in product raw materials, labor or technical difficulties, regulatory inspections or restrictions, shipping or customs delays, general global supply chain disruptions, events beyond our control, or any other performance failure by us or any third-party manufacturer on which we rely." **Prior (2024):** We rely on a worldwide network of third-party manufacturers and our internal capabilities, including our own manufacturing facilities in Boston, to manufacture product candidates for clinical trials as well as our medicines for commercial use. While we have developed internal capabilities to supply product candidates for use in our clinical trials as well as our products for commercial sale, a majority of the manufacturing steps needed to produce our medicines, product candidates, and drug products are performed through a third-party manufacturing network. The manufacture of our products and product candidates can be complex, which may require lengthy technology transfers between us and the third parties on which we rely. We expect that we will continue to rely on third parties to meet our commercial supply needs and a significant portion of our clinical supply needs for the foreseeable future. We could be subject to significant supply interruptions as a result of disruptions to third party or our internal manufacturing capabilities. Our supply chain for sourcing raw materials and manufacturing drug product ready for distribution, including obtaining necessary supplies, is a multi-step international endeavor. Third-party contract manufacturers, including some in China, perform different parts of our manufacturing process. Contract manufacturers may supply us with raw materials, convert these raw materials into drug substance and/or convert the drug substance into final dosage form. Third parties are used for packaging, warehousing and distribution of products. The manufacturing and logistics for cell and genetic therapies are highly complex, short lead time operations that require partnership with an extensive network of third parties to deliver product. These manufacturing and logistics operations require significant investment by us to secure capacity at third parties with expertise to meet our requirements. Even with the relevant experience and expertise, manufacturers of cell and genetic therapy products often encounter difficulties in production, including difficulties with production costs and yields, quality control, and compliance with federal, state and 47 47 47 foreign regulations. There are many risks that could result in delays and additional costs, including the need to hire and train qualified employees and obtain access to necessary equipment and third-party technology. This capacity may be limited by the number of other clinical trials and commercial manufacturing ongoing for other companies seeking similar support. If third parties are unwilling or unable to meet our requirements, we could experience supply disruptions outside of our control. Additionally, manufacturing facilities, both foreign and domestic, are subject to inspections by the FDA and other U.S. and foreign government authorities. Although we actively engage with regulatory authorities, the timing of regulatory approvals for each of these facilities may be delayed for a variety of reasons. We may experience supply disruptions if regulatory agencies are unable to inspect the manufacturing facilities on which we rely. In addition, we and the third parties with whom we engage are required to maintain compliance with quality regulations globally. An inability to maintain compliance with such regulations, including cGMP requirements, could cause significant disruptions to our business and operations. Additionally, establishing, managing and expanding our global manufacturing and supply chain requires a significant financial commitment and the creation and maintenance of our numerous third-party contractual relationships. We may not be able to agree on contractual terms with third parties as needed for manufacturing of our products. Although we attempt to manage the business relationships with our partners, we could be subject to supply disruptions outside of our control. Supply disruptions may result from a number of factors, including shortages in product raw materials, labor or technical difficulties, regulatory inspections or restrictions, shipping or customs delays, general global supply chain disruptions, or any other performance failure by us or any third-party manufacturer on which we rely. Additionally, unfavorable geopolitical events or situations could affect our ability to interact with or conduct business with specific vendors within our global supply network, or could prevent or delay the transportation of supplies or products to their planned destination. Any such disruptions could disrupt sales of our products and/or the timing or advancement of our clinical trials. If we or our third-party manufacturers become unable or unwilling to continue manufacturing product and we are not able to promptly identify another manufacturer, we could experience a disruption in the commercial supply of our then-marketed medicines, which would have a significant effect on patients, our business, and our product revenues. Similarly, a disruption in the clinical supply of product candidates could delay the completion of clinical trials and affect timelines for regulatory filings. We have a limited number of critical steps in our manufacturing process that are single sourced, including for commercialized products. To ensure the stability of our supply chains, we continue to develop alternative suppliers for our manufacturing processes. However, there can be no assurance that we will be able to establish and maintain additional manufacturers or capacity for all of our product candidates and products on a timely basis or at all. In the course of providing its services, a contract manufacturer may develop process technology related to the manufacture of our products or product candidates that the manufacturer owns, either independently or jointly with us. This would increase our reliance on that manufacturer or require us to obtain a license from that manufacturer to have our products or product candidates manufactured by other suppliers utilizing the same process. **Current (2025):** We rely on a worldwide network of third-party manufacturers and our internal capabilities, including our own manufacturing facilities in Boston, to manufacture product candidates for clinical trials as well as our medicines for commercial use. We also depend on third-party logistics providers to manage our shipments globally, and on approved distributors for supply, sales and marketing in certain markets. While we have developed internal capabilities to supply product candidates for use in our clinical trials as well as some of our products for commercial sale, a majority of the manufacturing steps needed to produce our medicines, therapies, product candidates, and drug products are performed through a third-party manufacturing network. The manufacture of our products and product candidates can be complex, which may require lengthy technology transfers between us and the third parties on which we rely. We expect that we will continue to rely on third parties to meet our commercial supply needs and a significant portion of our clinical supply needs for the foreseeable future. We could be subject to significant supply interruptions as a result of disruptions to third party or our internal manufacturing capabilities. Our supply chain for sourcing raw materials and manufacturing drug product ready for distribution, including obtaining necessary supplies, is a multi-step international endeavor. Third-party contract manufacturers, including some in China, perform different parts of our manufacturing process. Contract manufacturers may supply us with raw materials, convert these raw materials into drug substance and/or convert the drug substance into final dosage form. We also use third parties are used for packaging, warehousing, and distribution of products. We maintain property insurance to cover potential losses that may result from supply interruptions or destruction at these third parties, however, this insurance may not be sufficient to cover all potential losses that may result. The manufacturing and logistics for cell and genetic therapies are highly complex, often short lead time operations that require partnership with an extensive network of third parties to deliver product. These manufacturing and logistics operations require significant investment by us to secure capacity at third parties with expertise to meet our requirements. Even with the relevant experience and expertise, manufacturers of cell and genetic therapy products often encounter difficulties in production, including difficulties with production costs and yields, quality control, and compliance with federal, state and foreign regulations. There are many risks that could result in delays and additional costs, including the need to hire and train qualified employees and obtain access to necessary equipment and third-party technology. This capacity may be limited by the number of other clinical trials and commercial manufacturing ongoing for other companies seeking similar support. If third parties are unwilling or unable to meet our requirements, we could experience supply disruptions outside of our control. Additionally, manufacturing facilities, both foreign and domestic, are subject to inspections by the FDA and other U.S. and foreign government authorities. Although we actively engage with regulatory authorities, the timing of regulatory approvals for each of these facilities may be delayed for a variety of reasons. We may experience supply disruptions if regulatory agencies are unable to inspect the manufacturing facilities on which we rely. In addition, we and the third parties with whom we engage are required to maintain compliance with quality regulations globally. An inability to maintain compliance with such regulations, including cGMP requirements, could cause significant disruptions to our business and operations. Additionally, establishing, managing and expanding our global manufacturing and supply chain requires a significant financial commitment and the creation and maintenance of our numerous third-party contractual relationships. We may not 50 50 50 be able to agree on contractual terms with third parties as needed for manufacturing of our products. Although we attempt to manage the business relationships with our partners, we could be subject to supply disruptions outside of our control. Supply disruptions may result from a number of factors, including shortages in product raw materials, labor or technical difficulties, regulatory inspections or restrictions, shipping or customs delays, general global supply chain disruptions, events beyond our control, or any other performance failure by us or any third-party manufacturer on which we rely. Additionally, unfavorable geopolitical events or situations could affect our ability to interact with or conduct business with specific vendors within our global supply network, or could prevent or delay the transportation of supplies or products to their planned destination. Any such disruptions could disrupt sales of our products and/or the timing or advancement of our clinical trials. If we or our third-party manufacturers become unable (including potentially through governmental actions or legislation targeted toward them) or unwilling to continue manufacturing product and we are not able to promptly identify another manufacturer, we could experience a disruption in the commercial supply of our then-marketed medicines, which would have a significant effect on patients, our business, and our product revenues. Similarly, a disruption in the clinical supply of product candidates could delay the completion of clinical trials and affect timelines for regulatory filings. We have a limited number of critical steps and key materials for our manufacturing process that are single sourced, including for commercialized products. To ensure the stability of our supply chains, we continue to develop alternative suppliers for our manufacturing processes and key materials. However, there