Vertex Reports Third Quarter 2013 Financial Results and Provides Financial Outlook for 2014

  Vertex Reports Third Quarter 2013 Financial Results and Provides Financial
  Outlook for 2014

  -Third quarter 2013 total revenues of $222 million, including net product
 revenues of $101 million for KALYDECO in cystic fibrosis and $86 million for
                           INCIVEK in hepatitis C-

   -Cash, cash equivalents and marketable securities of approximately $1.42
                        billion on September30, 2013-

 -Company reduces workforce and focuses investment on future opportunities in
 cystic fibrosis and other research and early development programs, including
 all-oral regimens in hepatitis C; expected reduction of $150 million to $200
million in 2014 non-GAAP operating expenses compared to expected 2013 non-GAAP
              operating expenses of approximately $1.1 billion-

Business Wire

CAMBRIDGE, Mass. -- October 29, 2013

Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today reported consolidated
financial results for the quarter ended September30, 2013. Vertex reported
total third quarter 2013 revenues of $222 million, including net product
revenues of $101 million from KALYDECO^TM (ivacaftor) and $86 million from
INCIVEK^® (telaprevir). The GAAP net loss attributable to Vertex was $(124.1)
million, or $(0.54) per share, for the third quarter of 2013, including
certain charges of $49.7 million, comprised primarily of stock-based
compensation expense and restructuring charges. Non-GAAP net loss attributable
to Vertex for the third quarter of 2013 was $(74.4) million, or $(0.32) per
diluted share. The company reported $1.42 billion in cash, cash equivalents
and marketable securities as of September30, 2013. The company also today
provided updated financial guidance for 2013.

Vertex also announced that it would focus its investment on future
opportunities in cystic fibrosis (CF) and other research and early development
programs, including VX-135 as part of all-oral regimens for hepatitis C. The
company is reducing its workforce related to the support of INCIVEK following
the continued and rapid decline in the number of people being treated with
INCIVEK as other new medicines for hepatitis C near approval. These changes
are expected to generate a reduction in 2014 non-GAAP operating expenses of
approximately $150 million to $200 million compared to anticipated 2013
non-GAAP operating expenses of approximately $1.1 billion.

"Our business is at a unique point in its evolution. We have a tremendous
opportunity ahead of us to further transform the treatment of cystic fibrosis,
which continues to be the company's highest priority development program,"
commented Jeffrey Leiden, M.D., Ph.D., Chairman, President and Chief Executive
Officer of Vertex. "Following the continued decline in the number of people
starting treatment with INCIVEK, we today took the difficult step to reduce
our workforce supporting this medicine, enabling us to focus our investment on
key programs in cystic fibrosis and other diseases to position the company for
future growth."

Vertex continues to advance key development programs for the treatment of CF
and for all-oral regimens for hepatitis C and has multiple ongoing and planned
studies for these programs. The company today provided the following updates:

Cystic Fibrosis

Vertex is conducting multiple studies aimed at helping more people with CF and
enhancing the clinical benefit for these patients with our approved and
investigational medicines. The company recently provided a comprehensive
overview of its ongoing and planned studies in CF, including multiple ongoing
label-expansion studies for ivacaftor, ongoing and planned Phase 2 and Phase 3
combination studies of lumacaftor (VX-809) and ivacaftor, and VX-661 and
ivacaftor, and research efforts aimed at beginning clinical development of a
next-generation corrector. The company's two Phase 3 studies evaluating a
combination of ivacaftor and lumacaftor in people with CF who have two copies
of the F508del mutation are now fully enrolled. Data from these studies are
expected in mid-2014, and Vertex plans to submit a New Drug Application (NDA)
in the U.S. and a Marketing Authorization Application (MAA) in Europe in the
second half of 2014 for the combination of lumacaftor and ivacaftor. These and
other updates were made as part of a press release issued on October 17, 2013.

