10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________________

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2015
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM  TO

Commission file number 000-19319

____________________________________________

Vertex Pharmaceuticals Incorporated

(Exact name of registrant as specified in its charter)

Massachusetts	04-3039129
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
50 Northern Avenue, Boston, Massachusetts	02210
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (617) 341-6100

____________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Common Stock, par value $0.01 per share	243,752,247
Class	Outstanding at April 24, 2015

VERTEX PHARMACEUTICALS INCORPORATED

FORM 10-Q

FOR THE QUARTER ENDED March 31, 2015

TABLE OF CONTENTS

		Page
Part I. Financial Information
Item 1.	Financial Statements	2
	Condensed Consolidated Financial Statements (unaudited)	2
	Condensed Consolidated Statements of Operations - Three Months Ended March 31, 2015 and 2014	2
	Condensed Consolidated Statements of Comprehensive Loss - Three Months Ended March 31, 2015 and 2014	3
	Condensed Consolidated Balance Sheets - March 31, 2015 and December 31, 2014	4
	Condensed Consolidated Statements of Shareholders' Equity and Noncontrolling Interest - Three Months Ended March 31, 2015 and 2014	5
	Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2015 and 2014	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
Part II. Other Information
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6.	Exhibits	31
Signatures		32

“We,” “us,” “Vertex” and the “Company” as used in this Quarterly Report on Form 10-Q refer to Vertex Pharmaceuticals Incorporated, a Massachusetts corporation, and its subsidiaries.

“Vertex,” “KALYDECO®” and “ORKAMBI™” are registered trademarks of Vertex. Other brands, names and trademarks contained in this Quarterly Report on Form 10-Q are the property of their respective owners.

Part I. Financial Information

Item 1.    Financial Statements

VERTEX PHARMACEUTICALS INCORPORATED

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except per share amounts)

	Three Months Ended March 31,
	2015			2014
Revenues:
Product revenues, net	$	130,875		$	103,461
Royalty revenues	6,792			10,733
Collaborative revenues	842			4,257
Total revenues	138,509			118,451
Costs and expenses:
Cost of product revenues	9,381			8,572
Royalty expenses	2,926			6,904
Research and development expenses	215,599			238,617
Sales, general and administrative expenses	85,860			74,212
Restructuring (income) expenses	(3,272		)	6,188
Total costs and expenses	310,494			334,493
Loss from operations	(171,985		)	(216,042		)
Interest expense, net	(21,307		)	(15,717		)
Other (expense) income, net	(5,113		)	451
Loss from continuing operations before provision for income taxes	(198,405		)	(231,308		)
Provision for income taxes	299			803
Loss from continuing operations	(198,704		)	(232,111		)
Loss from discontinued operations, net of tax benefit of $0	—			(346		)
Net loss	(198,704		)	(232,457		)
Loss attributable to noncontrolling interest	98			—
Net loss attributable to Vertex	$	(198,606	)	$	(232,457	)
Amounts attributable to Vertex:
Loss from continuing operations	(198,606		)	(232,111		)
Loss from discontinued operations	—			(346		)
Net loss attributable to Vertex	(198,606		)	(232,457		)
Amounts per share attributable to Vertex common shareholders:
Net loss from continuing operations:
Basic	$	(0.83	)	$	(1.00	)
Diluted	$	(0.83	)	$	(1.00	)
Net loss from discontinued operations:
Basic	$	—		$	—
Diluted	$	—		$	—
Net loss:
Basic	$	(0.83	)	$	(1.00	)
Diluted	$	(0.83	)	$	(1.00	)
Shares used in per share calculations:
Basic	239,493			232,887
Diluted	239,493			232,887

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

VERTEX PHARMACEUTICALS INCORPORATED

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2015			2014
Net loss	$	(198,704	)	$	(232,457	)
Changes in other comprehensive loss:
Unrealized holding gains (losses) on marketable securities	176			(27		)
Unrealized gains (losses) on foreign currency forward contracts	306			(36		)
Foreign currency translation adjustment	(608		)	72
Total changes in other comprehensive loss	(126		)	9
Comprehensive loss	(198,830		)	(232,448		)
Comprehensive loss attributable to noncontrolling interest	98			—
Comprehensive loss attributable to Vertex	$	(198,732	)	$	(232,448	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

VERTEX PHARMACEUTICALS INCORPORATED

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)

	March 31,			December 31,
	2015			2014
Assets
Current assets:
Cash and cash equivalents	$	664,879		$	625,259
Marketable securities, available for sale	516,255			761,847
Accounts receivable, net	80,332			75,964
Inventories	34,089			30,848
Prepaid expenses and other current assets	62,648			52,593
Total current assets	1,358,203			1,546,511
Property and equipment, net	708,616			715,812
Intangible assets	29,000			29,000
Goodwill	39,915			39,915
Restricted cash	22,141			176
Other assets	7,952			3,265
Total assets	$	2,165,827		$	2,334,679
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	43,524		$	71,194
Accrued expenses	176,981			209,676
Deferred revenues, current portion	15,918			17,468
Accrued restructuring expenses, current portion	13,133			33,107
Capital lease obligations, current portion	19,672			17,806
Senior secured term loan, current portion	28,527			14,206
Other liabilities, current portion	4,683			4,797
Total current liabilities	302,438			368,254
Deferred revenues, excluding current portion	24,000			27,808
Accrued restructuring expenses, excluding current portion	8,355			12,748
Capital lease obligations, excluding current portion	46,471			39,293
Deferred tax liability	15,093			15,044
Fan Pier lease obligation, excluding current portion	472,971			473,073
Senior secured term loan, excluding current portion	266,266			280,569
Other liabilities, excluding current portion	32,696			21,707
Total liabilities	1,168,290			1,238,496
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued and outstanding at March 31, 2015 and December 31, 2014	—			—
Common stock, $0.01 par value; 300,000,000 shares authorized at March 31, 2015 and December 31, 2014; 243,580,032 and 241,764,398 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively	2,399			2,385
Additional paid-in capital	5,877,324			5,777,154
Accumulated other comprehensive income	791			917
Accumulated deficit	(4,904,056		)	(4,705,450		)
Total Vertex shareholders' equity	976,458			1,075,006
Noncontrolling interest	21,079			21,177
Total shareholders’ equity	997,537			1,096,183
Total liabilities and shareholders’ equity	$	2,165,827		$	2,334,679

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

VERTEX PHARMACEUTICALS INCORPORATED

Condensed Consolidated Statements of Shareholders’ Equity and Noncontrolling Interest

(unaudited)

(in thousands)

	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Vertex Shareholders’ Equity			Noncontrolling Interest			Total Shareholders’ Equity
	Shares	Amount
Balance at December 31, 2013	233,789	$	2,320	$	5,321,286	$	(306	)	$	(3,966,895	)	$	1,356,405		$	—		$	1,356,405
Other comprehensive income, net of tax						9						9						9
Net loss									(232,457		)	(232,457		)	—			(232,457		)
Issuance of common stock under benefit plans	2,412	14		60,120								60,134						60,134
Stock-based compensation				46,787								46,787						46,787
Balance at March 31, 2014	236,201	$	2,334	$	5,428,193	$	(297	)	$	(4,199,352	)	$	1,230,878		$	—		$	1,230,878
Balance at December 31, 2014	241,764	$	2,385	$	5,777,154	$	917		$	(4,705,450	)	$	1,075,006		$	21,177		$	1,096,183
Other comprehensive loss, net of tax						(126		)				(126		)				(126		)
Net loss									(198,606		)	(198,606		)	(98		)	(198,704		)
Issuance of common stock under benefit plans	1,816	14		41,902								41,916						41,916
Stock-based compensation				58,268								58,268						58,268
Balance at March 31, 2015	243,580	$	2,399	$	5,877,324	$	791		$	(4,904,056	)	$	976,458		$	21,079		$	997,537

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

VERTEX PHARMACEUTICALS INCORPORATED

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	Three Months Ended March 31,
	2015			2014
Cash flows from operating activities:
Net loss	$	(198,704	)	$	(232,457	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	16,363			15,788
Stock-based compensation expense	57,384			46,580
Other non-cash items, net	629			(173		)
Changes in operating assets and liabilities:
Accounts receivable, net	(5,863		)	25,237
Inventories	(2,635		)	2,488
Prepaid expenses and other assets	(15,233		)	(17,937		)
Accounts payable	(23,556		)	978
Accrued expenses and other liabilities	(5,866		)	(13,536		)
Accrued restructuring expense	(24,367		)	(4,486		)
Deferred revenues	(5,333		)	1,756
Net cash used in operating activities	(207,181		)	(175,762		)
Cash flows from investing activities:
Purchases of marketable securities	(125,655		)	(380,949		)
Sales and maturities of marketable securities	371,423			376,544
Expenditures for property and equipment	(10,558		)	(15,526		)
Increase in restricted cash and cash equivalents	(21,971		)	—
Decrease (increase) in other assets	799			(476		)
Net cash provided by (used in) investing activities	214,038			(20,407		)
Cash flows from financing activities:
Issuances of common stock under benefit plans	41,616			60,134
Payments on capital lease obligations	(4,497		)	(2,622		)
Proceeds from capital lease financing	13,386			—
Payments on Fan Pier lease obligation	(15,146		)	(15,146		)
Payments returned related to Fan Pier lease obligation	—			8,050
Net cash provided by financing activities	35,359			50,416
Effect of changes in exchange rates on cash	(2,596		)	499
Net increase (decrease) in cash and cash equivalents	39,620			(145,254		)
Cash and cash equivalents—beginning of period	625,259			569,299
Cash and cash equivalents—end of period	$	664,879		$	424,045
Supplemental disclosure of cash flow information:
Cash paid for interest	$	6,483		$	15,970
Cash paid for income taxes	$	60		$	140
Capitalization of costs related to Fan Pier lease obligation	$	—		$	25,564
Assets acquired under capital lease	$	—		$	3,619
Issuances of common stock exercises from employee benefit plans receivable	$	964		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

6

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

A. Basis of Presentation and Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared by Vertex Pharmaceuticals Incorporated ("Vertex" or the "Company") in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The condensed consolidated financial statements reflect the operations of (i) the Company, (ii) its wholly-owned subsidiaries and (iii) consolidated variable interest entities (VIEs). In addition, the condensed consolidated statements of operations for the three months ended March 31, 2014 in this Quarterly Report on Form 10-Q reflect direct expenses Vertex incurred as a result of the Company's collaboration with a former variable interest entity as discontinued operations. All material intercompany balances and transactions have been eliminated. The Company operates in one segment, pharmaceuticals.

Certain information and footnote disclosures normally included in the Company's annual financial statements have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations for the interim periods ended March 31, 2015 and 2014.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full fiscal year. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2014, which are contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 that was filed with the Securities and Exchange Commission (the “SEC”) on February 13, 2015 (the "2014 Annual Report on Form 10-K").

Use of Estimates and Summary of Significant Accounting Policies

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the amounts of revenues and expenses during the reported periods. Significant estimates in these condensed consolidated financial statements have been made in connection with the calculation of revenues, inventories, research and development expenses, stock-based compensation expense, restructuring expense, the fair value of intangible assets, noncontrolling interest, the consolidation of VIEs, leases and the provision for or benefit from income taxes. The Company bases its estimates on historical experience and various other assumptions, including in certain circumstances future projections that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.

The Company's significant accounting policies are described in Note A, "Nature of Business and Accounting Policies," in the 2014 Annual Report on Form 10-K.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements please refer to Note A, “Nature of Business and Accounting Policies—Recent Accounting Pronouncements,” in the 2014 Annual Report on Form 10-K. The Company did not adopt any new accounting pronouncements during the three months ended March 31, 2015 that had a material effect on its condensed consolidated financial statements.

B. Product Revenues, Net

The Company sells its products principally to a limited number of specialty pharmacy providers and selected regional wholesalers in North America as well as government-owned and supported customers in international markets (collectively, its “Customers”). The Company's Customers in North America subsequently resell the products to patients and health care providers. The Company recognizes net revenues from product sales upon delivery to the Customer as long as (i) there is

7

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

persuasive evidence that an arrangement exists between the Company and the Customer, (ii) collectibility is reasonably assured and (iii) the price is fixed or determinable.

In order to conclude that the price is fixed or determinable, the Company must be able to (i) calculate its gross product revenues from sales to Customers and (ii) reasonably estimate its net product revenues upon delivery to its Customer's locations. The Company calculates gross product revenues based on the price that the Company charges its Customers. The Company estimates its net product revenues by deducting from its gross product revenues (a) trade allowances, such as invoice discounts for prompt payment and Customer fees, (b) estimated government and private payor rebates, chargebacks and discounts, (c) estimated reserves for expected product returns and (d) estimated costs of incentives offered to certain indirect customers, including patients. The Company makes significant estimates and judgments that materially affect the Company's recognition of net product revenues. In certain instances, the Company may be unable to reasonably conclude that the price is fixed or determinable at the time of delivery, in which case it defers the recognition of revenues. Once the Company is able to determine that the price is fixed or determinable, it recognizes the revenues associated with the units in which revenue recognition was deferred.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the three months endedMarch 31, 2015:

	Trade Allowances			Rebates, Chargebacks and Discounts			Product Returns			Other Incentives			Total
	(in thousands)
Balance at December 31, 2014	$	1,463		$	29,102		$	4,713		$	745		$	36,023
Provision related to current period sales	1,297			9,027			79			830			11,233
Adjustments related to prior period sales	(87		)	(1,128		)	(410		)	—			(1,625		)
Credits/payments made	(1,366		)	(7,162		)	(2,788		)	(763		)	(12,079		)
Balance at March 31, 2015	$	1,307		$	29,839		$	1,594		$	812		$	33,552

C. Collaborative Arrangements

Cystic Fibrosis Foundation Therapeutics Incorporated

In April 2011, the Company entered into an amendment (the “April 2011 Amendment”) to its existing collaboration agreement with Cystic Fibrosis Foundation Therapeutics Incorporated (“CFFT”) pursuant to which CFFT agreed to provide financial support for (i) development activities for VX-661, a corrector compound discovered under the collaboration, and (ii) additional research and development activities directed at discovering new corrector compounds.

Under the April 2011 Amendment, CFFT agreed to provide the Company with up to $75.0 million in funding over approximately five years for corrector-compound research and development activities. The Company retains the right to develop and commercialize KALYDECO (ivacaftor), lumacaftor, VX-661 and any other compounds discovered during the course of the research collaboration with CFFT. The Company recognized no collaborative revenues from this collaboration during the three months ended March 31, 2015 and $2.9 million of collaborative revenues from this collaboration during the three months ended March 31, 2014.

In the original agreement, as amended prior to the April 2011 Amendment, the Company agreed to pay CFFT tiered royalties calculated as a percentage, ranging from single digits to sub-teens, of annual net sales of any approved drugs discovered during the research term that ended in 2008, including KALYDECO, lumacaftor and VX-661. The April 2011 Amendment provides for a tiered royalty in the same range on net sales of corrector compounds discovered during the research term that began in 2011 and ended in February 2014. In each of the third quarter of 2012 and the first quarter of 2013, CFFT earned a commercial milestone payment of $9.3 million from the Company upon achievement of certain sales levels for KALYDECO. These milestones were reflected in the Company's cost of product revenues. There are no additional commercial milestone payments payable by the Company to CFFT related to sales levels for KALYDECO. The Company also is obligated to make up to two one-time commercial milestone payments to CFFT upon achievement of certain sales levels for corrector compounds such as lumacaftor or VX-661.

8

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

The Company began marketing KALYDECO in the United States and certain countries in the European Union in 2012. The Company has royalty obligations to CFFT for each compound commercialized pursuant to this collaboration until the expiration of patents covering that compound. The Company has patents in the United States and European Union covering the composition-of-matter of ivacaftor that expire in 2027 and 2025, respectively, subject to potential patent life extensions. The Company has patents in the United States and European Union covering the composition-of-matter of lumacaftor that expire in 2030 and 2026, respectively, subject to potential patent life extensions. CFFT may terminate its funding obligations under the collaboration, as amended, in certain circumstances, in which case there will be a proportional adjustment to the royalty rates and commercial milestone payments for certain corrector compounds. The collaboration also may be terminated by either party for a material breach by the other, subject to notice and cure provisions.

Janssen Pharmaceutica NV

The Company has a collaboration agreement (the “Janssen HCV Agreement”) with Janssen Pharmaceutica NV (“Janssen NV”) for the development, manufacture and commercialization of telaprevir, which Janssen NV began marketing under the brand name INCIVO in certain of its territories in September 2011. Pursuant to the Janssen HCV Agreement, as amended, Janssen NV has a fully-paid license to manufacture and commercialize INCIVO in its territories including Europe, South America, the Middle East, Africa and Australia, subject to the payment of third-party royalties on net sales of INCIVO.

During the three months ended March 31, 2015 and 2014, the Company recognized $0.6 million and $1.4 million, respectively, as collaborative revenues based on net reimbursements provided by Janssen NV to the Company related to telaprevir development costs.

In addition to the collaborative revenues, the Company recorded royalty revenues and corresponding royalty expenses related to third-party royalties that Janssen NV remains responsible for based on INCIVO net sales. During the three months ended March 31, 2015 and 2014, the Company recognized royalty revenues and related royalty expenses related to the Janssen HCV collaboration of $1.5 million and $4.9 million, respectively.

Alios BioPharma, Inc.

In June 2011, the Company entered into a license and collaboration agreement (the “Alios Agreement”) with Alios BioPharma, Inc. (“Alios”), a privately-held biotechnology company. Pursuant to the Alios Agreement, the Company and Alios collaborated on the research, development and commercialization of HCV nucleotide analogues discovered by Alios through April 2014. In April 2014, Vertex and Alios amended the Alios Agreement to eliminate the Company's obligations to conduct further development activities with respect to VX-135. In December 2014, the Alios Agreement terminated in accordance with its terms pursuant to a termination notice delivered by the Company in October 2014. As of September 30, 2014, the Company concluded that it no longer had significant continuing involvement with Alios due to its intent and ability to terminate the Alios Agreement, among other factors; therefore, the operations of Alios are presented as discontinued operations in these condensed consolidated financial statements.

BioAxone Biosciences, Inc.

In October 2014, the Company entered into a license and collaboration agreement (the “BioAxone Agreement”) with BioAxone Biosciences, Inc. (“BioAxone”), a privately-held biotechnology company. The Company has determined that BioAxone is a VIE. Accordingly, the Company consolidated BioAxone’s financial statements with the Company’s consolidated financial statements beginning on October 1, 2014 as a business combination. The Company paid BioAxone initial payments of $10.0 million in the fourth quarter of 2014.

BioAxone has the potential to receive up to $90.0 million in milestones and fees, including development, regulatory and milestone payments and a license continuation fee. In addition, BioAxone would receive royalties and commercial milestones on future net product sales of VX-210 if any. As of December 31, 2014, the Company recorded $8.4 million of cash and cash equivalents, which were included in prepaid and other current assets, an in-process research and development intangible asset of $29.0 million for VX-210 and a corresponding deferred tax liability of $11.5 million, goodwill of $8.9 million, and noncontrolling interest of $21.2 million related to the BioAxone collaboration. As of March 31, 2015, BioAxone's cash and cash equivalents were $7.7 million, which represented the only balance included in the Company's condensed consolidated balance sheet related to the BioAxone collaboration that changed significantly compared to

9

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

December 31, 2014. Vertex has no rights to BioAxone’s cash and accordingly this cash does not affect Vertex’s liquidity or cash position. Net loss attributable to noncontrolling interest related to BioAxone for the three months ended March 31, 2015 was not material.

Vertex holds an option to purchase BioAxone at a predetermined price. The option expires on the earliest of (a) the day the FDA accepts the Biologics License Application submission for VX-210, (b) the day the Company elects to continue the license instead of exercising the option to purchase BioAxone and (c) March 15, 2018, subject to the Company’s option to extend this date by one year.

The Company uses present-value models to determine the estimated fair value of the contingent milestone and royalty payments, based on assumptions regarding the probability of achieving the relevant milestones, estimates regarding the time to develop drug candidates, estimates of future product sales and the appropriate discount rates. The Company bases its estimate of the probability of achieving the relevant milestones on industry data for similar assets and its own experience. The discount rates used in the valuation model represent a measure of credit risk and market risk associated with settling the liability. Significant judgment is used in determining the appropriateness of these assumptions at each reporting period. Changes in these assumptions could have a material effect on the fair value of the contingent milestone and royalty payments.

Outlicense Arrangements

In the ordinary course of the Company's business, the Company has entered into various agreements pursuant to which it has outlicensed rights to certain drug candidates to third-party collaborators. Although, the Company does not consider any of these outlicense arrangements to be material, the most notable of these outlicense arrangements is described below. Pursuant to these outlicense arrangements, our collaborators become responsible for all costs related to the continued development of such drug candidates. Depending on the terms of the arrangements, the Company's collaborators may be required to make upfront payments, milestone payments upon the achievement of certain product research and development objectives and/or pay royalties on future sales, if any, of commercial products resulting from the collaboration.

Janssen Pharmaceuticals, Inc.

In June 2014, the Company entered into an agreement (the “Janssen Influenza Agreement”) with Janssen Pharmaceuticals, Inc. (“Janssen Inc.”), which was amended in October 2014 to clarify certain roles and responsibilities of the parties.

Pursuant to the Janssen Influenza Agreement, Janssen Inc. has an exclusive worldwide license to develop and commercialize certain drug candidates for the treatment of influenza, including VX-787. The Company received non-refundable payments of $35.0 million from Janssen Inc. in 2014, which were recorded as collaborative revenue. The Company has the potential to receive development, regulatory and commercial milestone payments as well as royalties on future product sales, if any.

Janssen Inc. is responsible for costs related to the development and commercialization of the compounds. During the three months ended March 31, 2015 and 2014, the Company recorded reimbursement for these development activities of $7.6 million and zero, respectively, as a reduction to development expense in the Company's condensed consolidated statements of operations primarily due to the fact that Janssen Inc. directs the activities and selects the suppliers associated with these activities. Janssen Inc. may terminate the Janssen Influenza Agreement, subject to certain exceptions, upon six months' notice.

D. Earnings Per Share

Basic net loss per share attributable to Vertex common shareholders is based upon the weighted-average number of common shares outstanding during the period, excluding restricted stock and restricted stock units that have been issued but are not yet vested. Diluted net loss per share attributable to Vertex common shareholders is based upon the weighted-average number of common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period when the effect is dilutive.

10

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

The Company did not include the securities described in the following table in the computation of the net loss from continuing operations per share attributable to Vertex common shareholder calculations because the effect would have been anti-dilutive during each period:

	Three Months Ended March 31,
	2015	2014
	(in thousands)
Stock options	12,682	16,078
Unvested restricted stock and restricted stock units	3,474	2,842

E. Fair Value Measurements

The fair value of the Company’s financial assets and liabilities reflects the Company’s estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company’s assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1:	Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:	Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:	Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.

The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet the credit quality standards outlined in the Company’s investment policy. This policy also limits the amount of credit exposure to any one issue or type of instrument. As of March 31, 2015, the Company’s investments were in money market funds, government-sponsored enterprise securities, corporate debt securities and commercial paper.

