Vertex Pharmaceuticals Incorporated : Quarterly Report for Quarter Ending MARCH 31, 2026 (Form 10-Q)

About this update from Vertex Pharmaceuticals Incorporated

Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW We are a global biotechnology company that invests in scientific innovation to create transformative medicines for people with serious diseases, with a focus on specialty markets. We have seven approved medicines: five that treat the underlying cause of cystic fibrosis ("CF"), a life-threatening genetic disease, one that treats severe sickle cell disease ("SCD") and transfusion dependent beta thalassemia ("TDT"), life shortening inherited blood disorders, and one that treats moderate-to-severe acute pain. We are also preparing for the anticipated launch of povetacicept, a potential treatment for IgA nephropathy ("IgAN"). Our clinical-stage pipeline spans a range of programs targeting CF, SCD, beta thalassemia, neuropathic pain, type 1 diabetes, IgA nephropathy, primary membranous nephropathy and other autoimmune diseases and cytopenias, APOL1-mediated kidney disease, autosomal dominant polycystic kidney disease and myotonic dystrophy type 1, reflecting our commitment to addressing significant unmet medical needs globally. Financial Highlights Total Revenues In the first quarter of 2026 , our total revenues increased to $3.0 billion as compared to $2.8 billion in the first quarter of 2025 , primarily due to continued performance of our CF therapies and growth from diversification into additional disease areas. Cost of Sales Our cost of sales as a percentage of our net product revenues was 13.2% in each of the first quarter s of 2026 and 2025 , as a result of a lower overall royalty rate for our CF medicines, offset by changes in product mix. Total R&D, AIPR&D and SG&A Expenses Our total research and development ("R&D"), acquired in-process research and development expenses ("AIPR&D") and selling, general and administrative ("SG&A") expenses increased to $1.5 billion in the first quarter of 2026 as compared to $1.4 billion in the first quarter of 2025 , primarily due to increased investment to commercialize our new products . Cash Our total cash, cash equivalents and marketable securities increased to $13.0 billion as of March 31, 2026 as compared to $12.3 billion as of December 31, 2025 , primarily due to cash flows provided by our operating activities partially offset by repurchases of our common stock. Q1 2025 Q1 2026 December 31, 2025 March 31, 2026 Note: Charts above m ay not add due to rounding. Business Updates Marketed Products Cystic Fibrosis We expect that the number of people with CF taking our medicines will continue to grow through new approvals and reimbursement agreements, treatment of younger patients, increased survival and expansion into additional geographies. Recent and anticipated progress in activities expanding our CF business is included below: • The U.S. Food and Drug Administration (the "FDA") approved label extensions for ALYFTREK and TRIKAFTA, expanding availability of these medicines to approximately 95% of all people with CF in the United States (the "U.S."). With these label extensions, approximately 800 people with CF in the U.S. are newly eligible for a medicine that treats the underlying cause of CF. • We secured reimbursement agreements for ALYFTREK in Scotland, Spain, Sweden, Switzerland, New Zealand, Israel, and Finland, and we are working to secure access for eligible patients in additional countries. Sickle Cell Disease and Beta Thalassemia • In the first quarter of 2026, we recorded $43 million of CASGEVY product revenues. • We secured a pricing agreement for CASGEVY for eligible patients with SCD or TDT in Germany, and we are working through final implementation to provide long-term reimbursed access to patients at a sustainable price. • We completed the regulatory submission in the U.S. for approval of CASGEVY in children with SCD or TDT five to less than twelve years of age. The FDA awarded a Commissioner's National Priority Voucher for this pediatric submission, indicating an accelerated timeline for review once the submission is accepted. Acute Pain • Since the launch of JOURNAVX in March 2025, more than 1 million prescriptions have been filled for JOURNAVX across the hospital and retail settings for a broad range of acute pain conditions. In the first quarter of 2026, more than 350,000 prescriptions were filled, and we recorded $29 million of JOURNAVX product revenues. • We have reached an agreement with a major pharmacy benefit manager for Medicare Part D coverage for JOURNAVX effective on May 1. This agreement adds approximately 10 million lives covered under Part D. Twenty-two states provide coverage for JOURNAVX via Medicaid. In total, approximately 240 million individuals have reimbursed access to JOURNAVX across a wide range of commercial and government payers. Pipeline We continue to advance a diversified pipeline of potentially transformative medicines for serious diseases utilizing a range of modalities. Recent and anticipated progress in activities supporting these efforts is