Hepatitis C

Vertex's strategy in hepatitis C is to develop new all-oral treatment regimens
of 12 weeks or less in duration with a goal of providing a high viral cure
rate and improved tolerability for multiple hepatitis C genotypes. Vertex is
conducting the following studies of VX-135, its nucleotide analogue hepatitis
C virus (HCV) polymerase inhibitor:

  *Study of VX-135 in Combination with Daclatasvir: Vertex and Bristol Myers
    Squibb Company (BMS) are conducting a Phase 2 study of VX-135 in
    combination with daclatasvir, an NS5A replication complex inhibitor being
    developed by BMS, in New Zealand. Safety and efficacy results from the
    first part of the study are expected to be available in early 2014 to
    inform future development plans for this combination.
  *VX-135 in Combination with Simeprevir: A drug-drug interaction study of
    VX-135 in combination with simeprevir in healthy volunteers is complete.
    Simeprevir (TMC435) is a once-daily investigational hepatitis C protease
    inhibitor being jointly developed by Janssen R&D Ireland and Medivir AB.
    Vertex and Janssen are currently discussing the design of additional
    studies of VX-135 in combination with simeprevir in patients with genotype
    1 hepatitis C.
  *Studies of VX-135 in Combination with Ribavirin:  Dosing of VX-135 in
    combination with ribavirin is complete in two Phase 2 studies. These
    studies were conducted to generate safety data for VX-135 in combination
    with ribavirin and were not intended to evaluate the combination of VX-135
    and ribavirin as a therapeutic regimen.

       *Vertex recently completed a 12-week Phase 2 study of VX-135 dosed at
         100 mg and 200 mg in combination with ribavirin being conducted in
         Europe. Ten patients with genotype 1 hepatitis C were enrolled in
         each dose group and all 20 patients completed 12 weeks of treatment.
         Both the 100 mg and 200 mg doses were well tolerated, no serious
         adverse events were reported and no liver or cardiac safety issues
         were identified. As previously reported, 70 percent and 80 percent of
         patients in the 100 mg and 200 mg dosing arms, respectively, had
         undetectable HCV RNA within four weeks of initiating treatment. SVR12
         rates were 10 percent and 50 percent for the 100 mg and 200 mg
         groups, respectively. These data will be presented as a poster at the
         64^th American Association for the Study of Liver Diseases Annual
         Meeting (AASLD), November 1-5, 2013 in Washington, D.C.
       *Dosing of 100 mg of VX-135 in combination with ribavirin as part of a
         12-week Phase 2 study in the United States is complete. Ten patients
         with genotype 1 hepatitis C were enrolled in this dose group, and all
         10 patients completed 12 weeks of treatment. The 100 mg dose was well
         tolerated, no serious adverse events were reported and no liver or
         cardiac safety issues were identified. All patients achieved
         undetectable HCV RNA during the 12-week dosing period, and 60 percent
         of patients had undetectable HCV RNA within four weeks of initiating
         treatment. The SVR4 rate was 10 percent.
       *Further evaluation of VX-135 in the U.S. is subject to resolution
         with the FDA regarding the partial clinical hold on VX-135. The
         company intends to provide further data to the FDA, including SVR
         data from ongoing studies of VX-135 dosed at 100 mg and 200 mg in
         combination with ribavirin and with daclatasvir, through the first
         quarter of 2014.

Autoimmune Diseases

Vertex's strategy in autoimmune diseases is to maximize the value of VX-509,
an investigational oral, selective Janus kinase 3 (JAK3) inhibitor, across
multiple autoimmune diseases globally. Vertex is actively pursuing
collaborative opportunities to support further global development of VX-509.
In a press release issued on October 18, 2013, Vertex announced 12-week
results from an ongoing Phase 2b study of VX-509 dosed once or twice daily in
people with active rheumatoid arthritis (RA) taking methotrexate. The study
met its primary endpoints of both the proportion of people who achieved at
least a 20 percent improvement in signs and symptoms of RA, as measured by the
ACR improvement criteria (ACR20), and the change from baseline in Disease
Activity Score for 28 joints (DAS28). These results were accepted for
presentation at the ACR annual meeting, being held October 25-30 in San Diego,
CA. The presentation of the results will take place today in the "ACR
Late-Breaking Abstract Oral Session" from 2:30 to 4:00 p.m. PT.