As of March 31, 2015, all of the Company’s financial assets that were subject to fair value measurements were valued using observable inputs. The Company’s financial assets valued based on Level 1 inputs consisted of money market funds and government-sponsored enterprise securities. The Company’s financial assets valued based on Level 2 inputs consisted of corporate debt securities and commercial paper, which consist of investments in highly-rated investment-grade corporations.

11

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table sets forth the Company’s financial assets and liabilities subject to fair value measurements:

	Fair Value Measurements as of March 31, 2015
				Fair Value Hierarchy
	Total			Level 1		Level 2			Level 3
	(in thousands)
Financial assets carried at fair value:
Cash equivalents:
Money market funds	$	286,581		$	286,581	$	—		$	—
Marketable securities:
Government-sponsored enterprise securities	284,115			284,115		—			—
Corporate debt securities	172,395			—		172,395			—
Commercial paper	59,745			—		59,745			—
Prepaid and other current assets:
Foreign currency forward contracts	2,934			—		2,934			—
Total financial assets	$	805,770		$	570,696	$	235,074		$	—
Financial liabilities carried at fair value:
Other liabilities, current portion:
Foreign currency forward contracts	$	(282	)	$	—	$	(282	)	$	—
Other liabilities, excluding current portion:
Foreign currency forward contracts	(335		)	—		(335		)	—
Total financial liabilities	$	(617	)	$	—	$	(617	)	$	—

BioAxone’s cash equivalents of $7.7 million as of March 31, 2015 consisted of money market funds, which are valued based on Level 1 inputs, are not included in the table above. The Company’s noncontrolling interest related to BioAxone includes the fair value of the contingent payments, which are valued based on Level 3 inputs. Please refer to Note C, “Collaborative Arrangements,” for further information.

As of March 31, 2015, the fair value and carrying value of the Company's Term Loan was $294.8 million, which was recorded on its condensed consolidated balance sheet based on Level 3 inputs computed using the effective interest rate of the Term Loan. The effective interest rate considers the timing and amount of estimated future interest payments. Please refer to Note K, "Long-term Obligations" for further information regarding the Company's Term Loan.

12

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

F. Marketable Securities

A summary of the Company’s cash, cash equivalents and marketable securities is shown below:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
As of March 31, 2015
Cash and cash equivalents:
Cash and money market funds	$	664,879	$	—	$	—		$	664,879
Total cash and cash equivalents	$	664,879	$	—	$	—		$	664,879
Marketable securities:
Government-sponsored enterprise securities (due within 1 year)	$	284,126	$	5	$	(16	)	$	284,115
Commercial paper (due within 1 year)	59,688		57		—			59,745
Corporate debt securities (due within 1 year)	148,958		18		(24		)	148,952
Corporate debt securities (due after 1 year through 5 years)	23,430		13		—			23,443
Total marketable securities	$	516,202	$	93	$	(40	)	$	516,255
Total cash, cash equivalents and marketable securities	$	1,181,081	$	93	$	(40	)	$	1,181,134
As of December 31, 2014
Cash and cash equivalents:
Cash and money market funds	$	625,259	$	—	$	—		$	625,259
Total cash and cash equivalents	$	625,259	$	—	$	—		$	625,259
Marketable securities:
Government-sponsored enterprise securities (due within 1 year)	$	463,788	$	14	$	(52	)	$	463,750
Commercial paper (due within 1 year)	51,674		72		—			51,746
Corporate debt securities (due within 1 year)	196,065		2		(66		)	196,001
Corporate debt securities (due after 1 year through 5 years)	50,443		—		(93		)	50,350
Total marketable securities	$	761,970	$	88	$	(211	)	$	761,847
Total cash, cash equivalents and marketable securities	$	1,387,229	$	88	$	(211	)	$	1,387,106

The Company has a limited number of marketable securities in insignificant loss positions as of March 31, 2015, which the Company does not intend to sell and has concluded it will not be required to sell before recovery of the amortized costs for the investment at maturity. There were no charges recorded for other-than-temporary declines in fair value of marketable securities nor gross realized gains or losses recognized in the three months ended March 31, 2015 and 2014.

G. Accumulated Other Comprehensive Income (Loss)

A summary of the Company's changes in accumulated other comprehensive income (loss) by component is shown below:

	Foreign Currency Translation Adjustment			Unrealized Holding Gains (Losses) on Marketable Securities			Unrealized Gains (Losses) on Foreign Currency Forward Contracts			Total
	(in thousands)
Balance at December 31, 2014	$	(971	)	$	(123	)	$	2,011		$	917
Other comprehensive (loss) income before reclassifications	(608		)	176			2,004			1,572
Amounts reclassified from accumulated other comprehensive loss	—			—			(1,698		)	(1,698		)
Net current period other comprehensive (loss) income	$	(608	)	$	176		$	306		$	(126	)
Balance at March 31, 2015	$	(1,579	)	$	53		$	2,317		$	791

13

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

	Foreign Currency Translation Adjustment			Unrealized Holding Gains (Losses) on Marketable Securities			Unrealized Gains (Losses) on Foreign Currency Forward Contracts			Total
	(in thousands)
Balance at December 31, 2013	$	(325	)	$	42		$	(23	)	$	(306	)
Other comprehensive income (loss) before reclassifications	72			(27		)	(39		)	6
Amounts reclassified from accumulated other comprehensive loss	—			—			3			3
Net current period other comprehensive income (loss)	$	72		$	(27	)	$	(36	)	$	9
Balance at March 31, 2014	$	(253	)	$	15		$	(59	)	$	(297	)

H. Hedging

The Company maintains a hedging program intended to mitigate the effect of changes in foreign exchange rates for a portion of the Company’s forecasted product revenues denominated in certain foreign currencies. The program includes foreign currency forward contracts that are designated as cash flow hedges under GAAP having contractual durations from one to eighteen months. To date, the existence of operational sites in countries outside the United States has generally minimized the degree to which the Company has sought to hedge its revenues in certain foreign currencies.

The Company formally documents the relationship between foreign currency forward contracts (hedging instruments) and forecasted product revenues (hedged items), as well as the Company's risk management objective and strategy for undertaking various hedging activities, which includes matching all foreign currency forward contracts that are designated as cash flow hedges to forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the foreign currency forward contracts are highly effective in offsetting changes in cash flows of hedged items on a prospective and retrospective basis. If the Company determines that (i) a foreign currency forward contract is not highly effective as a cash flow hedge, (ii) it has ceased to be a highly effective hedge or (iii) a forecasted transaction is no longer probable of occurring, the Company would discontinue hedge accounting treatment prospectively. The Company measures effectiveness based on the change in fair value of the forward contracts and the fair value of the hypothetical foreign currency forward contracts with terms that match the critical terms of the risk being hedged. As of March 31, 2015, all hedges were determined to be highly effective and the Company has not recorded any ineffectiveness related to the hedging program.

The following table summarizes the notional amount of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges:

	As of March 31, 2015		As of December 31, 2014
Foreign Currency	(in thousands)
Euro	$	34,749	$	20,209
British pound sterling	33,696		13,515
Australian dollar	20,494		—
Total foreign currency forward contracts	$	88,939	$	33,724

The following table summarizes the fair value of the Company's outstanding foreign currency forward contracts designated as cash flow hedges under GAAP included on the Company's condensed consolidated balance sheets:

14

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

As of March 31, 2015
Assets			Liabilities
Classification	Fair Value		Classification	Fair Value
(in thousands)
Prepaid and other current assets	$	2,934	Other liabilities, current portion	$	(282	)
Other assets	—		Other liabilities, excluding current portion	(335		)
Total assets	$	2,934	Total liabilities	$	(617	)

As of December 31, 2014
Assets			Liabilities
Classification	Fair Value		Classification	Fair Value
(in thousands)
Prepaid and other current assets	$	2,011	Other liabilities, current portion	$	—
Total assets	$	2,011	Total liabilities	$	—

The following table summarizes the potential effect of offsetting derivatives by type of financial instrument on the Company's condensed consolidated balance sheets:

	As of March 31, 2015
	Gross Amounts Recognized		Gross Amounts Offset	Gross Amount Presented		Gross Amount Not Offset		Legal Offset
Foreign currency forward contracts	(in thousands)
Total assets	2,934		—	2,934		(617	)	2,317
Total liabilities	(617	)	—	(617	)	617		—

	As of December 31, 2014
	Gross Amounts Recognized	Gross Amounts Offset	Gross Amount Presented	Gross Amount Not Offset	Legal Offset
Foreign currency forward contracts	(in thousands)
Total assets	2,011	—	2,011	—	2,011

I. Inventories

Inventories consisted of the following:

	As of March 31, 2015		As of December 31, 2014
	(in thousands)
Raw materials	$	7,833	$	8,506
Work-in-process	22,564		20,508
Finished goods	3,692		1,834
Total	$	34,089	$	30,848

As of March 31, 2015, the Company has capitalized $14.1 million of inventory costs related to ORKAMBI, the brand name under which the Company expects to market lumacaftor in combination with ivacaftor, manufactured in preparation for the potential product launch of ORKAMBI in mid-2015 based on its evaluation of, among other factors, information regarding the safety and efficacy of ORKAMBI. In periods prior to July 1, 2014, the Company expensed costs associated with such raw materials and work-in-process as a development expense. In November 2014, the Company submitted a New Drug Application ("NDA") to the United States Food and Drug Administration ("FDA") and a Marketing Authorization

15

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

Application ("MAA") to the European Medicines Agency for ORKAMBI. The FDA has granted the Company priority review of the NDA. The FDA has scheduled a Pulmonary-Allergy Drugs Advisory Committee meeting for May 12, 2015 to discuss the NDA. The target date for the FDA to complete its review of the NDA for the combination under the Prescription Drug User Fee Act is July 5, 2015. The Company plans to continue to monitor the status of these regulatory processes and the other factors used to determine whether or not to capitalize the inventory and, if there are significant negative developments regarding ORKAMBI, the Company could be required to impair previously capitalized costs.

J. Intangible Assets and Goodwill

Intangible Assets

In October 2014, the Company recorded $29.0 million of an in-process research and development intangible asset on its condensed consolidated balance sheet based on the Company’s estimate of the fair value of VX-210, a drug candidate for patients with spinal cord injuries that is licensed by the Company from BioAxone. The Company used a 7.5% discount rate in the present-value models used to estimate the fair value of the in-process research and development asset. The Company also conducted an evaluation of BioAxone’s other programs and determined that market participants would not have ascribed value to those assets because of the stage of development of those assets. As of March 31, 2015, the Company did not have any additional intangible assets recorded on its condensed consolidated balance sheet.

Goodwill

As of March 31, 2015 and December 31, 2014, goodwill of $39.9 million was recorded on the Company's condensed consolidated balance sheets. There were no changes to goodwill recorded during the three months ended March 31, 2015 or 2014.

K. Long-term Obligations

Fan Pier Leases

In 2011, the Company entered into two lease agreements, pursuant to which the Company leases approximately 1.1 million square feet of office and laboratory space in two buildings (the “Buildings”) at Fan Pier in Boston, Massachusetts (the “Fan Pier Leases”). The Company commenced lease payments in December 2013, and will make lease payments pursuant to the Fan Pier Leases through December 2028. The Company has an option to extend the term of the Fan Pier Leases for an additional ten years.

Because the Company was involved in the construction project, the Company was deemed for accounting purposes to be the owner of the Buildings during the construction period and recorded project construction costs incurred by the landlord as an asset and a related financing obligation during the construction period. Upon completion of the Buildings, the Company

16

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

evaluated the Fan Pier Leases and determined that the Fan Pier Leases did not meet the criteria for “sale-leaseback” treatment. Accordingly, the Company began depreciating the asset and incurring interest expense related to the financing obligation in 2013. The Company bifurcates its lease payments pursuant to the Fan Pier Leases into (i) a portion that is allocated to the Buildings and (ii) a portion that is allocated to the land on which the Buildings were constructed. The portion of the lease obligations allocated to the land is treated as an operating lease that commenced in 2011.

Property and equipment, net, included $512.3 million and $515.0 million as of March 31, 2015 and December 31, 2014, respectively, related to construction costs for the Buildings. The carrying value of the Company's lease agreement for the Buildings was $473.3 million and $473.4 million as of March 31, 2015 and December 31, 2014, respectively.

Term Loan

On July 9, 2014, the Company entered into a credit agreement with the lenders party thereto, and Macquarie US Trading LLC ("Macquarie"), as administrative agent. The credit agreement provides for a $300.0 million senior secured term loan ("Term Loan"). The credit agreement also provides that, subject to satisfaction of certain conditions, the Company may request that the lenders establish an incremental senior secured term loan facility in an aggregate amount not to exceed $200.0 million.

The Term Loan initially bears interest at a rate of 7.2% per annum but shall be reduced to 6.2% per annum on the later to occur of (i) FDA approval in the United States of a product with a label claim for treating patients with cystic fibrosis 12 years of age and older who are homozygous with the F508del mutation ("FDA Approval"), and (ii) the one year anniversary of the closing, in each case, until the second anniversary of the closing. On and after the second anniversary of the closing, the Term Loan will bear interest at a rate per annum equal to LIBOR plus 5.0% to 7.5% depending on the receipt of FDA Approval.

The maturity date of all loans under the facilities is July 9, 2017. Interest is payable quarterly and on the maturity date. The Company is required to repay principal on the Term Loan in installments of $15.0 million per quarter from October 1, 2015 through July 1, 2016 and in installments of $60.0 million per quarter from October 1, 2016 through the maturity date. The Company may prepay the Term Loan, in whole or in part, at any time; provided that prepayments prior to the second anniversary of the closing are subject to a make-whole premium to ensure Macquarie receives approximately the present value of two years of interest payments over the life of the loan.

The Company's obligations under the facilities are unconditionally guaranteed by certain of its domestic subsidiaries. All obligations under the facilities, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the Company's assets and the assets of all guarantors, including the pledge of all or a portion of the equity interests of certain of its subsidiaries.

The credit agreement requires that the Company maintain, on a quarterly basis, a minimum level of KALYDECO net revenues. Further, the credit agreement includes negative covenants, subject to exceptions, restricting or limiting the Company's ability and the ability of its subsidiaries to, among other things, incur additional indebtedness, grant liens, engage in certain investment, acquisition and disposition transactions, pay dividends, repurchase capital stock and enter into transactions with affiliates. The credit agreement also contains customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the administrative agent would be entitled to take various actions, including the acceleration of amounts due under outstanding loans. There have been no events of default as of or during the period ended March 31, 2015.

Based on the Company's evaluation of the Term Loan, the Company determined that the Term Loan contains several embedded derivatives. These embedded derivatives are clearly and closely related to the host instrument because they relate to the Company's credit risk; therefore, they do not require bifurcation from the host instrument, the Term Loan.

The Company incurred $5.3 million in fees paid to Macquarie that were recorded as a discount on the Term Loan and are being recorded as interest expense using the effective interest method over the term of the loan in the Company’s condensed consolidated statements of operations. As of March 31, 2015, the unamortized discount associated with the Term Loan that

17

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

was embedded in the senior secured term loan caption on the Company’s condensed consolidated balance sheet was $5.2 million.

L. Stock-based Compensation Expense

The Company issues stock options, restricted stock and restricted stock units with service conditions, which are generally the vesting periods of the awards. The Company also has issued, to certain members of senior management, restricted stock and restricted stock units that vest upon the earlier of the satisfaction of (i) a performance condition or (ii) a service condition, stock options that vest upon the earlier of the satisfaction of (a) performance conditions or (b) a service condition and restricted stock and restricted stock units that vest upon the satisfaction of (i) a performance condition and (ii) a service condition. In addition, the Company issued pursuant to a retention program restricted stock awards to certain members of senior management that will vest upon the satisfaction of both (i) a performance condition and (ii) a service condition. In addition, the Company issues shares pursuant to an employee stock purchase plan ("ESPP").

Effective for equity awards granted on or after February 5, 2014, the Company provides to employees who have rendered significant service to the Company and meet certain age requirements, partial or full acceleration of vesting of these equity awards, subject to certain conditions, upon a termination of employment other than for cause.  Less than 5% of the Company’s employees were eligible for partial or full acceleration of any of their equity awards as of March 31, 2015.  The Company recognizes stock-based compensation expense related to these awards over the service period from the date of grant until the qualified employees become eligible for partial or full acceleration of vesting.

During the three months ended March 31, 2015 and 2014, the Company recognized the following stock-based compensation expense included in loss from continuing operations:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Stock-based compensation expense by type of award:
Stock options	$	28,959		$	25,127
Restricted stock and restricted stock units	27,169			18,993
ESPP share issuances	2,140			2,667
Less stock-based compensation expense capitalized to inventories	(884		)	(207		)
Total stock-based compensation included in costs and expenses	$	57,384		$	46,580
Stock-based compensation expense by line item:
Research and development expenses	$	38,217		$	32,900
Sales, general and administrative expenses	19,167			13,680
Total stock-based compensation included in costs and expenses	$	57,384		$	46,580

The following table sets forth the Company's unrecognized stock-based compensation expense, net of estimated forfeitures, by type of award and the weighted-average period over which that expense is expected to be recognized:

	As of March 31, 2015
	Unrecognized Expense, Net of Estimated Forfeitures		Weighted-average Recognition Period
	(in thousands)		(in years)
Type of award:
Stock options	$	199,256	2.31
Restricted stock and restricted stock units	$	201,465	2.88
ESPP share issuances	$	2,205	0.45

18

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following table summarizes information about stock options outstanding and exercisable at March 31, 2015:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-average Remaining Contractual Life	Weighted-average Exercise Price		Number Exercisable	Weighted-average Exercise Price
	(in thousands)	(in years)	(per share)		(in thousands)	(per share)
$17.16–$20.00	165	2.51	$	18.69	165	$	18.69
$20.01–$40.00	3,207	4.24	$	34.97	2,711	$	34.73
$40.01–$60.00	3,339	7.33	$	48.55	1,499	$	50.27
$60.01–$80.00	1,837	8.59	$	76.07	492	$	74.88
$80.01–$100.00	2,232	8.70	$	90.29	542	$	86.07
$100.01–$120.00	1,898	9.84	$	109.23	1	$	110.59
$120.01–$125.63	4	9.82	$	125.63	—	$	—
Total	12,682	7.28	$	65.17	5,410	$	47.36

M. Other Arrangements

Sale of HIV Protease Inhibitor Royalty Stream

In 2008, the Company sold to a third party its rights to receive royalty payments from GlaxoSmithKline plc, net of royalty amounts to be earned by and due to a third party, for a one-time cash payment of $160.0 million. These royalty payments relate to net sales of HIV protease inhibitors, which had been developed pursuant to a collaboration agreement between the Company and GlaxoSmithKline plc. As of March 31, 2015, the Company had $39.2 million in deferred revenues related to the one-time cash payment, which it is recognizing over the life of the collaboration agreement with GlaxoSmithKline plc based on the units-of-revenue method. In addition, the Company continues to recognize royalty revenues equal to the amount of the third-party subroyalty and an offsetting royalty expense for the third-party subroyalty payment.

N. Income Taxes

The Company is subject to U.S. federal, state, and foreign income taxes. For the three months ended March 31, 2015 and 2014, the Company recorded a provision for income taxes of $0.3 million and $0.8 million, respectively, related to state income taxes and income earned in various foreign jurisdictions.

As of March 31, 2015 and December 31, 2014, the Company had unrecognized tax benefits of $0.9 million. The Company recognizes interest and penalties related to income taxes as a component of income tax expense. As of March 31, 2015, no interest and penalties have been accrued. The Company does not expect that its unrecognized tax benefits will materially increase within the next twelve months. The Company did not recognize any material interest or penalties related to uncertain tax positions as of March 31, 2015 and December 31, 2014. In 2015, it is reasonably possible that the Company will reduce the balance of its unrecognized tax benefits by approximately $0.5 million due to the application of statute of limitations and settlements with taxing authorities, all of which would reduce the Company’s effective tax rate.

The Company continues to maintain a valuation allowance against certain deferred tax assets where it is more likely than not that the deferred tax asset will not be realized because of its extended history of annual losses.

The Company files U.S. federal income tax returns and income tax returns in various state, local and foreign jurisdictions. The Company is no longer subject to any tax assessment from an income tax examination in the United States before 2010 or any other major taxing jurisdiction for years before 2009, except where the Company has net operating losses or tax credit carryforwards that originated before 2009. The Company is currently under examination by Revenue Quebec for the year ended December 31, 2013 and the Internal Revenue Service, Massachusetts and Pennsylvania for the year ended December 31, 2011. No adjustments have been reported. The Company is not under examination by any other jurisdictions

for any tax year. The Company concluded audits with the Canada Revenue Agency and Revenue Quebec during 2014 with no material adjustments.

The Company currently intends to reinvest the total amount of its unremitted earnings. At March 31, 2015, foreign earnings, which were not significant, have been retained indefinitely by foreign subsidiary companies for reinvestment; therefore, no provision has been made for income taxes that would be payable upon the distribution of such earnings, and it would not be practicable to determine the amount of the related unrecognized deferred income tax liability. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company would be subject to U.S. federal income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries.

O. Restructuring Liabilities

2003 Kendall Restructuring

In 2003, the Company adopted a plan to restructure its operations to coincide with its increasing internal emphasis on advancing drug candidates through clinical development to commercialization. The restructuring liability relates to specialized laboratory and office space that is leased to the Company pursuant to a 15-year lease that terminates in 2018. The Company has not used more than 50% of this space since it adopted the plan to restructure its operations in 2003. This unused laboratory and office space currently is subleased to third parties.

The activities related to the restructuring liability for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Liability, beginning of the period	$	11,596		$	19,115
Cash payments	(3,985		)	(3,862		)
Cash received from subleases	2,476			2,689
Restructuring (income) expense	(581		)	382
Liability, end of the period	$	9,506		$	18,324

Fan Pier Move Restructuring

In connection with the relocation of its Massachusetts operations to Fan Pier in Boston, Massachusetts, which commenced in 2013, the Company is incurring restructuring charges related to its remaining lease obligations at its facilities in Cambridge, Massachusetts. The majority of these restructuring charges were recorded in the third quarter of 2014 upon decommissioning three facilities in Cambridge. During the first quarter of 2015, the Company terminated two of these lease agreements resulting in a credit to restructuring expense equal to the difference between the Company’s estimated future cash flows related to its lease obligations for these facilities and the termination payment paid to the Company’s landlord on the effective date of the termination. The third major facility included in this restructuring activity is 120,000 square feet of the Kendall Square Facility that the Company continued to use for its operations following its 2003 Kendall Restructuring. The rentable square footage in this portion of the Kendall Square Facility was subleased to a third party in February 2015. The Company will continue to incur charges through April 2018 related to the difference between the Company’s estimated future cash flows related to this portion of the Kendall Square Facility, which include an estimate for sublease income to be received from the Company's sublessee and its actual cash flows. The Company discounted the estimated cash flows related to this restructuring activity at a discount rate of 9%.

