Vertex Reports Full-Year and Fourth Quarter 2012 Financial Results and Provides Updates on Key Development Programs

  Vertex Reports Full-Year and Fourth Quarter 2012 Financial Results and
  Provides Updates on Key Development Programs

   -2013 investment focused on key development programs in cystic fibrosis,
                     hepatitis C and autoimmune diseases-

 -Full-year 2012 revenues of $1.53 billion, including net product revenues of
 $1.16 billion for INCIVEK in hepatitis C and $171.6 million for KALYDECO in
                               cystic fibrosis-

-Company ends 2012 with $1.32 billion in cash, cash equivalents and marketable
                                 securities-

Business Wire

CAMBRIDGE, Mass. -- January 29, 2013

Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today reported consolidated
financial results for the full year and fourth quarter ended December 31,
2012. The company also today provided financial guidance for 2013.

Vertex reported total 2012 revenues of $1.53 billion, including net product
revenues of $1.16 billion from INCIVEK^® (telaprevir) and $171.6 million from
KALYDECO^TM (ivacaftor). The GAAP net loss attributable to Vertex was $(107.0)
million, or $(0.50) per share, for 2012. 2012 non-GAAP net income attributable
to Vertex was $255.5 million, or $1.18 per diluted share, excluding certain
charges of $362.6 million. The company reported $1.32 billion in cash, cash
equivalents and marketable securities as of December 31, 2012.

For the fourth quarter of 2012, Vertex reported $334.0 million in total
revenues, including $222.8 million from INCIVEK and $58.5 million from
KALYDECO. In the fourth quarter of 2012, the GAAP net loss attributable to
Vertex was $(76.1) million, or $(0.35) per share. Non-GAAP net income
attributable to Vertex was $9.0 million, or $0.04 per diluted share, excluding
certain charges of $85.1 million, for the fourth quarter of 2012.

“Entering 2013, we are committed to advancing key development programs and to
maintaining financial strength to position the company for sustainable
long-term growth,” said Jeffrey Leiden, M.D., Ph.D., Chair, President and
Chief Executive Officer of Vertex. “Over the coming year, we expect to
generate a significant amount of data from our key development programs in
cystic fibrosis, hepatitis C and autoimmune diseases and to initiate important
studies designed to bring additional transformative medicines to people with
serious diseases, with a focus on specialty markets.”

Development Program Updates

On January 6, 2013, Vertex provided a comprehensive update on the status of
its development programs. The company today provided the following additional
updates to its programs for cystic fibrosis, hepatitis C and autoimmune
diseases:

Cystic Fibrosis

Combination of VX-809 and ivacaftor for People with Two Copies of the F508del
Mutation

  *In early January, Vertex announced that the combination of VX-809 and
    ivacaftor for the treatment of people with CF who have two copies of the
    F508del mutation received Breakthrough Therapy Designation from the U.S.
    Food and Drug Administration (FDA). Vertex completed an end-of-Phase 2
    meeting with the FDA and has submitted a proposed design for a pivotal
    Phase 3 program for the combination to the FDA. While the specific
    implications of the Breakthrough Therapy Designation cannot be determined
    at this time, Vertex is in discussions with the FDA regarding the final
    design of this program and expects to begin pivotal Phase 3 development in
    the first quarter of 2013, pending regulatory approval.

Hepatitis C

Telaprevir Twice-daily Dosing

  *Vertex recently submitted a supplemental New Drug Application (sNDA) for a
    twice-daily dosing regimen of telaprevir to the FDA. Also in January, the
    company submitted a supplemental New Drug Submission (sNDS) in Canada for
    a twice-daily dosing regimen of telaprevir.

Pipeline Programs

Ongoing Evaluation of VX-509 in Rheumatoid Arthritis

  *As part of its Phase 2 evaluation of VX-509 in rheumatoid arthritis (RA),
    Vertex recently initiated a 40-patient Phase 2 study in people with RA to
    evaluate the potential for VX-509 to improve structural joint changes as
    measured by Magnetic Resonance Imaging (MRI) and markers of inflammation
    and joint damage measured in joint fluid. The study will also examine a
    broad range of doses of VX-509 to provide information for future studies.

Full-Year 2012 Financial Results

Total Revenues: Total revenues for 2012 were $1.53 billion, compared with
$1.41 billion in total revenues for 2011. The components of total revenues for
2012 and 2011 were:

                                                          
                                             2012          2011
Revenues                                      (in millions)
INCIVEK revenues, net                         $1,161.8      $950.9
KALYDECO revenues, net                        171.6         —
Total product revenues, net                   1,333.5       950.9
Royalty revenues from INCIVO                  117.6         20.3
Collaborative and other royalty revenues      76.0          439.4
Total revenues                                $1,527.0      $1,410.6
                                                           

  *Net Product Revenues from INCIVEK

Vertex’s 2012 net product revenues from INCIVEK were $1.16 billion, compared
to $950.9 million for 2011 following the U.S. approval of INCIVEK in May 2011.