can be no assurance that we will be able to establish and maintain additional manufacturers or capacity for all of our product candidates and products on a timely basis or at all. In the course of providing its services, a contract manufacturer may develop process technology related to the manufacture of our products or product candidates that the manufacturer owns, either independently or jointly with us. This would increase our reliance on that manufacturer or require us to obtain a license from that manufacturer to have our products or product candidates manufactured by other suppliers utilizing the same process. --- ## Modified: Uncertainty over intellectual property in the pharmaceutical and biotechnology industry has been the source of litigation and other disputes that are inherently costly and unpredictable. **Key changes:** - Reworded sentence: "and elsewhere in the world, and, to date, the law and practice remains in flux both in the agencies that grant patents and in the courts." - Reworded sentence: "54 54 54 There has been, and we expect that there may continue to be, significant litigation and other disputes in the pharmaceutical industry regarding patents and other intellectual property rights." - Removed sentence: "On July 24, 2020, we filed a lawsuit against Sun Pharmaceutical Industries Limited ("Sun") in the U.S." - Removed sentence: "District Court for the District of Delaware alleging infringement of our U.S." - Removed sentence: "10,646,481 ("the '481 patent")." **Prior (2024):** There is considerable uncertainty within our industry about the validity, scope, and enforceability of many issued patents in the U.S. and elsewhere in the world, and, to date, the law and practice remains in flux both in the agencies that grant 51 51 51 patents and in the courts. We cannot currently determine the ultimate scope and validity of patents which may be granted to third parties in the future or which patents might be asserted as being infringed by the manufacture, use and sale of our products. There has been, and we expect that there may continue to be, significant litigation in the pharmaceutical industry regarding patents and other intellectual property rights. Litigation, arbitrations, administrative proceedings, and other legal actions with private parties and governmental authorities concerning patents and other intellectual property rights may be protracted, expensive, and distracting to management. Competitors may sue us as a way of delaying the introduction of our products or to remove our products from the market. Any litigation, including litigation related to Abbreviated New Drug Applications ("ANDA"), litigation related to 505(b)(2) applications, interference proceedings to determine priority of inventions, derivations proceedings, inter partes review, oppositions to patents in foreign countries, litigation against our collaborators or similar actions, may be costly and time consuming and could harm our business. We expect that litigation may be necessary in some instances to determine the validity and scope of certain of our proprietary rights. Litigation may be necessary in other instances to determine the validity, scope or non-infringement of certain patent rights claimed by third parties to be pertinent to the manufacture, use or sale of our products. Ultimately, the outcome of such litigation could adversely affect the validity and scope of our patent or other proprietary rights, hinder our ability to manufacture and market our products, or result in the assessment of significant monetary damages against us that may exceed amounts, if any, accrued in our consolidated financial statements. On July 24, 2020, we filed a lawsuit against Sun Pharmaceutical Industries Limited ("Sun") in the U.S. District Court for the District of Delaware alleging infringement of our U.S. Patent No. 10,646,481 ("the '481 patent"). The lawsuit follows our receipt of a Notice Letter on June 11, 2020, advising that Sun had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of the 150 mg tablet of KALYDECO in the U.S. The Notice Letter indicated that Sun submitted a "Paragraph IV" certification to the FDA in which Sun asserts that the '481 patent is invalid or would not be infringed by Sun's generic product. The '481 patent, which expires on August 13, 2029, was issued on May 12, 2020, and listed in the Orange Book with respect to the KALYDECO tablet on June 1, 2020. By letter dated June 5, 2023, Sun notified us that it had amended its ANDA to include a Paragraph IV certification with respect to our U.S. Patent No. 11,564,916 ("the '916 patent"), which issued on January 31, 2023, is related to the '481 patent and was listed in the FDA's Orange Book on February 28, 2023. On June 16, 2023, we filed a lawsuit against Sun in the U.S. District Court for the District of Delaware alleging infringement of the '916 patent. In December 2023, we settled the case against Sun. The terms of the settlement are confidential. On July 13, 2021, we filed a lawsuit against Lupin Limited and Lupin Pharmaceuticals, Inc. (collectively, "Lupin") in the U.S. District Court for the District of Delaware alleging infringement of the '481 patent. The lawsuit follows our receipt of a Notice Letter on June 2, 2021, advising that Lupin had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of the 150 mg tablet of KALYDECO in the U.S. The Notice Letter indicated that Lupin submitted a "Paragraph IV" certification to the FDA in which Lupin asserts that the '481 patent is invalid or would not be infringed by Lupin's generic product. By letter dated April 25, 2023, Lupin notified us that it had amended its ANDA to include a Paragraph IV certification with respect to the '916 patent. On May 26, 2023, we filed a lawsuit against Lupin in the U.S. District Court for the District of Delaware alleging infringement of the '916 patent. In November 2023, we settled the case against Lupin. The terms of the settlement agreement are confidential. On June 2, 2022, we filed a lawsuit against Aurobindo Pharma Limited ("Aurobindo") in the U.S. District Court for the District of Delaware alleging infringement of the '481 patent. The lawsuit follows our receipt of a Notice Letter on April 21, 2022, advising that Aurobindo had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of the 150 mg tablet of KALYDECO in the U.S. The Notice Letter indicated that Aurobindo submitted a "Paragraph IV" certification to the FDA in which Aurobindo asserts that the '481 patent is invalid or would not be infringed by Aurobindo's generic product. By letter dated April 12, 2023, Aurobindo notified us that it had amended its ANDA to include a Paragraph IV certification with respect to the '916 patent. On May 26, 2023, we filed a lawsuit against Aurobindo in the U.S. District Court for the District of Delaware alleging infringement of the '916 patent. In November 2023, we settled the case against Aurobindo. The terms of the settlement agreement are confidential. On July 22, 2022, we filed a lawsuit against Lupin in the U.S. District Court for the District of Delaware alleging infringement of the '481 patent and U.S. Patent Nos. 8,883,206 ("the '206 patent"), 10,272,046 ("the '046 patent"), and 11,147,770 ("the '770 patent"). The lawsuit follows our receipt of a Notice Letter on June 9, 2022, advising that Lupin had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of KALYDECO granules in 52 52 52 the U.S. The Notice Letter indicated that Lupin submitted a "Paragraph IV" certification to the FDA in which Lupin asserts that the '481 patent, the '206 patent, and the '046 patent are invalid or would not be infringed by Lupin's generic product. By letter dated April 25, 2023, Lupin notified us that it had amended its ANDA to include a Paragraph IV certification with respect to the '916 patent. On May 26, 2023, we filed a lawsuit against Lupin in the U.S. District Court for the District of Delaware alleging infringement of the '916 patent. On October 11, 2023, U.S. Patent No. 11,752,106 (the "'106 patent") was listed in the Orange Book as covering KALYDECO granules. We have not yet received notification that Lupin has submitted a "Paragraph IV" certification for the '106 patent. Other than the '770 patent, which was listed in the Orange Book on April 14, 2022, Lupin does not appear to challenge our other U.S. patents covering KALYDECO granules, the last of which expires on August 5, 2027. Therefore, regardless of the outcome of the litigation, Lupin cannot receive final approval of its ANDA before that date. A scheduling order has been entered by the court and trial is set for April 2025. We intend to vigorously enforce our intellectual property rights relating to KALYDECO granules and the '481, '206, '046, '770, '916, and '106 patents. CRISPR has licensed certain rights to a worldwide patent portfolio that covers various aspects of the CRISPR/Cas9 editing platform technology including, for example, compositions of matter and methods of use in targeting or cutting DNA from Dr. Emmanuelle Charpentier, one of the named inventors of this patent portfolio. The patent portfolio also has named inventors who assigned their rights to the CVC Group. For example, in connection with their collaboration, Novartis and Intellia Therapeutics, Inc. have reportedly obtained a license to this patent portfolio in certain fields. Both the CVC Group and Broad have obtained granted patents that purport to cover aspects of CRISPR/Cas9 editing platform technology. Patents and patent applications in this patent portfolio have been the subject of numerous contentious proceedings in the U.S., Europe, and other jurisdictions, including interference proceedings in the USPTO between the CVC Group and (separately) Broad, Sigma-Aldrich and ToolGen. On February 28, 2021, the USPTO issued a decision in Interference No. 106, 115, concluding that Broad invented certain applications of CRISPR/Cas9 technology in eukaryotic cells before the CVC Group. The CVC Group has appealed the decision to the U.S. Court of Appeals for the Federal Circuit. If the decision is upheld on appeal (including a potential subsequent appeal to the Supreme Court), Broad would maintain its granted patents directed to those applications CRISPR/Cas9 technology in eukaryotic cells, and the CVC Group's pending patent applications directed to that subject matter would not proceed to grant. We can give no assurances to the ultimate outcome of these proceedings or the disputes between the CVC Group and Broad, Sigma-Aldrich and ToolGen. In December 2023, we entered into an agreement with Editas, providing us a non-exclusive sublicense to certain patents relating to CRISPR/Cas9 technology owned by Broad and Harvard, which are licensed to Editas. In addition to Broad, other third parties have filed patent applications claiming CRISPR/Cas9-related inventions and may allege that they invented one or more of the inventions claimed by the CVC Group. Thus, the USPTO may, in the future, declare an interference between certain CVC Group patent applications and one or more patent applications. Third parties could seek to assert their patents, if issued, against us based on our CRISPR/Cas9-based activities, including commercialization. Defense of these claims, regardless of their merit, could involve substantial litigation expense and could result in a substantial diversion of management and other employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure. In that event, we could be unable to further develop and commercialize CASGEVY or other products that we may develop using the CRISPR/Cas9 technology we license from CRISPR. To the extent that valid present or future third-party patents or other intellectual property rights cover our products, product candidates or technologies, we or our strategic collaborators may seek licenses or other agreements from the holders of such rights to avoid or settle legal claims. Such licenses may not be available on acceptable terms, which may hinder our ability to, or prevent us from being able to, manufacture and market our products. Payments under any licenses that we are able to obtain would reduce our profits derived from the covered products. **Current (2025):** There is considerable uncertainty within our industry about the validity, scope, and enforceability of many issued patents in the U.S. and elsewhere in the world, and, to date, the law and practice remains in flux both in the agencies that grant patents and in the courts. We cannot currently determine the ultimate scope and validity of patents which may be granted to third parties in the future or which patents might be asserted as being infringed by the manufacture, use and sale of our products. 