The activities related to the restructuring liability for the three months ended March 31, 2015 and 2014 were as follows:

19

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Liability, beginning of the period	$	33,390		$	1,079
Cash payments	(19,256		)	(2,516		)
Restructuring (income) expense	(2,997		)	5,159
Liability, end of the period	$	11,137		$	3,722

Other Restructuring Activities

The Company has incurred several other restructuring activities that are unrelated to its 2003 Kendall Restructuring and the Fan Pier Move Restructuring. The most significant activity commenced in October 2013 when the Company adopted a restructuring plan that included (i) a workforce reduction primarily related to the commercial support of INCIVEK following the continued and rapid decline in the number of patients being treated with INCIVEK as new medicines for the treatment of HCV infection neared approval and (ii) the write-off of certain assets. This action resulted from the Company's decision to focus its investment on future opportunities in cystic fibrosis and other research and development programs.

The activities related to the Company's other restructuring liabilities for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Liability, beginning of the period	$	869		$	8,441
Cash payments	(330		)	(7,267		)
Restructuring expense	306			647
Liability, end of the period	$	845		$	1,821

P. Commitments and Contingencies

Financing Arrangements

As of March 31, 2015, the Company had irrevocable stand-by letters of credit outstanding that were issued in connection with property leases and other similar agreements that were supported by an unsecured credit facility that expired in April

20

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

2015. The Company cash collateralized the letters of credit totaling $21.9 million in April 2015. The cash used to support these letters of credit is included in restricted cash as of March 31, 2015 on the Company's condensed consolidated balance sheet.

Litigation

On May 28, 2014, a purported shareholder class action Local No. 8 IBEW Retirement Plan & Trust v. Vertex Pharmaceuticals Incorporated, et al. was filed in the United States District Court for the District of Massachusetts, naming the Company and certain of the Company's current and former officers and directors as defendants. The lawsuit alleged that the Company made material misrepresentations and/or omissions of material fact in the Company's disclosures during the period from May 7, 2012 through May 29, 2012, all in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The purported class consists of all persons (excluding defendants) who purchased the Company’s common stock between May 7, 2012 and May 29, 2012. The plaintiffs seek unspecified monetary damages, costs and attorneys’ fees as well as disgorgement of the proceeds from certain individual defendants’ sales of the Company’s stock. On October 8, 2014, the Court approved Local No. 8 IBEW Retirement Fund as lead plaintiff, and Scott and Scott LLP as lead counsel for the plaintiff and the putative class. On February 23, 2015, the Company filed a reply to the plaintiffs’ opposition to its motion to dismiss.  The court heard oral argument on the motion to dismiss on March 6, 2015 and took the motion under advisement. The Company believes the claims to be without merit and intends to vigorously defend the litigation. As of March 31, 2015, the Company has not recorded any reserves for this purported class action.

Guaranties and Indemnifications

As permitted under Massachusetts law, the Company’s Articles of Organization and By-laws provide that the Company will indemnify certain of its officers and directors for certain claims asserted against them in connection with their service as an officer or director. The maximum potential amount of future payments that the Company could be required to make under these indemnification provisions is unlimited. However, the Company has purchased directors’ and officers’ liability insurance policies that could reduce its monetary exposure and enable it to recover a portion of any future amounts paid. No indemnification claims currently are outstanding, and the Company believes the estimated fair value of these indemnification arrangements is minimal.

The Company customarily agrees in the ordinary course of its business to indemnification provisions in agreements with clinical trial investigators and sites in its drug development programs, sponsored research agreements with academic and not-for-profit institutions, various comparable agreements involving parties performing services for the Company, and its real estate leases. The Company also customarily agrees to certain indemnification provisions in its drug discovery, development and commercialization collaboration agreements. With respect to the Company’s clinical trials and sponsored research agreements, these indemnification provisions typically apply to any claim asserted against the investigator or the investigator’s institution relating to personal injury or property damage, violations of law or certain breaches of the Company’s contractual obligations arising out of the research or clinical testing of the Company’s compounds or drug candidates. With respect to lease agreements, the indemnification provisions typically apply to claims asserted against the landlord relating to personal injury or property damage caused by the Company, to violations of law by the Company or to certain breaches of the Company’s contractual obligations. The indemnification provisions appearing in the Company’s collaboration agreements are similar to those for the other agreements discussed above, but in addition provide some limited indemnification for its collaborator in the event of third-party claims alleging infringement of intellectual property rights. In each of the cases above, the indemnification obligation generally survives the termination of the agreement for some extended period, although the Company believes the obligation typically has the most relevance during the contract term and for a short period of time thereafter. The maximum potential amount of future payments that the Company could be required to make under these provisions is generally unlimited. The Company has purchased insurance policies covering personal injury, property damage and general liability that reduce its exposure for indemnification and would enable it in many cases to recover all or a portion of any future amounts paid. The Company has never paid any material amounts to defend lawsuits or settle claims related to these indemnification provisions. Accordingly, the Company believes the estimated fair value of these indemnification arrangements is minimal.

21

VERTEX PHARMACEUTICALS INCORPORATED

Notes to Condensed Consolidated Financial Statements

(unaudited)

Other Contingencies

The Company has certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a reserve for contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. There were no material contingent liabilities accrued as of March 31, 2015 or December 31, 2014.

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Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations

OVERVIEW

We are in the business of discovering, developing, manufacturing and commercializing small molecule drugs. We use precision medicine approaches to create transformative drugs for patients with serious diseases in specialty markets. Our business is focused on developing and commercializing therapies for the treatment of cystic fibrosis, or CF, and advancing our research and early-stage development programs, while maintaining our financial strength.

We have marketed KALYDECO (ivacaftor) since it was approved in 2012 for the treatment of patients six years of age and older with CF who have specific genetic mutations in their cystic fibrosis transmembrane conductance regulator, or CFTR, gene. In June 2014, we announced data from two Phase 3 clinical trials, referred to as TRAFFIC and TRANSPORT, of lumacaftor, a CFTR corrector compound, in combination with ivacaftor, a CFTR potentiator compound. In TRAFFIC and TRANSPORT, we evaluated the combination regimen in patients with CF twelve years of age and older who have two copies (homozygous) of the F508del mutation in their CFTR gene, which is the most prevalent form of CF. In November 2014, we submitted a New Drug Application, or NDA, to the United States Food and Drug Administration, or FDA, and a Marketing Authorization Application, or MAA, to the European Medicines Agency, or EMA, for lumacaftor in combination with ivacaftor. We refer to lumacaftor in combination with ivacaftor under its anticipated brand name ORKAMBI.

Cystic Fibrosis

Our plan is to (i) continue to increase the number of patients eligible for treatment with ivacaftor, (ii) obtain marketing approval for ORKAMBI and (iii) research and develop earlier-stage compounds for the treatment of CF.

Ivacaftor

KALYDECO (ivacaftor) was approved in 2012 in the United States and European Union as a treatment for patients with CF six years of age and older who have the G551D mutation in their CFTR gene. Our KALYDECO net product revenues have been increasing over the last several years due to the increased number of patients who are being treated with KALYDECO in the United States and ex-U.S. markets as we have expanded the label for KALYDECO and completed reimbursement discussions for a portion of the patients eligible for treatment with KALYDECO in ex-U.S markets. Most recently, in March 2015, the FDA approved KALYDECO for the treatment of patients with CF two to five years of age who have one of ten mutations in their CFTR gene. We expect our KALYDECO net product revenues to increase further as a result of additional label expansions and as we increase the number of patients with CF for whom reimbursement is available in ex-U.S. markets.

Lumacaftor in Combination with Ivacaftor

In November 2014, we submitted an NDA to the FDA and an MAA to the EMA for ORKAMBI in patients with CF twelve years of age and older who are homozygous for the F508del mutation in their CFTR gene. These regulatory applications were based on two Phase 3 randomized, double-blind, placebo-controlled clinical trials of lumacaftor in combination with ivacaftor referred to as TRAFFIC and TRANSPORT. All four treatment arms in TRAFFIC and TRANSPORT met their primary endpoints of mean absolute improvement in percent predicted forced expiratory volume in one second, or ppFEV₁, as compared to placebo.

The FDA has granted us priority review of the NDA. The FDA has scheduled a Pulmonary-Allergy Drugs Advisory Committee, or PADAC, meeting for May 12, 2015 to discuss the NDA. The target date for the FDA to complete its review of the NDA under the Prescription Drug User Fee Act, or PDUFA, is July 5, 2015. Accordingly, assuming timely approval, we expect to begin recognizing net product revenues from ORKAMBI in the United States in mid-2015. We do not expect significant net product revenues from ORKAMBI from ex-U.S. markets in 2015 due to the reimbursement discussions that will be required in these markets following its potential approval by the European Commission in the fourth quarter of 2015. We believe that there are approximately 22,000 patients with CF twelve years of age and older who are homozygous for the F508del mutation in North America, Europe and Australia, including approximately 8,500 in the United States and approximately 12,000 in Europe.

VX-661 in Combination with Ivacaftor

In February 2015, we initiated a Phase 3 development program for VX-661 in combination with ivacaftor in patients with CF twelve years of age and older, including patients who are homozygous for the F508del mutation in their CFTR gene and patients who have one copy of the F508del mutation in their CFTR gene (heterozygous). This program was based on safety and efficacy data from previously completed clinical trials of VX-661 alone and in combination with ivacaftor, including a

23

Phase 2 clinical trial of VX-661 in combination with ivacaftor in patients with CF eighteen years of age and older who are homozygous for the F508del mutation in their CFTR gene, for which we announced data in March 2015.

Next-generation CFTR Corrector Compounds

We also are seeking to identify and develop next-generation CFTR corrector compounds that could be evaluated in future dual- and/or triple-combination treatment regimens with the potential to provide additional benefits to patients with CF. We have multiple next-generation correctors in the lead-optimization stage of research and expect to begin clinical development of a next-generation corrector in 2015.

Research and Early-Stage Development

We are engaged in a number of other research and early-stage development programs, including programs in the areas of oncology and neurology. We plan to continue investing in our research programs and fostering scientific innovation in order to identify and develop transformative medicines with a focus on CF and other genetic diseases, oncology and neurology. We believe that pursuing research in diverse areas allows us to balance the risks inherent in drug development and may provide drug candidates that will form our pipeline in future years.

HCV Infection

Prior to 2014, we recognized significant net product revenues based on sales of INCIVEK (telaprevir), a product for the treatment of genotype 1 HCV infection that we marketed in North America. In October 2013, in response to declining sales of INCIVEK and increased competition, we reduced our focus on marketing INCIVEK and eliminated the U.S. field-based sales force that had been promoting INCIVEK. We have withdrawn INCIVEK from the market in the United States, and we expect to wind-down any remaining activities relating to the field of HCV infection in 2015.

In the fourth quarter of 2014, we terminated our collaboration with Alios BioPharma, Inc., or Alios, related to the development of HCV nucleotide analogues. Our financial statements reflect the activities related to Alios as discontinued operations.

Drug Discovery and Development

Discovery and development of a new pharmaceutical product is a difficult and lengthy process that requires significant financial resources along with extensive technical and regulatory expertise and can take 10 to 15 years or more. Potential drug candidates are subjected to rigorous evaluations, driven in part by stringent regulatory considerations, designed to generate information concerning efficacy, side-effects, proper dosage levels and a variety of other physical and chemical characteristics that are important in determining whether a drug candidate should be approved for marketing as a pharmaceutical product. Most chemical compounds that are investigated as potential drug candidates never progress into development, and most drug candidates that do advance into development never receive marketing approval. Because our investments in drug candidates are subject to considerable risks, we closely monitor the results of our discovery, research, clinical trials and nonclinical studies and frequently evaluate our drug development 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 abrupt 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.

If we believe that data from a completed registration program support approval of a drug candidate, we submit an NDA to the FDA requesting approval to market the drug candidate in the United States and seek analogous approvals from comparable regulatory authorities in foreign jurisdictions. To obtain approval, we must, among other things, demonstrate with evidence gathered in nonclinical studies and well-controlled clinical trials that the drug candidate is safe and effective for the disease it is intended to treat and that the manufacturing facilities, processes and controls for the manufacture of the drug candidate are adequate. The FDA and foreign regulatory authorities have substantial discretion in deciding whether or not a drug candidate should be granted approval based on the benefits and risks of the drug candidate in the treatment of a particular disease, and could delay, limit or deny regulatory approval. If regulatory delays are significant or regulatory approval is limited or denied altogether, our financial results and the commercial prospects for the drug candidate involved will be harmed.

Regulatory Compliance

Our marketing of pharmaceutical products is subject to extensive and complex laws and regulations. We have a corporate compliance program designed to actively identify, prevent and mitigate risk through the implementation of compliance policies and systems, and through the promotion of a culture of compliance. Among other laws, regulations and standards, we are subject to various U.S. federal and state laws, and comparable foreign laws pertaining to health care fraud and abuse,

24

including anti-kickback and false claims statutes, and laws prohibiting the promotion of drugs for unapproved or off-label uses. Anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive or pay any remuneration to induce the referral of business, including the purchase or prescription of a particular drug. False claims laws prohibit anyone from presenting for payment to third-party payors, including Medicare and Medicaid, claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. We expect to continue to devote substantial resources to maintain, administer and expand these compliance programs globally.

Reimbursement

Sales of our products depend, to a large degree, on the extent to which our products will be covered by third-party payors, such as government health programs, commercial insurance and managed health care organizations. We dedicate substantial management and other resources in order to obtain and maintain appropriate levels of reimbursement for our products from third-party payors, including governmental organizations in the United States and ex-U.S. markets. If ORKAMBI is approved, in the United States, we will engage in discussions with numerous commercial insurers and managed health care organizations, along with government health programs that are typically managed by authorities in the individual states. In Europe and many other foreign countries, we will need to focus on obtaining and maintaining government reimbursement for ORKAMBI on a country-by-country basis, because in many foreign countries patients are unable to access prescription pharmaceutical products that are not reimbursed by their governments. Consistent with our experience with KALYDECO when it was first approved, we expect reimbursement discussions in ex-U.S. markets may take a significant period of time following obtaining any marketing approvals for ORKAMBI in ex-U.S. markets.

25

RESULTS OF OPERATIONS

	Three Months Ended March 31,						Increase/(Decrease)
	2015			2014			$			%
	(in thousands)
Revenues	$	138,509		$	118,451		$	20,058		17	%
Operating costs and expenses	310,494			334,493			(23,999		)	(7	)%
Other items, net	(26,621		)	(16,415		)	N/A			N/A
Net loss attributable to Vertex	$	(198,606	)	$	(232,457	)	$	(33,851	)	(15	)%

Net Loss Attributable to Vertex

Net loss attributable to Vertex was $198.6 million in the first quarter of 2015 compared to a net loss attributable to Vertex of $232.5 million in the first quarter of 2014. Our revenues increased in the first quarter of 2015 as compared to the first quarter of 2014 due to increased KALYDECO net product revenues, partially offset by decreased royalty revenues and collaborative revenues. Our operating costs and expenses decreased in the first quarter of 2015 as compared to the first quarter of 2014 primarily due to reductions in research and development expenses, royalty expenses, and restructuring expenses, partially offset by increased sales, general and administrative expenses. We expect that our net loss attributable to Vertex in 2015 will be largely dependent on the timing of potential regulatory approval of ORKAMBI in the United States and on our ability to successfully commercialize this combination therapy following the potential approval.

Diluted Net Loss Per Share Attributable to Vertex Common Shareholders

Diluted net loss per share attributable to Vertex common shareholders was $0.83 in the first quarter of 2015 as compared to a diluted net loss per share attributable to Vertex common shareholders of $1.00 in the first quarter of 2014.

Revenues

	Three Months Ended March 31,				Increase/(Decrease)
	2015		2014		$			%
	(in thousands)
Product revenues, net	$	130,875	$	103,461	$	27,414		26	%
Royalty revenues	6,792		10,733		(3,941		)	(37	)%
Collaborative revenues	842		4,257		(3,415		)	(80	)%
Total revenues	$	138,509	$	118,451	$	20,058		17	%

Product Revenues, Net

	Three Months Ended March 31,				Increase/(Decrease)
	2015		2014		$			%
	(in thousands)
KALYDECO	$	130,174	$	99,515	$	30,659		31	%
INCIVEK	701		3,946		(3,245		)	(82	)%
Total product revenues, net	$	130,875	$	103,461	$	27,414		26	%

Our total net product revenues increased in the first quarter of 2015 as compared to the first quarter of 2014 due to increased KALYDECO net product revenues. KALYDECO net product revenues were $130.2 million in the first quarter of 2015, including $58.3 million of net product revenues from international markets. The increase in KALYDECO net product revenues in the first quarter of 2015, as compared to the first quarter of 2014, was primarily due to additional patients being treated with KALYDECO as we completed reimbursement discussions in various jurisdictions and increased the number of patients eligible to receive KALYDECO through multiple label expansions that were approved by regulatory authorities in the United States and Europe during 2014 and 2015. We expect further increases in KALYDECO net product revenues during the remainder of 2015 as we continue to increase the number of patients that are treated with KALYDECO.

We have withdrawn INCIVEK from the market in the United States and do not expect significant INCIVEK net product revenues in future periods.

We believe our total net product revenues for the remainder of 2015 will be dependent on the timing of potential regulatory approval of ORKAMBI in the United States and on our ability to successfully commercialize this combination therapy following the potential approval. We submitted an NDA to the FDA and an MAA to the EMA for ORKAMBI in

26

November 2014. The target date for the FDA to complete its review of the NDA under PDUFA is July 5, 2015. Accordingly, if approved on a timely basis, we expect to begin recognizing net product revenues from ORKAMBI in the United States in mid-2015. We do not expect significant net product revenues from ORKAMBI in 2015 from ex-U.S. markets due to the reimbursement discussions that will be required in these markets following the potential approval of ORKAMBI by the European Commission in the fourth quarter of 2015.

Royalty Revenues

Our royalty revenues were $6.8 million in the first quarter of 2015 compared to $10.7 million in the first quarter of 2014. Since the beginning of 2014, our royalty revenues have consisted of (i) revenues related to a cash payment we received in 2008 when we sold our rights to certain HIV royalties and (ii) revenues related to certain third-party royalties payable by our collaborators on sales of HIV and HCV drugs that also result in corresponding royalty expenses. The decreased royalty revenues in the first quarter of 2015 compared to the first quarter of 2014 were primarily due to the continued decline in net sales of INCIVO (telaprevir) by our collaborator Janssen NV.

Collaborative Revenues

Our collaborative revenues were $0.8 million in the first quarter of 2015 as compared to $4.3 million in the first quarter of 2014. The decrease during the first quarter of 2015 was primarily attributable to the fact that we did not receive any research funding from CFFT during the first quarter of 2015, as compared to $2.9 million in research funding provided by CFFT in the first quarter of 2014.

Operating Costs and Expenses

	Three Months Ended March 31,					Increase/(Decrease)
	2015			2014		$			%
	(in thousands)
Cost of product revenues	$	9,381		$	8,572	$	809		9	%
Royalty expenses	2,926			6,904		(3,978		)	(58	)%
Research and development expenses	215,599			238,617		(23,018		)	(10	)%
Sales, general and administrative expenses	85,860			74,212		11,648			16	%
Restructuring (income) expenses	(3,272		)	6,188		N/A			N/A
Total costs and expenses	$	310,494		$	334,493	$	(23,999	)	(7	)%

Cost of Product Revenues

Our cost of product revenues includes the cost of producing inventories that corresponded to product revenues for the reporting period, plus the third-party royalties payable on our net sales of our products. Pursuant to our agreement with CFFT, our tiered third-party royalties on KALYDECO, and ORKAMBI, if approved, calculated as a percentage of net sales, range from the single digits to the sub-teens. We expect our cost of product revenues to increase moving forward due to increased net product revenues, together with an expected increase in the third-party royalty rate payable to CFFT as we begin to pay royalties at the top end of the royalty range.

Royalty Expenses

Royalty expenses include third-party royalties payable upon net sales of telaprevir by our collaborators in their territories and expenses related to a subroyalty payable to a third party on net sales of an HIV protease inhibitor sold by GlaxoSmithKline. Royalty expenses in the first quarter of 2015decreased by $4.0 million, or 58%, as compared to the first quarter of 2014 as a result of decreased INCIVO (telaprevir) sales by our collaborator Janssen NV.

Research and Development Expenses

	Three Months Ended March 31,				Increase/(Decrease)
	2015		2014		$			%
	(in thousands)
Research expenses	$	65,562	$	67,023	$	(1,461	)	(2	)%
Development expenses	150,037		171,594		(21,557		)	(13	)%
Total research and development expenses	$	215,599	$	238,617	$	(23,018	)	(10	)%

Our research and development expenses include internal and external costs incurred for research and development of our drugs and drug candidates. We do not assign our internal costs, such as salary and benefits, stock-based compensation

27

expense, laboratory supplies and other direct expenses and infrastructure costs, to individual drugs or drug candidates, because the employees within our research and development groups typically are deployed across multiple research and development programs. These internal costs are significantly greater than our external costs, such as the costs of services provided to us by clinical research organizations and other outsourced research, which we allocate by individual program. All research and development costs for our drugs and drug candidates are expensed as incurred.

Since January 1, 2012, we have incurred $2.7 billion in research and development expenses associated with drug discovery and development. The successful development of our drug candidates is highly uncertain and subject to a number of risks. In addition, the duration of clinical trials may vary substantially according to the type, complexity and novelty of the drug candidate and the disease indication being targeted. The FDA and comparable agencies in foreign countries impose substantial requirements on the introduction of therapeutic pharmaceutical products, typically requiring lengthy and detailed laboratory and clinical testing procedures, sampling activities and other costly and time-consuming procedures. Data obtained from nonclinical and clinical activities at any step in the testing process may be adverse and lead to discontinuation or redirection of development activities. Data obtained from these activities also are susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The duration and cost of discovery, nonclinical studies and clinical trials may vary significantly over the life of a project and are difficult to predict. Therefore, accurate and meaningful estimates of the ultimate costs to bring our drug candidates to market are not available.

In 2014 and the first quarter of 2015, costs related to our CF programs represented the largest portion of our development costs. Any estimates regarding development and regulatory timelines for our drug candidates are highly subjective and subject to change. In November 2014, we submitted an NDA to the FDA and an MAA to the EMA for lumacaftor in combination with ivacaftor. Obtaining regulatory approval can be a lengthy, time-consuming and uncertain process. Even if we are successful in obtaining marketing approval on a timely basis, we currently do not expect to recognize revenues from lumacaftor in combination with ivacaftor in the United States until mid-2015 and expect that it will take longer to obtain approval and third-party reimbursement for the combination therapy in ex-U.S. markets. We cannot make a meaningful estimate when, if ever, our other clinical development programs will generate revenues and cash flows.

Research Expenses

	Three Months Ended March 31,				Increase/(Decrease)
	2015		2014		$			%
	(in thousands)
Research Expenses:
Salary and benefits	$	20,456	$	20,427	$	29		—	%
Stock-based compensation expense	13,776		12,054		1,722			14	%
Laboratory supplies and other direct expenses	9,168		9,279		(111		)	(1	)%
Outsourced services	4,558		4,484		74			2	%
Infrastructure costs	17,604		20,779		(3,175		)	(15	)%
Total research expenses	$	65,562	$	67,023	$	(1,461	)	(2	)%

We maintain a substantial investment in research activities. Our research expenses decreased modestly in the first quarter of 2015 as compared to the first quarter of 2014. We expect to continue to invest in our research programs with a focus on identifying drug candidates for specialty markets.

