— Product revenue of $2.37 billion, a 13% increase compared to Q1 2022 —

— Company reiterates full year 2023 financial guidance, including product revenue guidance of $9.55 to $9.7 billion —

— TRIKAFTA approved in U.S. for children with cystic fibrosis 2 to 5 years of age —

— Pipeline advancement continues with completion of rolling BLA submissions for exa-cel in the U.S.; multiple additional clinical milestones expected in 2023 —

BOSTON--(BUSINESS WIRE)-- Vertex Pharmaceuticals Incorporated (Nasdaq: VRTX) today reported consolidated financial results for the first quarter ended March 31, 2023 and reiterated full year 2023 financial guidance.

“Vertex delivered a strong start to 2023, with outstanding execution across our business. We continue to reach more patients globally with our cystic fibrosis medicines and progress our broad and diverse pipeline, most notably completing the rolling BLA submissions for exa-cel in the U.S.,” said Reshma Kewalramani, M.D., Chief Executive Officer and President of Vertex. “Over the course of this year, we look forward to continuing to expand our leadership in CF; preparing for near-term launches, including exa-cel; and advancing multiple potentially transformative medicines through mid- and late-stage clinical trials.”

First Quarter 2023 Results

Product revenue increased 13% to $2.37 billion compared to the first quarter of 2022, primarily driven by the strong uptake of TRIKAFTA/KAFTRIO in multiple countries internationally and continued performance of TRIKAFTA in the U.S. Net product revenue in the first quarter of 2023 increased 3% to $1.40 billion in the U.S. and increased 33% to $971 million outside the U.S., compared to the first quarter of 2022.

Combined GAAP and Non-GAAP R&D, Acquired IPR&D and SG&A expenses were $1.3 billion and $1.2 billion, respectively, compared to $818 million and $687 million, respectively, in the first quarter of 2022. The increases were due to higher acquired IPR&D expenses, increased investment in support of multiple programs that have advanced in mid- and late-stage clinical development, and the costs to support launches of Vertex's therapies globally.

GAAP effective tax rate was 21.5% compared to 20.2% for the first quarter of 2022.

Non-GAAP effective tax rate was 21.3% compared to 21.5% for the first quarter of 2022. Please refer to Note 1 for further details on our GAAP to Non-GAAP tax adjustments.

GAAP and Non-GAAP net income decreased by 8% and 12%, respectively, compared to the first quarter of 2022, primarily driven by higher acquired IPR&D expenses, increased investment in our mid- and late-stage clinical pipeline, and the costs to support launches of Vertex’s therapies globally, partially offset by strong revenue growth and increased interest income.

Cash, cash equivalents and total marketable securities as of March 31, 2023 were $11.5 billion, compared to $10.9 billion as of December 31, 2022. The increase was primarily driven by strong revenue growth and operating cash flow, partially offset by our upfront payments to Entrada Therapeutics, CRISPR Therapeutics and other collaboration partners, repurchases of our common stock pursuant to our share repurchase program, and income tax payments.

Full Year 2023 Financial Guidance

Vertex today reiterated its full year 2023 financial guidance, including CF product revenue guidance of $9.55 to $9.7 billion. Vertex’s CF product revenue guidance includes expectations in the U.S. for continued performance of TRIKAFTA in ages 6+ and the launch of TRIKAFTA in the 2-5 age group, as well as continued uptake of KAFTRIO/TRIKAFTA in ages 6+ in countries outside the U.S., including those with recent reimbursement agreements. This guidance includes an approximately 150-basis-point negative impact from changes in foreign currency rates, inclusive of our foreign exchange risk management program.

Vertex’s financial guidance is summarized below:

Key Business Highlights

Cystic Fibrosis (CF) Marketed Products

Vertex anticipates the number of CF patients taking our medicines will continue to grow, including through new approvals and reimbursement for the treatment of younger patients. Recent progress includes:

• Vertex received approval from the U.S. Food and Drug Administration (FDA) for the use of TRIKAFTA in children 2 to 5 years of age with at least one F508del mutation in the cystic fibrosis transmembrane conductance regulator (CFTR) gene or a mutation in the CFTR gene that is responsive to TRIKAFTA. With this approval, approximately 900 children are newly eligible for TRIKAFTA. Vertex has also completed regulatory submissions with the European Medicines Agency (EMA), the Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom, Health Canada, and the Therapeutic Goods Administration (TGA) in Australia for the use of KAFTRIO/TRIKAFTA in children 2 to 5 years of age.
• Vertex received a positive opinion from the EMA Committee for Medicinal Products for Human Use (CHMP) for the use of ORKAMBI in children 1 to