54 54 54 There has been, and we expect that there may continue to be, significant litigation and other disputes in the pharmaceutical industry regarding patents and other intellectual property rights. Litigation, arbitrations, administrative proceedings, and other legal actions with private parties and governmental authorities concerning patents and other intellectual property rights may be protracted, expensive, and distracting to management. Competitors may sue us as a way of delaying the introduction of our products or to remove our products from the market. Any litigation, including litigation related to Abbreviated New Drug Applications ("ANDA"), litigation related to 505(b)(2) applications, interference proceedings to determine priority of inventions, derivations proceedings, inter partes review, oppositions to patents in foreign countries, litigation against our collaborators or similar actions, may be costly and time consuming and could harm our business. We expect that litigation may be necessary in some instances to determine the validity and scope of certain of our proprietary rights. Litigation may be necessary in other instances to determine the validity, scope or non-infringement of certain patent rights claimed by third parties to be pertinent to the manufacture, use or sale of our products. Ultimately, the outcome of such litigation could adversely affect the validity and scope of our patent or other proprietary rights, hinder our ability to manufacture and market our products, or result in the assessment of significant monetary damages against us that may exceed amounts, if any, accrued in our consolidated financial statements. On July 22, 2022, we filed a lawsuit against Lupin in the U.S. District Court for the District of Delaware alleging infringement of U.S. Patent Nos. 10,646,481 ("the '481 patent"), 8,883,206 ("the '206 patent"), 10,272,046 ("the '046 patent"), and 11,147,770 ("the '770 patent"). The lawsuit follows our receipt of a Notice Letter on June 9, 2022, advising that Lupin had submitted an ANDA to the FDA seeking approval to manufacture and market a generic version of KALYDECO granules in the U.S. The Notice Letter indicated that Lupin submitted a "Paragraph IV" certification to the FDA in which Lupin asserts that the '481 patent, the '206 patent, and the '046 patent are invalid or would not be infringed by Lupin's generic product. On February 28, 2023, U.S. Patent No. 11,564,916 ("the '916 patent") was listed in the Orange Book as covering KALYDECO granules. By letter dated April 25, 2023, Lupin notified us that it had amended its ANDA to include a Paragraph IV certification with respect to the '916 patent. On May 26, 2023, we filed a lawsuit against Lupin in the U.S. District Court for the District of Delaware alleging infringement of the '916 patent. On October 11, 2023, U.S. Patent No. 11,752,106 (the "'106 patent") was listed in the Orange Book as covering KALYDECO granules. By letter dated February 27, 2024, Lupin notified Vertex that it had amended its ANDA to include a Paragraph IV certification with respect to the '106 patent. On April 11, 2024, Vertex filed a lawsuit against Lupin in the U.S. District Court for the District of Delaware alleging infringement of the '106 patent. The Court subsequently entered a scheduling order, which consolidated the lawsuit asserting infringement of the '106 patent with the earlier filed lawsuits asserting infringement of the '481, '206, '046, '770, and '916 patents. A three-day trial is scheduled for September 15, 2025. Other than the '770 patent, which was listed in the Orange Book on April 14, 2022, Lupin does not appear to challenge our other U.S. patents covering KALYDECO granules, the last of which expires on August 5, 2027. Therefore, regardless of the outcome of the litigation, Lupin cannot receive final approval of its ANDA before that date. We intend to vigorously enforce our intellectual property rights relating to KALYDECO granules and the '481, '206, '046, '770, '916, and '106 patents. CRISPR has licensed certain rights to a worldwide patent portfolio that covers various aspects of the CRISPR/Cas9 editing platform technology including, for example, compositions of matter and methods of use in targeting or cutting DNA from Dr. Emmanuelle Charpentier, one of the named inventors of this patent portfolio. The patent portfolio also has named inventors who assigned their rights to the CVC Group. For example, in connection with their collaboration, Novartis and Intellia Therapeutics, Inc. have reportedly obtained a license to this patent portfolio in certain fields. Both the CVC Group and Broad have obtained granted patents that purport to cover aspects of CRISPR/Cas9 editing platform technology. Patents and patent applications in this patent portfolio have been the subject of numerous contentious proceedings in the U.S., Europe, and other jurisdictions, including interference proceedings in the USPTO between the CVC Group and (separately) Broad, Sigma-Aldrich and ToolGen. On February 28, 2021, the USPTO issued a decision in Interference No. 106, 115, concluding that Broad invented certain applications of CRISPR/Cas9 technology in eukaryotic cells before the CVC Group. The CVC Group has appealed the decision to the U.S. Court of Appeals for the Federal Circuit. If the decision is upheld on appeal (including a potential subsequent appeal to the Supreme Court), Broad would maintain its granted patents directed to those applications CRISPR/Cas9 technology in eukaryotic cells, and the CVC Group's pending patent applications directed to that subject matter would not proceed to grant. We can give no assurances to the ultimate outcome of these proceedings or the disputes between the CVC Group and Broad, Sigma-Aldrich and ToolGen. In December 2023, we entered into an agreement with Editas, providing us a non-exclusive sublicense to certain patents relating to CRISPR/Cas9 technology owned by Broad and Harvard, which are licensed to Editas. In addition to Broad, other third parties have filed patent applications claiming CRISPR/Cas9-related inventions and may allege that they invented one or more of the inventions claimed by the CVC Group. Thus, the USPTO may, in the future, 55 55 55 declare an interference between certain CVC Group patent applications and one or more patent applications. Third parties could seek to assert their patents, if issued, against us based on our CRISPR/Cas9-based activities, including commercialization. Defense of these claims, regardless of their merit, could involve substantial litigation expense and could result in a substantial diversion of management and other employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, obtain one or more licenses from third parties, pay royalties or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure. In that event, we could be unable to further develop and commercialize CASGEVY or other products that we may develop using the CRISPR/Cas9 technology we license from CRISPR. To the extent that valid present or future third-party patents or other intellectual property rights cover our products, product candidates or technologies, we or our strategic collaborators may seek licenses or other agreements from the holders of such rights to avoid or settle legal claims. Such licenses may not be available on acceptable terms, which may hinder our ability to, or prevent us from being able to, manufacture and market our products. Payments under any licenses that we are able to obtain would reduce our profits derived from the covered products. --- ## Modified: A variety of risks associated with operating in foreign countries could materially adversely affect our business. **Key changes:** - Added sentence: "Risks associated with operating a global biotechnology company include: •differing regulatory requirements for drug approvals and regulation of approved drugs in foreign countries; •varying reimbursement regimes and difficulties or the inability to obtain reimbursement for our products in foreign countries in a timely manner; •differing patient treatment infrastructures, particularly since our business is focused on the treatment of serious diseases that affect relatively smaller numbers of patients and are typically prescribed by specialist physicians; •collectability of accounts receivable; •changes in tariffs, trade barriers, and regulatory requirements, the risks of which appear to have increased in the current political environment; •economic weakness, including recession and inflation, or political instability in particular foreign economies and markets; •differing levels of enforcement and/or recognition of contractual and intellectual property rights; •circulation of unauthorized copy versions of our medicines that infringe our intellectual property rights; •governments seeking to override our intellectual property rights through the introduction of compulsory license or similar mechanisms; •complying with local laws and regulations, which can change significantly over time; •foreign taxes, including withholding of payroll taxes; •foreign currency fluctuations, which could result in reduced revenues or increased operating expenses, and other obligations incident to doing business or operating in another country; •workforce uncertainty in countries where labor unrest is more common than in the U.S.; •reliance on third-party vendors, distributors and suppliers; •import and export licensing requirements, tariffs, and other trade and travel restrictions; •global or regional public health emergencies that could affect our operations or business; •production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and •business interruptions resulting from geo-political actions, including war and terrorism." - Reworded sentence: "In particular, there is currently significant uncertainty about the future relationship between the U.S." - Reworded sentence: "Although we have a foreign currency risk management program, our efforts to reduce currency exchange volatility may not be successful." **Prior (2024):** We have expanded our international operations over the past several years to market our medicines and expand our research and development capabilities. New laws and industry codes in the E.U. and elsewhere have expanded transparency requirements regarding payments and transfers of value to healthcare professionals, requirements surrounding patient-level clinical trial data, the protection of personal data and increased sanctions for violations. Collectively, our expansion and these new requirements are adding to our compliance costs and potentially exposes us to sanctions in the event of an infringement or failure to report in these jurisdictions. In addition, a significant portion of our commercial supply chain, including sourcing of raw materials and manufacturing, is located in China and the E.U. Consequently, we are, and will continue to be, subject to risks related to operating in foreign countries, including risks relating to intellectual property protections and business interruptions. These risks are increased with respect to countries such as China that have substantially different local laws and business practices and weaker protections for intellectual property. Risks associated with operating a global biotechnology company include: •differing regulatory requirements for drug approvals and regulation of approved drugs in foreign countries; •varying reimbursement regimes and difficulties or the inability to obtain reimbursement for our products in foreign countries in a timely manner; •differing patient treatment infrastructures, particularly since our business is focused on the treatment of serious diseases that affect relatively smaller numbers of patients and are typically prescribed by specialist physicians; •collectability of accounts receivable; •changes in tariffs, trade barriers, and