Development Expenses

	Three Months Ended March 31,				Increase/(Decrease)
	2015		2014		$			%
	(in thousands)
Development Expenses:
Salary and benefits	$	42,195	$	42,011	$	184		—	%
Stock-based compensation expense	24,441		20,846		3,595			17	%
Laboratory supplies and other direct expenses	6,944		8,634		(1,690		)	(20	)%
Outsourced services	50,094		65,192		(15,098		)	(23	)%
Drug supply costs	1,583		2,967		(1,384		)	(47	)%
Infrastructure costs	24,780		31,944		(7,164		)	(22	)%
Total development expenses	$	150,037	$	171,594	$	(21,557	)	(13	)%

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Our development expenses decreased by $21.6 million, or 13%, in the first quarter of 2015 as compared to the first quarter of 2014, primarily due to a reduction in outsourced services expenses and infrastructure costs. The decrease in outsourced services expenses in the first quarter of 2015 was largely attributable to reduced clinical trial expenses following the completion of the TRAFFIC and TRANSPORT clinical trials in the first half of 2014. We expect our development expenses for outsourced activities to increase during the balance of 2015 as compared to the first quarter of 2015 due to activities related to clinical trials we have initiated or plan to initiate in 2015, including our Phase 3 development program for VX-661 in combination with ivacaftor. The decrease in infrastructure costs in the first quarter of 2015 as compared to the first quarter of 2014 was largely attributable to costs incurred in the the first quarter of 2014 related to the relocation of our corporate headquarters in Massachusetts from Cambridge to Boston.

Sales, General and Administrative Expenses

	Three Months Ended March 31,				Increase/(Decrease)
	2015		2014		$		%
	(in thousands)
Sales, general and administrative expenses	$	85,860	$	74,212	$	11,648	16	%

Sales, general and administrative expenses increased by 16% in the first quarter of 2015 as compared to the first quarter of 2014, primarily due to increased investment in commercial support for KALYDECO and costs incurred to prepare for the potential launch of ORKAMBI.

Restructuring Expense

We recorded restructuring credits of $3.3 million in the first quarter of 2015 as compared to restructuring expenses of $6.2 million in the first quarter of 2014. Our restructuring credits in the first quarter of 2015 were primarily related to the early termination of two leases in Cambridge, Massachusetts in connection with the relocation of our corporate headquarters to Boston, Massachusetts for which we had accrued a restructuring liability in excess of the termination fee we ultimately paid. Our restructuring expenses in the first quarter of 2014 were primarily related to cease use charges incurred for several facilities due to the relocation of our corporate headquarters.

Other Items

Interest Expense, Net

Interest expense, net was $21.3 million in the first quarter of 2015 compared to $15.7 million in the first quarter of 2014. The increase during the first quarter of 2015 compared to the first quarter of 2014 was primarily due to interest expense associated with the $300.0 million we borrowed in July 2014 pursuant to our credit agreement. During the remainder of 2015, we expect to incur approximately $45.1 million of interest expense associated with the leases for our corporate headquarters and approximately $16.2 million of interest expense related to the credit agreement that we entered into in July 2014.

Other Income (Expense), Net

Other income (expense), net was $(5.1) million in the first quarter of 2015 compared to $0.5 million in the first quarter of 2014. Other income (expense), net in the first quarter of 2015 was primarily due to unrealized foreign exchange losses.

Income Taxes

We recorded a provision for income taxes of $0.3 million and $0.8 million in the first quarter of 2015 and the first quarter of 2014, respectively, related to state income taxes and income earned in various foreign jurisdictions.

Discontinued Operations, Net of Tax

Our loss from discontinued operations was $0.3 million in the first quarter of 2014 related to Alios BioPharma, Inc., a variable interest entity that we consolidated from June 2011 through December 2013. As of September 30, 2014, we concluded that we no longer had significant continuing involvement with Alios. As a result, the effect of the Alios collaboration is presented as discontinued operations in our condensed consolidated statements of operations.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2015, we had cash, cash equivalents and marketable securities of $1.18 billion, which represented a decrease of $206 million from $1.39 billion as of December 31, 2014. This decrease was primarily due to cash expenditures we made during the three months ended March 31, 2015 related to, among other things, research and development expenses and sales, general and administrative expenses, partially offset by cash receipts from product sales and $41.6 million in cash we received from issuances of common stock pursuant to our employee benefit plans. We also incurred $15.1 million in costs for capital expenditures including payments on capital leases during the three months ended March 31, 2015. We expect to continue to incur losses on a quarterly basis until we can substantially increase revenues as a result of potential future regulatory approvals, the timing of which are uncertain.

Sources of Liquidity

We intend to rely on our existing cash, cash equivalents and marketable securities together with cash flows from product sales as our primary source of liquidity. Our cash flows from product sales have decreased on an annual basis during each of the past two years. In the near-term, we expect cash flows from sales of KALYDECO to increase as we continue to increase the number of patients that are treated with KALYDECO. If we obtain approval on a timely basis, we expect to begin recognizing net product revenues from ORKAMBI in the United States in mid-2015. We do not expect significant net product revenues from ORKABMI in 2015 from ex-U.S. markets due to the reimbursement discussions that will be required in these markets following the potential approval of ORKAMBI by the European Commission in the fourth quarter of 2015.

We have borrowed $300.0 million under a credit agreement that we entered into in July 2014 and, subject to certain conditions, we may request up to an additional $200.0 million pursuant to that credit agreement. In recent periods, we also have received significant proceeds from the issuance of common stock under our employee benefit plans, but the amount and timing of future proceeds from employee benefits plans is uncertain. Other possible sources of liquidity include strategic collaborative agreements that include research and/or development funding, commercial debt, public and private offerings of our equity and debt securities, development milestones and royalties on sales of products, software and equipment leases, strategic sales of assets or businesses and financial transactions. Negative covenants in our credit agreement may prohibit or limit our ability to access these sources of liquidity.

Future Capital Requirements

We incur substantial operating expenses to conduct research and development activities and operate our organization. In addition, we must repay the principal amount on the $300.0 million we borrowed in June 2014 as follows: $15.0 million in the second half of 2015, $105.0 million in 2016 and $180.0 million in 2017. We also have substantial facility and capital lease obligations, including leases for two buildings in Boston, Massachusetts that continue through 2028. We expect that cash flows from KALYDECO together with our current cash, cash equivalents and 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 the amounts of future revenues generated by KALYDECO, potential revenues from ORKBAMI, and the potential introduction or one or more of our other drug candidates to the market, the level of our business development activities and the number, breadth, cost and prospects of our research and development programs.

Financing Strategy

In July 2014, we borrowed $300.0 million pursuant to a credit agreement. In addition, subject to certain conditions, we may request that the lenders loan us up to an additional $200.0 million under the credit agreement. We may raise additional capital 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.

CONTRACTUAL COMMITMENTS AND OBLIGATIONS

Our commitments and obligations were reported in our Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the Securities and Exchange Commission, or SEC, on February 13, 2015. There have been no material changes from the contractual commitments and obligations previously disclosed in that Annual Report on Form 10-K.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States. 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, 2015, 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, 2014, which was filed with the SEC on February 13, 2015.

RECENT ACCOUNTING PRONOUNCEMENTS

For a discussion of recent accounting pronouncements please refer to Note A, “Nature of Business and Accounting Policies—Recent Accounting Pronouncements,” in the 2014 Annual Report on Form 10-K. There were no new accounting pronouncements adopted during the three months ended March 31, 2015 that had a material effect on our financial statements.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

As part of our investment portfolio, we own financial instruments that are sensitive to market risks. The investment portfolio is used to preserve our capital until it is required to fund operations, including our research and development activities. None of these market risk-sensitive instruments are held for trading purposes.

Interest Rate Risk

We invest our cash in a variety of financial instruments, principally money market funds, securities issued by the U.S. government and its agencies, investment-grade corporate bonds and commercial paper. These investments are denominated in U.S. dollars. All of our interest-bearing securities are subject to interest rate risk and could decline in value if interest rates fluctuate. Substantially all of our investment portfolio consists of marketable securities with active secondary or resale markets to help ensure portfolio liquidity, and we have implemented guidelines limiting the term-to-maturity of our investment instruments. Due to the conservative nature of these instruments, we do not believe that we have a material exposure to interest rate risk.

Foreign Exchange Market Risk

As a result of our foreign operations, we face exposure to movements in foreign currency exchange rates, primarily the Euro, Swiss Franc, British Pound, Australian Dollar and Canadian Dollar against the U.S. dollar. The current exposures arise primarily from cash, accounts receivable, intercompany receivables, payables and inventories. Both positive and negative affects to our net revenues from international product sales from movements in foreign currency exchange rates are partially mitigated by the natural, opposite affect that foreign currency exchange rates have on our international operating costs and expenses.

We maintain a foreign currency management program with the objective of reducing the impact of exchange rate fluctuations on our operating results and forecasted revenues and expenses denominated in foreign currencies. The change in fair value of these foreign currency forward contracts included in accumulated other comprehensive loss and the gross fair value of foreign currency forward assets and liabilities included on the condensed consolidated balance sheet as of March 31, 2015 were not material.

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Item 4.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that, based on such evaluation, as of March 31, 2015 our disclosure controls and procedures were effective and designed to provide reasonable assurance that the information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Controls Over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) occurred during the three months ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. Other Information

Item 1.     Legal Proceedings

Local No. 8 IBEW Retirement Plan & Trust v. Vertex Pharmaceuticals Incorporated, et al.

On May 28, 2014, a purported shareholder class action Local No. 8 IBEW Retirement Plan & Trust v. Vertex Pharmaceuticals Incorporated, et al. was filed in the United States District Court for the District of Massachusetts, naming us and certain of our current and former officers and directors as defendants. The lawsuit alleged that we made material misrepresentations and/or omissions of material fact in our disclosures during the period from May 7, 2012 through May 29, 2012, all in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The purported class consists of all persons (excluding defendants) who purchased our common stock between May 7, 2012 and May 29, 2012. The plaintiffs seek unspecified monetary damages, costs and attorneys’ fees as well as disgorgement of the proceeds from certain individual defendants’ sales of our stock. On October 8, 2014, the Court approved Local No. 8 IBEW Retirement Fund as lead plaintiff, and Scott and Scott LLP as lead counsel for the plaintiff and the putative class. We filed a motion to dismiss the complaint on December 8, 2014 and the plaintiffs filed their opposition to our motion to dismiss on January 22, 2015. On February 23, 2015, we filed a reply to the plaintiffs’ opposition to our motion to dismiss.  The court heard oral argument on our motion to dismiss on March 6, 2015 and took the motion under advisement. We believe the claims to be without merit and intend to vigorously defend the litigation.

Item 1A. Risk Factors

Information regarding risk factors appears in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 13, 2015. There have been no material changes from the risk factors previously disclosed in that Annual Report on Form 10-K.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q and, in particular, our Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in Part I-Item 2, contain or incorporate a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding:

• our expectations regarding the amount of, timing of and trends with respect to our revenues, costs and expenses and other gains and losses, including those related to net product revenues from KALYDECO and potential net product revenues from ORKAMBI, if approved;

• our expectations regarding clinical trials, development timelines and regulatory authority filings and submissions for ivacaftor, lumacaftor and VX-661;

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• expectations regarding potential marketing approvals for ORKAMBI in the United States and ex-U.S. markets;

• our ability to successfully market KALYDECO, ORKAMBI, if approved, or any of our other drug candidates for which we obtain regulatory approval;

• our expectations regarding the timing and structure of clinical trials of our drugs and drug candidates, including, ivacaftor, lumacaftor and VX-661, and the expected timing of our receipt of data from our ongoing and planned clinical trials;

• the data that will be generated by ongoing and planned clinical trials and the ability to use that data to advance compounds, continue development or support regulatory filings;

• our beliefs regarding the support provided by clinical trials and preclinical and nonclinical studies of our drug candidates for further investigation, clinical trials or potential use as a treatment;

• our plan to continue investing in our research and development programs and our strategy to develop our drug candidates, alone or with third party-collaborators;

• the establishment, development and maintenance of collaborative relationships;

• potential business development activities;

• our ability to use our research programs to identify and develop new drug candidates to address serious diseases and significant unmet medical needs; and

• our liquidity and our expectations regarding the possibility of raising additional capital.

Any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many factors mentioned in this Quarterly Report on Form 10-Q will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may vary materially from expected results. We also provide a cautionary discussion of risks and uncertainties under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on February 13, 2015. These are factors and uncertainties that we think could cause our actual results to differ materially from expected results. Other factors and uncertainties besides those listed there could also adversely affect us.

Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “intends,” “expects” and similar expressions are intended to identify forward-looking statements. There are a number of factors and uncertainties that could cause actual events or results to differ materially from those indicated by such forward-looking statements, many of which are beyond our control. In addition, the forward-looking statements contained herein represent our estimate only as of the date of this filing and should not be relied upon as representing our estimate as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements.

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Repurchases of Equity Securities

The table set forth below shows all repurchases of securities by us during the three months ended March 31, 2015:

Period	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
January 1, 2015 to January 31, 2015	47,510	$0.01	—	—
February 1, 2015 to February 28, 2015	47,863	$0.01	—	—
March 1, 2015 to March 31, 2015	21,221	$0.01	—	—

The repurchases were made under the terms of our Amended and Restated 2006 Stock and Option Plan and our 2013 Stock and Option Plan. Under these plans, we award shares of restricted stock to our employees that typically are subject to a lapsing right of repurchase by us. We may exercise this right of repurchase if a restricted stock recipient’s service to us is terminated. If we exercise this right, we are required to repay the purchase price paid by or on behalf of the recipient for the repurchased restricted shares, which typically is the par value per share of $0.01. Repurchased shares are returned to applicable plan and are available for future awards under the terms of the applicable plan.

Item 6.    Exhibits

Exhibit Number	Exhibit Description
10.1	Employment Agreement, dated as of December 2, 2013, between Vertex Pharmaceuticals Incorporated and Jeffrey Chodakewitz.
10.2	Change of Control Agreement, dated as of December 2, 2013, between Vertex Pharmaceuticals Incorporated and Jeffrey Chodakewitz.
31.1	Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer and the Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation
101.LAB	XBRL Taxonomy Extension Labels
101.PRE	XBRL Taxonomy Extension Presentation
101.DEF	XBRL Taxonomy Extension Definition

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Vertex Pharmaceuticals Incorporated
May 4, 2015	By:	/s/ Ian F. Smith
		Ian F. Smith
		Executive Vice President and Chief Financial Officer (principal financial officer and duly authorized officer)

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EX-10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) is made and entered into as of this 2nd day of December, 2013, by and between Vertex Pharmaceuticals Incorporated, a Massachusetts corporation (together with its successors and assigns, the “Company”), and Jeffrey Allan Chodakewitz, M.D. (the “Executive”).

W IT N E S S E T H

WHEREAS, the Company will employ the Executive as the Company’s Chief Medical Officer, and Senior Vice President, Global Medicines Development and Affairs, commencing on the Effective Date, as defined in Section 1 below; and

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration, the receipt of which mutually is acknowledged, the Company and the Executive (each individually a “Party”, and together the “Parties”) agree as follows:

1. DEFINITIONS.

“Base Salary” shall mean the Executive’s base salary in accordance with Section 4 below.

“Board” shall mean the Board of Directors of the Company.

“Cause” shall mean (i) the Executive is convicted of a crime involving moral turpitude, (ii) the Executive commits a material breach of any provision of this Agreement not involving the performance or nonperformance of duties, or (iii) the Executive, in carrying out the Executive’s duties, acts or fails to act in a manner that is determined, in the sole discretion of the Board, after written notice of any such act or failure to act and a reasonable opportunity to cure the deficiency has been provided to the Executive, to be (A) willful gross neglect or (B) willful gross misconduct resulting, in either case, in material harm to the Company unless such act, or failure to act, was believed by the Executive, in good faith, to be in the best interests of the Company.

“Change of Control” shall have the meaning set forth in the Change of Control Agreement.

“Change of Control Agreement” shall mean the Change of Control letter agreement between the Company and the Executive of even date herewith.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Common Stock” shall mean the common stock of the Company.

“Disability” or “Disabled” shall mean a disability as determined under the Company’s long-term disability plan or program in effect at the time the disability first occurs, or if no such plan or program exists at the time of disability, then a “disability” as defined under Section 22(e)(3) of the Code.

“Effective Date” shall mean January 2, 2014.

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“Good Reason” shall mean that, without the Executive’s consent, one or more of the following events occurs:

(i) the Executive's duties are materially diminished and, as a result, the Executive ceases to be a member of the Executive Team or a similar group of senior leadership of the Company;

(ii) the Executive’s Base Salary is decreased unless such reduction is part of an across-the-board proportionate reduction in the salaries of the Company’s senior management team; or

(iii) the office to which the Executive is assigned is relocated to a place 35 or more miles away and such relocation is not at the Executive’s request or with the Executive’s prior agreement (and other than, for Executives assigned to the Company’s principal executive offices, in connection with a change in location of the Company’s principal executive offices);

provided that Good Reason shall not exist unless and until within 30 days after the event giving rise to Good Reason under any of (i), (ii) or (iii) above has occurred, the Executive delivers a written termination notice to the Company stating that an event giving rise to Good Reason has occurred and identifying with reasonable detail the event that the Executive asserts constitutes Good Reason under any of (i), (ii) or (ii) above and the Company fails or refuses to cure or eliminate the event giving rise to Good Reason on or within 30 days after receiving such notice. To avoid doubt, the termination of the Executive’s employment would become effective at the close of business on the thirtieth day after the Company receives the Executive’s termination notice, unless the Company cures or eliminates the event giving rise to Good Reason prior to such time.

“Severance Payment” shall mean an amount equal to the sum of the Base Salary in effect on the date of termination of Executive’s employment, plus the amount of the Target Bonus for the Executive for the year in which the Executive’s employment is terminated; provided, however, that if the Executive terminates the Executive’s employment for Good Reason based on a reduction in Base Salary, then the Base Salary to be used in calculating the Severance Payment shall be the Base Salary in effect immediately prior to such reduction in Base Salary.

“Target Bonus” shall mean the target cash bonus for which the Executive is eligible on an annual basis, at a level consistent with the Executive’s title and responsibilities, under the Company’s bonus program then in effect and applicable to the Company’s senior executives generally.

2. TERM OF EMPLOYMENT.

The Company hereby employs the Executive, and the Executive hereby accepts such employment, continuing until termination in accordance with the terms of this Agreement. The period during which the Executive is employed hereunder is referred to in this Agreement as the “term of employment.”

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3. POSITION.

On the Effective Date, the Company will employ the Executive in a dual role. The Executive will serve as the Company’s Chief Medical Officer, reporting to the Company’s President, Chairman & Chief Executive Officer, currently Jeffrey M. Leiden. The Executive will also serve as Senior Vice President, Global Medicines Development and Affairs, reporting to the Company’s Chief Scientific Officer, currently Peter Mueller.

4. BASE SALARY.

The Executive’s annualized Base Salary as of the date of this Agreement is $520,000, payable in accordance with the regular payroll practices of the Company. The Base Salary shall be reviewed no less frequently than annually, and any changes thereto (which shall thereafter be deemed the Executive’s Base Salary) shall be solely within the discretion of the Board.

5. TARGET BONUS/SIGN-ON BONUS/EQUITY.

(a) Target Bonus Program: The Executive shall participate in the Company’s Target Bonus program (and other cash incentive compensation programs) applicable to the Company’s senior executives, as any such programs are established and modified from time to time by the Board in its sole discretion, and in accordance with the terms of such program.

(b) Sign-On Cash Bonus: The Executive shall receive a sign-on cash bonus in the amount of $250,000 payable (with appropriate deductions as required by law) to the Executive at the first regular pay date applicable to the Executive after the Effective Date. If the Executive terminates this Agreement without Good Reason, and other than as a result of death or Disability, during the period commencing on the Effective Date and ending on the first anniversary of the Effective Date, the Executive shall repay the sign-on cash bonus to the Company within 30 days of such termination.

(c) Sign-On Stock Option Grants: The Executive shall receive a stock option grant under the Company’s 2006 Stock and Option Plan (the “Stock Plan”) to purchase 55,000 shares of the Company’s common stock at a price equal to the Fair Market Value of Vertex’s shares, as defined in the Stock Plan, on the Effective Date. The option will vest and become exercisable as to equal numbers of shares quarterly in arrears over the four year period commencing on the Effective Date, and as otherwise specified herein and in the Stock Plan, and shall be subject to the other terms and conditions specified in a separate grant agreement.

(d)     Sign-On Restricted Stock Grants:

(i)     the Executive will purchase, in accordance with the terms of a Restricted Stock Agreement executed and delivered to the Company by the Executive on the Effective Date (the “Grant Date”), 1,631 shares of the Company’s Common Stock, at a purchase price per share of $0.01. The Company will retain the right to repurchase these shares at $0.01 per share purchase price should the Executive experience a termination of employment, as such term is used in the Stock Plan, but this repurchase right will lapse as to one quarter of the total number of shares on the last calendar day of the anniversary month of hire each year the executive is employed until fully vested, and shall be subject to the other terms and conditions specified in a separate grant agreement; and

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(ii)     the Executive will purchase, in accordance with the terms of a Restricted Stock Agreement executed and delivered to the Company by the Executive on the Grant Date (the “Special Grant”), 7,869 shares of the Company’s Common Stock, at a purchase price per share of $0.01. Subject to the provisions of Section 9(c)(iv), the Company will retain the right to repurchase these shares at $0.01 per share purchase price should the Executive experience a termination of employment, as such term is used in the Stock Plan, but this repurchase right will lapse as to one quarter of the total number of shares on the last calendar day of the anniversary month of hire each year the executive is employed until fully vested, and shall be subject to the other terms and conditions specified in a separate grant agreement.

6. INCENTIVE COMPENSATION PROGRAMS.

During the term of employment, the Executive shall be eligible to participate in the Company’s incentive compensation programs applicable to the Company’s senior executives, as such programs may be established and modified from time to time by the Board in its sole discretion.

7. EMPLOYEE BENEFIT PROGRAMS.

During the term of employment, the Executive shall be entitled to participate in all employee welfare and pension benefit plans, programs and/or arrangements offered by the Company to its senior executives, as such plans, programs and arrangements may be amended from time to time, to the same extent and on the same terms applicable to other senior executives. Nothing in this section shall preclude the Company from amending or terminating any of its employee benefit plans, programs or arrangements.

8. VACATION.

During the term of employment, the Executive shall be entitled to paid vacation days each calendar year in accordance with the Company’s vacation policy then in effect.

9. TERMINATION OF EMPLOYMENT.

(a) Termination in Connection with a Change of Control. To the extent the Executive is entitled, in connection with the Executive’s termination of employment, to severance or other benefits under the Change of Control Agreement, the Executive shall not be entitled to corresponding benefits under this Section 9.

(b) Termination by the Company for Cause; or Termination by the Executive without Good Reason. If the Company terminates the Executive’s employment for Cause, or if the Executive voluntarily terminates the Executive’s employment, other than for Good Reason, death or Disability, the term of employment shall end as of the date specified below, and the Executive shall be entitled to the following:

(i) Base Salary earned by Executive but not paid through the date of termination of Executive’s employment under this Section 9(b); and

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(ii) any amounts earned, accrued or owing to the Executive but not yet paid under Sections 5, 6, or 7 above.