included below: Cystic Fibrosis • Following positive results from the ALYFTREK clinical trial in children with CF two to five years of age, we expect to submit for global regulatory approvals in this age group in the first half of 2026. We continue to enroll and dose patients in the pivotal clinical trial evaluating ALYFTREK in children with CF one to less than two years of age. • Following positive results from the TRIKAFTA clinical trial in children one to less than two years of age, we have begun submissions for global regulatory approvals in this age group. Peripheral Neuropathic Pain • We expect to complete enrollment in both Phase 3 clinical trials evaluating suzetrigine in diabetic peripheral neuropathy, a form of peripheral neuropathic pain, by the end of 2026. IgA Nephropathy and Other B Cell-Mediated Diseases • We are developing povetacicept, a dual inhibitor of B cell activating factor ("BAFF") and a proliferation-inducing ligand ("APRIL") cytokines, for multiple diseases. Povetacicept represents a potentially best-in-class approach to control B cell activity in IgAN. • Following positive results from the RAINIER Phase 3 clinical trial evaluating povetacicept in adults with IgAN, we completed in March the submission of the rolling biologics license application ("BLA") to the FDA for potential accelerated approval in the U.S. We are using a Priority Review Voucher and therefore expect the FDA review of this BLA to be expedited to six months from the date of the FDA's acceptance of the BLA. • Povetacicept represents a potentially best-in-class approach to control B cell activity in primary membranous nephropathy ("pMN"), another B cell-mediated disease. We completed enrollment in the Phase 2 portion of the Phase 2/3 OLYMPUS pivotal trial evaluating povetacicept in people with pMN, and we initiated the Phase 3 portion of this clinical trial. Enrollment and dosing in this clinical trial are ongoing. APOL1-Mediated Kidney Disease • Inaxaplin is our small molecule for the treatment of APOL1-mediated kidney disease ("AMKD"). We completed enrollment in the interim analysis cohort of the global AMPLITUDE Phase 2/3 pivotal clinical trial evaluating inaxaplin. We expect to conduct the pre-planned interim analysis for potential accelerated approval once this cohort has been treated for 48 weeks. We expect to share data from the interim analysis in early 2027. We expect to complete full enrollment in the AMPLITUDE clinical trial in the second half of 2026. Type 1 Diabetes • Zimislecel is an allogeneic, stem cell-derived, fully differentiated, insulin-producing islet cell replacement therapy, using standard immunosuppression to protect the implanted cells. We have completed the internal manufacturing analysis for the Phase 1/2/3 clinical trial of zimislecel in people with type 1 diabetes ("T1D"), and we have resumed dosing in this clinical trial. Multiple people with T1D have been treated since the resumption of dosing. In 2026, we expect to provide updated timelines for trial completion. Our Business Environment In the first quarter of 2026 , our total product revenues came primarily from the sale of our medicines for the treatment of CF. Our CF strategy involves continuing to develop and obtain approval and reimbursement for treatment regimens that will provide benefits to all people with CF and increasing the number of people with CF eligible and able to receive our medicines. O utside of CF , we continue to advance the commercialization of CASGEVY for the treatment of SCD and TDT, and JOURNAVX for the treatment of acute pain, and we are preparing for a potential launch of povetacicept for the treatment of IgAN. In addition, we are advancing our pipeline of product candidates for the treatment of serious diseases outside of CF, SCD, TDT and acute pain. Our strategy is to combine transformative advances in the understanding of causal human biology and the science of therapeutics to discover and develop innovative medicines. This approach includes advancing multiple compounds or therapies from each program, spanning multiple modalities, into early clinical trials to obtain patient data that can inform selection of the most promising therapies for later-stage development, as well as to inform discovery and development efforts. We aim to serially innovate in our disease areas of interest and follow our first-in-class therapies with potential best- in-class candidates to provide durable clinical and commercial success. In pursuit of new product candidates and therapies in specialty markets, we invest in research and development. We believe that pursuing research in diverse areas allows us to balance the risks inherent in product development and may provide product candidates that will form our pipeline in future years. To supplement our internal research programs, we acquire technologies and programs and collaborate with biopharmaceutical and technology companies, leading academic research institutions, government laboratories, foundations and other organizations, as needed, to advance research in our areas of therapeutic interest and to access