regulatory requirements, the risks of which appear to have increased in the current political environment; 54 54 54 •economic weakness, including recession and inflation, or political instability in particular foreign economies and markets; •differing levels of enforcement and/or recognition of contractual and intellectual property rights; •complying with local laws and regulations, which can change significantly over time; •foreign taxes, including withholding of payroll taxes; •foreign currency fluctuations, which could result in reduced revenues or increased operating expenses, and other obligations incident to doing business or operating in another country; •workforce uncertainty in countries where labor unrest is more common than in the U.S.; •reliance on third-party vendors, distributors and suppliers; •import and export licensing requirements, tariffs, and other trade and travel restrictions; •global or regional public health emergencies that could affect our operations or business; •production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and •business interruptions resulting from geo-political actions, including war and terrorism. Our revenues are subject to foreign exchange rate fluctuations due to the global nature of our operations. Although we have foreign currency forward contracts to hedge certain forecasted product revenues denominated in foreign currencies, our efforts to reduce currency exchange losses may not be successful. As a result, currency fluctuations among our reporting currency, the U.S. dollar, and the currencies in which we do business will affect our operating results, often in unpredictable ways. In addition, our international operations are subject to regulation under U.S. law. For example, the FCPA prohibits U.S. companies and their representatives from offering, promising, authorizing or making payments to foreign officials for the purpose of obtaining or retaining business abroad. In many countries, the health care professionals we regularly interact with may meet the definition of a foreign government official for purposes of the FCPA. We also are subject to import/export control laws. Failure to comply with domestic or foreign laws could result in various adverse consequences, including the possible delay in approval or refusal to approve a product, recalls, seizures, withdrawal of an approved product from the market, the imposition of civil or criminal sanctions, the prosecution of executives overseeing our international operations and corresponding bad publicity and negative perception of our company in foreign countries. **Current (2025):** We have expanded our international operations over the past several years to market our medicines and expand our research and development capabilities. New laws and industry codes in the E.U. and elsewhere have expanded transparency requirements regarding payments and transfers of value to healthcare professionals, requirements surrounding patient-level clinical trial data, the protection of personal data and increased sanctions for violations. Collectively, our expansion and these new requirements are adding to our compliance costs and potentially exposes us to sanctions in the event of an infringement or failure to report in these jurisdictions. In addition, a significant portion of our commercial supply chain, including sourcing of raw materials and manufacturing, is located in China and the E.U. Consequently, we are, and will continue to be, subject to risks related to operating in foreign countries, including risks relating to intellectual property protections and business interruptions. Risks associated with operating a global biotechnology company include: •differing regulatory requirements for drug approvals and regulation of approved drugs in foreign countries; •varying reimbursement regimes and difficulties or the inability to obtain reimbursement for our products in foreign countries in a timely manner; •differing patient treatment infrastructures, particularly since our business is focused on the treatment of serious diseases that affect relatively smaller numbers of patients and are typically prescribed by specialist physicians; •collectability of accounts receivable; •changes in tariffs, trade barriers, and regulatory requirements, the risks of which appear to have increased in the current political environment; •economic weakness, including recession and inflation, or political instability in particular foreign economies and markets; •differing levels of enforcement and/or recognition of contractual and intellectual property rights; •circulation of unauthorized copy versions of our medicines that infringe our intellectual property rights; •governments seeking to override our intellectual property rights through the introduction of compulsory license or similar mechanisms; •complying with local laws and regulations, which can change significantly over time; •foreign taxes, including withholding of payroll taxes; •foreign currency fluctuations, which could result in reduced revenues or increased operating expenses, and other obligations incident to doing business or operating in another country; •workforce uncertainty in countries where labor unrest is more common than in the U.S.; •reliance on third-party vendors, distributors and suppliers; •import and export licensing requirements, tariffs, and other trade and travel restrictions; •global or regional public health emergencies that could affect our operations or business; •production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and •business interruptions resulting from geo-political actions, including war and terrorism. These risks are increased with respect to countries such as China that have substantially different local laws and business practices and weaker protections for intellectual property. In particular, there is currently significant uncertainty about the future relationship between the U.S. and various other countries, including China, with respect to trade policies, treaties, tariffs, taxes, and other limitations on cross-border operations. The U.S. government has made and continues to make significant additional changes in U.S. trade policy and may continue to take future actions that could negatively impact U.S. 57 57 57 trade. For example, legislation has been introduced in Congress to limit certain U.S. biotechnology companies from using equipment or services produced or provided by select Chinese biotechnology companies, and others in Congress have advocated for the use of existing executive branch authorities to limit those Chinese service providers' ability to engage in business in the U.S. We cannot predict what actions may ultimately be taken with respect to trade relations between the United States and China or other countries, what products and services may be subject to such actions or what actions may be taken by the other countries in retaliation. If we are unable to obtain or use services from existing service providers or become unable to export or sell our products to any of our customers or service providers, our business could be materially and adversely affected. Our revenues are subject to foreign exchange rate fluctuations due to the global nature of our operations. Although we have a foreign currency risk management program, our efforts to reduce currency exchange volatility may not be successful. As a result, currency fluctuations among our reporting currency, the U.S. dollar, and the currencies in which we do business will affect our operating results, often in unpredictable ways. In addition, our international operations are subject to regulation under U.S. law. For example, the FCPA prohibits U.S. companies and their representatives from offering, promising, authorizing or making payments to foreign officials for the purpose of obtaining or retaining business abroad. In many countries, the health care professionals we regularly interact with may meet the definition of a foreign government official for purposes of the FCPA. We also are subject to import/export control laws. Failure to comply with domestic or foreign laws could result in various adverse consequences, including the possible delay in approval or refusal to approve a product, recalls, seizures, withdrawal of an approved product from the market, the imposition of civil or criminal sanctions, the prosecution of executives overseeing our international operations and corresponding bad publicity and negative perception of our company in foreign countries. --- ## Modified: If we are not successful in commercializing CASGEVY, our revenue growth could be limited and our business could be materially harmed. **Key changes:** - Reworded sentence: "We have invested significant resources in the development and commercialization of CASGEVY." - Reworded sentence: "In addition: •the manufacturing process for CASGEVY is more complex than the manufacturing processes for our small molecule medicines and we may encounter difficulties in the production of CASGEVY and ensuring that the product meets required specifications; •there are multiple steps along the CASGEVY patient treatment journey, many of which involve significant clinical complexities performed by third parties, including the collection of blood cells from patients, transfer of those cells to and from a manufacturing facility, and other procedures either before or after delivery of CASGEVY; •the commercial success of CASGEVY continues to depend in part on the medical community, patients, governments, and third-party or governmental payors accepting it as a medically useful, cost-effective, ethical, and safe, and providing adequate reimbursement; and •global market acceptance continues to be dependent in part on the prevalence and severity of side effects associated with the procedure by which CASGEVY is administered, including the prevalence and severity of any side effects resulting from the myeloablative preconditioning regime." **Prior (2024):** We recently obtained approval for CASGEVY for the treatment of people 12 years and older with SCD and TDT in the U.S., the E.U., the U.K., Saudi Arabia, and Bahrain. We invested significant resources in the research and development of CASGEVY. While we have previously successfully commercialized several small molecule drugs, we have limited experience with the commercialization of cell and genetic therapies. Manufacturing and commercialization of CASGEVY is subject to similar risks and uncertainties as small molecules. In addition: •the manufacturing process for CASGEVY is more complex than the manufacturing processes for our CF medicines and we may encounter difficulties in the production of CASGEVY and ensuring that the product meets required 33 33 33 specifications; •there are multiple steps along the CASGEVY patient treatment journey, many of which involve significant clinical complexities performed by third parties, including the collection of blood cells from patients, transfer of those cells to and from a manufacturing facility, and other procedures either before or after delivery of CASGEVY; •the commercial success of CASGEVY will depend in part on the medical community, patients, governments, and third-party or governmental payors accepting and providing adequate reimbursement of CASGEVY products, and recognizing the applicable medicine as medically useful, cost-effective, ethical, and safe; and •market acceptance will be dependent in part on the prevalence and severity of side effects associated with the procedure by which CASGEVY is administered, the prevalence and severity of any side effects resulting from the myeloablative preconditioning regime. If we are not successful in commercializing CASGEVY, our revenue growth could be limited and our business could be materially harmed. **Current (2025):** We have invested significant resources in the development and commercialization of CASGEVY. While we have previously successfully commercialized several small molecule drugs, we have limited experience with the commercialization of cell and genetic therapies. Manufacturing and commercialization of CASGEVY is subject to similar risks and uncertainties as small molecules. In addition: •the manufacturing process for CASGEVY is more complex than the manufacturing processes for our small