Workforce Reduction and Investment Focus on Future Opportunities in Cystic
Fibrosis and Other Key Research and Development Programs

As part of a reduction in Vertex's global workforce and the resulting
investment focus on future opportunities in cystic fibrosis and other
high-potential research and development programs, Vertex expects to incur
total restructuring charges of approximately $35 million to $45 million in
2013, including a restructuring charge of approximately $11 million in the
third quarter of 2013. Vertex anticipates a reduction in 2014 non-GAAP
operating expenses of approximately $150 million to $200 million compared to
anticipated 2013 non-GAAP operating expenses of approximately $1.1 billion.
The company is eliminating 370 positions, primarily related to the support of
INCIVEK, representing an approximately 15 percent reduction in the company’s
global workforce. Approximately 175 positions are being eliminated in
Massachusetts.

Third Quarter 2013 Financial Results

Total Revenues: Total revenues for the third quarter of 2013 were $221.7
million, compared with $336.0 million in total revenues for the third quarter
of 2012. The components of total revenues for the third quarter and first nine
months of 2013 and 2012 were:

                              Three Months Ended     Nine Months Ended
                               September 30,           September 30,
                               2013       2012        2013       2012
Product revenues, net          (in millions)           (in millions)
INCIVEK revenues, net          $ 85.6     $ 254.3     $ 447.0    $ 939.0
KALYDECO revenues, net         101.1     49.2       261.8     113.1
Total product revenues, net    186.7       303.5       708.8       1,052.1
Royalty revenues
Royalty revenues from INCIVO   21.0        20.0        104.3       80.8
Other royalty revenues         6.0       5.6        15.4      17.2
Total royalty revenues         27.0        25.6        119.7       98.0
Collaborative revenues         8.0       6.9        32.3      42.9
Total revenues                 $ 221.7   $ 336.0    $ 860.8   $ 1,193.0

A table of the components of total revenues on a quarterly basis since the
third quarter of 2012 is provided following the Condensed Consolidated
Statements of Operations Data.

  *Net Product Revenues from INCIVEK

Vertex's third quarter 2013 net product revenues from INCIVEK were $85.6
million, compared to $254.3 million for the third quarter of 2012. The reduced
revenues from INCIVEK were due to fewer HCV patients initiating treatment in
the third quarter of 2013 compared to the third quarter of 2012 as well as a
reduction in channel inventory and a reduced realized price due to changes in
the payer mix. Vertex expects a continued decline in INCIVEK revenues as
people with hepatitis C await new treatment options.

  *Net Product Revenues from KALYDECO

Vertex's third quarter 2013 net product revenues from KALYDECO were $101.1
million, compared to $49.2 million for the third quarter of 2012. The
increased revenues, compared to the third quarter of 2012, resulted primarily
from the rapid uptake of KALYDECO in eligible patients in Europe following the
conclusion of reimbursement discussions. Nearly all eligible patients with the
G551D mutation in the United States and Europe have started treatment with
KALYDECO. In 2014, further growth in KALYDECO revenues is dependent on
completion of reimbursement discussions in Australia and Canada for eligible
patients with the G551D mutation and on the potential approval of ivacaftor
for use in people with non-G551D gating mutations, as well as in people with
CF who have the R117H mutation.

  *Royalty Revenues from INCIVO^®

Vertex recognized $21.0 million in INCIVO royalty revenues for the third
quarter of 2013 from our collaborator Janssen, compared to $20.0 million in
INCIVO royalty revenues for the third quarter of 2012.

Cost of Product Revenues: Cost of product revenues was $20.0 million for the
third quarter of 2013, compared to cost of product revenues of $30.7 million
for the third quarter of 2012.

Research and Development (R&D) Expenses: R&D expenses were $228.6 million for
the third quarter of 2013, including $26.9 million of Vertex stock-based
compensation expense and Alios expenses related to the accounting for the
collaboration with Vertex, compared to $200.2 million for the third quarter of
2012, including $21.3 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 cystic fibrosis and development
of all-oral hepatitis C treatment regimens, including initiation of a pivotal
program for a combination of lumacaftor and ivacaftor.