Termination by Company for Cause shall be effective as of the date noticed by the Company. Voluntary termination by Executive other than for Good Reason, death or Disability shall be effective upon 90 days’ prior written notice to the Company and shall not be deemed a breach of this Agreement.

(c) Termination by the Company Without Cause; or Termination by the Executive for Good Reason. If the Executive's employment is terminated by the Company without Cause (other than due to death or Disability), or is terminated by the Executive for Good Reason (in accordance with the notice and cure provisions set forth in the definition of “Good Reason” above), the Executive shall be entitled to the following(provided that, with respect to (iii) and (v) such amounts shall be subject to and in exchange for a general release of all claims against the Company, its subsidiaries, and their officers, directors, agents and representatives, which is executed by Executive and becomes enforceable and non-revocable within 60 days of the date of termination):

(i) Base Salary earned by Executive but not paid through the date of termination of Executive’s employment under this Section 9(c);

(ii) all incentive compensation awards earned by Executive but not paid prior to the date of termination of Executive’s employment under this Section 9(c);

(iii) a cash payment to the Executive in an amount equal to the Severance Payment, payable within ten days after the execution of a general release and expiration, without revocation, of any applicable revocation periods under the general release provided that if the 60-day period during which the release is required to become effective and irrevocable begins in one calendar year and ends in another calendar year, the Severance Payment shall not be made before the first day of the second calendar year;

(iv) the Company’s right to repurchase the shares of restricted stock subject to the Special Grant shall lapse in full;

(v) any amounts earned, accrued or owing to the Executive but not yet paid under Sections 5, 6 or 7 above;

(vi) if COBRA coverage is elected by the Executive, the Company shall pay the cost of insurance continuation premiums on the Executive’s behalf (whether or not covered by COBRA) to continue standard medical, dental and life insurance coverage for the Executive (or the cash equivalent of same in the event the Executive is ineligible for continued coverage) until the earlier of:

(A) the date 12 months after the date the Executive’s employment is terminated; or

(B) the date, or dates, on which the Executive receives equivalent coverage and benefits under the plans, programs and/or arrangements of a subsequent employer (such coverage and benefits to be determined on a coverage-by-coverage or benefit-by-benefit basis).

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If Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of the Code, any payment of “nonqualified deferred compensation” (as defined under Section 409A of the Code and related guidance) attributable to a “separation from service” (as defined under Section 409A of the Code and related guidance) shall not commence until the first full business day that is more than six months after the applicable separation from service (“Deferred Payment Date”). Any payments that would otherwise have been made between the separation from service and the Deferred Payment Date, but for this paragraph, shall be made in a lump sum on the Deferred Payment Date. Payments that, in any case, are scheduled to be made after the Deferred Payment Date shall continue according to the applicable payment schedule. To the extent that the termination of the Executive’s employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code (as the result of further services that reasonably are anticipated to be provided by the Executive to the Company at the time the Executive’s employment is terminated), the payment of any nonqualified deferred compensation will be further delayed until the date that is the first full business day that is more than six months after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code.

10. ASSIGNABILITY; BINDING NATURE.

This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors, heirs (in the case of the Executive) and assigns. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company; provided, however, that the assignee or transferee is the successor to all or substantially all of the assets of the Company and such assignee or transferee assumes the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law.

11. REPRESENTATIONS.

The Company represents and warrants that it is fully authorized and empowered to enter into this Agreement, and that the performance of its obligations under this Agreement will not violate any agreement between it and any other person, firm or organization. The Executive represents and warrants that no agreement exists between her and any other person, firm or organization that would be violated by the performance of the Executive’s obligations under this Agreement.

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12. INDEMNIFICATION; INSURANCE.

The Executive shall at all times be indemnified and eligible for advancement of expenses on the same basis as is provided for the Company’s other executive officers and in accordance with the provisions of the Company’s charter and by-laws then in effect. The Executive shall also be covered under all of the Company’s policies of liability insurance maintained for the benefit of its directors and officers on the same basis as is provided for its other executive officers.

13. ENTIRE AGREEMENT; TERMINATION.

This Agreement, the agreements referenced herein and the Employee Non-Disclosure, Non-Competition & Inventions Agreement between the Executive and the Company contain the entire understanding and agreement between the Parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, including but not limited to the offer letter dated December 2, 2013 between the Parties with respect thereto. Subject to the terms of this Agreement, the Company shall be entitled to terminate the Executive’s employment at any time, and the Executive may terminate the Executive’s employment by the Company, at any time subject to the provisions of Section 9(b) of this Agreement, in each case by written notice provided in accordance with Section 20 of this Agreement.

14. AMENDMENT OR WAIVER.

No provision in this Agreement may be amended unless such amendment is agreed to in writing and signed by the Executive and an authorized officer of the Company provided that the Company may, without the Executive’s consent, unilaterally adopt amendments that may be required so that this Agreement continues to comply with applicable law or regulations, including without limitation Section 409A of the Code, provided such amendments do not adversely affect the benefits to the Executive under this Agreement. No waiver by either Party of any breach by the other Party of any condition or provision contained in this Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. Any waiver must be in writing and signed by the Executive or an authorized officer of the Company, as the case may be.

15. SEVERABILITY.

If any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law.

16. SURVIVORSHIP.

The respective rights and obligations of the Parties hereunder shall survive any termination of the Executive’s employment to the extent necessary to the intended preservation of such rights and obligations.

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17. BENEFICIARIES/REFERENCES.

The Executive shall be entitled, to the extent permitted under any applicable law, to select and change a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following the Executive’s death by giving the Company written notice thereof. In the event of the Executive’s death or a judicial determination of the Executive’s incompetence, reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to the Executive’s beneficiary, estate or other legal representative.

18. GOVERNING LAW/JURISDICTION.

This Agreement shall be governed by and construed and interpreted in accordance with the laws of The Commonwealth of Massachusetts without reference to principles of conflict of laws.

19. RESOLUTION OF DISPUTES.

Any disputes arising under or in connection with this Agreement may, at the election of the Executive or the Company, be resolved by binding arbitration, to be held in Massachusetts in accordance with the Rules and Procedures of the American Arbitration Association. If arbitration is elected, the Executive and the Company shall mutually select the arbitrator. If the Executive and the Company cannot agree on the selection of an arbitrator, each Party shall select an arbitrator and the two arbitrators shall select a third arbitrator, and the three arbitrators shall form an arbitration panel that shall resolve the dispute by majority vote. Judgment upon the award rendered by the arbitrator or arbitrators may be entered in any court having jurisdiction thereof. Costs of the arbitrator or arbitrators and other similar costs in connection with an arbitration shall be shared equally by the Parties; all other costs, such as attorneys’ fees incurred by each Party, shall be borne by the Party incurring such costs.

20. NOTICES.

All notices that are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, addressed as follows:

If to the Company:    Vertex Pharmaceuticals Incorporated

130 Waverly Street

Cambridge, MA 02139-4242

Attn: Chief Executive Officer

with copies to:

the General Counsel

If to the Executive:    at the Executive’s home address listed in the Company records.

Any such notice shall be deemed to have been given: (a) when delivered if personally delivered or sent by facsimile on a business day; (b) on the business day after dispatch if sent by

8

nationally-recognized overnight courier; and/or (c) on the fifth business day following the date of mailing if sent by mail.

21. HEADINGS.

The headings of the sections contained in this Agreement are for convenience only and shall not be deemed to control or affect the meaning or construction of any provision of this Agreement.

22. COUNTERPARTS.

This Agreement may be executed in two or more counterparts.

23. SECTION 409A COMPLIANCE.

It is the intention of the Company and the Executive that this Agreement and the payments provided for herein meet the requirements of Section 409A of the Code, to the extent applicable to this Agreement and such payments. The Company and the Executive agree to cooperate in good faith in preparing and executing, at such time as sufficient guidance is available under Section 409A and from time to time thereafter, such amendments to this Agreement, if any, as the Executive may reasonably request solely for the purpose of assuring that this Agreement and the payments provided hereunder meet the requirements of Section 409A. Nothing in this Section 23 shall require the Company to increase the Executive’s compensation or make the Executive whole for any requested changes.

24. TAX WITHHOLDING; NO GUARANTEE OF ANY TAX CONSEQUENCES.

All payments hereunder shall be subject to all applicable withholding for any federal, state or local income taxes including any excise taxes under the Code. Notwithstanding any other provision of this Agreement to the contrary or other representation, the Company does not in any way guarantee the tax consequences of any payment or compensation under this Agreement including, without limitation, under Section 409A of the Code.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first written above.

Vertex Pharmaceuticals Incorporated

/s/ Jeffrey M. Leiden                

Jeffrey M. Leiden, President, Chairman and

Chief Executive Officer

9

Executive

/s/ Jeffrey Allan Chodakewitz            

Jeffrey Allan Chodakewitz, M.D.

10

EX-10.2

Jeffrey Allan Chodakewitz, M.D.

December 2, 2013

Page 1 of 6

December 2, 2013

Jeffrey Allan Chodakewitz, M.D.

3810 Secondwoods Road

Doylestown, PA 18902

RE:    Change of Control Agreement

Dear Jeffrey:

You are a key member of the senior management team of Vertex Pharmaceuticals Incorporated (the “Company”). As a result, the Company would like to provide you with the following “change of control” benefits to help ensure that if the Company becomes involved in a “change of control” transaction, there will be no distraction from your attention to the needs of the Company.

I. Definitions. For the purposes of this Change of Control Agreement (this “Agreement”), capitalized terms shall have the following meanings:

1. “Cause” shall mean:

(a) your conviction of a crime involving moral turpitude;

(b) your willful refusal or failure to follow a lawful directive or instruction of the Company’s Board of Directors or the individual(s) to whom you report, provided that you receive prior written notice of the directive(s) or instruction(s) that you failed to follow, and providedfurther that the Company, in good faith, gives you 30 days to correct such failure and furtherprovided that if you correct the failure(s), any termination of your employment on account of such failure shall not be treated for purposes of this Agreement as a termination of employment for “Cause”;

(c) in carrying out your duties you commit (i) willful gross negligence, or (ii) willful gross misconduct, resulting in either case in material harm to the Company, unless such act, or failure to act, was believed by you, in good faith, to be in the best interests of the Company; or

(d) your violation of the Company’s policies made known to you regarding confidentiality, securities trading or inside information.

2. “Change of Control” shall mean that:

(a) any “person” or “group” as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (the “Act”), becomes a beneficial owner, as such term is used in Rule 13d-3 promulgated under the Act, of securities of the Company representing more than 50% of the combined voting power of the outstanding securities of the Company having the right to vote in the election of directors; or

Jeffrey Allan Chodakewitz, M.D.

December 2, 2013

Page 2 of 6

(b) all or substantially all the business or assets of the Company are sold or disposed of, or the Company or a subsidiary of the Company combines with another company pursuant to a merger, consolidation, or other similar transaction, otherthan (i) a transaction solely for the purpose of reincorporating the Company or one of its subsidiaries in a different jurisdiction or recapitalizing or reclassifying the Company’s stock; or (ii) a merger or consolidation in which the shareholders of the Company immediately prior to such merger or consolidation continue to own at least a majority of the outstanding voting securities of the Company or the surviving entity immediately after the merger or consolidation.

3. “Code” shall mean the Internal Revenue Code of 1986, as amended.

4. “Disability” shall mean a disability as determined under the Company's long-term disability plan or program in effect at the time the disability first occurs, or if no such plan or program exists at the time of disability, then a “disability” as defined Section 22(e)(3) of the Code.

5. “Good Reason” shall mean one of the following events has occurred without your consent:

(a) you suffer a material reduction in the authorities, duties or job title and responsibilities associated with your position as Chief Medical Officer and Senior Vice President, Global Medicines Development and Affairs for the Company as of the date hereof;

(b) your annual base salary is decreased;

(c) the office to which you are assigned is relocated to a place 35 or more miles away; or

(d) following a Change of Control, the Company’s successor fails to assume the Company’s rights and obligations under this Agreement;

provided that Good Reason shall not exist unless and until within 30 days after the event giving rise to Good Reason under (a), (b), (c) or (d) above has occurred, you deliver a written termination notice to the Company stating that an event giving rise to Good Reason has occurred and identifying with reasonable detail the event that you assert constitutes Good Reason under (a), (b), (c) or (d) above and the Company fails or refuses to cure or eliminate the event giving rise to Good Reason on or within 30 days after receiving your notice. To avoid doubt, the termination of your employment would become effective at the close of business on the thirtieth day after the Company receives your termination notice, unless the Company cures or eliminates the event giving rise to Good Reason prior to such time.

6. “Termination Date” shall mean the last day of your employment with the Company.

Jeffrey Allan Chodakewitz, M.D.

December 2, 2013

Page 3 of 6

II. Severance Benefits upon Change of Control. If:

(A) your employment is terminated by the Company (except for termination for Cause or due to a Disability) and the Termination Date is within 90 days prior to a Change of Control or within 12 months after a Change of Control; or

(B) you, of your own initiative, (i) terminate your employment for Good Reason (in accordance with the notice and cure provisions set forth in Section I.5 above) and (ii) the event giving rise to Good Reason occurs within 90 days prior to a Change of Control or within 12 months after a Change of Control;

then, you shall receive the following benefits:

1. Severance Payment. In exchange for your execution within 60 days of the Termination Date of a general release, in a form satisfactory to the Company, of all claims against the Company, its subsidiaries, and its and their officers, directors and representatives, that becomes enforceable and irrevocable within such 60-day period, the Company shall make a cash payment (the “Severance Payment”) to you in an amount equal to:

(a) your annual base salary (provided, however, that if you terminate your employment for Good Reason based on a reduction in your annual base salary, then the annual base salary to be used in calculating the Severance Payment shall be your annual base salary in effect immediately prior to such reduction in annual base salary) plus your target bonus under any bonus program applicable to you for the year in which the Termination Date occurs; plus

(b) A prorata portion of your target bonus for the portion of the year in which the Termination Date occurs under any bonus program applicable to you; plus

(c) all cash incentive compensation awards earned by you but not paid prior to the Termination Date; provided that, if a fiscal year has been completed and the incentive award for such fiscal year has not been determined, the incentive compensation for such completed fiscal year shall equal the target bonus for such fiscal year.

Except with respect to any portion of the Severance Payment that is delayed as set forth in this paragraph, the Severance Payment shall be made in cash within ten days after the execution by you of the general release referred to above and expiration without revocation of any applicable revocation periods under such general release (or, if the Change of Control resulting in your becoming entitled to such benefits occurs after such execution and expiration, within ten days after the Change of Control), provided that, if the 60-day period during which the general release is required to become effective and irrevocable begins in one calendar year and ends in another calendar year, the Severance Payment shall not be made before the first day of the second calendar year. The Severance Payment shall be divided into two portions, consisting of a portion that does not constitute “nonqualified

Jeffrey Allan Chodakewitz, M.D.

December 2, 2013

Page 4 of 6

deferred compensation” within the meaning of Section 409A of the Code and a portion, if any, that does constitute nonqualified deferred compensation. If you are a “specified employee” as defined in Section 409A(a)(2)(B)(i) of the Code, the commencement of the delivery of any such payments that constitute nonqualified deferred compensation payable upon a “separation from service” under Section 409A(a)(2)(A)(i) of the Code will be delayed until the first business day that is more than six months after your Termination Date. The determination of whether, and the extent to which, any of the payments to be made to you hereunder are nonqualified deferred compensation shall be made after the application of all applicable exclusions, including those set forth under Treasury Reg. §1.409A-1(b)(9). Any payments that are intended to qualify for the exclusion for separation pay due to involuntary separation from service set forth in Reg. §1.409A-1(b)(9)(iii) must be paid no later than the last day of the second taxable year following the taxable year in which the Termination Date occurs. To the extent that the termination of your employment does not constitute a separation of service under Section 409A(a)(2)(A)(i) of the Code (as the result of further services that are reasonably anticipated to be provided by you to the Company at the time your employment is terminated), the payment of any non-qualified deferred compensation will be further delayed until the first business day that is more than six months after the date of a subsequent event constituting a separation of service under Section 409A(a)(2)(A)(i) of the Code.

2. Accelerated Vesting.

(a) On the Termination Date, stock options for the purchase of the Company’s securities held by you as of the Termination Date and not then exercisable shall immediately become exercisable in full. The options to which this accelerated vesting applies shall remain exercisable until the earlier of (a) the end of the 90-day period immediately following the later of (i) the Termination Date or (ii) the date of the Change of Control and (b) the date the stock option(s) would otherwise expire; and

(b) On the Termination Date, the Company’s lapsing repurchase right with respect to shares of restricted stock held by you shall lapse in full (subject to your making satisfactory arrangements with the Company providing for the payment to the Company of all required withholding taxes).

Notwithstanding anything to the contrary in this Agreement, the terms of any option agreement or restricted stock agreement shall govern the acceleration, if any, of vesting or lapsing of the Company’s repurchase rights and period of exercisability of such awards, as applicable, except to the extent that the terms of this Agreement are more favorable to you.

3. Continued Insurance Coverage. If COBRA coverage is elected by you, the Company shall pay the cost of insurance continuation premiums on your behalf (whether or not covered by COBRA) to continue standard medical, dental and life insurance coverage for you (or the cash equivalent of same if you are ineligible for continued coverage) until the earlier of (i) the date 12 months after the Termination Date or (ii) the date you begin receiving substantially equivalent coverage and benefits through a subsequent employer.

Jeffrey Allan Chodakewitz, M.D.

December 2, 2013

Page 5 of 6

4. No Mitigation. You shall not be required to mitigate the amount of the Severance Payment or any other benefit provided under this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Agreement be reduced (except as provided in Article II Section 3(ii)) by any compensation earned by you as the result of other employment, by retirement benefits, or be offset against any amount claimed to be owed by you to the Company or otherwise (except for any required withholding taxes); provided, that if the Company makes any other severance payments to you under any other program or agreement, such amounts shall be offset against the payments the Company is obligated to make pursuant to this Agreement.

III. Miscellaneous.

1. Employee’s Obligations. Upon the termination of employment, you shall promptly deliver to the Company all property of the Company and all material documents, statistics, account records, programs and other similar tangible items which may by in your possession or under your control and which relate in a material way to the business or affairs of the Company or its subsidiaries, and no copies of any such documents or any part thereof shall be retained by you.

2. Entire Agreement. This Agreement and the “Employee Non-Disclosure, Non-Competition & Inventions Agreement” previously executed by you covers the entire understanding of the parties as to the subject matter hereof, superseding all prior understandings and agreements related hereto. No modification or amendment of the terms and conditions of this Agreement shall be effective unless in writing and signed by the parties or their respective duly authorized agents, provided, however, that the Company may, without your consent, unilaterally adopt amendments that may be required so that this Agreement continues to comply with applicable law or regulation, including without limitation Section 409A of the Code, provided such amendments do not adversely affect the benefits to be provided to you under Section II of this Agreement.

3. Governing Law. This Agreement shall be governed by the laws of The Commonwealth of Massachusetts, as applied to contracts entered into and performed entirely in Massachusetts by Massachusetts residents.

4. Successors and Assigns. This Agreement may be assigned by the Company upon a sale, transfer or reorganization of the Company. Upon a Change of Control, the Company shall require the successor to assume the Company’s rights and obligations under this Agreement. The Company’s failure to do so shall constitute a material breach of this Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their successors, permitted assigns, legal representatives and heirs.

Jeffrey Allan Chodakewitz, M.D.

December 2, 2013

Page 6 of 6

Kindly indicate your acceptance of the foregoing by signing and dating this Agreement as noted below, and returning one fully executed original to my attention.

Very truly yours,

Vertex Pharmaceuticals Incorporated

By: /s/ Jeffrey M. Leiden        

Jeffrey M. Leiden

President, Chairman and

Chief Executive Officer

ACCEPTED AND AGREED:

/s/ Jeffrey Allan Chodakewitz    

Jeffrey Allan Chodakewitz, M.D.