molecule medicines and we may encounter difficulties in the production of CASGEVY and ensuring that the product meets required specifications; •there are multiple steps along the CASGEVY patient treatment journey, many of which involve significant clinical complexities performed by third parties, including the collection of blood cells from patients, transfer of those cells to and from a manufacturing facility, and other procedures either before or after delivery of CASGEVY; •the commercial success of CASGEVY continues to depend in part on the medical community, patients, governments, and third-party or governmental payors accepting it as a medically useful, cost-effective, ethical, and safe, and providing adequate reimbursement; and •global market acceptance continues to be dependent in part on the prevalence and severity of side effects associated with the procedure by which CASGEVY is administered, including the prevalence and severity of any side effects resulting from the myeloablative preconditioning regime. In addition, there is actual and potential future competition for CASGEVY, including bluebird's SCD gene therapy, LYFGENIA™, and its TDT gene therapy, ZYNTEGLO™, which are both approved in the U.S. If competing therapies are commercialized, or developed and then commercialized, more successfully by other companies as a treatment for people with SCD or TDT, our future net product revenues and cash flows will be adversely affected and our business could be materially harmed If we are not successful in commercializing CASGEVY, our business could be materially harmed. --- ## Modified: Government and other third-party payors seek to contain costs of health care through legislative and other means. If they fail to provide coverage and adequate reimbursement rates for our products, our revenues will be harmed. **Key changes:** - Reworded sentence: "38 38 38 In the U.S., there have been, and we expect that there will continue to be, a number of federal and state proposals to implement governmental controls that are similar to those that currently exist in Europe." - Reworded sentence: "On August 16, 2022, the IRA was enacted." - Reworded sentence: "We cannot predict with certainty whether there will be future legislative changes to the scope of these exclusions or how they will affect future drugs that we may develop and commercialize." - Reworded sentence: "We expect that this law will affect our business once fully implemented, and it is possible that other legislative updates will have an adverse impact on our revenue." - Reworded sentence: "While CMS has issued guidance covering the first two years of the program (2026 and 2027), we do not know with certainty what guidance will apply in future years or how such guidance will affect our business." **Prior (2024):** Sales of our products depend in part upon the availability of reimbursement from third-party payors. Third-party payors include government health programs such as Medicare and Medicaid in the U.S. and the national health care systems in ex-U.S. markets, managed care providers, private health insurers and other organizations. The trend in the health care industry is cost containment, and efforts of third-party payors to contain or reduce health care costs may adversely affect our ability to establish or maintain appropriate prices for our products or any drugs that we may develop and commercialize. In the U.S., there have been, and we expect that there will continue to be, a number of federal and state proposals to implement governmental controls that are similar to those that currently exist in Europe. For example, the ACA required manufacturers of Medicare Part D brand name drugs to provide discounts on those drugs to Medicare Part D beneficiaries during the coverage gap; increased the rebates paid by pharmaceutical companies to state Medicaid programs on drugs covered by Medicaid; and imposed an annual fee, which increases annually, on sales by branded pharmaceutical manufacturers. Additionally, private payors, including health maintenance organizations and pharmacy benefit managers in the U.S., are adopting more aggressive utilization management techniques and are increasingly applying restrictive plan designs that can impact patients and manufacturers, and they continue to push for significant discounts and rebates from manufacturers. Additionally, on August 16, 2022, the IRA was enacted. Among other things, the IRA establishes a Drug Price Negotiation Program, under which the government may negotiate maximum fair prices for certain drugs covered by Medicare that do not have generic or biosimilar competition. The first set of maximum fair prices will be effective in 2026. Certain products are excluded from the negotiation program including drugs that have a single orphan drug designation and that are not approved for any other orphan or non-orphan diseases or conditions. We cannot predict with certainty whether there will be future legislative changes to the scope of these exclusions. The law also requires manufacturers to pay a rebate to Medicare if the price of a Medicare drug (under both Part B and Part D) increases faster than the rate of inflation. The law also redesigns the Part D benefit. The current Coverage Gap Discount Program, which requires manufacturers to provide a 70% discount on brand drugs and biologics during the coverage gap phase, will be eliminated after the 2024 plan year. Starting in 2025, manufacturers of brand drugs and biologics will be required to provide a 10% discount during the initial 36 36 36 phase and a 20% discount during the catastrophic phase of the Part D benefit. The IRA continues a trend in the U.S. toward reducing drug prices and limiting spending by the federal health care programs on drugs. We cannot predict how CMS will interpret the IRA or how the provisions of the law will affect our business once fully implemented, but it is possible that these changes or other legislative updates will have an adverse impact on our revenue. The IRA also requires the Secretary of the Department of Health and Human Services (the "Secretary") to issue program guidance on numerous areas associated with implementation of the law's requirements, including for drug price negotiation and inflation rebates. We cannot know what form this program guidance would take or how it would affect our business. It is possible the U.S. Congress or administration may take further actions to address health care costs and access to medicine, and specifically address coverage and reimbursement of cell and gene therapies. For example, in October 2022, President Biden issued an Executive Order directing the Center for Medicare and Medicaid Innovation ("CMMI"), to consider new healthcare payment and delivery models that would lower drug costs and promote access to innovative drug therapies for Medicare and Medicaid beneficiaries. In February 2023, the Secretary submitted a report to the White House describing three models that the Secretary selected for testing. Among the selected models is a Cell & Gene Therapy Access Model, under which CMS would structure and coordinate multi-state Medicaid outcomes-based agreements between participating states and manufacturers. The report also directs CMS to consider potential Medicare fee-for-service options to support cell and gene therapy access and affordability. In October 2023, CMMI further announced that it will move the start-date for the Cell & Gene Therapy Access Model from 2026 to 2025. On January 30, 2024,CMMI released additional information about the Cell & Gene Therapy Access Model, including the initial focus on cell and gene therapies for sickle cell disease. CMS intends to negotiate outcomes-based agreements with manufacturers between May 2024 and November 2024. In addition to the supplemental rebate negotiated under the outcomes-based agreement, participating manufacturers would be required to cover certain fertility preservation services and supports for ancillary services (e.g., travel, case management, behavioral health services). CMS is requesting that states submit an optional, non-binding letter of intent by April 2024. States may begin participating in the Cell & Gene Therapy Access Model on a rolling-basis, between January 2025 and January 2026. Third-party payors throughout the world also have been attempting to control drug spending in light of the global economic pressures. In reimbursement negotiations, many payors are requesting price discounts and caps on total expenditures and limiting both the types and variety of drugs that they will cover if they are not able to secure them. Some payors restrict reimbursement to certain patient groups or by indication. As part of these negotiations, many ex-U.S. government payors also are requiring companies to establish product cost-effectiveness as a condition of reimbursement. These cost-effectiveness reviews may overlook many of the benefits provided by innovative medicines, and for the most part, have not taken into account the specific circumstances of products that treat rare diseases. This has led to conclusions that certain medicines, including our products in certain jurisdictions, are not cost-effective. As a result, certain countries have declined to reimburse, or delayed their reimbursement of, some of our products. Although not mandated in the U.S., various organizations have started advocating for cost-effectiveness analyses in the U.S. as well as value-based contracting in which the amount of reimbursement for a product is based on patient outcomes and other clinical or economic metrics related to the performance of such product. If U.S. payors were to adopt such assessments and make negative coverage determinations or utilize value-based contracts that result in penalties to, or lower rates of, reimbursement, it could adversely affect our product revenues. Our business would be materially adversely affected if we are not able to obtain or maintain coverage and reimbursement of our products from third-party payors on a broad, timely, or satisfactory basis, or if such coverage is subject to overly broad or restrictive utilization management controls. The increasing availability and use of innovative specialty pharmaceuticals for rare diseases, combined with their higher cost as compared to other types of pharmaceutical products, is generating significant third-party payor interest in developing cost-containment strategies targeted to this sector. Government regulations in both U.S. and ex-U.S. markets could further limit the prices that can be charged for our products and may limit our commercial opportunity. The increasing use of cost-effectiveness assessments in markets around the world and the financial challenges faced by many governments may lead to significant adverse effects on our business. **Current (2025):** Sales of our products depend in part upon the availability of reimbursement from third-party payors. Third-party payors include government health programs such as Medicare and Medicaid in the U.S. and the national health care systems in ex-U.S. markets, managed care providers, private health insurers and other organizations. The trend in the health care industry is cost containment, and efforts of third-party payors to contain or reduce health care costs may adversely affect our ability to establish or maintain appropriate prices for our products or any drugs that we may develop and commercialize. 