technologies needed to execute on our strategy. Discovery and development of a new pharmaceutical or biological product is a difficult and lengthy process that requires significant financial resources along with extensive technical and regulatory expertise. Across the industry, most potential drug or biological products never progress into development, and most products that advance into development never receive marketing approval. Our investments in product candidates are subject to considerable risks. We closely monitor our research and development activities, and frequently evaluate our pipeline programs in light of new data and scientific, business and commercial insights, with the objective of balancing risk and potential. This process can result in rapid changes in focus and priorities as new information becomes available and as we gain additional understanding of our ongoing programs and potential new programs, as well as those of our competitors. In addition, our product candidates must satisfy rigorous standards of safety and efficacy before they can be approved for sale by regulatory authorities. Our analysis of data obtained from nonclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. Our business also requires ensuring appropriate manufacturing and supply of our products. As we advance our product candidates through clinical development toward commercialization and market and sell our approved products, we build and maintain our supply chain and quality assurance resources. We rely on a global network of third parties, including some in China, and our internal capabilities to manufacture and distribute our products for commercial sale and post-approval clinical trials and to manufacture and distribute our product candidates for clinical trials. In addition to establishing supply chains for each newly approved product, we adapt our supply chain for existing products to include additional formulations or to increase scale of production for existing products as needed. The processes for biological and cell and genetic therapies can be more complex than those required for small molecule drugs and require additional investments in different systems, equipment, facilities and expertise. We are focused on ensuring the stability of the supply chains for our current products, as well as for our pipeline programs. Sales of our products depend, to a large degree, on the extent to which our products are reimbursed by third-party payors, such as government health programs, commercial insurance and managed health care organizations. Reimbursement for our products, including our potential pipeline therapies, cannot be assured and may take significant periods of time to obtain. We dedicate substantial management and other resources to obtain and maintain appropriate levels of reimbursement for our products from third-party payors, including governmental organizations in the U.S. and ex-U.S. markets. In the U.S., we work with government and commercial payors to obtain and maintain appropriate levels of reimbursement for our medicines. In ex-U.S. markets, we seek government reimbursement for our medicines on a country-by-country or region-by-region, as required. This is necessary for each new medicine, as well as for label expansions for our current medicines. We expect to continue to focus significant resources to expand and maintain reimbursement for our CF medicines, CASGEVY, JOURNAVX, and, ultimately, our pipeline therapies, in U.S. and ex-U.S. markets. Strategic Transactions Acquisitions As part of our business strategy, we seek to license or acquire technologies, products, product candidates and businesses that are aligned with our corporate and research and development strategies and complement and advance our ongoing research and development efforts. We have acquired multiple biotechnology companies over the last several years and expect to continue to identify and evaluate such opportunities. The accounting for these acquisitions can vary significantly based on whether we conclude the transactions represent business combinations or asset acquisitions. In 2024, we acquired Alpine Immune Sciences, Inc. ("Alpine") and its lead molecule, povetacicept, for approximately $5.0 billion. Povetacicept, has shown potential to treat multiple diseases or conditions and become a pipeline-in-a-product. We accounted for the Alpine transaction as an asset acquisition because povetacicept represented substantially all of the fair value of the gross assets that we acquired. As a result, $4.4 billion of the fair value attributed to povetacicept was expensed as AIPR&D in 2024. Collaboration and In-Licensing Arrangements We enter into arrangements with third parties, including collaboration and licensing arrangements, for the development, manufacture and commercialization of products, product candidates and other technologies that have the potential to complement our ongoing research and development efforts. Over the last several years, we entered into collaboration agreements with a number of companies, including CRISPR T herapeutics AG ("CRISPR") and