  *Net Product Revenues from KALYDECO

Vertex’s 2012 net product revenues from KALYDECO were $171.6 million,
following FDA approval in January 2012. The vast majority of people with CF
aged 6 and older with the G551D mutation in the U.S. have started treatment
with KALYDECO. Vertex is currently seeking reimbursement for KALYDECO in
multiple countries in Europe.

  *Royalty Revenues from INCIVO

Vertex recognized $117.6 million in INCIVO royalty revenues in 2012 from our
collaborator Janssen, compared to $20.3 million in INCIVO royalty revenues for
2011. INCIVO was approved in Europe in September 2011 for the treatment of
hepatitis C.

  *Collaborative and Other Royalty Revenues

Vertex recognized $76.0 million in collaborative and other royalty revenues in
2012, compared to $439.4 million for 2011. The 2011 collaborative and other
royalty revenues included $318.5 million in collaborative milestone revenues,
including $250.0 million in collaborative milestone payments from Janssen
related to approval and commercialization of INCIVO in Europe and a $65.0
million milestone payment from Mitsubishi Tanabe related to approval and
commercialization of TELAVIC in Japan.

Cost of Product Revenues: Cost of product revenues was $236.7 million for
2012, including charges of $133.2 million to reserve against the potential for
excess INCIVEK inventory, compared to cost of product revenues of $63.6
million for 2011. The inventory charges reflect decreases in the anticipated
future demand for INCIVEK, including the potential role that INCIVEK may have
had in combination with VX-135 given plans to evaluate VX-135 in combination
with other direct-acting antiviral medicines.

Research and Development (R&D) Expenses: R&D expenses were $806.2 million in
2012, including $87.5 million of Vertex stock-based compensation expense and
Alios expenses related to the accounting for the collaboration with Vertex,
compared to $707.7 million for 2011, including $80.5 million of Vertex
stock-based compensation expense and Alios expenses related to the accounting
for the collaboration with Vertex. The increase in Vertex’s R&D investment is
principally due to progression and expansion of clinical development programs
in hepatitis C and cystic fibrosis, including preparation for a pivotal
program for a combination of VX-809 and ivacaftor.

Sales, general and administrative (SG&A) expenses: SG&A expenses were $436.8
million in 2012, including $46.4 million of Vertex stock-based compensation
expense and Alios expenses related to the accounting for the collaboration
with Vertex, compared to $400.7 million for 2011, including $46.6 million of
Vertex stock-based compensation expense and Alios expenses related to the
accounting for the collaboration with Vertex. This increase reflects the
expansion of the company’s global commercial organization to support the
launch of KALYDECO in North America and Europe.

GAAP Net Income (Loss) Attributable to Vertex: Vertex’s 2012 GAAP net loss was
$(107.0) million, or $(0.50) per share. Vertex’s 2012 GAAP net loss includes
certain charges totaling $362.6 million, including a charge in cost of product
revenues to reserve against the potential for excess INCIVEK inventory, Vertex
stock-based compensation expense, restructuring expense and a charge related
to an increase in the fair value of expected future payments under Vertex's
collaboration with Alios. Vertex’s GAAP net income for 2011 was $29.6 million,
or $0.14 per diluted share, including $(13.5) million in certain items.

Non-GAAP Net Income Attributable to Vertex: Vertex’s 2012 non-GAAP net income
was $255.5 million, or $1.18 per diluted share, excluding certain charges of
$362.6 million. Vertex’s non-GAAP net income in 2011 was $16.1 million, or
$0.08 per diluted share, excluding $(13.5) million in certain items. The
increased 2012 non-GAAP net income compared to 2011 was principally the result
of increased INCIVEK and KALYDECO net product revenues and INCIVO royalties.

Cash Position: As of December 31, 2012, Vertex had $1.32 billion in cash, cash
equivalents and marketable securities compared to $968.9 million in cash, cash
equivalents and marketable securities on December 31, 2011.

Convertible Debt: As of December 31, 2012, Vertex had $400.0 million in
convertible debt due in October 2015. The conversion price of the debt is
$48.83 per share and is callable in October 2013.