Sales, General and Administrative (SG&A) Expenses: SG&A expenses were $87.8
million for the third quarter of 2013, including $13.4 million of Vertex
stock-based compensation expense and Alios expenses related to the accounting
for the collaboration with Vertex, compared to $97.7 million for the third
quarter of 2012, including $10.9 million of Vertex stock-based compensation
expense and Alios expenses related to the accounting for the collaboration
with Vertex. This decrease in SG&A expenses resulted primarily from reduced
HCV marketing and commercial expenses, partially offset by increased
investment to support the expanded global use of KALYDECO.

GAAP Net Loss Attributable to Vertex: Vertex's third quarter 2013 GAAP net
loss was $(124.1) million, or $(0.54) per share, including certain charges of
$49.7 million, comprised primarily of stock-based compensation expense and a
restructuring charge. Vertex's GAAP net loss for the third quarter of 2012 was
$(57.5) million, or $(0.27) per diluted share, including $85.7 million in
certain charges.

Non-GAAP Net Income (Loss) Attributable to Vertex: Vertex's third quarter 2013
non-GAAP net loss was $(74.4) million, or $(0.32) per diluted share. Vertex's
non-GAAP net income for the third quarter of 2012 was $28.2 million, or $0.13
per diluted share. The decrease in the company's third quarter 2013 non-GAAP
net income (loss), compared to the third quarter of 2012, is primarily
attributable to a decrease in total revenues, specifically decreased INCIVEK
revenues due to fewer HCV patients initiating treatment. Total non-GAAP
operating expenses for the third quarter of 2013 were consistent with the
third quarter of 2012.

Cash Position: As of September30, 2013, Vertex had $1.42 billion in cash,
cash equivalents and marketable securities compared to $1.32 billion in cash,
cash equivalents and marketable securities as of December31, 2012.

2013 Financial Guidance

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

Vertex today updated its financial guidance for 2013 total net revenues and
2013 KALYDECO net revenues. The company now expects lower 2013 total net
revenues in the range of $1.0 billion to $1.05 billion. The company also now
expects higher total 2013 KALYDECO net revenues in the range of $360 million
to $365 million.

The company also today updated its financial guidance for total 2013 non-GAAP
operating expenses, excluding cost of revenues, stock-based compensation
expense, restructuring charges, intangible asset impairment charges, certain
interest expenses related to the 2015 Notes, transition costs related to the
relocation of our corporate headquarters and Alios expenses related to the
accounting for the collaboration with Vertex. Vertex now expects total 2013
non-GAAP operating expenses of approximately $1.1 billion, which is within the
range provided previously for total 2013 non-GAAP operating expenses.

Vertex expects to end 2013 with a cash position of approximately $1.3 billion.
Based on the reduction in global workforce and the resulting investment focus
announced today in a separate press release, the company anticipates a
reduction in 2014 non-GAAP operating expenses of approximately $150 million to
$200 million compared to anticipated 2013 non-GAAP operating expenses of
approximately $1.1 billion.

Non-GAAP Financial Measures

In this press release, Vertex's financial results and financial guidance are
provided in accordance with accounting principles generally accepted in the
United States (GAAP) and using certain non-GAAP financial measures. In
particular, Vertex provides its non-GAAP net income (loss) for the periods
ending September 30, 2013 and 2012 excluding stock-based compensation expense,
restructuring expense, inventory reserves, intangible asset impairment
charges, net of tax, certain interest expenses related to the 2015 Notes 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
Third Quarter and Nine Month Results
Condensed Consolidated Statements of Operations Data
(in thousands, except per share amounts)
(unaudited)
                                               