Entrada Therapeutics, Inc. ("Entrada") . Generally, when we in-license a technology or product candidate, we make upfront payments to the collaborator, assume the costs of the program and/or agree to make contingent payments, which could consist of milestone, royalty and option payments. Most of these collaboration payments are expensed as AIPR&D because they were primarily attributable to acquired in-process research and development for which there was no alternative future use. However, depending on many factors, including the structure of the collaboration, the stage of development of the acquired technology, the significance of the in-licensed product candidate to the collaborator's operations and the other activities in which our collaborators are engaged, the accounting for these transactions can vary significantly. We expect to continue to identify and evaluate collaboration and licensing opportunities that may be similar to or different from the collaborations and licenses that we have engaged in previously. Acquired In-Process Research and Development Expenses In the first quarter of 2026 and 2025 , our AIPR&D included $0.5 million and $19.8 million , respectively, related to upfront, contingent milestone, or other payments pursuant to our business development transactions, including the asset acquisitions, collaborations, and licenses of third-party technologies described above. Please refer to Note B, "Collaboration, License and Other Arrangements," for further information regarding our asset acquisitions, collaborations and in-license agreements. Out-licensing Arrangements We also have out-licensed certain development programs to collaborators who are leading the development or commercialization of these programs, either globally or within certain geographic regions. In January 2025 and June 2025, we entered into agreements with Zai Lab Limited ("Zai") and Ono Pharmaceuticals Co., Ltd ("Ono"), respectively, for the development and commercialization of povetacicept in various Asian markets. Zai licensed povetacicept for mainland China, Hong Kong SAR, Macau SAR, Taiwan region and Singapore, while Ono licensed povetacicept for Japan and South Korea. Zai and Ono will help advance povetacicept clinical trials, and will be responsible for obtaining marketing authorizations and commercialization activities, if povetacicept becomes an approved product, in their licensed territories. We are eligible to receive certain future milestone payments and tiered royalties on future net sales of povetacicept in these regions. RESULTS OF OPERATIONS Total Revenues Three Months Ended March 31, 2026 2025 Change (in millions, except percentages) TRIKAFTA/KAFTRIO $ 2,354.7 $ 2,535.5 (7)% ALYFTREK 424.4 53.9 687% Other CF product revenues (1) 135.9 155.3 (12)% Total CF product revenues, net 2,915.0 2,744.7 6% CASGEVY 42.9 14.2 202% JOURNAVX 29.0 1.3 ** Product revenues, net 2,986.9 2,760.2 8% Other revenues - 10.0 ** Total revenues $ 2,986.9 $ 2,770.2 8% (1) Include KALYDECO, ORKAMBI and SYMDEKO/SYMKEVI. ** Not meaningful Product Revenues, Net In the first quarter of 2026 , our net product revenues increased by $226.7 million , or 8% , as compared to the first quarter of 2025 , primarily due to continued performance of our CF therapies and growth from diversification into additional disease areas. Other Revenues Other revenues were $10.0 million in the first quarter of 2025 , related to an upfront payment received from our collaboration agreement with Zai. Revenues by Geographic Location Our total revenues from the U.S. and from ex-U.S. markets were as follows: Three Months Ended March 31, 2026 2025 Change (in millions, except percentages) United States $ 1,775.9 $ 1,663.5 7% ex-U.S. 1,211.0 1,106.7 9% Total revenues $ 2,986.9 $ 2,770.2 8% In the first quarter of 2026 , our U.S. total revenues increased 7% , as compared to the first quarter of 2025 , due to continued strong patient demand, including from new initiations of ALYFTREK, and higher realized net prices in CF, and contributions from CASGEVY and JOURNAVX. In the first quarter of 2026 , our ex-U.S. total revenues increased 9% , as compared to the first quarter of 2025 , primarily due to strong CF performance across multiple geographies, including ALYFTREK uptake, increased CASGEVY product revenues, and a favorable impact from foreign exchange. Operating Costs and Expenses Three Months Ended March 31, 2026 2025 Change (in millions, except percentages) Cost of sales $ 392.8 $ 363.0 8% Research and development expenses 961.6 979.7 (2)% Acquired in-process research and development expenses 0.5 19.8 ** Selling, general and administrative expenses 493.7 396.4 25% Intangible asset impairment charge - 379.0 ** Change in fair value of contingent consideration 0.2 2.2 ** Total costs and expenses $ 1,848.8 $ 2,140.1 (14)% ** Not meaningful Cost of Sales Our cost of sales primarily consists of third-party royalties payable on net sales of our CF products as well as the cost of producing inventories. Our cost of sales as a percentage of our net product revenues was 13.2% i n each of the first quarter s of 2026 