Fourth Quarter 2012 Financial Results

Total Revenues: Total  revenues were $334.0 million for the fourth quarter of
2012, compared with $563.3 million for the fourth quarter of 2011, which
included a one-time milestone payment of $65.0 million from Mitsubishi Tanabe
related to the approval and commercialization of TELAVIC in Japan. The
components of total revenues for the fourth quarter of 2012 and 2011 were:

                                                         
                                            2012          2011
Revenues                                     (in millions)
INCIVEK revenues, net                        $222.8        $456.8
KALYDECO revenues, net                       58.5          —
Total product revenues, net                  281.3         456.8
Royalty revenues from INCIVO                 36.8          16.5
Collaborative and other royalty              15.9          90.1
revenues
Total revenues                               $334.0        $563.3
                                                          

  *Net Product Revenues from INCIVEK

Net product revenues from INCIVEK were $222.8 million for the fourth quarter
of 2012, compared with $456.8 million for the fourth quarter of 2011. The
change in revenue is primarily due to a decrease in the number of people with
hepatitis C who are choosing to start treatment for hepatitis C with currently
available medicines.

  *Net Product Revenues from KALYDECO

Net product revenues from KALYDECO were $58.5 million for the fourth quarter
of 2012. KALYDECO was approved in the U.S. in January 2012.

  *Royalty Revenues from INCIVO

Vertex recognized $36.8 million in INCIVO royalty revenues from our
collaborator Janssen in the fourth quarter of 2012, compared to $16.5 million
in INCIVO royalty revenues from our collaborator Janssen for the fourth
quarter of 2011. INCIVO was approved in Europe in September 2011.

  *Collaborative and Other Royalty Revenues

Vertex recognized $15.9 million in collaborative and other royalty revenues
for the fourth quarter of 2012, compared to $90.1 million for the fourth
quarter of 2011, which included a one-time milestone payment of $65.0 million
from Mitsubishi Tanabe.

Cost of Product Revenues: Cost of product revenues was $75.6 million in the
fourth quarter of 2012, including a $55.2 million charge to reserve against
the potential for excess INCIVEK inventory, compared to $22.9 million for the
fourth quarter of 2011. The inventory charge reflects a decrease in the
anticipated potential role that INCIVEK may have had in combination with
VX-135 given plans to evaluate VX-135 in combination with other direct-acting
antiviral medicines.

Research and Development (R&D) Expenses: R&D expenses were $213.1 million in
the fourth quarter of 2012, including $21.8 million of Vertex stock-based
compensation expense and Alios expenses related to the accounting for the
collaboration with Vertex, compared to $186.4 million for the fourth quarter
of 2011, including $20.1 million of Vertex stock-based compensation expense
and Alios expenses related to the accounting for the collaboration with
Vertex. The increase in our R&D investment during the fourth quarter of 2012
is primarily due to the progression and expansion of clinical development
programs in hepatitis C and cystic fibrosis, including preparation for a
pivotal program for a combination of VX-809 and ivacaftor.

Sales, general and administrative (SG&A) expenses: SG&A expenses were $110.5
million in the fourth quarter of 2012, including $11.4 million of Vertex
stock-based compensation expense and Alios expenses related to the accounting
for the collaboration with Vertex, compared to $121.9 million for the fourth
quarter of 2011, including $12.3 million of Vertex stock-based compensation
expense and Alios expenses related to the accounting for the collaboration
with Vertex.

GAAP Net Income (Loss) Attributable to Vertex: Vertex’s fourth quarter 2012
GAAP net loss was $(76.1) million, or $(0.35) per share. Vertex’s fourth
quarter 2012 GAAP net loss includes certain charges totaling $85.1 million,
including a charge in cost of product revenues to reserve against the
potential for excess INCIVEK inventory, Vertex stock-based compensation
expense, restructuring expense and a charge related to an increase in the fair
value of expected future payments under Vertex's collaboration with Alios. The
company’s fourth quarter 2011 GAAP net income was $158.6 million, or $0.74 per
diluted share, including $26.6 million in certain items.

Non-GAAP Net Income Attributable to Vertex: Vertex’s fourth quarter 2012
non-GAAP net income was $9.0 million, or $0.04 per diluted share, excluding
certain charges of $85.1 million, compared to fourth quarter 2011 non-GAAP net
income of $185.2 million, or $0.86 per diluted share, excluding $26.6 million
in certain items. The decrease in the company’s fourth quarter 2012 non-GAAP
net income compared to the fourth quarter of 2011 is primarily attributable to
a decrease in INCIVEK revenues due to fewer HCV patients initiating treatment.

2013 Financial Guidance

This section contains forward-looking guidance about the financial outlook for
Vertex Pharmaceuticals.

Total Revenues: Vertex expects full-year 2013 total revenues to be in the
range of $1.10 billion to $1.25 billion, including full-year 2013 KALYDECO net
revenues of $280 million to $320 million. The growth of 2013 KALYDECO
revenues, compared to full-year 2012 revenues of $172 million, is primarily
dependent on completion of reimbursement discussions in countries outside the
U.S.