                     Three Months Ended           Nine Months Ended
                     September 30,                September 30,
                     2013          2012          2013          2012
Revenues:                                                     
Product revenues,    $ 186,653      $ 303,501     $ 708,823      $ 1,052,149
net
Royalty revenues     27,012         25,586        119,705        98,047
Collaborative        8,035         6,919        32,290        42,852      
revenues
Total revenues       221,700        336,006       860,818        1,193,048
Costs and
expenses:
Cost of product      20,048         30,680        75,698         161,147
revenues (Note 1)
Royalty expenses     7,291          7,856         32,315         31,023
Research and
development          228,567        200,161       669,117        593,076
expenses (R&D)
Sales, general and
administrative       87,804         97,684        287,204        326,344
expenses (SG&A)
Restructuring        12,048         696           12,863         1,650
expense (Note 2)
Intangible asset
impairment charge    —             —            412,900       —           
(Note 3)
Total costs and      355,758        337,077       1,490,097      1,113,240
expenses
Income (loss) from   (134,058   )   (1,071    )   (629,279   )   79,808
operations
Other income
(expense), net       4,652         (4,041    )   (6,578     )   (11,417     )
(Note 4)
Income (loss)
before provision     (129,406   )   (5,112    )   (635,857   )   68,391
for (benefit from)
income taxes
Provision for
(benefit from)       (751       )   21,355       (132,863   )   41,450      
income taxes (Note
3)
Net income (loss)    (128,655   )   (26,467   )   (502,994   )   26,941
Net loss (income)
attributable to      4,530         (31,076   )   13,688        (57,825     )
noncontrolling
interest (Note 5)
Net income (loss)
attributable to      $ (124,125 )   $ (57,543 )   $ (489,306 )   $ (30,884   )
Vertex
                                                                 
Net loss per share
attributable to
Vertex common
shareholders:
Basic                $ (0.54    )   $ (0.27   )   $ (2.20    )   $ (0.15     )
Diluted              $ (0.54    )   $ (0.27   )   $ (2.20    )   $ (0.15     )
                                                                 
Shares used in per
share
calculations:
Basic                230,505        213,767       222,764        211,053
Diluted              230,505        213,767       222,764        211,053

Consolidated Revenues
(in millions)
(unaudited)
               
               Three Months Ended
               September      June 30,    March 31,   December 31,   September
               30,           2013       2013       2012          30,
               2013                                                  2012
Product
revenues, net
INCIVEK        $  85.6        $ 155.8     $ 205.6     $  222.8       $  254.3
revenues, net
KALYDECO       101.1         99.0       61.8       58.5          49.2
revenues, net
Total product  186.7          254.8       267.4       281.3          303.5
revenues, net
Royalty
revenues
Royalty
revenues from  21.0           44.1        39.0        36.8           20.0
INCIVO
Other royalty  6.0           5.0        4.5        6.7           5.6
revenues
Total royalty  27.0           49.1        43.6        43.5           25.6
revenues
Collaborative  8.0           6.8        17.4       9.2           6.9
revenues
Total revenues $  221.7      $ 310.8    $ 328.4    $  334.0      $  336.0

Reconciliation of GAAP to Non-GAAP Financial Information-Third Quarter
(in thousands, except per share amounts)
                                                                       
Three Months
Ended
September 30,
2013
                                Adjustments
                                              Stock-based    Inventory
                 GAAP           Alios        Compensation  Write-off and   Non-GAAP
                                Transaction   Expense        Restructuring
                                                             Expenses
                                                                             
Income (loss)
from             $ (134,058 )   $  9,052      $  31,197      $  17,324       $ (76,485 )
operations
Other income     4,652         4           —            —             4,656     
(expense), net
Income (loss)
before
provision for    (129,406   )   9,056         31,197         17,324          (71,829   )
(benefit from)
income taxes
Provision for
(benefit from)   (751       )   3,306       —            —             2,555     
income taxes
Net income       (128,655   )   5,750         31,197         17,324          (74,384   )
(loss)
Net loss
(income)
attributable
to               4,530         (4,530    )  —            —              —         
noncontrolling
interest
(Alios)
Net income
(loss)           $ (124,125 )   $  1,220    $  31,197    $  17,324      $ (74,384 )
attributable
to Vertex
                                                                             
Net income
(loss) per
diluted share
attributable     $ (0.54    )                                                $ (0.32   )
to Vertex
common
shareholders
(Note 6)
                                                                             
                                                                             
Three Months
Ended
September 30,
2012
                                Adjustments
                                Alios         Stock-based    Restructuring
                 GAAP           Transaction  Compensation  Expenses        Non-GAAP
                                              Expense
                                                                             