and 2025 , as a result of a lower overall royalty rate for our CF medicines, offset by changes in product mix. Pursuant to our agreement (the "CFF Agreement") with the Cystic Fibrosis Foundation (the "CFF"), our tiered third- party royalties on sales of ALYFTREK, TRIKAFTA/KAFTRIO, SYMDEKO/SYMKEVI, KALYDECO, and ORKAMBI, calculated as a percentage of net sales, range from the single digits to the sub-teens, with lower royalties on sales of ALYFTREK and TRIKAFTA/KAFTRIO than for our other products. The royalty burden associated with TRIKAFTA/ KAFTRIO is 9.33%, and our position is that the royalty burden associated with ALYFTREK is 4%. On October 10, 2025, Royalty Pharma plc ("RP"), the third party to whom the CFF assigned its rights (and the CFF, which remains a party to the CFF Agreement), initiated a confidential arbitration alleging the royalty burden on ALYFTREK is approximately 8%. RP is seeking a declaratory judgment regarding the royalty burden on ALYFTREK as well as alleged unpaid royalties and other alleged damages available under the CFF Agreement or applicable law, costs, expenses, attorneys' fees, and interest. We believe RP's position is contrary to the plain terms of the CFF Agreement and intend to vigorously defend our position under the CFF Agreement. Research and Development Expenses Three Months Ended March 31, 2026 2025 Change (in millions, except percentages) Research expenses $ 205.0 $ 206.1 (1)% Development expenses 756.6 773.6 (2)% Total research and development expenses $ 961.6 $ 979.7 (2)% Research Expenses Three Months Ended March 31, 2026 2025 Change (in millions, except percentages) Research Expenses: Salary and benefits $ 55.2 $ 53.1 4% Stock-based compensation expense 21.2 22.3 (5)% Outsourced services and other direct expenses 66.6 73.1 (9)% Infrastructure costs 62.0 57.6 8% Total research expenses $ 205.0 $ 206.1 (1)% Our research expenses include investment in our pipeline, including our cell and genetic therapy capabilities, which has increased our salary and benefits and infrastructure costs in the first quarter of 2026 as compared to the first quarter of 2025 . We expect to continue to invest in our research programs with a focus on creating transformative medicines for serious diseases. Development Expenses Three Months Ended March 31, 2026 2025 Change (in millions, except percentages) Development Expenses: Salary and benefits $ 212.6 $ 195.9 9% Stock-based compensation expense 80.5 77.8 3% Outsourced services and other direct expenses 326.2 379.7 (14)% Infrastructure costs 137.3 120.2 14% Total development expenses $ 756.6 $ 773.6 (2)% As we have advanced our pipeline of transformative medicines, we have invested in internal headcount and infrastructure to support multiple mid- and late-stage clinical development programs, including our povetacicept, T1D, peripheral neuropathic pain and AMKD programs. We expect to continue to invest in these programs, launch new products and advance our pipeline going forward. Our outsourced services and other direct expenses were lower as compared to the first quarter of 2025 due to the discontinuation of certain clinical programs during 2025. Our research and development expenses include internal and external costs incurred for research and development of our products and product candidates. We assign external costs of services provided to us by clinical research organizations and other outsourced research by individual program. Our internal costs include salary and benefits, stock-based compensation expense, laboratory supplies and other direct expenses and infrastructure costs, the majority of which are not assigned to individual products or product candidates. Our stock-based compensation expenses, including those recorded as research and development expenses, have historically fluctuated and are expected to continue to fluctuate from one period to another primarily due to changes in the probability of achieving milestones associated with our performance-based awards. Acquired In-Process Research and Development Expenses Three Months Ended March 31, 2026 2025 Change (in millions, except percentages) Acquired in-process research and development expenses $ 0.5 $ 19.8 ** ** Not meaningful AIPR&D in the first quarter s of 2026 and 2025 included various upfront and milestone payments related to our collaboration and in-licensing arrangements. Our AIPR&D has historically fluctuated, and is expected to continue to fluctuate, from one period to another due to upfront, contingent milestone, and other payments pursuant to our existing and future business development transactions, including collaborations, licenses of third-party technologies, and asset acquisitions. Selling, General and Administrative Expenses Three Months Ended March 31, 2026 2025 Change (in millions, except percentages) Selling, general and administrative expenses $ 493.7 $ 396.4 25% Selling, general and administrative expenses increased by 25% in the first quarter of 2026 , as compared to the first quarter of 2025 , primarily due to increased internal headcount and commercial investment to support JOURNAVX and