Total Operating Expenses (non-GAAP): Vertex expects total operating expenses,
excluding cost of revenues, stock-based compensation expense and Alios
expenses related to the accounting for the collaboration with Vertex, to be in
the range of $1.09 billion to $1.15 billion for 2013. The principal non-GAAP
operating expenses are:

  *R&D Expenses:Vertex expects that full-year 2013 R&D expenses will be in
    the range of$750 million to $790 million. The principal R&D expenses
    relate to investment in broad development activities for our late-stage CF
    and hepatitis C programs, including formulation and commercial supply
    chain investment, completion of Phase 2 evaluation of VX-509 in RA and
    investment in research programs aimed at the creation of future medicines.
    Vertex’s 2013 R&D investment is expected to increase over the company’s
    2012 R&D investment of $718.7 million, primarily related to expenses for
    increased development and pre-launch supply chain activities to support
    medicines in late-stage development. The research component of 2013 R&D
    expenses is expected to remain consistent with 2012 at approximately $200
    million.
  *SG&A Expenses:Vertex expects that full-year 2013 SG&A expenses will be in
    the range of$340 million to $360 million. The 2013 SG&A expenses are
    primarily driven by corporate infrastructure and activities related to
    global launches and commercial support for KALYDECO in cystic fibrosis and
    continued sales and marketing support for INCIVEK in hepatitis C. Vertex’s
    guidance for 2013 SG&A expenses is less than the company’s 2012 SG&A
    expenses of $390.4 million.

Non-GAAP Financial Measures

In this press release, Vertex's financial results and financial guidance are
provided both in accordance with accounting principles generally accepted in
the United States (GAAP) and using certain non-GAAP financial measures. In
particular, Vertex provides its fourth quarter and full-year 2012 and 2011 net
income (loss) excluding stock-based compensation expense, restructuring
expense, inventory write-offs, revenues and expenses related to certain
September 2009 financial transactions, intangible asset impairment charges,
net of tax, a commercial milestone payment, and charges related to changes in
the fair value of expected future payments under Vertex’s collaboration with
Alios. These results are provided as a complement to results provided in
accordance with GAAP because management believes these non-GAAP financial
measures help indicate underlying trends in the company's business, are
important in comparing current results with prior period results and provide
additional information regarding its financial position. Management also uses
these non-GAAP financial measures to establish budgets and operational goals
that are communicated internally and externally, and to manage the company's
business and to evaluate its performance. A reconciliation of the GAAP
financial results to non-GAAP financial results is included in the attached
financial statements.

                                                
Vertex Pharmaceuticals Incorporated
Fourth Quarter and Twelve Months Results
Condensed Consolidated Statements of Operations Data
(in thousands, except per share amounts)
(unaudited)
                                                      
                           Three Months Ended         Twelve Months Ended
                           December 31,               December 31,
                           2012        2011         2012         2011
Revenues:
Product revenues,          $281,309      $456,759     $1,333,458     $950,889
net
Royalty revenues           43,451        25,405       141,498        50,015
Collaborative              9,234         81,176       52,086         409,722
revenues (Note 2)
Total revenues             333,994       563,340      1,527,042      1,410,626
                                                                     
Costs and expenses:
Cost of product            75,595        22,936       236,742        63,625
revenues (Note 3)
Royalty expenses           12,120        7,191        43,143         16,880
Research and
development expenses       213,109       186,438      806,185        707,706
(R&D)
Sales, general and
administrative             110,452       121,881      436,796        400,721
expenses (SG&A)
Restructuring              194           992          1,844          2,074
expense
Intangible asset
impairment charge          —             —            —              105,800
(Note 4)
                                                                     
Total costs and            411,470       339,438      1,524,710      1,296,806
expenses
                                                                     
Income (loss) from         (77,476)      223,902      2,332          113,820
operations
                                                                     
Net interest expense       (3,296)       (12,233)     (14,713)       (36,574)
(Note 2)
Change in fair value
of derivative              —             (868)        —              (16,801)
instruments (Note 2)
Income (loss) before
provision for              (80,772)      210,801      (12,381)       60,445
(benefit from)
income taxes
Provision for
(benefit from)             (2,696)       22,660       38,754         19,266
income taxes (Note
4)
Net income (loss)          (78,076)      188,141      (51,135)       41,179
Net loss (income)
attributable to            1,928         (29,512)     (55,897)       (11,605)
noncontrolling
interest (Note 1)
Net income (loss)
attributable to            $(76,148)     $158,629     $(107,032)     $29,574
Vertex
                                                                     
Net income (loss)
per share
attributable to
Vertex common
shareholders:
Basic                      $(0.35)       $0.76        $(0.50)        $0.14
Diluted                    $(0.35)       $0.74        $(0.50)        $0.14
                                                                     
Shares used in per
share calculations:
Basic                      214,607       206,758      211,946        204,891
Diluted                    214,607       217,602      211,946        208,807
                                                                     