Income (loss)
from             (1,071     )   4,624         27,484         696             31,733
operations
Other income     (4,041     )   466         —            —             (3,575    )
(expense), net
Income (loss)
before
provision for    (5,112     )   5,090         27,484         696             28,158
(benefit from)
income taxes
Provision for
(benefit from)   21,355        (21,394   )  —            —             (39       )
income taxes
Net income       (26,467    )   26,484        27,484         696             28,197
(loss)
Net loss
(income)
attributable
to               (31,076    )   31,076      —            —              —         
noncontrolling
interest
(Alios)
Net income
(loss)           (57,543    )   57,560      27,484       696            28,197    
attributable
to Vertex
                                                                             
Net income
(loss) per
diluted share
attributable     $ (0.27    )                                                $ 0.13
to Vertex
common
shareholders
(Note 6)

Reconciliation of GAAP to Non-GAAP Financial Information-Third Quarter
(in thousands)
(unaudited)

                                             Three Months Ended September 30,
                                              2013             2012
GAAP total costs and expenses                 $  355,758        $  337,077
Adjustments:
Cost of product revenues (Note 1) and         (27,339     )     (38,536     )
royalty expenses
Stock-based compensation expense              (31,197     )     (27,484     )
Alios transaction (Note 5)                    (9,052      )     (4,624      )
Restructuring expenses (Note 2)               (12,048     )    (696        )
Non-GAAP total costs and expenses             $  276,122        $  265,737
                                                                
GAAP research and development expenses        $  228,567        $  200,161
Adjustments:
Stock-based compensation expense              (19,137     )     (17,396     )
Alios transaction (Note 5)                    (7,725      )     (3,862      )
Non-GAAP research and development expenses    $  201,705        $  178,903
                                                                
GAAP sales, general, and administrative       $  87,804         $  97,684
expenses
Adjustments:
Stock-based compensation expense              (12,060     )     (10,088     )
Alios transaction (Note 5)                    (1,327      )     (762        )
Non-GAAP sales, general, and administrative   $  74,417         $  86,834
expenses

Reconciliation of GAAP to Non-GAAP Financial Information-Nine Month
(in thousands, except per share amounts)
(unaudited)
                                                                                     
Nine Months Ended September 30, 2013
                              Adjustments                                
                                                             Inventory
                                                             Write
                                Alios         Stock-based    -off,           Debt
                 GAAP           Transaction  Compensation  Intangible     Conversion   Non-GAAP
                                              Expense        Asset and       Costs
                                                             Restructuring
                                                             Charges
                                                                                          
Income (loss)
from             $ (629,279 )   $  21,348     $  103,613     $  436,121      $  —         $ (68,197 )
operations
Other income     (6,578     )   (171      )  —            —             3,908       (2,841    )
(expense), net
Income (loss)
before
provision for    (635,857   )   21,177        103,613        436,121         3,908        (71,038   )
(benefit from)
income taxes
Provision for
(benefit from)   (132,863   )   9,089       —            127,586       —           3,812     
income taxes
Net income       (502,994   )   12,088        103,613        308,535         3,908        (74,850   )
(loss)
Net loss
(income)
attributable
to               13,688        (13,688   )  —            —             —           —         
noncontrolling
interest
(Alios)
Net income
(loss)           $ (489,306 )   $  (1,600 )  $  103,613   $  308,535    $  3,908    $ (74,850 )
attributable
to Vertex
                                                                                          
Net income
(loss) per
diluted share
attributable     $ (2.20    )                                                             $ (0.34   )
to Vertex
common
shareholders
(Note 6)

Nine Months Ended September 30, 2012                                    
                             Adjustments                
                                             Stock-based    Inventory
                 GAAP          Alios        Compensation  Write-off and   Non-GAAP
                               Transaction   Expense        Restructuring
                                                            Charges
                                                                            