38 38 38 In the U.S., there have been, and we expect that there will continue to be, a number of federal and state proposals to implement governmental controls that are similar to those that currently exist in Europe. For example, the Affordable Care Act ("ACA") required manufacturers of Medicare Part D brand name drugs to provide discounts on those drugs to Medicare Part D beneficiaries during the coverage gap; increased the rebates paid by pharmaceutical companies to state Medicaid programs on drugs covered by Medicaid; and imposed an annual fee, which increases annually, on sales by branded pharmaceutical manufacturers. Additionally, private payors, including health maintenance organizations and pharmacy benefit managers in the U.S., are adopting more aggressive utilization management techniques and are increasingly applying restrictive plan designs that can impact patients and manufacturers, and they continue to push for significant discounts and rebates from manufacturers. On August 16, 2022, the IRA was enacted. Among other things, the IRA establishes a Drug Price Negotiation Program, under which the government may negotiate maximum fair prices for certain drugs covered by Medicare that do not have generic or biosimilar competition. The first set of maximum fair prices will be effective in 2026. Certain products are excluded from the negotiation program including drugs that have a single orphan drug designation and that are not approved for any other orphan or non-orphan diseases or conditions. We cannot predict with certainty whether there will be future legislative changes to the scope of these exclusions or how they will affect future drugs that we may develop and commercialize. The law also requires manufacturers to pay a rebate to Medicare if the price of a Medicare drug (under both Part B and Part D) increases faster than the rate of inflation and redesigns the Part D benefit. Starting in 2025, manufacturers of brand drugs and biologics will be required to provide a 10% discount during the initial phase and a 20% discount during the catastrophic phase of the Part D benefit. The IRA continues a trend in the U.S. toward reducing drug prices and limiting spending by the federal health care programs on drugs. We expect that this law will affect our business once fully implemented, and it is possible that other legislative updates will have an adverse impact on our revenue. The IRA also requires the Secretary of the Department of Health and Human Services (the "Secretary") to issue program guidance on numerous areas associated with implementation of the law's requirements, including for drug price negotiation and inflation rebates. While CMS has issued guidance covering the first two years of the program (2026 and 2027), we do not know with certainty what guidance will apply in future years or how such guidance will affect our business. It is possible the U.S. Congress or administration may take further actions to address health care costs and access to medicine, and specifically address coverage and reimbursement of cell and gene therapies. For example, the Center for Medicare and Medicaid Innovation ("CMMI") was directed to consider new healthcare payment and delivery models that would lower drug costs and promote access to innovative drug therapies for Medicare and Medicaid beneficiaries. In February 2023, the U.S. Administration addressed access for cell and gene therapies in diseases such as SCD through the CMS program known as The Cell and Gene Therapy Access Model ("CGT Access Model"). The CGT Access Model was designed to provide an opportunity to accelerate and enhance broad Medicaid access for eligible patients across all 50 U.S. states by allowing state Medicaid agencies to delegate authority to CMS to coordinate and facilitate outcomes-based payment arrangements ("OBAs") with cell and gene therapy manufacturers, such as ours. In 2024, we reached an agreement with CMS to expand access by participating in the CGT Access Model for SCD to benefit Medicaid beneficiaries. States may begin participating in the Cell & Gene Therapy Access Model on a rolling-basis, between January 2025 and January 2026. In January 2025, President Trump repealed Executive Order 14087, which had directed CMS to consider innovative pricing models, ultimately leading to the CGT Access Model. The rescission currently does not appear to impact our agreement with CMS or CMS' authority to proceed with the CGT Access Model; however, any discontinuation of the CGT Access Model, or CMS' termination of our agreement to participate in the model in the future, could impact access to CASGEVY. Third-party payors throughout the world also have been attempting to control drug spending in light of global economic pressures. In reimbursement negotiations, many payors are requesting price discounts and caps on total expenditures and limiting both the types and variety of drugs that they will cover if they are not able to secure them. Some payors restrict reimbursement of drugs through implementing utilization management controls. As part of these negotiations, many ex-U.S. government payors also are requiring companies to establish product cost-effectiveness as a condition of reimbursement. These cost-effectiveness reviews may overlook many of the benefits provided by innovative medicines, and for the most part, have not taken into account the specific circumstances of products that treat rare diseases. This has led to conclusions that certain medicines, including our products in certain jurisdictions, are not cost-effective. As a result, certain countries have declined to reimburse, or delayed their reimbursement of, some of our products. Although not mandated in the U.S., various organizations have started advocating for cost-effectiveness analyses in the U.S. as well as value-based contracting in which the amount of reimbursement for a product is based on patient outcomes and other clinical or economic metrics related to the performance of such product. If U.S. payors were to adopt such assessments and make negative coverage determinations or utilize value-based contracts that result in penalties to, or lower rates of, reimbursement, it could adversely affect our product 39 39 39 revenues. Our business would be materially adversely affected if we are not able to obtain or maintain coverage and reimbursement of our products from third-party payors on a broad, timely, or satisfactory basis, or if such coverage is subject to overly broad or restrictive utilization management controls. The increasing availability and use of innovative specialty pharmaceuticals for rare or other diseases or conditions, combined with their higher cost as compared to other types of pharmaceutical products, is generating significant third-party payor interest in developing cost-containment strategies targeted to this sector. Government regulations in both U.S. and ex-U.S. markets could further limit the prices that can be charged for our products, including for those with broader patient populations, and may limit our commercial opportunity. The increasing use of cost-effectiveness assessments in markets around the world and the financial challenges faced by many governments may lead to significant adverse effects on our business. --- ## Modified: Risks Related to Financial Results and Holding Our Common Stock **Key changes:** - Added sentence: "•Our stock price may fluctuate and our quarterly operating results are subject to significant fluctuation." **Prior (2024):** •Our effective tax rate fluctuates, and changes in tax laws, regulations and treaties, unfavorable resolution to the tax positions we have taken or exposure to additional income tax liabilities could have a material impact on our future taxable income. 32 32 32 **Current (2025):** •Our stock price may fluctuate and our quarterly operating results are subject to significant fluctuation. •Our effective tax rate fluctuates, and changes in tax laws, regulations and treaties, unfavorable resolution to the tax positions we have taken or exposure to additional income tax liabilities could have a material impact on our future taxable income. 34 34 34 --- ## Modified: Insurance coverage and reimbursement of cell and genetic therapies is uncertain. **Key changes:** - Reworded sentence: "There is uncertainty related to the insurance coverage and reimbursement of cell or genetic therapies, including those gene therapies that are potential one-time treatments." - Reworded sentence: "Inadequate reimbursement for such services may discourage physicians and hospitals from recommending our cell and genetic therapies and impair our ability to market or sell such therapies." **Prior (2024):** There is significant uncertainty related to the insurance coverage and reimbursement of cell or genetic therapy products, including gene therapies that are potential one-time treatments (e.g., CASGEVY). It is difficult to predict what third party payors, including U.S. or ex-U.S. governments or private insurance companies, will decide with respect to reimbursement for CASGEVY and the other novel cell and genetic therapies in our pipeline. Additionally, reimbursement rates for cell and genetic therapies approved before ours could create an adverse environment for reimbursement of any therapies we ultimately commercialize. The administration of our products may require procedures for the collection of cells from patients, followed by other procedures either before or after delivery of the cell or genetic therapy. The manner and level at which reimbursement is provided for these services also is important. Inadequate reimbursement for such services may discourage physicians from recommending decisions to recommend any product for which we obtain approval in the future and impair our ability to market or sell the associated cell or genetic therapy. **Current (2025):** There is uncertainty related to the insurance coverage and reimbursement of cell or genetic therapies, including those gene therapies that are potential one-time treatments. While coverage has not been a significant obstacle in the launch of CASGEVY, it is difficult to predict what third party payors, including U.S. or ex-U.S. governments or private insurance companies, will decide with respect to reimbursement for the other novel cell and genetic therapies in our pipeline. Additionally, reimbursement rates for cell and genetic therapies approved before ours could create an adverse environment for reimbursement of any therapies we ultimately commercialize. The administration of our products may require procedures for the collection of cells from patients, followed by other procedures either before or after delivery of the cell or genetic therapy. The manner and level at which reimbursement is provided for these services also is important. Inadequate reimbursement for such services may discourage physicians and hospitals from recommending our cell and genetic therapies and impair our ability to market or sell such therapies. Moreover, the treatment center network for our products and growth of such network could also impact uptake and necessitate out-of-state access for some beneficiaries if an authorized treatment center is not available within their home state, which could result in further underpayment from out-of-state Medicaid programs. --- ## Modified: If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program or other governmental pricing programs in the U.S., we could be subject to additional reimbursement requirements, penalties, sanctions, and fines that could have a material adverse effect on our business, financial condition, results of operations and growth prospects. **Key changes:** - Reworded sentence: "The terms, scope and complexity of these government pricing programs may change." - Reworded sentence: "The portion of this rule dealing with manufacturer co-payment assistance was struck down by the U.S." - Reworded sentence: "In September 2024, CMS issued a final rule withdrawing the challenged accumulator adjustment regulations." - Reworded sentence: "For example, the removal of the current statutory 100% of Average Manufacturer Price per-unit cap on Medicaid rebate liability for single source and innovator multiple source drugs, effective as of January 1, 2024, under the American Rescue Plan Act of 2021, may affect the prices that are required to be charged to covered entities under the 340B Drug Discount Program." **Prior (2024):** We participate in the Medicaid Drug Rebate Program, the 340B program, and a number of other federal and state government pricing programs in the U.S. to obtain coverage for our products by certain government health care programs. These programs require us to pay rebates or provide discounts to certain government payors or private purchasers in connection with our products when dispensed to beneficiaries of these programs. In some cases, such as with the Medicaid Drug Rebate Program, the rebates are based on pricing and rebate calculations that we report on a monthly and quarterly basis to the government agencies that administer the programs. The terms, scope and complexity of