                                                                                                                     
Reconciliation of GAAP to Non-GAAP Financial Information-Fourth Quarter
(in thousands, except per share amounts)
(unaudited)
Three Months
Ended December
31, 2012                                                              Adjustments
                                                                                                  
                                                                                                  Intangible
                                                                      September                   Asset
                                           Stock-based                2009           Mitsubishi   Impairment
                             Alios         Compensation   Inventory   Financial      Tanabe       Charge,      Restructuring   Non-
                 GAAP        Transaction   Expense        Write-off   Transactions   Milestone    Net of Tax   Expense         GAAP
Income (loss)
from             $(77,476)   $5,706        $27,524        $55,189     $—             $—           $—           $194            $11,137
operations
Other income     (3,296)     (243)         —              —           —              —            —            —               (3,539)
and expenses
Income (loss)                              
before                      
provision for                                            55,189      —              —            —            194             7,598
(benefit from)   (80,772)    5,463
income taxes                               27,524
Provision for
(benefit from)   (2,696)     1,325         —              —           —              —            —            —               (1,371)
income taxes
Net income       (78,076)    4,138         27,524         55,189      —              —            —            194             8,969
(loss)
Net loss
(income)
attributable                                                                                                           
to
noncontrolling   1,928       (1,928)       —              —           —              —            —            —               —
interest
(Alios)
Net income
(loss)           $(76,148)   $2,210        $27,524        $55,189     $—             $—           $—           $194            $8,969
attributable
to Vertex
Net income
(loss) per
diluted share
attributable     $(0.35)                                                                                                       $0.04
to Vertex
common
shareholders
(Note 5)
                                                                                                                               

               
Three Months
Ended December
31, 2011         Adjustments
                 
                                                                                                                     
                                                                                                 Intangible
                                                                     September                   Asset
                                          Stock-based                2009           Mitsubishi   Impairment
                            Alios         Compensation   Inventory   Financial      Tanabe       Charge,      Restructuring   Non-
                 GAAP       Transaction   Expense        Write-off   Transactions   Milestone    Net of Tax   Expense         GAAP
Income (loss)
from             $223,902   $3,119        $29,278        $—          $—             $(65,000)    $—           $992            $192,291
operations
Other income     (13,101)   358           —              —           8,798          —            —            —               (3,945)
and expenses
Income (loss)
before
provision for    210,801    3,477         29,278         —           8,798          (65,000)     —            992             188,346
(benefit from)
income taxes
Provision for
(benefit from)   22,660     (19,511)      —              —           —              —            —            —               3,149
income taxes
Net income       188,141    22,988        29,278         —           8,798          (65,000)     —            992             185,197
(loss)
Net loss
(income)
attributable                                                                                                          
to
noncontrolling   (29,512)   29,512        —              —           —              —            —            —               —
interest
(Alios)
Net income
(loss)           $158,629   $52,500       $29,278        $—          $8,798         $(65,000)    $—           $992            $185,197
attributable
to Vertex
Net income
(loss) per
diluted share
attributable     $0.74                                                                                                        $0.86
to Vertex
common
shareholders
(Note 5)
                                                                                                                              

                                                                                                                     
Reconciliation of GAAP to Non-GAAP Financial Information-Twelve Months
(in thousands, except per share amounts)
(unaudited)
Twelve Months
Ended December
31, 2012                                                               Adjustments   
                                                          
                                                                                                  Intangible
                                                                       September                  Asset
                                            Stock-based                2009          Mitsubishi   Impairment
                              Alios         Compensation   Inventory   Financial     Tanabe       Charge,      Restructuring   Non-
                 GAAP         Transaction   Expense        Write-Off   Transaction   Milestone    Net of Tax   Expense         GAAP
                                                                                    
                                                                       
                                                                                                                        
                                                                       
                                                                                    
Income (loss)
from             $2,332       $20,062       $113,804       $133,189    $—            $—           $—           $1,844          $271,231
operations
Other income     (14,713)     (18)          —              —           —             —            —            —               (14,731)
and expenses
Income (loss)                                                                                                          
before
provision for                                                                                                          
(benefit from)
income taxes     (12,381)     20,044        113,804        133,189     —             —            —            1,844           256,500
Provision for
(benefit from)   38,754       (39,029)      —              1,239       —             —            —            —               964
income taxes
Net income       (51,135)     59,073        113,804        131,950     —             —            —            1,844           255,536
(loss)
Net loss
(income)
attributable                                                                                                           
to
noncontrolling   (55,897)     55,897        —              —           —             —            —            —               —
interest
(Alios)
Net income
(loss)           $(107,032)   $114,970      $113,804       $131,950    $—            $—           $—           $1,844          $255,536
attributable
to Vertex
Net income
(loss) per
diluted share
attributable     $(0.50)                                                                                                       $1.18
to Vertex
common
shareholders
(Note 5)