Income (loss)
from             $ 79,808      $ 14,356      $  86,280      $  79,650       $ 260,094
operations
Other income     (11,417   )   225         —            —              (11,192   )
(expense), net
Income (loss)
before
provision for    68,391        14,581        86,280         79,650          248,902
(benefit from)
income taxes
Provision for
(benefit from)   41,450       (40,354   )  —            1,239          2,335     
income taxes
Net income       26,941        54,935        86,280         78,411          246,567
(loss)
Net loss
(income)
attributable
to               (57,825   )   57,825      —            —              —         
noncontrolling
interest
(Alios)
Net income
(loss)           $ (30,884 )   $ 112,760   $  86,280    $  78,411      $ 246,567 
attributable
to Vertex
                                                                            
Net income
(loss) per
diluted share
attributable     $ (0.15   )                                                $ 1.15
to Vertex
common
shareholders
(Note 6)

Reconciliation of GAAP to Non-GAAP Financial Information-Nine Month
(in thousands)
(unaudited)
                                               
                                               Nine Months Ended September 30,
                                               2013             2012
GAAP total costs and expenses                  $  1,490,097      $ 1,113,240
Adjustments:
Cost of product revenues (Note 1) and royalty  (108,013      )   (192,170    )
expenses
Stock-based compensation expense               (103,613      )   (86,280     )
Alios transaction (Note 5)                     (21,348       )   (14,356     )
Intangible asset impairment charge (Note 3)    (425,763      )   (1,650      )
and restructuring expenses (Note 2)
Non-GAAP total costs and expenses              $  831,360        $ 818,784
                                                                 
GAAP research and development expenses         $  669,117        $ 593,076
Adjustments:
Stock-based compensation expense               (64,110       )   (54,223     )
Alios transaction (Note 5)                     (17,339       )   (11,480     )
Non-GAAP research and development expenses     $  587,668        $ 527,373
                                                                 
GAAP sales, general, and administrative        $  287,204        $ 326,344
expenses
Adjustments:
Stock-based compensation expense               (39,503       )   (32,057     )
Alios transaction (Note 5)                     (4,009        )   (2,876      )
Non-GAAP sales, general, and administrative    $  243,692        $ 291,411
expenses

Condensed Consolidated Balance Sheets Data
(in thousands)
(unaudited)
                                                           
                                        September 30, 2013   December 31, 2012
Assets
Cash, cash equivalents and marketable   $   1,422,650        $    1,321,215
securities
Restricted cash and cash equivalents    51,059               69,983
(Alios) (Note 5)
Accounts receivable, net                120,281              143,250
Inventories (Note 1)                    13,543               30,464
Other current assets                    41,105               24,673
Restricted cash                         127                  31,934
Property and equipment, net             648,924              433,609
Intangible assets (Note 3)              250,600              663,500
Goodwill                                30,992               30,992
Other non-current assets                3,474               9,668
Total assets                            $   2,582,755       $    2,759,288
                                                             
Liabilities and Shareholders' Equity
Other liabilities                       $   418,798          $    429,372
Accrued restructuring expense (Note 2)  26,138               23,328
Deferred tax liability (Note 3)         150,203              280,367
Deferred revenues                       108,361              123,808
Construction financing lease obligation 392,569              268,031
Convertible notes (due 2015) (Note 4)   —                    400,000
Noncontrolling interest (Alios) (Note   221,792              235,202
5)
Shareholders' equity (Vertex)           1,264,894           999,180
Total liabilities and shareholders'     $   2,582,755       $    2,759,288
equity
                                                             
Common shares outstanding               233,592              217,287

Note 1: In the three and nine months ended September30, 2013, the company
recorded within cost of product revenues reserves for excess and obsolete
inventories of $5.3 million and $10.4 million, respectively.In the nine
months ended September30, 2012, the company recorded within cost of product
revenues reserves for excess and obsolete inventories of $78.0 million.

Note 2: On October 29, 2013, the company announced a restructuring in which it
recorded $11.4 million in restructuring expenses during the three months ended
September 30, 2013. The company expects to record the majority of the
remaining expenses associated with this restructuring in the fourth quarter of
2013.

Note 3: As of September30, 2013, the intangible assets and deferred tax
liability reflected in the condensed consolidated balance sheet relate to the
company's collaboration agreement with Alios BioPharma, Inc. (Alios).

In the first quarter of 2013, the company determined that the value of VX-222
had become impaired and that the fair value of VX-222 was zero as of March 31,
2013. This resulted in a $412.9 million impairment charge. In connection with
this impairment charge, the company recorded a credit of $127.6 million in its
provision for income taxes.