these government pricing programs change frequently. For example, regulations finalized in December 2020 created an alternative Medicaid rebate formula for "line extensions" of oral solid dosage forms. Moreover, in December 2020, CMS finalized changes to Medicaid Drug Rebate Program pricing calculations regarding the provision of co-payment assistance to patients that may be impacted by so-called accumulator programs operated by private insurers or pharmacy benefit managers. The portion of this rule 44 44 44 dealing with manufacturer co-payment assistance was struck down by the U.S. District Court for the District of Columbia in May 2022 (and the deadline for an appeal has lapsed). In May 2023, CMS issued a proposed rule, which would withdraw the challenged accumulator adjustment regulations, consistent with the Court's order. The rule also proposes significant changes, which, if finalized, could have an impact on our Medicaid rebate liability, impact our participation in the Medicaid Drug Rebate Program, and impose new reporting requirements. Additionally, the expansion of the 340B Drug Discount Program through the ACA has increased the number of purchasers who are eligible for significant discounts on branded drugs. These and future changes to government pricing programs, laws, and regulations may have a material adverse impact on our revenue and operations. We also may have reimbursement obligations or be subject to penalties if we fail to provide timely and accurate information to the government, pay the correct rebates, or offer the correct discounted pricing. Changes to the price reporting or rebate requirements of these programs would affect our obligations to pay rebates or offer discounts. For example, the removal of the current statutory 100% of Average Manufacturer Price per-unit cap on Medicaid rebate liability for single source and innovator multiple source drugs, effective as of January 1, 2024, under the American Rescue Plan Act of 2021 may affect the amount of rebates paid on prescription drugs under Medicaid and the prices that are required to be charged to covered entities under the 340B Drug Discount Program. Additionally, the IRA requires manufacturers to pay rebates for Medicare Part B and Part D drugs with prices that increase faster than the rate of inflation. Responding to current and future changes to these and other Medicaid Drug Rebate Program requirements may reduce our net revenues and the complexity of compliance, will be time-consuming, and could have a material adverse effect on our results of operations. **Current (2025):** We participate in the Medicaid Drug Rebate Program, the 340B program, and a number of other federal and state government pricing programs in the U.S. to obtain coverage for our products by certain government health care programs. These programs require us to pay rebates or provide discounts to certain government payors or private purchasers in connection with our products when dispensed to beneficiaries of these programs. In some cases, such as with the Medicaid Drug Rebate Program, the rebates are based on pricing and rebate calculations that we report on a monthly and quarterly basis to the government agencies that administer the programs. The terms, scope and complexity of these government pricing programs may change. For example, regulations finalized in December 2020 created an alternative Medicaid rebate formula for "line extensions" of oral solid dosage forms. Moreover, in December 2020, CMS finalized changes to Medicaid Drug Rebate Program pricing calculations regarding the provision of co-payment assistance to patients that may be impacted by so-called accumulator programs operated by private insurers or pharmacy benefit managers. The portion of this rule dealing with manufacturer co-payment assistance was struck down by the U.S. District Court for the District of Columbia in May 2022 (and the deadline for an appeal has lapsed). In September 2024, CMS issued a final rule withdrawing the challenged accumulator adjustment regulations. The rule made significant changes to, among other things, penalties for misclassification and the definitions of a covered outpatient drug, internal investigation and market date, which may have an impact on our Medicaid rebate liability. Additionally, the expansion of the 340B Drug Discount Program through the ACA has increased the number of purchasers, known as covered entities, who are eligible for significant discounts on branded drugs. In general, covered entities distribute 340B drugs through their own in-house pharmacies. A growing number of covered entities have been contracting with retail and/or specialty pharmacies, known as contract pharmacies, to distribute 340B drugs. Manufacturers have begun to implement restrictions on covered entities that use contract pharmacies. Similarly, we limit hospital covered entities to contract with one contract pharmacy if the covered entity does not have an in-house outpatient pharmacy. Otherwise, hospital covered entities that have an in-house outpatient pharmacy are not permitted to use contract pharmacies. Our policy applies to our CF and pain products, and it does not apply to Federal grantees and hospitals and any covered entities in states that prohibit manufacturers from restricting covered entities from accessing 340B drugs through contract pharmacies. Certain states, including Arkansas, Kansas, Louisiana, Maryland, Minnesota, Mississippi, Missouri, and West Virginia, have passed laws to regulate the relationship between manufacturers and contract pharmacies. A number of manufacturers have filed lawsuits against these states. These and future changes to government pricing programs, laws, and regulations may have a material adverse impact on our revenue and operations. We also may have reimbursement obligations or be subject to penalties if we fail to provide timely and accurate information to the government, pay the correct rebates, or offer the correct discounted pricing. Changes to the price reporting or rebate requirements of these programs would affect our obligations to pay rebates or offer discounts. For example, the removal of the current statutory 100% of Average Manufacturer Price per-unit cap on Medicaid rebate liability for single source and innovator multiple source drugs, effective as of January 1, 2024, under the American Rescue Plan Act of 2021, may affect the prices that are required to be charged to covered entities under the 340B Drug Discount Program. Additionally, the IRA requires manufacturers to pay rebates for Medicare Part B and Part D drugs with prices that increase 47 47 47 faster than the rate of inflation. Responding to current and future changes to these and other Medicaid Drug Rebate Program requirements may reduce our net revenues and the complexity of compliance, will be time-consuming, and could have a material adverse effect on our results of operations. --- ## Modified: Risks Related to Supply, Manufacturing and Reliance on Third Parties **Key changes:** - Reworded sentence: "•We may face manufacturing, supply, and distribution difficulties, among other challenges, delays, or interruptions, including at our third-parties." **Prior (2024):** •We depend on third-party manufacturers and our internal capabilities to manufacture our products and the materials we require for our clinical trials. We rely on third party logistics providers to manage our shipments globally. We may not be able to maintain our third-party relationships and could experience supply disruptions outside of our control. •We rely on third parties to conduct pre-clinical work, clinical trials and other activities, and those third parties may not perform satisfactorily, including failing to meet established deadlines for the completion of such studies and/or trials or failing to satisfy regulatory requirements. **Current (2025):** •We may face manufacturing, supply, and distribution difficulties, among other challenges, delays, or interruptions, including at our third-parties. •We rely on third parties to conduct pre-clinical work, clinical trials and other activities, and those third parties may not perform satisfactorily, including failing to meet established deadlines for the completion of such studies and/or trials or failing to satisfy regulatory requirements. --- ## Modified: Our business has a substantial risk of product liability claims and other litigation liability. **Key changes:** - Reworded sentence: "For example, we pay royalties on certain sales of TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, KALYDECO, ORKAMBI and ALYFTREK pursuant to our agreement with the Cystic Fibrosis Foundation." - Reworded sentence: "If a claim is brought against us, we might be required to pay legal and other expenses to defend the claim, as well as pay uncovered damage awards and these damages could be significant and have a material adverse effect on our financial condition." **Prior (2024):** We are or may be involved in various legal proceedings, including securities/shareholder matters and claims related to product liability, intellectual property, employment law, competition law, data privacy, and breach of contract. Such proceedings may involve claims for, or the possibility of, damages or fines and penalties involving substantial amounts of money or other relief, including civil or criminal fines and penalties. If any of these legal proceedings were to result in an adverse outcome, it could have a material adverse effect on our business. With respect to product liability and clinical trial risks, in the ordinary course of business we are subject to liability claims and lawsuits, including potential class actions, alleging that our products or product candidates have caused, or could cause, serious adverse events or other injury. We have product liability insurance and clinical trial insurance in amounts that we believe are adequate to cover this risk. However, our insurance may not provide adequate coverage against all potential liabilities. If a claim is brought against us, we might be required to pay legal and other expenses to defend the claim, as well as pay uncovered damage awards resulting from a claim brought successfully against us and these damages could be significant and have a material adverse effect on our financial condition. Furthermore, whether or not we are ultimately successful in defending any such claims, we might be required to direct significant financial and managerial resources to such defense and adverse publicity is likely to result. 