                                                                                                                   
Twelve Months
Ended December
31, 2011                                                            Adjustments
                                                                                                                              
                                                                                                Intangible
                                                                     September                   Asset
                                          Stock-based                2009           Mitsubishi   Impairment
                            Alios         Compensation   Inventory   Financial      Tanabe       Charge,      Restructuring   Non-
                GAAP       Transaction   Expense        Write-off   Transactions   Milestone    Net of Tax   Expense         GAAP
                                                         
                                                                                                                       
                                                         
Income (loss)
from             $113,820   $9,178        $117,922       $—          $(250,000)     $(65,000)    $105,800     $2,074          $33,794
operations
Other income     (53,375)   358           —              —           38,488         —            —            —               (14,529)
and expenses
Income (loss)                                                                                                         
before
provision for                                                                                                         
(benefit from)
income taxes     60,445     9,536         117,922        —           (211,512)      (65,000)     105,800      2,074           19,265
Provision for
(benefit from)   19,266     (48,809)      —              —           —              —            32,692       —               3,149
income taxes
Net income       41,179     58,345        117,922        —           (211,512)      (65,000)     73,108       2,074           16,116
(loss)
Net loss
(income)
attributable                                                                                                          
to
noncontrolling   (11,605)   11,605        —              —           —              —            —            —               —
interest
(Alios)
Net income
(loss)           $29,574    $69,950       $117,922       $—          $(211,512)     $(65,000)    $73,108      $2,074          $16,116
attributable
to Vertex
Net income
(loss) per
diluted share
attributable     $0.14                                                                                                        $0.08
to Vertex
common
shareholders
(Note 5)

                                                         
Condensed Consolidated Balance Sheets Data
(in thousands)
(unaudited)
                                                                  
                                             December 31,         December 31,

                                             2012                 2011
                                                                  
Assets                                       
Cash, cash equivalents and                   $1,321,215           $968,922
marketable securities
Restricted cash and cash equivalents         69,983               51,878
(Alios) (Note 1)
Accounts receivable, net                     143,250              183,135
Inventories (Note 3)                         30,464               112,430
Other current assets                         24,673               14,889
Property and equipment, net                  433,609              133,176
Restricted cash                              31,934               34,090
Intangible assets (Note 4)                   663,500              663,500
Goodwill (Note 4)                            30,992               30,992
Other non-current assets                     9,668                11,268
Total assets                                 $2,759,288           $2,204,280
                                                                  
                                                                  
Liabilities and Shareholders’ Equity
                                                                  
Other liabilities                            $424,772             $349,666
Accrued restructuring expense                23,328               26,313
Deferred tax liability (Note 4)              280,367              243,707
Deferred revenues                            123,808              163,132
Construction financing lease                 272,631              55,950
obligation
Convertible notes (due 2015)                 400,000              400,000
Noncontrolling interest (Alios)              235,202              178,669
(Note 1)
Shareholders’ equity (Vertex)                999,180              786,843
Total liabilities and shareholders’          $2,759,288           $2,204,280
equity
Common shares outstanding                    217,287              209,304

Note 1: The company has consolidated the financial statements of its
collaborator Alios BioPharma,Inc., as of December 31, 2012 and December31,
2011, for three and twelve months ended December 31, 2012, and for the period
from June 13, 2011 through December 31, 2011. The company’s interest and
obligations with respect to Alios’ assets and liabilities are limited to those
accorded to the company in its collaboration agreement with Alios. Restricted
cash and cash equivalents (Alios) reflects Alios’ cash and cash equivalents,
which Vertex does not have any interest in and which will not be used to fund
the collaboration. Each reporting period Vertex estimates the fair value of
the contingent milestone payments and royalties payable by Vertex to Alios.
Any increase in the fair value of these contingent milestone and royalty
payments results in a decrease in net income attributable to Vertex (or an
increase in net loss attributable to Vertex) on a dollar-for-dollar basis.

Note 2: In 2011, a portion of the collaborative revenues, the change in fair
value of derivative instruments and a portion of the net interest expense
reflected in the Condensed Consolidated Statements of Operations Data relate
to two financial transactions that the company entered into in September2009
relating to milestone payments under the company’s collaboration agreement
with Janssen Pharmaceutica, N.V. In 2011, the company earned $250.0 million in
milestone payments from its collaborator, Janssen, which are reflected in
total collaborative revenues in the Condensed Consolidated Statements of
Operations Data.

Note 3: In the three and twelve months ended December 31, 2012, the company
recorded within cost of product revenues a $55.2million and $133.2million,
respectively, lower of cost or market charge for excess and obsolete INCIVEK
inventories. The inventory charges reflect decreases in the anticipated future
demand for INCIVEK, including the potential role that INCIVEK may have had in
combination with VX-135 given plans to evaluate VX-135 in combination with
other direct-acting antiviral medicines.