povetacicept in IgAN . Intangible Asset Impairment Charge In the first quarter of 2025 , based on results from a Phase 1/2 clinical trial evaluating our VX-264 clinical program in patients with T1D, we concluded that VX-264 will not be advancing further in clinical development. Based on this event, we performed an interim impairment test on the fair value of our VX-264 indefinite-lived in-process research and development asset. As a result, we recorded a full intangible asset impairment charge of $379.0 million associated with VX-264 in the first quarter of 2025. Non-Operating Income (Expense), Net Interest Income, Net Our net interest income of $114.8 million in the first quarter of 2026 was similar to $117.9 million of net interest income in the first quarter of 2025 . Our future net interest income is primarily dependent on the amount of, and prevailing market interest rates on our outstanding cash, cash equivalents and available-for-sale debt securities. Other Income (Expense), Net Other income (expense), net was $0.0 million in the first quarter of 2026 and net expenses of $17.6 million in the first quarter of 2025 . Our other income (expense), net primarily relates to net unrealized and realized losses resulting from changes in the fair value of certain of our strategic equity investments and net foreign currency exchange losses. Income Taxes Our effective tax rate fluctuates from period to period due to the global nature of our operations. The factors that most significantly impact our effective tax rate include changes in tax laws, excess tax benefits related to stock-based compensation, variability in the amount and allocation of our taxable earnings among multiple jurisdictions, the amount and characterization of our research and development expenses, the levels of certain deductions and credits, adjustments to the value of our uncertain tax positions, acquisitions and third-party collaboration and licensing transactions. In July 2025, the U.S. enacted H.R.1, which includes significant provisions modifying the U.S. tax framework, including the ability for companies to immediately deduct research and development expenditures for 2025 and provisions for deducting previously capitalized amounts. H.R.1 does not have a material impact on our U.S. taxes for the first quarter of 2026, but we expect further guidance to be issued. We will review guidance when issued for impacts on future years and disclose any impacts if needed at that time. These legislative changes could have an impact on our future effective tax rates, tax liabilities, and cash taxes. Our effective tax rates of 17.7% and 11.5% in the first quarter of 2026 and 2025 , respectively, were lower than the U.S. statutory rate primarily due to excess tax benefits related to stock-based compensation. LIQUIDITY AND CAPITAL RESOURCES The following table summarizes the components of our financial condition as of March 31, 2026 and December 31, 2025 : As of March 31, 2026 As of December 31, 2025 Change (in millions, except percentages) Cash, cash equivalents and marketable securities: Cash and cash equivalents $ 5,492.9 $ 5,084.8 Marketable securities 1,753.8 1,523.3 Long-term marketable securities 5,749.9 5,712.3 Total cash, cash equivalents and marketable securities $ 12,996.6 $ 12,320.4 5% Working Capital: Total current assets $ 11,730.3 $ 11,201.0 5% Total current liabilities (3,880.6) (3,861.2) 1% Total working capital $ 7,849.7 $ 7,339.8 7% Working Capital As of March 31, 2026 , total working capital was $7.8 billion , which represented an increase of $509.9 million , or 7% , compared to December 31, 2025 , primarily due to increased cash, cash equivalents and marketable securities resulting from our growing portfolio of products, partially offset by tax accruals and payments. Cash Flows Three Months Ended March 31, 2026 2025 (in millions) Net cash provided by (used in): Operating activities $ 1,428.1 $ 818.9 Investing activities $ (431.9) $ (55.8) Financing activities $ (538.8) $ (680.4) Operating Activities Cash provided by operating activities increased to $1.4 billion in the first quarter of 2026 , as compared to $818.9 million in the first quarter of 2025 , primarily due to the timing of tax payments and increased accounts receivable during the first quarter of 2025 resulting from our product launches . Investing Activities Cash used in investing activities was $431.9 million in the first quarter of 2026 , primarily related to net purchases of available-for-sale debt securities. Cash used in investing activities was $55.8 million in the first quarter of 2025 , primarily related to purchases of property and equipment. Financing Activities Cash used in financing activities were $538.8 million and $680.4 million in the first quarter of 2026 and 2025 , respectively. Our financing activities in each of these periods were primarily related to repurchases of our common stock pursuant to our share repurchase programs and payments in connection with common stock withheld for employee tax obligations. Sources and Uses of Liquidity We intend to rely on our existing cash, cash equivalents