12/3/2013    

Date

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jeffrey M. Leiden, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Vertex Pharmaceuticals Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 4, 2015	/s/ Jeffrey M. Leiden
		Jeffrey M. Leiden
		Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Ian F. Smith, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Vertex Pharmaceuticals Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	May 4, 2015	/s/ Ian F. Smith
		Ian F. Smith
		Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 906 CEO/CFO CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) each of the undersigned officers of Vertex Pharmaceuticals Incorporated, a Massachusetts corporation (the “Company”), does hereby certify, to such officer’s knowledge, that the Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 4, 2015
		/s/ Jeffrey M. Leiden
		Jeffrey M. Leiden
		Chief Executive Officer and President
Date:	May 4, 2015
		/s/ Ian F. Smith
		Ian F. Smith
		Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Fair Value Measurements (Details) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Level 3
Financial assets carried at fair value:
Term loan fair value	$ 294,800,000
Recurring basis
Financial assets carried at fair value:
Total financial assets	805,770,000
Total financial liabilities	(617,000)
Recurring basis | Money market funds
Financial assets carried at fair value:
Cash equivalents:	286,581,000
Recurring basis | Government-sponsored enterprise securities
Financial assets carried at fair value:
Marketable securities:	284,115,000
Recurring basis | Corporate debt securities
Financial assets carried at fair value:
Marketable securities:	172,395,000
Recurring basis | Commercial paper
Financial assets carried at fair value:
Marketable securities:	59,745,000
Recurring basis | Level 1
Financial assets carried at fair value:
Total financial assets	570,696,000
Total financial liabilities	0
Recurring basis | Level 1 | Money market funds
Financial assets carried at fair value:
Cash equivalents:	286,581,000
Recurring basis | Level 1 | Government-sponsored enterprise securities
Financial assets carried at fair value:
Marketable securities:	284,115,000
Recurring basis | Level 1 | Corporate debt securities
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis | Level 1 | Commercial paper
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis | Level 2
Financial assets carried at fair value:
Total financial assets	235,074,000
Total financial liabilities	(617,000)
Recurring basis | Level 2 | Money market funds
Financial assets carried at fair value:
Cash equivalents:	0
Recurring basis | Level 2 | Government-sponsored enterprise securities
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis | Level 2 | Corporate debt securities
Financial assets carried at fair value:
Marketable securities:	172,395,000
Recurring basis | Level 2 | Commercial paper
Financial assets carried at fair value:
Marketable securities:	59,745,000
Recurring basis | Level 3
Financial assets carried at fair value:
Total financial assets	0
Total financial liabilities	0
Recurring basis | Level 3 | Money market funds
Financial assets carried at fair value:
Cash equivalents:	0
Recurring basis | Level 3 | Government-sponsored enterprise securities
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis | Level 3 | Corporate debt securities
Financial assets carried at fair value:
Marketable securities:	0
Recurring basis | Level 3 | Commercial paper
Financial assets carried at fair value:
Marketable securities:	0
Prepaid and other current assets | Foreign currency forward contracts | Recurring basis
Financial assets carried at fair value:
Foreign currency forward contracts	2,934,000
Prepaid and other current assets | Foreign currency forward contracts | Recurring basis | Level 1
Financial assets carried at fair value:
Foreign currency forward contracts	0
Prepaid and other current assets | Foreign currency forward contracts | Recurring basis | Level 2
Financial assets carried at fair value:
Foreign currency forward contracts	2,934,000
Prepaid and other current assets | Foreign currency forward contracts | Recurring basis | Level 3
Financial assets carried at fair value:
Foreign currency forward contracts	0
Other liabilities, current portion | Foreign currency forward contracts | Recurring basis
Financial assets carried at fair value:
Foreign currency forward contracts	(282,000)
Other liabilities, current portion | Foreign currency forward contracts | Recurring basis | Level 1
Financial assets carried at fair value:
Foreign currency forward contracts	0
Other liabilities, current portion | Foreign currency forward contracts | Recurring basis | Level 2
Financial assets carried at fair value:
Foreign currency forward contracts	(282,000)
Other liabilities, current portion | Foreign currency forward contracts | Recurring basis | Level 3
Financial assets carried at fair value:
Foreign currency forward contracts	0
Other liabilities, excluding current portion | Foreign currency forward contracts | Recurring basis
Financial assets carried at fair value:
Foreign currency forward contracts	(335,000)
Other liabilities, excluding current portion | Foreign currency forward contracts | Recurring basis | Level 1
Financial assets carried at fair value:
Foreign currency forward contracts	0
Other liabilities, excluding current portion | Foreign currency forward contracts | Recurring basis | Level 2
Financial assets carried at fair value:
Foreign currency forward contracts	(335,000)
Other liabilities, excluding current portion | Foreign currency forward contracts | Recurring basis | Level 3
Financial assets carried at fair value:
Foreign currency forward contracts	0
Variable Interest Entity, Primary Beneficiary | BioAxone Biosciences Inc
Financial assets carried at fair value:
Cash and cash equivalents	7,700,000	8,400,000
Variable Interest Entity, Primary Beneficiary | BioAxone Biosciences Inc | Level 1
Financial assets carried at fair value:
Cash and cash equivalents	$ 7,700,000

XML

Commitments and Contingencies (Details) (Subsequent Event, USD $) In Millions, unless otherwise specified	Apr. 30, 2015
Subsequent Event
Subsequent Event [Line Items]
Restricted cash and cash equivalents	$ 21.9

XML

Stock-based Compensation Expense (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Stock-based compensation expense:
Less stock-based compensation expense capitalized to inventories	$ (884)	$ (207)
Total stock-based compensation included in costs and expenses	57,384	46,580
Stock options
Stock-based compensation expense:
Stock-based compensation expense by type of award	28,959	25,127
Type of award:
Unrecognized Expense, Net of Estimated Forfeitures	199,256
Weighted-average Recognition Period (in years)	2 years 3 months 22 days
Restricted stock and restricted stock units
Stock-based compensation expense:
Stock-based compensation expense by type of award	27,169	18,993
Type of award:
Unrecognized Expense, Net of Estimated Forfeitures	201,465
Weighted-average Recognition Period (in years)	2 years 10 months 17 days
ESPP share issuances
Stock-based compensation expense:
Stock-based compensation expense by type of award	2,140	2,667
Type of award:
Unrecognized Expense, Net of Estimated Forfeitures	2,205
Weighted-average Recognition Period (in years)	5 months 12 days
Research and development expenses
Stock-based compensation expense:
Total stock-based compensation included in costs and expenses	38,217	32,900
Sales, general and administrative expenses
Stock-based compensation expense:
Total stock-based compensation included in costs and expenses	$ 19,167	$ 13,680
Maximum
Share-based Compensation Arrangement by Share-based Payment Award
Maximum percent of employees eligible for partial or full acceleration of equity awards	5.00%

XML

Long-term Obligations - Fan Pier Leases (Details) (USD $)	12 Months Ended
	Dec. 31, 2011 building lease sqft	Mar. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Number of leases	2
Area of real estate property (in square feet)	1,100,000
Number of buildings under lease agreement	2
Optional term of lease agreement (in years)	10 years
Property, Plant and Equipment, Net		$ 708,616,000	$ 715,812,000
Construction financing lease obligation, current and noncurrent		473,300,000	473,400,000
Building [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Net		$ 512,300,000	$ 515,000,000

XML

Stock-based Compensation Expense (Tables)

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based compensation expense by line item

During the three months ended March 31, 2015 and 2014, the Company recognized the following stock-based compensation expense included in loss from continuing operations:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Stock-based compensation expense by type of award:
Stock options	$	28,959		$	25,127
Restricted stock and restricted stock units	27,169			18,993
ESPP share issuances	2,140			2,667
Less stock-based compensation expense capitalized to inventories	(884		)	(207		)
Total stock-based compensation included in costs and expenses	$	57,384		$	46,580
Stock-based compensation expense by line item:
Research and development expenses	$	38,217		$	32,900
Sales, general and administrative expenses	19,167			13,680
Total stock-based compensation included in costs and expenses	$	57,384		$	46,580

Unrecognized stock-based compensation expense, net of estimated forfeitures

The following table sets forth the Company's unrecognized stock-based compensation expense, net of estimated forfeitures, by type of award and the weighted-average period over which that expense is expected to be recognized:

	As of March 31, 2015
	Unrecognized Expense, Net of Estimated Forfeitures		Weighted-average Recognition Period
	(in thousands)		(in years)
Type of award:
Stock options	$	199,256	2.31
Restricted stock and restricted stock units	$	201,465	2.88
ESPP share issuances	$	2,205	0.45

Stock options outstanding and exercisable

The following table summarizes information about stock options outstanding and exercisable at March 31, 2015:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-average Remaining Contractual Life	Weighted-average Exercise Price		Number Exercisable	Weighted-average Exercise Price
	(in thousands)	(in years)	(per share)		(in thousands)	(per share)
$17.16–$20.00	165	2.51	$	18.69	165	$	18.69
$20.01–$40.00	3,207	4.24	$	34.97	2,711	$	34.73
$40.01–$60.00	3,339	7.33	$	48.55	1,499	$	50.27
$60.01–$80.00	1,837	8.59	$	76.07	492	$	74.88
$80.01–$100.00	2,232	8.70	$	90.29	542	$	86.07
$100.01–$120.00	1,898	9.84	$	109.23	1	$	110.59
$120.01–$125.63	4	9.82	$	125.63	—	$	—
Total	12,682	7.28	$	65.17	5,410	$	47.36

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Basis of Presentation and Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared by Vertex Pharmaceuticals Incorporated ("Vertex" or the "Company") in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The condensed consolidated financial statements reflect the operations of (i) the Company, (ii) its wholly-owned subsidiaries and (iii) consolidated variable interest entities (VIEs). In addition, the condensed consolidated statements of operations for the three months ended March 31, 2014 in this Quarterly Report on Form 10-Q reflect direct expenses Vertex incurred as a result of the Company's collaboration with a former variable interest entity as discontinued operations. All material intercompany balances and transactions have been eliminated. The Company operates in one segment, pharmaceuticals.

Certain information and footnote disclosures normally included in the Company's annual financial statements have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations for the interim periods ended March 31, 2015 and 2014.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full fiscal year. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2014, which are contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 that was filed with the Securities and Exchange Commission (the “SEC”) on February 13, 2015 (the "2014 Annual Report on Form 10-K").

Use of Estimates and Summary of Significant Accounting Policies

Use of Estimates and Summary of Significant Accounting Policies

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the amounts of revenues and expenses during the reported periods. Significant estimates in these condensed consolidated financial statements have been made in connection with the calculation of revenues, inventories, research and development expenses, stock-based compensation expense, restructuring expense, the fair value of intangible assets, noncontrolling interest, the consolidation of VIEs, leases and the provision for or benefit from income taxes. The Company bases its estimates on historical experience and various other assumptions, including in certain circumstances future projections that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.

The Company's significant accounting policies are described in Note A, "Nature of Business and Accounting Policies," in the 2014 Annual Report on Form 10-K.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements please refer to Note A, “Nature of Business and Accounting Policies—Recent Accounting Pronouncements,” in the 2014 Annual Report on Form 10-K. The Company did not adopt any new accounting pronouncements during the three months ended March 31, 2015 that had a material effect on its condensed consolidated financial statements.

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Other Arrangements (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2008	Mar. 31, 2015
Sale of HIV Protease Inhibitor Royalty Stream
Gross proceeds from sale of royalty rights receivable from GlaxoSmithKline	$ 160.0
Deferred revenue royalty purchase agreement		$ 39.2

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Hedging (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Foreign Currency Cash Flow Hedge Derivative at Fair Value [Abstract]
Fair value - assets	$ 2,934	$ 2,011
Fair value - liabilities	(617)	0
Offsetting Derivative Assets [Abstract]
Gross Amounts Recognized	2,934	2,011
Gross Amounts Offset	0	0
Gross Amount Presented	2,934	2,011
Gross Amount Not Offset	(617)	0
Legal Offset	2,317	2,011
Offsetting Derivative Liabilities [Abstract]
Gross Amounts Recognized	(617)
Gross Amounts Offset	0
Gross Amount Presented	617
Gross Amount Not Offset	617
Legal Offset	0
Foreign Currency Forward Contract | Cash Flow Hedging
Derivative [Line Items]
Notional amount of foreign currency forward contract	88,939	33,724
Euro | Foreign Currency Forward Contract | Cash Flow Hedging
Derivative [Line Items]
Notional amount of foreign currency forward contract	34,749	20,209
British pound sterling | Foreign Currency Forward Contract | Cash Flow Hedging
Derivative [Line Items]
Notional amount of foreign currency forward contract	33,696	13,515
Australian dollar | Foreign Currency Forward Contract | Cash Flow Hedging
Derivative [Line Items]
Notional amount of foreign currency forward contract	20,494	0
Prepaid and other current assets
Foreign Currency Cash Flow Hedge Derivative at Fair Value [Abstract]
Fair value - assets	2,934	2,011
Other liabilities, current portion
Foreign Currency Cash Flow Hedge Derivative at Fair Value [Abstract]
Fair value - liabilities	(282)	0
Other assets
Foreign Currency Cash Flow Hedge Derivative at Fair Value [Abstract]
Fair value - assets	0
Other liabilities, excluding current portion
Foreign Currency Cash Flow Hedge Derivative at Fair Value [Abstract]
Fair value - liabilities	$ (335)

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Collaborative Arrangements (Details) (USD $)	3 Months Ended		1 Months Ended	3 Months Ended	12 Months Ended	1 Months Ended	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Oct. 31, 2014	Dec. 31, 2014	Dec. 31, 2014	Apr. 30, 2011	Mar. 31, 2013	Sep. 30, 2012
Schedule of Collaborative Arrangements
Collaborative revenues	$ 842,000	$ 4,257,000
Noncontrolling interest	21,079,000			21,177,000	21,177,000
BioAxone Biosciences Inc
Schedule of Collaborative Arrangements
Up-front license payment				10,000,000
License fees and milestone payments (up to)			90,000,000
Goodwill acquired					8,900,000
Noncontrolling interest				21,200,000	21,200,000
Cystic Fibrosis Foundation Therapeutics Incorporated
Schedule of Collaborative Arrangements
Collaborative funding						75,000,000
Number of years over which funding will be made (in years)						5 years
Collaborative revenues	0	2,900,000
Milestone payment made							9,300,000	9,300,000
Number of commercial milestone payments for achievement of certain sales levels for corrector compound such as VX-809 or VX-661 (in payments)	2
Janssen
Schedule of Collaborative Arrangements
Net reimbursement for telaprevir development costs	600,000	1,400,000
Royalty Expense	1,500,000	4,900,000
Up-front license payment					35,000,000
Reimbursement Revenue	7,600,000	0
Variable Interest Entity, Primary Beneficiary | BioAxone Biosciences Inc
Schedule of Collaborative Arrangements
Cash and cash equivalents	7,700,000			8,400,000	8,400,000
In-process research and development intangible asset				29,000,000	29,000,000
Deferred tax liability				$ 11,500,000	$ 11,500,000

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Restructuring Liabilities (Details)	12 Months Ended	3 Months Ended
	Dec. 31, 2003	Mar. 31, 2015 lease sqft	Dec. 31, 2011 sqft
Restructuring Cost and Reserve [Line Items]
Area of real estate property (in square feet)			1,100,000
Kendall Restructuring
Restructuring Cost and Reserve [Line Items]
Lease term (in years)	15 years
Restructuring and related activities, leased office space, maximum percentage used - not more than	50.00%
Fan Pier Move Restructuring
Restructuring Cost and Reserve [Line Items]
Number of leases terminated		2
Area of real estate property (in square feet)		120,000
Discount rate related to leases (percent)		9.00%

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Long-term Obligations - Term Loan (Details) (USD $)	0 Months Ended
	Jul. 09, 2014	Mar. 31, 2015	Jul. 09, 2014
Senior Secured Term Loan
Debt Instrument [Line Items]
Face amount of term loan	$ 300,000,000		$ 300,000,000
Interest rate, stated percentage	7.20%		7.20%
Contingent interest rate (percent)	6.20%
Minimum age of patients (in years)	12 years
Amount of principal repayment on quarterly installment payments through July 2016	15,000,000
Amount of principal repayment on quarterly installment payments from October 2016	60,000,000
Unamortized discount on term loan	5,300,000	5,200,000	5,300,000
Senior Secured Term Loan Facility
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 200,000,000		$ 200,000,000
Minimum | Senior Secured Term Loan | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	5.00%
Maximum | Senior Secured Term Loan | LIBOR
Debt Instrument [Line Items]
Basis spread on variable rate (percent)	7.50%

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Basis of Presentation and Accounting Policies

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Basis of Presentation and Accounting Policies

Basis of Presentation and Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements are unaudited and have been prepared by Vertex Pharmaceuticals Incorporated ("Vertex" or the "Company") in accordance with accounting principles generally accepted in the United States of America ("GAAP").

The condensed consolidated financial statements reflect the operations of (i) the Company, (ii) its wholly-owned subsidiaries and (iii) consolidated variable interest entities (VIEs). In addition, the condensed consolidated statements of operations for the three months ended March 31, 2014 in this Quarterly Report on Form 10-Q reflect direct expenses Vertex incurred as a result of the Company's collaboration with a former variable interest entity as discontinued operations. All material intercompany balances and transactions have been eliminated. The Company operates in one segment, pharmaceuticals.

Certain information and footnote disclosures normally included in the Company's annual financial statements have been condensed or omitted. These interim financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations for the interim periods ended March 31, 2015 and 2014.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full fiscal year. These interim financial statements should be read in conjunction with the audited financial statements for the year ended December 31, 2014, which are contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 that was filed with the Securities and Exchange Commission (the “SEC”) on February 13, 2015 (the "2014 Annual Report on Form 10-K").

Use of Estimates and Summary of Significant Accounting Policies

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the amounts of revenues and expenses during the reported periods. Significant estimates in these condensed consolidated financial statements have been made in connection with the calculation of revenues, inventories, research and development expenses, stock-based compensation expense, restructuring expense, the fair value of intangible assets, noncontrolling interest, the consolidation of VIEs, leases and the provision for or benefit from income taxes. The Company bases its estimates on historical experience and various other assumptions, including in certain circumstances future projections that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.

The Company's significant accounting policies are described in Note A, "Nature of Business and Accounting Policies," in the 2014 Annual Report on Form 10-K.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements please refer to Note A, “Nature of Business and Accounting Policies—Recent Accounting Pronouncements,” in the 2014 Annual Report on Form 10-K. The Company did not adopt any new accounting pronouncements during the three months ended March 31, 2015 that had a material effect on its condensed consolidated financial statements.

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Inventories - Schedule of Inventories (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Inventory Disclosure [Abstract]
Raw materials	$ 7,833	$ 8,506
Work-in-process	22,564	20,508
Finished goods	3,692	1,834
Total	$ 34,089	$ 30,848

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Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2015

Cash and Cash Equivalents [Abstract]

Summary of cash, cash equivalents and marketable securities

A summary of the Company’s cash, cash equivalents and marketable securities is shown below:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
As of March 31, 2015
Cash and cash equivalents:
Cash and money market funds	$	664,879	$	—	$	—		$	664,879
Total cash and cash equivalents	$	664,879	$	—	$	—		$	664,879
Marketable securities:
Government-sponsored enterprise securities (due within 1 year)	$	284,126	$	5	$	(16	)	$	284,115
Commercial paper (due within 1 year)	59,688		57		—			59,745
Corporate debt securities (due within 1 year)	148,958		18		(24		)	148,952
Corporate debt securities (due after 1 year through 5 years)	23,430		13		—			23,443
Total marketable securities	$	516,202	$	93	$	(40	)	$	516,255
Total cash, cash equivalents and marketable securities	$	1,181,081	$	93	$	(40	)	$	1,181,134
As of December 31, 2014
Cash and cash equivalents:
Cash and money market funds	$	625,259	$	—	$	—		$	625,259
Total cash and cash equivalents	$	625,259	$	—	$	—		$	625,259
Marketable securities:
Government-sponsored enterprise securities (due within 1 year)	$	463,788	$	14	$	(52	)	$	463,750
Commercial paper (due within 1 year)	51,674		72		—			51,746
Corporate debt securities (due within 1 year)	196,065		2		(66		)	196,001
Corporate debt securities (due after 1 year through 5 years)	50,443		—		(93		)	50,350
Total marketable securities	$	761,970	$	88	$	(211	)	$	761,847
Total cash, cash equivalents and marketable securities	$	1,387,229	$	88	$	(211	)	$	1,387,106

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Financial assets subject to fair value measurements (excluding restricted cash and cash equivalents (Alios))

The following table sets forth the Company’s financial assets and liabilities subject to fair value measurements:

	Fair Value Measurements as of March 31, 2015
				Fair Value Hierarchy
	Total			Level 1		Level 2			Level 3
	(in thousands)
Financial assets carried at fair value:
Cash equivalents:
Money market funds	$	286,581		$	286,581	$	—		$	—
Marketable securities:
Government-sponsored enterprise securities	284,115			284,115		—			—
Corporate debt securities	172,395			—		172,395			—
Commercial paper	59,745			—		59,745			—
Prepaid and other current assets:
Foreign currency forward contracts	2,934			—		2,934			—
Total financial assets	$	805,770		$	570,696	$	235,074		$	—
Financial liabilities carried at fair value:
Other liabilities, current portion:
Foreign currency forward contracts	$	(282	)	$	—	$	(282	)	$	—
Other liabilities, excluding current portion:
Foreign currency forward contracts	(335		)	—		(335		)	—
Total financial liabilities	$	(617	)	$	—	$	(617	)	$	—

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Inventories - By Product (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Inventory [Line Items]
Inventory, Net	$ 34,089	$ 30,848
Orkambi [Member]
Inventory [Line Items]
Inventory, Net	$ 14,100

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Accumulated Other Comprehensive Income (Loss) (Tables)

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

A summary of the Company's changes in accumulated other comprehensive income (loss) by component is shown below:

	Foreign Currency Translation Adjustment			Unrealized Holding Gains (Losses) on Marketable Securities			Unrealized Gains (Losses) on Foreign Currency Forward Contracts			Total
	(in thousands)
Balance at December 31, 2014	$	(971	)	$	(123	)	$	2,011		$	917
Other comprehensive (loss) income before reclassifications	(608		)	176			2,004			1,572
Amounts reclassified from accumulated other comprehensive loss	—			—			(1,698		)	(1,698		)
Net current period other comprehensive (loss) income	$	(608	)	$	176		$	306		$	(126	)
Balance at March 31, 2015	$	(1,579	)	$	53		$	2,317		$	791

	Foreign Currency Translation Adjustment			Unrealized Holding Gains (Losses) on Marketable Securities			Unrealized Gains (Losses) on Foreign Currency Forward Contracts			Total
	(in thousands)
Balance at December 31, 2013	$	(325	)	$	42		$	(23	)	$	(306	)
Other comprehensive income (loss) before reclassifications	72			(27		)	(39		)	6
Amounts reclassified from accumulated other comprehensive loss	—			—			3			3
Net current period other comprehensive income (loss)	$	72		$	(27	)	$	(36	)	$	9
Balance at March 31, 2014	$	(253	)	$	15		$	(59	)	$	(297	)

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Hedging (Tables)

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Cash Flow Hedging Instruments

The following table summarizes the notional amount of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges:

	As of March 31, 2015		As of December 31, 2014
Foreign Currency	(in thousands)
Euro	$	34,749	$	20,209
British pound sterling	33,696		13,515
Australian dollar	20,494		—
Total foreign currency forward contracts	$	88,939	$	33,724

Schedule of Foreign Exchange Contracts

The following table summarizes the fair value of the Company's outstanding foreign currency forward contracts designated as cash flow hedges under GAAP included on the Company's condensed consolidated balance sheets:

As of March 31, 2015
Assets			Liabilities
Classification	Fair Value		Classification	Fair Value
(in thousands)
Prepaid and other current assets	$	2,934	Other liabilities, current portion	$	(282	)
Other assets	—		Other liabilities, excluding current portion	(335		)
Total assets	$	2,934	Total liabilities	$	(617	)

As of December 31, 2014
Assets			Liabilities
Classification	Fair Value		Classification	Fair Value
(in thousands)
Prepaid and other current assets	$	2,011	Other liabilities, current portion	$	—
Total assets	$	2,011	Total liabilities	$	—

Derivatives Offsetting

The following table summarizes the potential effect of offsetting derivatives by type of financial instrument on the Company's condensed consolidated balance sheets:

	As of March 31, 2015
	Gross Amounts Recognized		Gross Amounts Offset	Gross Amount Presented		Gross Amount Not Offset		Legal Offset
Foreign currency forward contracts	(in thousands)
Total assets	2,934		—	2,934		(617	)	2,317
Total liabilities	(617	)	—	(617	)	617		—

	As of December 31, 2014
	Gross Amounts Recognized	Gross Amounts Offset	Gross Amount Presented	Gross Amount Not Offset	Legal Offset
Foreign currency forward contracts	(in thousands)
Total assets	2,011	—	2,011	—	2,011

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net loss	$ (198,704)	$ (232,457)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	16,363	15,788
Stock-based compensation expense	57,384	46,580
Other non-cash items, net	629	(173)
Changes in operating assets and liabilities:
Accounts receivable, net	(5,863)	25,237
Inventories	(2,635)	2,488
Prepaid expenses and other assets	(15,233)	(17,937)
Accounts payable	(23,556)	978
Accrued expenses and other liabilities	(5,866)	(13,536)
Accrued restructuring expense	(24,367)	(4,486)
Deferred revenues	(5,333)	1,756
Net cash used in operating activities	(207,181)	(175,762)
Cash flows from investing activities:
Purchases of marketable securities	(125,655)	(380,949)
Sales and maturities of marketable securities	371,423	376,544
Expenditures for property and equipment	(10,558)	(15,526)
Increase in restricted cash and cash equivalents	(21,971)	0
Decrease (increase) in other assets	799	(476)
Net cash provided by (used in) investing activities	214,038	(20,407)
Cash flows from financing activities:
Issuances of common stock from employee benefit plans	41,616	60,134
Payments on capital lease obligations	(4,497)	(2,622)
Proceeds from capital lease financing	13,386	0
Payments on Fan Pier lease obligation	(15,146)	(15,146)
Payments returned related to Fan Pier lease obligation	0	8,050
Net cash provided by (used in) financing activities	35,359	50,416
Effect of changes in exchange rates on cash	(2,596)	499
Net increase (decrease) in cash and cash equivalents	39,620	(145,254)
Cash and cash equivalents—beginning of period	625,259	569,299
Cash and cash equivalents—end of period	664,879	424,045
Supplemental disclosure of cash flow information:
Cash paid for interest	6,483	15,970
Cash paid for income taxes	60	140
Capitalization of costs related to Fan Pier lease obligation	0	25,564
Assets acquired under capital lease	0	3,619
Issuances of common stock exercises from employee benefit plans receivable	$ 964	$ 0