56 56 56 **Current (2025):** We are or may be involved in various legal proceedings, including securities/shareholder matters and claims related to product liability, intellectual property, employment law, competition law, data privacy, and breach of contract. Such proceedings may involve claims for, or the possibility of, damages or fines and penalties involving substantial amounts of money or other relief, including civil or criminal fines and penalties. If any of these legal proceedings were to result in an adverse outcome, it could have a material adverse effect on our business. For example, we pay royalties on certain sales of TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, KALYDECO, ORKAMBI and ALYFTREK pursuant to our agreement with the Cystic Fibrosis Foundation. The third-party to whom the Cystic Fibrosis Foundation has assigned rights to receive these royalty payments has made public statements related to the calculation of royalties associated with ALYFTREK. Based on the agreement between Vertex and the Cystic Fibrosis Foundation, we believe the third party is wrong. If any potential future adversarial proceedings were not resolved in our favor, however, we could be required to pay a higher royalty percentage on ALYFTREK sales than we currently expect, and our future cost of goods with respect to ALYFTREK could increase above our current expectations. The use of our approved products and our product candidates exposes us to the risk of product liability claims. Product liability claims may be brought against us by people participating in clinical trials, patients, healthcare providers, or others selling or coming in contact with our products or our product candidates. There is a risk that our products or our product candidates may induce adverse events. For instance, the product labels for TRIKAFTA and ALYFTREK include a boxed warning regarding liver injury and liver failure. If we cannot successfully defend ourselves against product liability claims, we could incur substantial liability and costs, which could have a material adverse effect on our business or financial condition. In addition, regardless of merit or eventual outcome, product liability claims may result in: •Decreased demand for our approved products, such as TRIKAFTA and ALYFTREK, or any product candidate for which we obtain marketing approval; •Inability to successfully commercialize approved products; •Impairment of our business reputation and exposure to adverse publicity; •New or increased warnings on our product labels; •Withdrawal of clinical trial participants; 58 58 58 •Costs as a result of related litigation; •Distraction of management's attention from our primary business; •Substantial monetary awards to patients or other claimants; and •Loss of revenue. We have product liability insurance and clinical trial insurance in amounts that we believe are adequate to cover this risk. However, our insurance may not provide adequate coverage against all potential liabilities. If a claim is brought against us, we might be required to pay legal and other expenses to defend the claim, as well as pay uncovered damage awards and these damages could be significant and have a material adverse effect on our financial condition. Furthermore, whether or not we are ultimately successful in defending any such claims, we might be required to direct significant financial and managerial resources to such defense and adverse publicity is likely to result. --- ## Modified: If we are unable to sustain and grow revenues from sales of our CF medicines, our business would be materially harmed and the market price of our common stock would likely decline. **Key changes:** - Reworded sentence: "We seek to continue to increase our CF product revenue through serial innovation, including development and commercialization of next-generation CF medicines, extending access of CF medicines to younger children with CF, seeking additional approvals for our CF medicines in ex-U.S." **Prior (2024):** Substantially all of our net product revenues have been derived from the sale of our CF medicines over the last several years. As a result, our business is dependent upon our ability to sustain and increase revenues from sales of our CF medicines. We seek to continue to increase our CF product revenue through serial innovation, including the potential approval of our vanzacaftor/tezacaftor/deutivacaftor triple combination, development and commercialization CF medicines in younger children with CF and through securing additional approvals and reimbursements for our CF medicines in ex-U.S. markets. Our concentrated source of revenues presents a number of risks to our business, including: •that one or more competing therapies may be developed successfully as a treatment for people with CF; •that reimbursement policies of payors and other third parties may make it difficult to obtain reimbursement or reduce the net price we receive for our products; •that we may experience manufacturing or supply disruptions for our CF medicines; and •that we may experience adverse developments with respect to development or commercialization of our CF medicines. If any of the above risks were to materialize, if we are otherwise unable to increase revenues from sales of our CF medicines, or if we do not meet the expectations of investors or public equity market analysts, our business would be materially harmed and our ability to fund our operations could be adversely affected. **Current (2025):** Substantially all of our net product revenues have been derived from the sale of our CF medicines over the last several years. As a result, our business is dependent upon our ability to sustain and increase revenues from sales of our CF medicines. We seek to continue to increase our CF product revenue through serial innovation, including development and commercialization of next-generation CF medicines, extending access of CF medicines to younger children with CF, seeking additional approvals for our CF medicines in ex-U.S. markets and securing and maintaining adequate reimbursements for our CF medicines globally, and by developing a nebulized mRNA therapy for the more than 5,000 people with CF who do not make CFTR protein and cannot benefit from CFTR modulators. Our concentrated source of revenues presents a number of risks to our business, including: •that one or more competing therapies may be developed successfully by others as a treatment for people with CF; •that reimbursement policies of payors and other third parties may make it difficult to obtain reimbursement or may reduce the net price we receive for our products; •that we may experience manufacturing or supply disruptions for our CF medicines; and •that we may experience adverse developments with respect to development or commercialization of our CF medicines. Our ability to increase our CF product revenues is dependent in part on our ability to successfully commercialize ALYFTREK, our recently approved once-daily CF medicine. We expect the commercial opportunity for ALYFTREK to depend on three types of patients: (i) those who are currently on a CFTR modulator who may want to switch to ALYFTREK, (ii) those patients who have not yet been initiated on a CFTR modulator or been eligible for a CFTR modulator, and (iii) those who have discontinued from another CFTR modulator. There can be no assurance that people with CF will be willing to switch from their current CFTR modulator or initiate treatment with ALYFTREK if they are not currently being treated by a CFTR modulator. If any of the above risks were to materialize, if we are otherwise unable to increase revenues from sales of our CF medicines, or if we do not meet the expectations of investors or public equity market analysts, our business would be materially harmed and our ability to fund our operations could be adversely affected. 35 35 35 --- ## Modified: If we are unable to successfully develop, obtain approval and commercialize treatments for acute and neuropathic pain, our business could be materially harmed. **Key changes:** - Reworded sentence: "We believe that a portion of the value attributed to our company by investors is based on our approved and potential treatments for acute and peripheral neuropathic pain." **Prior (2024):** We believe that a portion of the value attributed to our company by investors is based on our potential treatments for acute and neuropathic pain, including VX-548. We have completed the Phase 3 development program for VX-548 in acute pain and we are planning to submit an NDA to the FDA by mid-2024. We are planning to initiate a Phase 3 development program for VX-548 in neuropathic pain based on positive Phase 2 clinical results we received in the fourth quarter of 2023. Obtaining approval for VX-548 is uncertain process and we may not be successful. If we do not obtain approval of VX-548, our business may be materially harmed. VX-548, if approved, may not gain or maintain market acceptance among physicians and patients or other members of the medical community. In addition to the risks normally associated with launching a new branded product, VX-548 will need to compete in an acute pain market that largely consists of low-cost generic drugs, including opioids, non-steroidal anti-inflammatory drugs, acetaminophen and local anesthetics. Similarly, if we are successful in developing and obtaining approval for VX-548 in neuropathic pain, VX-548 will face competition from generic anticonvulsant and antidepressant drugs. If we are not able to successfully develop, obtain approval for and commercialize treatments for acute and neuropathic pain, our future net product revenues and cash flows will be adversely affected and our business could be materially harmed. **Current (2025):** We believe that a portion of the value attributed to our company by investors is based on our approved and potential treatments for acute and peripheral neuropathic pain. JOURNAVX, which was approved in January 2025 for moderate-to-severe acute pain in adults, may not gain or maintain market acceptance among physicians and patients or other members of the medical community. In addition to the risks normally associated with launching a new branded product, JOURNAVX will need to compete, and obtain reimbursement from third-party payors, in an acute pain market that largely consists of low-cost generic drugs, including opioids, non-steroidal anti-inflammatory drugs, acetaminophen and local anesthetics. Similarly, if we are successful in developing and obtaining approval for suzetrigine in peripheral neuropathic pain, this product will face competition from generic anticonvulsant and antidepressant drugs. If we are not able to successfully develop and commercialize treatments for acute and peripheral neuropathic pain, our future net product revenues and cash flows will be adversely affected and our business could be materially harmed. --- ## Modified: If we are unable to successfully develop and commercialize additional products, our business could be materially harmed. **Key changes:** - Reworded sentence: "We invest significant resources in the research and development of therapies for serious diseases and conditions, including CF, SCD, TDT, acute and peripheral neuropathic pain, IgAN, AMKD, T1D, DM1, and ADPKD." **Prior (2024):** We invest significant resources in the research and development of therapies for serious diseases, including CF, SCD, TDT, acute and neuropathic pain, AMKD, T1D, DM1, and AATD. Product development is highly uncertain and expensive, and we may experience unforeseen delays, including regulatory and commercialization delays. Product candidates that may appear promising in the early phases of research and development may fail to reach commercial success for many reasons, including the failure to demonstrate acceptable clinical trial results or obtain marketing approval, the inability to manufacture or commercialize the product candidate on economically feasible terms, or the appearance of safety issues. When we receive marketing approval for a pipeline product, we cannot be sure that we will obtain market acceptance or adequate reimbursement levels from third-party payors or foreign governments for such product. Additionally, many of the therapies that we are developing in our pipeline target rare diseases that affect a limited number of patients. There can be no guarantee that we will effectively identify patients that are eligible for enrollment in our clinical trials or treatment with our product candidates. Even if we do successfully identify eligible patients, the number of patients that our product candidates are able to treat may turn out to be lower than we expect or new patients may become increasingly difficult to identify, each of which may adversely affect our revenues and materially harm our business. If we are not able to successfully develop and commercialize additional products our business could be materially harmed. **Current (2025):** We invest significant resources in the research and development of therapies for serious diseases and conditions, including CF, SCD, TDT, acute and peripheral neuropathic pain, IgAN, AMKD, T1D, DM1, and ADPKD. Product development is highly uncertain and expensive. Product candidates that may appear promising in research and development may fail to reach commercial success for many reasons, including: •the failure to establish safety and efficacy through clinical trials; •the failure to obtain marketing approval for the product candidate; •the inability to manufacture the product candidate on economically feasible terms; •the failure to gain and maintain market acceptance among physicians and patients or other members of the medical community; and •the failure to obtain market acceptance or adequate reimbursement levels from third-party payors or foreign governments for such product. If we are not able to successfully develop and commercialize additional products our business could be materially harmed. --- *Data sourced from SEC EDGAR. Last updated 2026-05-10.*