and current marketable securities together with our operating profitability as our primary source of liquidity. We expect that cash flows from our product sales together with our cash, cash equivalents and current marketable securities will be sufficient to fund our operations for at least the next twelve months. The adequacy of our available funds to meet our future operating and capital requirements will depend on many factors, including our future sales of currently marketed products, and the potential introduction of one or more new product candidates to the market, our business development activities, and the number, breadth and cost of our research and development programs. Credit Facilities & Financing Strategy We may borrow up to a total of $500.0 million pursuant to a revolving credit facility that we entered into in July 2022 and could repay and reborrow amounts under this revolving credit agreement without penalty. Subject to certain conditions, we could request that the borrowing capacity be increased by an additional $500.0 million, for a total of $1.0 billion. Negative covenants in our credit agreement could prohibit or limit our ability to access this source of liquidity. As of March 31, 2026 , the facility was undrawn, and we were in compliance with these covenants. We may also raise additional capital by borrowing under credit agreements, through public offerings or private placements of our securities, or securing new collaborative agreements or other methods of financing. We will continue to manage our capital structure and will consider all financing opportunities, whenever they may occur, that could strengthen our long-term liquidity profile. There can be no assurance that any such financing opportunities will be available on acceptable terms, if at all. Future Capital Requirements We have significant future capital requirements, including: • Expected operating expenses to conduct research and development activities, manufacture and commercialize our existing and future products, and to operate our organization. • Cash that we pay for income taxes. • Royalties we pay related to sales of our CF products. • Facility, operating and finance lease obligations. • Firm purchase obligations related to our supply and manufacturing processes. In addition, other potential significant future capital requirements may include: • We have entered into certain agreements with third parties that include the funding of certain research, development, manufacturing and commercialization efforts. Certain of our transactions, including collaborations, licensing arrangements, and asset acquisitions, include the potential for future milestone and royalty payments by us upon the achievement of pre-established developmental and regulatory targets and/or commercial targets. Other transactions include the potential for future lease-related expenses and other costs. Our obligation to fund these research and development and commercialization efforts and to pay these potential milestones, expenses and royalties is contingent upon continued involvement in the programs and/or the lack of any adverse events that could cause their discontinuance. We may enter into additional agreements, including acquisitions, collaborations, licensing arrangements and equity investments, which require additional capital. • To the extent we borrow amounts under our existing credit agreement, we would be required to repay any outstanding principal amounts in July 2027. • As of March 31, 2026 , we had $3.0 billion remaining available under the share repurchase program that our Board of Directors authorized in May 2025. The program does not have an expiration date and can be discontinued at any time. We expect to fund the program through a combination of cash on hand and cash generated by operations. There have not been any material changes to our future capital requirements disclosed in our Annual Report on Form 10- K for the year ended December 31, 2025 , which was filed with the Securities and Exchange Commission, or SEC, on February 13, 2026 . CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements prepared in accordance with generally accepted accounting principles in the U.S. The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reported periods. These items are monitored and analyzed by management for changes in facts and circumstances, and material changes in these estimates could occur in the future. Changes in estimates are reflected in reported results for the period in which the change occurs. We base our estimates on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ from our estimates if past experience or other assumptions do not turn out to be substantially accurate. During the three months ended March 31, 2026 , there were no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2025 , which was filed with the SEC on February 13, 2026 . RECENT ACCOUNTING PRONOUNCEMENTS For a discussion of recent accounting pronouncements, please refer to Note A, "Basis of Presentation and Accounting Policies."

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