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Inventories (Tables)

3 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Schedule of Inventories by Type

Inventories consisted of the following:

	As of March 31, 2015		As of December 31, 2014
	(in thousands)
Raw materials	$	7,833	$	8,506
Work-in-process	22,564		20,508
Finished goods	3,692		1,834
Total	$	34,089	$	30,848

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Marketable Securities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Summary of cash, cash equivalents and marketable securities
Amortized Cost	$ 1,181,081	$ 1,387,229
Gross Unrealized Gains	93	88
Gross Unrealized Losses	(40)	(211)
Fair Value	1,181,134	1,387,106
Total cash and cash equivalents
Summary of cash, cash equivalents and marketable securities
Amortized Cost	664,879	625,259
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	664,879	625,259
Cash and money market funds
Summary of cash, cash equivalents and marketable securities
Amortized Cost	664,879	625,259
Gross Unrealized Gains	0	0
Gross Unrealized Losses	0	0
Fair Value	664,879	625,259
Total marketable securities
Summary of cash, cash equivalents and marketable securities
Amortized Cost	516,202	761,970
Gross Unrealized Gains	93	88
Gross Unrealized Losses	(40)	(211)
Fair Value	516,255	761,847
Government-sponsored enterprise securities (due within 1 year)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	284,126	463,788
Gross Unrealized Gains	5	14
Gross Unrealized Losses	(16)	(52)
Fair Value	284,115	463,750
Commercial paper (due within 1 year)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	59,688	51,674
Gross Unrealized Gains	57	72
Gross Unrealized Losses	0	0
Fair Value	59,745	51,746
Corporate debt securities (due within 1 year)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	148,958	196,065
Gross Unrealized Gains	18	2
Gross Unrealized Losses	(24)	(66)
Fair Value	148,952	196,001
Corporate debt securities (due after 1 year through 5 years)
Summary of cash, cash equivalents and marketable securities
Amortized Cost	23,430	50,443
Gross Unrealized Gains	13	0
Gross Unrealized Losses	0	(93)
Fair Value	$ 23,443	$ 50,350

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Restructuring Liabilities (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Restructuring activities
Restructuring (income) expense	$ (3,272)	$ 6,188
Kendall Restructuring
Restructuring activities
Liability, beginning of the period	11,596	19,115
Cash payments	(3,985)	(3,862)
Cash received from subleases	2,476	2,689
Restructuring (income) expense	(581)	382
Liability, end of the period	9,506	18,324
Fan Pier Move Restructuring
Restructuring activities
Liability, beginning of the period	33,390	1,079
Cash payments	(19,256)	(2,516)
Restructuring (income) expense	(2,997)	5,159
Liability, end of the period	11,137	3,722
Other Restructuring
Restructuring activities
Liability, beginning of the period	869	8,441
Cash payments	(330)	(7,267)
Restructuring (income) expense	306	647
Liability, end of the period	$ 845	$ 1,821

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Condensed Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Revenues:
Product revenues, net	$ 130,875	$ 103,461
Royalty revenues	6,792	10,733
Collaborative revenues	842	4,257
Total revenues	138,509	118,451
Costs and expenses:
Cost of product revenues	9,381	8,572
Royalty expenses	2,926	6,904
Research and development expenses	215,599	238,617
Sales, general and administrative expenses	85,860	74,212
Restructuring (income) expenses	(3,272)	6,188
Total costs and expenses	310,494	334,493
Loss from operations	(171,985)	(216,042)
Interest expense, net	(21,307)	(15,717)
Other (expense) income, net	(5,113)	451
Loss from continuing operations before provision for income taxes	(198,405)	(231,308)
Provision for income taxes	299	803
Loss from continuing operations	(198,704)	(232,111)
Loss from discontinued operations, net of tax benefit of $0	0	(346)
Net loss	(198,704)	(232,457)
Loss attributable to noncontrolling interest	98	0
Net loss attributable to Vertex	(198,606)	(232,457)
Loss from continuing operations	(198,606)	(232,111)
Loss from discontinued operations	$ 0	$ (346)
Net loss from continuing operations:
Net loss per share from continuing operations, basic (usd per share)	$ (0.83)	$ (1.00)
Net loss per share from continuing operations, diluted (usd per share)	$ (0.83)	$ (1.00)
Net loss from discontinued operations:
Net loss from discontinued operations, basic (usd per share)	$ 0.00	$ 0.00
Net loss from discontinued operations, diluted (usd per share)	$ 0.00	$ 0.00
Net loss:
Basic (usd per share)	$ (0.83)	$ (1.00)
Diluted (usd per share)	$ (0.83)	$ (1.00)
Shares used in per share calculations:
Basic (in shares)	239,493	232,887
Diluted (in shares)	239,493	232,887

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Intangible Assets and Goodwill (Details) (USD $)	3 Months Ended		1 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Oct. 31, 2014	Dec. 31, 2014
Indefinite-Lived Intangible Assets [Line Items]
Goodwill	$ 39,915,000			$ 39,915,000
Goodwill, period increase (decrease)	0	0
Variable Interest Entity, Primary Beneficiary | BioAxone Biosciences Inc
Indefinite-Lived Intangible Assets [Line Items]
In-process research and development intangible asset				$ 29,000,000
Indefinite-lived Intangible Assets | Variable Interest Entity, Primary Beneficiary | BioAxone Biosciences Inc
Indefinite-Lived Intangible Assets [Line Items]
Fair value inputs, discount rate (percent)			7.50%

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (shares)	1,000,000	1,000,000
Preferred stock, shares issued (shares)	0	0
Preferred stock, shares outstanding (shares)	0	0
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, shares authorized (shares)	300,000,000	300,000,000
Common stock, shares issued (shares)	243,580,032	241,764,398
Common stock, shares outstanding (shares)	243,580,032	241,764,398

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Basis of Presentation and Accounting Policies (Details)	3 Months Ended
	Mar. 31, 2015 segment
Accounting Policies [Abstract]
Number of operating segments	1

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Income Taxes

3 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company is subject to U.S. federal, state, and foreign income taxes. For the three months ended March 31, 2015 and 2014, the Company recorded a provision for income taxes of $0.3 million and $0.8 million, respectively, related to state income taxes and income earned in various foreign jurisdictions.

As of March 31, 2015 and December 31, 2014, the Company had unrecognized tax benefits of $0.9 million. The Company recognizes interest and penalties related to income taxes as a component of income tax expense. As of March 31, 2015, no interest and penalties have been accrued. The Company does not expect that its unrecognized tax benefits will materially increase within the next twelve months. The Company did not recognize any material interest or penalties related to uncertain tax positions as of March 31, 2015 and December 31, 2014. In 2015, it is reasonably possible that the Company will reduce the balance of its unrecognized tax benefits by approximately $0.5 million due to the application of statute of limitations and settlements with taxing authorities, all of which would reduce the Company’s effective tax rate.

The Company continues to maintain a valuation allowance against certain deferred tax assets where it is more likely than not that the deferred tax asset will not be realized because of its extended history of annual losses.

The Company files U.S. federal income tax returns and income tax returns in various state, local and foreign jurisdictions. The Company is no longer subject to any tax assessment from an income tax examination in the United States before 2010 or any other major taxing jurisdiction for years before 2009, except where the Company has net operating losses or tax credit carryforwards that originated before 2009. The Company is currently under examination by Revenue Quebec for the year ended December 31, 2013 and the Internal Revenue Service, Massachusetts and Pennsylvania for the year ended December 31, 2011. No adjustments have been reported. The Company is not under examination by any other jurisdictions for any tax year. The Company concluded audits with the Canada Revenue Agency and Revenue Quebec during 2014 with no material adjustments.

The Company currently intends to reinvest the total amount of its unremitted earnings. At March 31, 2015, foreign earnings, which were not significant, have been retained indefinitely by foreign subsidiary companies for reinvestment; therefore, no provision has been made for income taxes that would be payable upon the distribution of such earnings, and it would not be practicable to determine the amount of the related unrecognized deferred income tax liability. Upon repatriation of those earnings, in the form of dividends or otherwise, the Company would be subject to U.S. federal income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the various foreign countries.

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Product Revenues, Net (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Product Revenue Allowance and Reserve [Roll Forward]
Product revenue allowance and reserve, beginning balance	$ 36,023
Provision related to current period sales	11,233
Adjustments related to prior period sales	(1,625)
Credits/payments made	(12,079)
Product revenue allowance and reserve, ending balance	33,552
Trade Allowances
Product Revenue Allowance and Reserve [Roll Forward]
Product revenue allowance and reserve, beginning balance	1,463
Provision related to current period sales	1,297
Adjustments related to prior period sales	(87)
Credits/payments made	(1,366)
Product revenue allowance and reserve, ending balance	1,307
Rebates, Chargebacks and Discounts
Product Revenue Allowance and Reserve [Roll Forward]
Product revenue allowance and reserve, beginning balance	29,102
Provision related to current period sales	9,027
Adjustments related to prior period sales	(1,128)
Credits/payments made	(7,162)
Product revenue allowance and reserve, ending balance	29,839
Product Returns
Product Revenue Allowance and Reserve [Roll Forward]
Product revenue allowance and reserve, beginning balance	4,713
Provision related to current period sales	79
Adjustments related to prior period sales	(410)
Credits/payments made	(2,788)
Product revenue allowance and reserve, ending balance	1,594
Other Incentives
Product Revenue Allowance and Reserve [Roll Forward]
Product revenue allowance and reserve, beginning balance	745
Provision related to current period sales	830
Adjustments related to prior period sales	0
Credits/payments made	(763)
Product revenue allowance and reserve, ending balance	$ 812

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Financing Arrangements

As of March 31, 2015, the Company had irrevocable stand-by letters of credit outstanding that were issued in connection with property leases and other similar agreements that were supported by an unsecured credit facility that expired in April 2015. The Company cash collateralized the letters of credit totaling $21.9 million in April 2015. The cash used to support these letters of credit is included in restricted cash as of March 31, 2015 on the Company's condensed consolidated balance sheet.

Litigation

On May 28, 2014, a purported shareholder class action Local No. 8 IBEW Retirement Plan & Trust v. Vertex Pharmaceuticals Incorporated, et al. was filed in the United States District Court for the District of Massachusetts, naming the Company and certain of the Company's current and former officers and directors as defendants. The lawsuit alleged that the Company made material misrepresentations and/or omissions of material fact in the Company's disclosures during the period from May 7, 2012 through May 29, 2012, all in violation of Section 10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The purported class consists of all persons (excluding defendants) who purchased the Company’s common stock between May 7, 2012 and May 29, 2012. The plaintiffs seek unspecified monetary damages, costs and attorneys’ fees as well as disgorgement of the proceeds from certain individual defendants’ sales of the Company’s stock. On October 8, 2014, the Court approved Local No. 8 IBEW Retirement Fund as lead plaintiff, and Scott and Scott LLP as lead counsel for the plaintiff and the putative class. On February 23, 2015, the Company filed a reply to the plaintiffs’ opposition to its motion to dismiss.  The court heard oral argument on the motion to dismiss on March 6, 2015 and took the motion under advisement. The Company believes the claims to be without merit and intends to vigorously defend the litigation. As of March 31, 2015, the Company has not recorded any reserves for this purported class action.

Guaranties and Indemnifications

As permitted under Massachusetts law, the Company’s Articles of Organization and By-laws provide that the Company will indemnify certain of its officers and directors for certain claims asserted against them in connection with their service as an officer or director. The maximum potential amount of future payments that the Company could be required to make under these indemnification provisions is unlimited. However, the Company has purchased directors’ and officers’ liability insurance policies that could reduce its monetary exposure and enable it to recover a portion of any future amounts paid. No indemnification claims currently are outstanding, and the Company believes the estimated fair value of these indemnification arrangements is minimal.

The Company customarily agrees in the ordinary course of its business to indemnification provisions in agreements with clinical trial investigators and sites in its drug development programs, sponsored research agreements with academic and not-for-profit institutions, various comparable agreements involving parties performing services for the Company, and its real estate leases. The Company also customarily agrees to certain indemnification provisions in its drug discovery, development and commercialization collaboration agreements. With respect to the Company’s clinical trials and sponsored research agreements, these indemnification provisions typically apply to any claim asserted against the investigator or the investigator’s institution relating to personal injury or property damage, violations of law or certain breaches of the Company’s contractual obligations arising out of the research or clinical testing of the Company’s compounds or drug candidates. With respect to lease agreements, the indemnification provisions typically apply to claims asserted against the landlord relating to personal injury or property damage caused by the Company, to violations of law by the Company or to certain breaches of the Company’s contractual obligations. The indemnification provisions appearing in the Company’s collaboration agreements are similar to those for the other agreements discussed above, but in addition provide some limited indemnification for its collaborator in the event of third-party claims alleging infringement of intellectual property rights. In each of the cases above, the indemnification obligation generally survives the termination of the agreement for some extended period, although the Company believes the obligation typically has the most relevance during the contract term and for a short period of time thereafter. The maximum potential amount of future payments that the Company could be required to make under these provisions is generally unlimited. The Company has purchased insurance policies covering personal injury, property damage and general liability that reduce its exposure for indemnification and would enable it in many cases to recover all or a portion of any future amounts paid. The Company has never paid any material amounts to defend lawsuits or settle claims related to these indemnification provisions. Accordingly, the Company believes the estimated fair value of these indemnification arrangements is minimal.

Other Contingencies

The Company has certain contingent liabilities that arise in the ordinary course of its business activities. The Company accrues a reserve for contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. There were no material contingent liabilities accrued as of March 31, 2015 or December 31, 2014.

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Condensed Consolidated Statements of Shareholders' Equity and Noncontrolling Interest (USD $) In Thousands, unless otherwise specified	Total	Total Vertex Shareholders' Equity	Common Stock	Additional Paid-in Capital	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Noncontrolling Interest
Balance at Dec. 31, 2013	$ 1,356,405	$ 1,356,405	$ 2,320	$ 5,321,286	$ (306)	$ (3,966,895)	$ 0
Balance (shares) at Dec. 31, 2013			233,789
Increase (Decrease) in Stockholders' Equity
Other comprehensive income, net of tax	9	9			9
Net loss	(232,457)	(232,457)				(232,457)	0
Issuance of common stock under benefit plans (shares)			2,412
Issuance of common stock under benefit plans	60,134	60,134	14	60,120
Stock-based compensation	46,787	46,787		46,787
Balance at Mar. 31, 2014	1,230,878	1,230,878	2,334	5,428,193	(297)	(4,199,352)	0
Balance (shares) at Mar. 31, 2014			236,201
Balance at Dec. 31, 2014	1,096,183	1,075,006	2,385	5,777,154	917	(4,705,450)	21,177
Balance (shares) at Dec. 31, 2014			241,764
Increase (Decrease) in Stockholders' Equity
Other comprehensive income, net of tax	(126)	(126)			(126)
Net loss	(198,704)	(198,606)				(198,606)	(98)
Issuance of common stock under benefit plans (shares)			1,816
Issuance of common stock under benefit plans	41,916	41,916	14	41,902
Stock-based compensation	58,268	58,268		58,268
Balance at Mar. 31, 2015	$ 997,537	$ 976,458	$ 2,399	$ 5,877,324	$ 791	$ (4,904,056)	$ 21,079
Balance (shares) at Mar. 31, 2015			243,580

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Condensed Consolidated Statements of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Statement [Abstract]
Tax effect of discontinued operations	$ 0	$ 0

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Inventories

3 Months Ended

Mar. 31, 2015

Inventory Disclosure [Abstract]

Inventories

Inventories

Inventories consisted of the following:

	As of March 31, 2015		As of December 31, 2014
	(in thousands)
Raw materials	$	7,833	$	8,506
Work-in-process	22,564		20,508
Finished goods	3,692		1,834
Total	$	34,089	$	30,848

As of March 31, 2015, the Company has capitalized $14.1 million of inventory costs related to ORKAMBI, the brand name under which the Company expects to market lumacaftor in combination with ivacaftor, manufactured in preparation for the potential product launch of ORKAMBI in mid-2015 based on its evaluation of, among other factors, information regarding the safety and efficacy of ORKAMBI. In periods prior to July 1, 2014, the Company expensed costs associated with such raw materials and work-in-process as a development expense. In November 2014, the Company submitted a New Drug Application ("NDA") to the United States Food and Drug Administration ("FDA") and a Marketing Authorization Application ("MAA") to the European Medicines Agency for ORKAMBI. The FDA has granted the Company priority review of the NDA. The FDA has scheduled a Pulmonary-Allergy Drugs Advisory Committee meeting for May 12, 2015 to discuss the NDA. The target date for the FDA to complete its review of the NDA for the combination under the Prescription Drug User Fee Act is July 5, 2015. The Company plans to continue to monitor the status of these regulatory processes and the other factors used to determine whether or not to capitalize the inventory and, if there are significant negative developments regarding ORKAMBI, the Company could be required to impair previously capitalized costs.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 24, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	VERTEX PHARMACEUTICALS INC / MA
Entity Central Index Key	0000875320
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		243,752,247

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Intangible Assets and Goodwill

3 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Intangible Assets and Goodwill

Intangible Assets

In October 2014, the Company recorded $29.0 million of an in-process research and development intangible asset on its condensed consolidated balance sheet based on the Company’s estimate of the fair value of VX-210, a drug candidate for patients with spinal cord injuries that is licensed by the Company from BioAxone. The Company used a 7.5% discount rate in the present-value models used to estimate the fair value of the in-process research and development asset. The Company also conducted an evaluation of BioAxone’s other programs and determined that market participants would not have ascribed value to those assets because of the stage of development of those assets. As of March 31, 2015, the Company did not have any additional intangible assets recorded on its condensed consolidated balance sheet.

Goodwill

As of March 31, 2015 and December 31, 2014, goodwill of $39.9 million was recorded on the Company's condensed consolidated balance sheets. There were no changes to goodwill recorded during the three months ended March 31, 2015 or 2014.

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Condensed Consolidated Statements of Comprehensive Loss (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract]
Net loss	$ (198,704)	$ (232,457)
Changes in other comprehensive loss:
Unrealized holding gains (losses) on marketable securities	176	(27)
Unrealized gains (losses) on foreign currency forward contracts	306	(36)
Foreign currency translation adjustment	(608)	72
Total changes in other comprehensive loss	(126)	9
Comprehensive loss	(198,830)	(232,448)
Comprehensive loss attributable to noncontrolling interest	98	0
Comprehensive loss attributable to Vertex	$ (198,732)	$ (232,448)

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Earnings Per Share

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic net loss per share attributable to Vertex common shareholders is based upon the weighted-average number of common shares outstanding during the period, excluding restricted stock and restricted stock units that have been issued but are not yet vested. Diluted net loss per share attributable to Vertex common shareholders is based upon the weighted-average number of common shares outstanding during the period plus additional weighted-average common equivalent shares outstanding during the period when the effect is dilutive.

The Company did not include the securities described in the following table in the computation of the net loss from continuing operations per share attributable to Vertex common shareholder calculations because the effect would have been anti-dilutive during each period:

	Three Months Ended March 31,
	2015	2014
	(in thousands)
Stock options	12,682	16,078
Unvested restricted stock and restricted stock units	3,474	2,842

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Collaborative Arrangements

3 Months Ended

Mar. 31, 2015

Collaborative Arrangements

Collaborative Arrangements

Collaborative Arrangements

Cystic Fibrosis Foundation Therapeutics Incorporated

In April 2011, the Company entered into an amendment (the “April 2011 Amendment”) to its existing collaboration agreement with Cystic Fibrosis Foundation Therapeutics Incorporated (“CFFT”) pursuant to which CFFT agreed to provide financial support for (i) development activities for VX-661, a corrector compound discovered under the collaboration, and (ii) additional research and development activities directed at discovering new corrector compounds.

Under the April 2011 Amendment, CFFT agreed to provide the Company with up to $75.0 million in funding over approximately five years for corrector-compound research and development activities. The Company retains the right to develop and commercialize KALYDECO (ivacaftor), lumacaftor, VX-661 and any other compounds discovered during the course of the research collaboration with CFFT. The Company recognized no collaborative revenues from this collaboration during the three months ended March 31, 2015 and $2.9 million of collaborative revenues from this collaboration during the three months ended March 31, 2014.

In the original agreement, as amended prior to the April 2011 Amendment, the Company agreed to pay CFFT tiered royalties calculated as a percentage, ranging from single digits to sub-teens, of annual net sales of any approved drugs discovered during the research term that ended in 2008, including KALYDECO, lumacaftor and VX-661. The April 2011 Amendment provides for a tiered royalty in the same range on net sales of corrector compounds discovered during the research term that began in 2011 and ended in February 2014. In each of the third quarter of 2012 and the first quarter of 2013, CFFT earned a commercial milestone payment of $9.3 million from the Company upon achievement of certain sales levels for KALYDECO. These milestones were reflected in the Company's cost of product revenues. There are no additional commercial milestone payments payable by the Company to CFFT related to sales levels for KALYDECO. The Company also is obligated to make up to two one-time commercial milestone payments to CFFT upon achievement of certain sales levels for corrector compounds such as lumacaftor or VX-661.

The Company began marketing KALYDECO in the United States and certain countries in the European Union in 2012. The Company has royalty obligations to CFFT for each compound commercialized pursuant to this collaboration until the expiration of patents covering that compound. The Company has patents in the United States and European Union covering the composition-of-matter of ivacaftor that expire in 2027 and 2025, respectively, subject to potential patent life extensions. The Company has patents in the United States and European Union covering the composition-of-matter of lumacaftor that expire in 2030 and 2026, respectively, subject to potential patent life extensions. CFFT may terminate its funding obligations under the collaboration, as amended, in certain circumstances, in which case there will be a proportional adjustment to the royalty rates and commercial milestone payments for certain corrector compounds. The collaboration also may be terminated by either party for a material breach by the other, subject to notice and cure provisions.

Janssen Pharmaceutica NV

The Company has a collaboration agreement (the “Janssen HCV Agreement”) with Janssen Pharmaceutica NV (“Janssen NV”) for the development, manufacture and commercialization of telaprevir, which Janssen NV began marketing under the brand name INCIVO in certain of its territories in September 2011. Pursuant to the Janssen HCV Agreement, as amended, Janssen NV has a fully-paid license to manufacture and commercialize INCIVO in its territories including Europe, South America, the Middle East, Africa and Australia, subject to the payment of third-party royalties on net sales of INCIVO.

During the three months ended March 31, 2015 and 2014, the Company recognized $0.6 million and $1.4 million, respectively, as collaborative revenues based on net reimbursements provided by Janssen NV to the Company related to telaprevir development costs.