Note 4: The intangible assets, the goodwill and the deferred tax liability
reflected in the Condensed Consolidated Balance Sheets Data relate to the
company’s acquisition of ViroChem Pharma Inc. in 2009 and the company’s
collaboration agreement with Alios in June2011.

In the third quarter of 2011, the company recorded an impairment charge of
$105.8 million related to VX-759, a back-up HCV polymerase inhibitor to VX-222
that had been discovered by ViroChem Pharma Inc. The fair value of VX-759
following the impairment charge was zero. In connection with this impairment
charge, the company recorded a benefit from income taxes of $32.7 million
resulting in a net effect on its income (loss) related to this impairment
charge of $73.1 million in 2011.

Note 5: Shares used in non-GAAP net income (loss) per diluted share
attributable to Vertex common shareholders were 217,291,000 and 217,602,000
for the three months ended December 31, 2012 and 2011, respectively, and
215,263,000 and 208,807,000 for the twelve months ended December 31, 2012 and
2011, respectively.

About Vertex

Vertex creates new possibilities in medicine. Our team discovers, develops and
commercializes innovative therapies so people with serious diseases can lead
better lives.

Vertex scientists and our collaborators are working on new medicines to cure
or significantly advance the treatment of hepatitis C, cystic fibrosis,
rheumatoid arthritis and other life-threatening diseases.

Founded more than 20 years ago in Cambridge, Mass., we now have ongoing
worldwide research programs and sites in the U.S., U.K. and Canada. Today,
Vertex has more than 2,000 employees around the world, and for three years in
a row, Science magazine has named Vertex one of its Top Employers in the life
sciences.

Vertex's press releases are available at www.vrtx.com.

Indication and Important Safety Information for KALYDECO (ivacaftor)

Ivacaftor (150mg tablets) is indicated for the treatment of cystic fibrosis
(CF) in patients age 6 years and older who have a G551D mutation in the CFTR
gene.

Ivacaftor is not for use in people with CF due to other mutations in
theCFTRgene. It is not effective in CF patients with two copies of the
F508del mutation (F508del/F508del) in theCFTRgene. The efficacy and safety
of ivacaftor in children younger than 6 years of age have not been evaluated.

High liver enzymes (transaminases, ALT and AST) have been reported in patients
receiving ivacaftor. It is recommended that ALT and AST be assessed prior to
initiating ivacaftor, every 3 months during the first year of treatment, and
annually thereafter. Patients who develop increased transaminase levels should
be closely monitored until the abnormalities resolve. Dosing should be
interrupted in patients with ALT or AST of greater than 5 times the upper
limit of normal. Following resolution of transaminase elevations, consider the
benefits and risks of resuming ivacaftor dosing. Moderate transaminase
elevations are common in subjects with CF. Overall, the incidence and clinical
features of transaminase elevations in clinical trials was similar between
subjects in the ivacaftor and placebo treatment groups. In the subset of
patients with a medical history of elevated transaminases, increased ALT or
AST have been reported more frequently in patients receiving ivacaftor
compared to placebo.

Use of ivacaftor with medicines that are strong CYP3A inducers such as the
antibiotics rifampin and rifabutin; seizure medications (phenobarbital,
carbamazepine, or phenytoin); and the herbal supplement St. John's Wort
substantially decreases exposure of ivacaftor, which may diminish
effectiveness. Therefore, co-administration is not recommended.

The dose of ivacaftor must be adjusted when concomitantly used with potent and
moderate CYP3A inhibitors. The dose of ivacaftor must be adjusted when used in
patients with moderate or severe hepatic disease.

Ivacaftor can cause serious adverse reactions including abdominal pain and
high liver enzymes in the blood. The most common side effects associated with
ivacaftor include headache; upper respiratory tract infection (the common
cold), including sore throat, nasal or sinus congestion, and runny nose;
stomach (abdominal) pain; diarrhea; rash; and dizziness. These are not all the
possible side effects of ivacaftor. A list of the adverse reactions can be
found in the full product labeling for each country where ivacaftor is
approved. Patients should tell their healthcare providers about any side
effect that bothers them or doesn't go away.

Please see full U.S. Prescribing Information for KALYDECO atwww.KALYDECO.com,
the EU Summary of Product Characteristics for KALYDECO at http://goo.gl/N3Tz4,
and the KALYDECO Canadian Product Monograph at www.vrtx.ca.

Indication and Important Safety Information for INCIVEK (telaprevir)

INCIVEK® (telaprevir) is a prescription medicine used with the medicines
peginterferon alfa and ribavirin to treat chronic (lasting a long time)
hepatitis C genotype 1 infection in adults with stable liver problems, who
have not been treated before or who have failed previous treatment. It is not
known if INCIVEK is safe and effective in children under 18 years of age.