Note 4: In the second quarter of 2013, the company elected to redeem $400.0
million in aggregate principal amount of 3.35% convertible senior subordinated
notes due 2015 (“2015 Notes”). In response, the holders of the 2015 Notes
converted their 2015 Notes into approximately 8.2 million shares of the
company's common stock. In accordance with the terms of the 2015 Notes, the
company made additional make-whole interest payments of $6.7 million, payable
in shares of the company's common stock.

Note 5: The company has consolidated the financial statements of its
collaborator Alios as of September30, 2013, December31, 2012, and for the
three and nine months ended September30, 2013 and 2012. 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 6: Shares used in non-GAAP net income (loss) per diluted share
attributable to Vertex common shareholders were 230,505,000 and 217,797,000
for the three months ended September30, 2013 and 2012, respectively, and
222,764,000 and 214,580,000 for the nine months ended September30, 2013 and
2012, respectively.

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 patients with CF with 2 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.

Elevated 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.

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 used concomitantly 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 product labeling for each country where ivacaftor is approved.
Patients should tell their healthcare providers about any side effect that
bothers them or does not go away.

Please see full U.S. Prescribing Information for KALYDECO at www.KALYDECO.com,
the EU Summary of Product Characteristics for KALYDECO at http://goo.gl/N3Tz4,
the Canadian Product Monograph for KALYDECO at www.vrtx.ca and the Australian
Consumer Medical Information and Product Information for KALYDECO at
http://bit.ly/18wlMld.

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 or itching 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 over-the-counter 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.

About Vertex

Vertex is a global biotechnology company that aims to discover, develop and
commercialize innovative medicines 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 cystic fibrosis,
hepatitis C, rheumatoid arthritis and other life-threatening diseases. In
addition to our clinical development programs, Vertex has more than a dozen
ongoing preclinical programs aimed at other serious and life-threatening
diseases.

Founded in 1989 in Cambridge, Mass., Vertex today has research and development
sites and commercial offices in the United States, Europe, Canada and
Australia. For four years in a row, Science magazine has named Vertex one of
its Top Employers in the life sciences. For additional information and the
latest updates from the company, please visit www.vrtx.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 third paragraph of the press
release, the information provided in the sections captioned “Workforce
Reduction and Investment Focus on Future Opportunities in Cystic Fibrosis and
Other Key Research and Development Programs” and "2013 Financial Guidance" and
statements regarding (i) expected non-GAAP operating expense in 2013 and 2014;
(ii) the company focusing its investment on future opportunities in cystic
fibrosis and other research and development programs, including VX-135; (iii)
the timing of receipt of data from studies, including the Phase 3 studies of
lumacaftor and ivacaftor and studies of VX-135 in combination with
daclatasvir; (iv) the research efforts aimed at beginning clinical development
of a next generation corrector; (v) the timing of potential regulatory
submissions to the FDA and in Europe; (vi) the company's intent to provide
further data to the FDA regarding VX-135; (vii) Vertex pursuing collaborative
opportunities to support further global development of VX-509; (viii)
expectations regarding the restructuring charges and (ix) expectations
regarding future KALYDECO and INCIVEK revenues. 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 revenues and financial results, and its 2013
and 2014 non-GAAP 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 be delayed or may not support registration or
further development of its compounds due to safety, efficacy, or other
reasons, 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 and Webcast

The company will host a conference call and webcast at 8:30 a.m. ET. To access
this call, dial (866) 501-1537 (U.S.) or +1 (720) 545-0001 (International).
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.

A replay of the conference call and webcast will be archived on the company’s
website until November 5, 2013. To ensure a timely connection, it is
recommended that users register at least 15 minutes prior to the scheduled
webcast.

(VRTX-GEN)

Contact:

Vertex Pharmaceuticals Incorporated
Investors:
Michael Partridge, 617-341-6108
or
Kelly Lewis, 617-961-7530
or
Media:
Zach Barber
or
Nikki Levy, 617-341-6992
mediainfo@vrtx.com
 
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