Important Safety Information

INCIVEK® (telaprevir) should always be used in combination with peginterferon
alfa and ribavirin. INCIVEK combination treatment may cause serious side
effects including skin rash and serious skin reactions, anemia (low red blood
cell count) that can be severe, and birth defects or death of an unborn baby.

Skin rashes are common with INCIVEK combination treatment. Sometimes these
skin rashes and other skin reactions can become serious, require treatment in
a hospital, and may lead to death. Patients should call their healthcare
provider right away if they develop any skin changes during treatment with
INCIVEK. Their healthcare provider will decide if they need treatment or if
they need to stop INCIVEK or any of their other medicines. Patients should not
stop taking INCIVEK combination treatment without talking with their
healthcare provider first.

Patients' healthcare providers will do blood tests regularly to check for
anemia. If anemia is severe, the healthcare providers may tell them to stop
taking INCIVEK.

INCIVEK combined with peginterferon alfa and ribavirin may cause birth defects
or death of an unborn baby. Therefore, a patient should not take INCIVEK
combination treatment if she is pregnant or may become pregnant, or if he is a
man with a sexual partner who is pregnant. Females who can become pregnant and
females whose male partner takes these medicines must have a negative
pregnancy test before starting treatment, every month during treatment, and
for 6 months after treatment ends. Patients must use two forms of effective
birth control during treatment and for 6 months after all treatment has ended.
These two forms of birth control should not contain hormones, as these may not
work during treatment with INCIVEK.

INCIVEK and other medicines can affect each other and can also cause side
effects that can be serious or life-threatening. There are certain medicines
patients cannot take with INCIVEK combination treatment. Patients should tell
their healthcare providers about all the medicines they take, including
prescription and non-prescription medicines, vitamins and herbal supplements.

The most common side effects of INCIVEK combination treatment include itching,
nausea, diarrhea, vomiting, anal or rectal problems (including hemorrhoids,
discomfort, burning or itching around or near the anus), taste changes and
tiredness. There are other possible side effects of INCIVEK, and side effects
associated with peginterferon alfa and ribavirin also apply to INCIVEK
combination treatment. Patients should tell their healthcare provider about
any side effect that bothers them or doesn't go away.

Please see full Prescribing Information including Boxed Warning, and the
Medication Guide for INCIVEK available at www.INCIVEK.com.

Special Note Regarding Forward-looking Statements

This press release contains forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995, including, without
limitation, Dr. Leiden's statements in the fourth paragraph of the press
release, the information provided in the section captioned "2013 Financial
Guidance" and statements regarding (i) the focus of Vertex’s 2013 investments;
(ii) the expectation that Vertex will begin pivotal development of VX-809 and
ivacaftor in the first quarter of 2013; and (iii) information regarding the
company's ongoing and planned studies. While Vertex believes the
forward-looking statements contained in this press release are accurate, there
are a number of factors that could cause actual events or results to differ
materially from those indicated by such forward-looking statements. Those
risks and uncertainties include, among other things, that the company's
expectations regarding its 2013 total revenues and/or operating expenses may
be incorrect (including because one or more of the company's assumptions
underlying its revenue or expense expectations may not be realized), that the
outcomes of Vertex's ongoing and planned clinical studies may not be
favorable, that the initiation of planned studies may be delayed or prevented,
and other risks listed under Risk Factors in Vertex's annual report and
quarterly reports filed with the Securities and Exchange Commission and
available through the company's website at www.vrtx.com. Vertex disclaims any
obligation to update the information contained in this press release as new
information becomes available.

Conference Call Information

Vertex will host a conference call and webcast today, January 29, 2013 at 5:00
p.m. ET to review financial results and recent developments. The conference
call will be webcast live, and a link to the webcast may be accessed from the
‘Vertex Events' page of Vertex's website at www.vrtx.com.

To listen to the live call on the telephone, dial 1-866-501-1537 (United
States and Canada) or 1-720-545-0001 (International). To ensure a timely
connection, it is recommended that users register at least 15 minutes prior to
the scheduled webcast.

The conference ID number for the live call and replay is 89408068.

The call will be available for replay via telephone commencing January 29,
2013 at 8:00 p.m. ET running through 5:00 p.m. ET on February 5, 2013. The
replay phone number for the United States and Canada is 1-855-859-2056. The
international replay number is 1-404-537-3406.

Following the live webcast, an archived version will be available on Vertex's
website until 5:00 p.m. ET on February 5, 2013. Vertex is also providing a
podcast MP3 file available for download on the Vertex website at www.vrtx.com.

(VRTX-GEN)

Contact:

Vertex Pharmaceuticals Incorporated
Investors:
Michael Partridge, 617-341-6108
or
Kelly Lewis, 617-961-7530
or
Media:
Zachry Barber, 617-341-6470
 
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