In addition to the collaborative revenues, the Company recorded royalty revenues and corresponding royalty expenses related to third-party royalties that Janssen NV remains responsible for based on INCIVO net sales. During the three months ended March 31, 2015 and 2014, the Company recognized royalty revenues and related royalty expenses related to the Janssen HCV collaboration of $1.5 million and $4.9 million, respectively.

Alios BioPharma, Inc.

In June 2011, the Company entered into a license and collaboration agreement (the “Alios Agreement”) with Alios BioPharma, Inc. (“Alios”), a privately-held biotechnology company. Pursuant to the Alios Agreement, the Company and Alios collaborated on the research, development and commercialization of HCV nucleotide analogues discovered by Alios through April 2014. In April 2014, Vertex and Alios amended the Alios Agreement to eliminate the Company's obligations to conduct further development activities with respect to VX-135. In December 2014, the Alios Agreement terminated in accordance with its terms pursuant to a termination notice delivered by the Company in October 2014. As of September 30, 2014, the Company concluded that it no longer had significant continuing involvement with Alios due to its intent and ability to terminate the Alios Agreement, among other factors; therefore, the operations of Alios are presented as discontinued operations in these condensed consolidated financial statements.

BioAxone Biosciences, Inc.

In October 2014, the Company entered into a license and collaboration agreement (the “BioAxone Agreement”) with BioAxone Biosciences, Inc. (“BioAxone”), a privately-held biotechnology company. The Company has determined that BioAxone is a VIE. Accordingly, the Company consolidated BioAxone’s financial statements with the Company’s consolidated financial statements beginning on October 1, 2014 as a business combination. The Company paid BioAxone initial payments of $10.0 million in the fourth quarter of 2014.

BioAxone has the potential to receive up to $90.0 million in milestones and fees, including development, regulatory and milestone payments and a license continuation fee. In addition, BioAxone would receive royalties and commercial milestones on future net product sales of VX-210 if any. As of December 31, 2014, the Company recorded $8.4 million of cash and cash equivalents, which were included in prepaid and other current assets, an in-process research and development intangible asset of $29.0 million for VX-210 and a corresponding deferred tax liability of $11.5 million, goodwill of $8.9 million, and noncontrolling interest of $21.2 million related to the BioAxone collaboration. As of March 31, 2015, BioAxone's cash and cash equivalents were $7.7 million, which represented the only balance included in the Company's condensed consolidated balance sheet related to the BioAxone collaboration that changed significantly compared to December 31, 2014. Vertex has no rights to BioAxone’s cash and accordingly this cash does not affect Vertex’s liquidity or cash position. Net loss attributable to noncontrolling interest related to BioAxone for the three months ended March 31, 2015 was not material.

Vertex holds an option to purchase BioAxone at a predetermined price. The option expires on the earliest of (a) the day the FDA accepts the Biologics License Application submission for VX-210, (b) the day the Company elects to continue the license instead of exercising the option to purchase BioAxone and (c) March 15, 2018, subject to the Company’s option to extend this date by one year.

The Company uses present-value models to determine the estimated fair value of the contingent milestone and royalty payments, based on assumptions regarding the probability of achieving the relevant milestones, estimates regarding the time to develop drug candidates, estimates of future product sales and the appropriate discount rates. The Company bases its estimate of the probability of achieving the relevant milestones on industry data for similar assets and its own experience. The discount rates used in the valuation model represent a measure of credit risk and market risk associated with settling the liability. Significant judgment is used in determining the appropriateness of these assumptions at each reporting period. Changes in these assumptions could have a material effect on the fair value of the contingent milestone and royalty payments.

Outlicense Arrangements

In the ordinary course of the Company's business, the Company has entered into various agreements pursuant to which it has outlicensed rights to certain drug candidates to third-party collaborators. Although, the Company does not consider any of these outlicense arrangements to be material, the most notable of these outlicense arrangements is described below. Pursuant to these outlicense arrangements, our collaborators become responsible for all costs related to the continued development of such drug candidates. Depending on the terms of the arrangements, the Company's collaborators may be required to make upfront payments, milestone payments upon the achievement of certain product research and development objectives and/or pay royalties on future sales, if any, of commercial products resulting from the collaboration.

Janssen Pharmaceuticals, Inc.

In June 2014, the Company entered into an agreement (the “Janssen Influenza Agreement”) with Janssen Pharmaceuticals, Inc. (“Janssen Inc.”), which was amended in October 2014 to clarify certain roles and responsibilities of the parties.

Pursuant to the Janssen Influenza Agreement, Janssen Inc. has an exclusive worldwide license to develop and commercialize certain drug candidates for the treatment of influenza, including VX-787. The Company received non-refundable payments of $35.0 million from Janssen Inc. in 2014, which were recorded as collaborative revenue. The Company has the potential to receive development, regulatory and commercial milestone payments as well as royalties on future product sales, if any.

Janssen Inc. is responsible for costs related to the development and commercialization of the compounds. During the three months ended March 31, 2015 and 2014, the Company recorded reimbursement for these development activities of $7.6 million and zero, respectively, as a reduction to development expense in the Company's condensed consolidated statements of operations primarily due to the fact that Janssen Inc. directs the activities and selects the suppliers associated with these activities. Janssen Inc. may terminate the Janssen Influenza Agreement, subject to certain exceptions, upon six months' notice.

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Restructuring Liabilities

3 Months Ended

Mar. 31, 2015

Restructuring and Related Activities [Abstract]

Restructuring Liabilities

Restructuring Liabilities

2003 Kendall Restructuring

In 2003, the Company adopted a plan to restructure its operations to coincide with its increasing internal emphasis on advancing drug candidates through clinical development to commercialization. The restructuring liability relates to specialized laboratory and office space that is leased to the Company pursuant to a 15-year lease that terminates in 2018. The Company has not used more than 50% of this space since it adopted the plan to restructure its operations in 2003. This unused laboratory and office space currently is subleased to third parties.

The activities related to the restructuring liability for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Liability, beginning of the period	$	11,596		$	19,115
Cash payments	(3,985		)	(3,862		)
Cash received from subleases	2,476			2,689
Restructuring (income) expense	(581		)	382
Liability, end of the period	$	9,506		$	18,324

Fan Pier Move Restructuring

In connection with the relocation of its Massachusetts operations to Fan Pier in Boston, Massachusetts, which commenced in 2013, the Company is incurring restructuring charges related to its remaining lease obligations at its facilities in Cambridge, Massachusetts. The majority of these restructuring charges were recorded in the third quarter of 2014 upon decommissioning three facilities in Cambridge. During the first quarter of 2015, the Company terminated two of these lease agreements resulting in a credit to restructuring expense equal to the difference between the Company’s estimated future cash flows related to its lease obligations for these facilities and the termination payment paid to the Company’s landlord on the effective date of the termination. The third major facility included in this restructuring activity is 120,000 square feet of the Kendall Square Facility that the Company continued to use for its operations following its 2003 Kendall Restructuring. The rentable square footage in this portion of the Kendall Square Facility was subleased to a third party in February 2015. The Company will continue to incur charges through April 2018 related to the difference between the Company’s estimated future cash flows related to this portion of the Kendall Square Facility, which include an estimate for sublease income to be received from the Company's sublessee and its actual cash flows. The Company discounted the estimated cash flows related to this restructuring activity at a discount rate of 9%.

The activities related to the restructuring liability for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Liability, beginning of the period	$	33,390		$	1,079
Cash payments	(19,256		)	(2,516		)
Restructuring (income) expense	(2,997		)	5,159
Liability, end of the period	$	11,137		$	3,722

Other Restructuring Activities

The Company has incurred several other restructuring activities that are unrelated to its 2003 Kendall Restructuring and the Fan Pier Move Restructuring. The most significant activity commenced in October 2013 when the Company adopted a restructuring plan that included (i) a workforce reduction primarily related to the commercial support of INCIVEK following the continued and rapid decline in the number of patients being treated with INCIVEK as new medicines for the treatment of HCV infection neared approval and (ii) the write-off of certain assets. This action resulted from the Company's decision to focus its investment on future opportunities in cystic fibrosis and other research and development programs.

The activities related to the Company's other restructuring liabilities for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Liability, beginning of the period	$	869		$	8,441
Cash payments	(330		)	(7,267		)
Restructuring expense	306			647
Liability, end of the period	$	845		$	1,821

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Long-term Obligations

3 Months Ended

Mar. 31, 2015

Long-term Debt and Capital Lease Obligations [Abstract]

Long-term Obligations

Long-term Obligations

Fan Pier Leases

In 2011, the Company entered into two lease agreements, pursuant to which the Company leases approximately 1.1 million square feet of office and laboratory space in two buildings (the “Buildings”) at Fan Pier in Boston, Massachusetts (the “Fan Pier Leases”). The Company commenced lease payments in December 2013, and will make lease payments pursuant to the Fan Pier Leases through December 2028. The Company has an option to extend the term of the Fan Pier Leases for an additional ten years.

Because the Company was involved in the construction project, the Company was deemed for accounting purposes to be the owner of the Buildings during the construction period and recorded project construction costs incurred by the landlord as an asset and a related financing obligation during the construction period. Upon completion of the Buildings, the Company evaluated the Fan Pier Leases and determined that the Fan Pier Leases did not meet the criteria for “sale-leaseback” treatment. Accordingly, the Company began depreciating the asset and incurring interest expense related to the financing obligation in 2013. The Company bifurcates its lease payments pursuant to the Fan Pier Leases into (i) a portion that is allocated to the Buildings and (ii) a portion that is allocated to the land on which the Buildings were constructed. The portion of the lease obligations allocated to the land is treated as an operating lease that commenced in 2011.

Property and equipment, net, included $512.3 million and $515.0 million as of March 31, 2015 and December 31, 2014, respectively, related to construction costs for the Buildings. The carrying value of the Company's lease agreement for the Buildings was $473.3 million and $473.4 million as of March 31, 2015 and December 31, 2014, respectively.

Term Loan

On July 9, 2014, the Company entered into a credit agreement with the lenders party thereto, and Macquarie US Trading LLC ("Macquarie"), as administrative agent. The credit agreement provides for a $300.0 million senior secured term loan ("Term Loan"). The credit agreement also provides that, subject to satisfaction of certain conditions, the Company may request that the lenders establish an incremental senior secured term loan facility in an aggregate amount not to exceed $200.0 million.

The Term Loan initially bears interest at a rate of 7.2% per annum but shall be reduced to 6.2% per annum on the later to occur of (i) FDA approval in the United States of a product with a label claim for treating patients with cystic fibrosis 12 years of age and older who are homozygous with the F508del mutation ("FDA Approval"), and (ii) the one year anniversary of the closing, in each case, until the second anniversary of the closing. On and after the second anniversary of the closing, the Term Loan will bear interest at a rate per annum equal to LIBOR plus 5.0% to 7.5% depending on the receipt of FDA Approval.

The maturity date of all loans under the facilities is July 9, 2017. Interest is payable quarterly and on the maturity date. The Company is required to repay principal on the Term Loan in installments of $15.0 million per quarter from October 1, 2015 through July 1, 2016 and in installments of $60.0 million per quarter from October 1, 2016 through the maturity date. The Company may prepay the Term Loan, in whole or in part, at any time; provided that prepayments prior to the second anniversary of the closing are subject to a make-whole premium to ensure Macquarie receives approximately the present value of two years of interest payments over the life of the loan.

The Company's obligations under the facilities are unconditionally guaranteed by certain of its domestic subsidiaries. All obligations under the facilities, and the guarantees of those obligations, are secured, subject to certain exceptions, by substantially all of the Company's assets and the assets of all guarantors, including the pledge of all or a portion of the equity interests of certain of its subsidiaries.

The credit agreement requires that the Company maintain, on a quarterly basis, a minimum level of KALYDECO net revenues. Further, the credit agreement includes negative covenants, subject to exceptions, restricting or limiting the Company's ability and the ability of its subsidiaries to, among other things, incur additional indebtedness, grant liens, engage in certain investment, acquisition and disposition transactions, pay dividends, repurchase capital stock and enter into transactions with affiliates. The credit agreement also contains customary representations and warranties, affirmative covenants and events of default, including payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the administrative agent would be entitled to take various actions, including the acceleration of amounts due under outstanding loans. There have been no events of default as of or during the period ended March 31, 2015.

Based on the Company's evaluation of the Term Loan, the Company determined that the Term Loan contains several embedded derivatives. These embedded derivatives are clearly and closely related to the host instrument because they relate to the Company's credit risk; therefore, they do not require bifurcation from the host instrument, the Term Loan.

The Company incurred $5.3 million in fees paid to Macquarie that were recorded as a discount on the Term Loan and are being recorded as interest expense using the effective interest method over the term of the loan in the Company’s condensed consolidated statements of operations. As of March 31, 2015, the unamortized discount associated with the Term Loan that was embedded in the senior secured term loan caption on the Company’s condensed consolidated balance sheet was $5.2 million.

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Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

A summary of the Company's changes in accumulated other comprehensive income (loss) by component is shown below:

	Foreign Currency Translation Adjustment			Unrealized Holding Gains (Losses) on Marketable Securities			Unrealized Gains (Losses) on Foreign Currency Forward Contracts			Total
	(in thousands)
Balance at December 31, 2014	$	(971	)	$	(123	)	$	2,011		$	917
Other comprehensive (loss) income before reclassifications	(608		)	176			2,004			1,572
Amounts reclassified from accumulated other comprehensive loss	—			—			(1,698		)	(1,698		)
Net current period other comprehensive (loss) income	$	(608	)	$	176		$	306		$	(126	)
Balance at March 31, 2015	$	(1,579	)	$	53		$	2,317		$	791

	Foreign Currency Translation Adjustment			Unrealized Holding Gains (Losses) on Marketable Securities			Unrealized Gains (Losses) on Foreign Currency Forward Contracts			Total
	(in thousands)
Balance at December 31, 2013	$	(325	)	$	42		$	(23	)	$	(306	)
Other comprehensive income (loss) before reclassifications	72			(27		)	(39		)	6
Amounts reclassified from accumulated other comprehensive loss	—			—			3			3
Net current period other comprehensive income (loss)	$	72		$	(27	)	$	(36	)	$	9
Balance at March 31, 2014	$	(253	)	$	15		$	(59	)	$	(297	)

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Fair Value Measurements

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The fair value of the Company’s financial assets and liabilities reflects the Company’s estimate of amounts that it would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company’s assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1:	Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2:	Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
Level 3:	Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.

The Company’s investment strategy is focused on capital preservation. The Company invests in instruments that meet the credit quality standards outlined in the Company’s investment policy. This policy also limits the amount of credit exposure to any one issue or type of instrument. As of March 31, 2015, the Company’s investments were in money market funds, government-sponsored enterprise securities, corporate debt securities and commercial paper.

As of March 31, 2015, all of the Company’s financial assets that were subject to fair value measurements were valued using observable inputs. The Company’s financial assets valued based on Level 1 inputs consisted of money market funds and government-sponsored enterprise securities. The Company’s financial assets valued based on Level 2 inputs consisted of corporate debt securities and commercial paper, which consist of investments in highly-rated investment-grade corporations.

The following table sets forth the Company’s financial assets and liabilities subject to fair value measurements:

	Fair Value Measurements as of March 31, 2015
				Fair Value Hierarchy
	Total			Level 1		Level 2			Level 3
	(in thousands)
Financial assets carried at fair value:
Cash equivalents:
Money market funds	$	286,581		$	286,581	$	—		$	—
Marketable securities:
Government-sponsored enterprise securities	284,115			284,115		—			—
Corporate debt securities	172,395			—		172,395			—
Commercial paper	59,745			—		59,745			—
Prepaid and other current assets:
Foreign currency forward contracts	2,934			—		2,934			—
Total financial assets	$	805,770		$	570,696	$	235,074		$	—
Financial liabilities carried at fair value:
Other liabilities, current portion:
Foreign currency forward contracts	$	(282	)	$	—	$	(282	)	$	—
Other liabilities, excluding current portion:
Foreign currency forward contracts	(335		)	—		(335		)	—
Total financial liabilities	$	(617	)	$	—	$	(617	)	$	—

BioAxone’s cash equivalents of $7.7 million as of March 31, 2015 consisted of money market funds, which are valued based on Level 1 inputs, are not included in the table above. The Company’s noncontrolling interest related to BioAxone includes the fair value of the contingent payments, which are valued based on Level 3 inputs. Please refer to Note C, “Collaborative Arrangements,” for further information.

As of March 31, 2015, the fair value and carrying value of the Company's Term Loan was $294.8 million, which was recorded on its condensed consolidated balance sheet based on Level 3 inputs computed using the effective interest rate of the Term Loan. The effective interest rate considers the timing and amount of estimated future interest payments. Please refer to Note K, "Long-term Obligations" for further information regarding the Company's Term Loan.

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Marketable Securities

3 Months Ended

Mar. 31, 2015

Cash and Cash Equivalents [Abstract]

Marketable Securities

Marketable Securities

A summary of the Company’s cash, cash equivalents and marketable securities is shown below:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
As of March 31, 2015
Cash and cash equivalents:
Cash and money market funds	$	664,879	$	—	$	—		$	664,879
Total cash and cash equivalents	$	664,879	$	—	$	—		$	664,879
Marketable securities:
Government-sponsored enterprise securities (due within 1 year)	$	284,126	$	5	$	(16	)	$	284,115
Commercial paper (due within 1 year)	59,688		57		—			59,745
Corporate debt securities (due within 1 year)	148,958		18		(24		)	148,952
Corporate debt securities (due after 1 year through 5 years)	23,430		13		—			23,443
Total marketable securities	$	516,202	$	93	$	(40	)	$	516,255
Total cash, cash equivalents and marketable securities	$	1,181,081	$	93	$	(40	)	$	1,181,134
As of December 31, 2014
Cash and cash equivalents:
Cash and money market funds	$	625,259	$	—	$	—		$	625,259
Total cash and cash equivalents	$	625,259	$	—	$	—		$	625,259
Marketable securities:
Government-sponsored enterprise securities (due within 1 year)	$	463,788	$	14	$	(52	)	$	463,750
Commercial paper (due within 1 year)	51,674		72		—			51,746
Corporate debt securities (due within 1 year)	196,065		2		(66		)	196,001
Corporate debt securities (due after 1 year through 5 years)	50,443		—		(93		)	50,350
Total marketable securities	$	761,970	$	88	$	(211	)	$	761,847
Total cash, cash equivalents and marketable securities	$	1,387,229	$	88	$	(211	)	$	1,387,106

The Company has a limited number of marketable securities in insignificant loss positions as of March 31, 2015, which the Company does not intend to sell and has concluded it will not be required to sell before recovery of the amortized costs for the investment at maturity. There were no charges recorded for other-than-temporary declines in fair value of marketable securities nor gross realized gains or losses recognized in the three months ended March 31, 2015 and 2014.

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Hedging

3 Months Ended

Mar. 31, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Hedging

Hedging

The Company maintains a hedging program intended to mitigate the effect of changes in foreign exchange rates for a portion of the Company’s forecasted product revenues denominated in certain foreign currencies. The program includes foreign currency forward contracts that are designated as cash flow hedges under GAAP having contractual durations from one to eighteen months. To date, the existence of operational sites in countries outside the United States has generally minimized the degree to which the Company has sought to hedge its revenues in certain foreign currencies.

The Company formally documents the relationship between foreign currency forward contracts (hedging instruments) and forecasted product revenues (hedged items), as well as the Company's risk management objective and strategy for undertaking various hedging activities, which includes matching all foreign currency forward contracts that are designated as cash flow hedges to forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the foreign currency forward contracts are highly effective in offsetting changes in cash flows of hedged items on a prospective and retrospective basis. If the Company determines that (i) a foreign currency forward contract is not highly effective as a cash flow hedge, (ii) it has ceased to be a highly effective hedge or (iii) a forecasted transaction is no longer probable of occurring, the Company would discontinue hedge accounting treatment prospectively. The Company measures effectiveness based on the change in fair value of the forward contracts and the fair value of the hypothetical foreign currency forward contracts with terms that match the critical terms of the risk being hedged. As of March 31, 2015, all hedges were determined to be highly effective and the Company has not recorded any ineffectiveness related to the hedging program.

The following table summarizes the notional amount of the Company’s outstanding foreign currency forward contracts designated as cash flow hedges:

	As of March 31, 2015		As of December 31, 2014
Foreign Currency	(in thousands)
Euro	$	34,749	$	20,209
British pound sterling	33,696		13,515
Australian dollar	20,494		—
Total foreign currency forward contracts	$	88,939	$	33,724

The following table summarizes the fair value of the Company's outstanding foreign currency forward contracts designated as cash flow hedges under GAAP included on the Company's condensed consolidated balance sheets:

As of March 31, 2015
Assets			Liabilities
Classification	Fair Value		Classification	Fair Value
(in thousands)
Prepaid and other current assets	$	2,934	Other liabilities, current portion	$	(282	)
Other assets	—		Other liabilities, excluding current portion	(335		)
Total assets	$	2,934	Total liabilities	$	(617	)

As of December 31, 2014
Assets			Liabilities
Classification	Fair Value		Classification	Fair Value
(in thousands)
Prepaid and other current assets	$	2,011	Other liabilities, current portion	$	—
Total assets	$	2,011	Total liabilities	$	—

The following table summarizes the potential effect of offsetting derivatives by type of financial instrument on the Company's condensed consolidated balance sheets:

	As of March 31, 2015
	Gross Amounts Recognized		Gross Amounts Offset	Gross Amount Presented		Gross Amount Not Offset		Legal Offset
Foreign currency forward contracts	(in thousands)
Total assets	2,934		—	2,934		(617	)	2,317
Total liabilities	(617	)	—	(617	)	617		—

	As of December 31, 2014
	Gross Amounts Recognized	Gross Amounts Offset	Gross Amount Presented	Gross Amount Not Offset	Legal Offset
Foreign currency forward contracts	(in thousands)
Total assets	2,011	—	2,011	—	2,011

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Restructuring Liabilities (Tables)

3 Months Ended

Mar. 31, 2015

Restructuring Cost and Reserve [Line Items]

Activity related to the restructuring liability

The activities related to the restructuring liability for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Liability, beginning of the period	$	11,596		$	19,115
Cash payments	(3,985		)	(3,862		)
Cash received from subleases	2,476			2,689
Restructuring (income) expense	(581		)	382
Liability, end of the period	$	9,506		$	18,324

Fan Pier Move Restructuring

Restructuring Cost and Reserve [Line Items]

Restructuring charges and related liability

The activities related to the restructuring liability for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Liability, beginning of the period	$	33,390		$	1,079
Cash payments	(19,256		)	(2,516		)
Restructuring (income) expense	(2,997		)	5,159
Liability, end of the period	$	11,137		$	3,722

Other Restructuring

Restructuring Cost and Reserve [Line Items]

Restructuring charges and related liability

The activities related to the Company's other restructuring liabilities for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Liability, beginning of the period	$	869		$	8,441
Cash payments	(330		)	(7,267		)
Restructuring expense	306			647
Liability, end of the period	$	845		$	1,821

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Income Taxes (Details) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Provision for income taxes	$ 299,000	$ 803,000
Unrecognized tax benefits	900,000		900,000
Estimated reduction in unrecognized tax benefits in next fiscal year	$ 500,000

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Other Arrangements

3 Months Ended

Mar. 31, 2015

Other Income and Expenses [Abstract]

Other Arrangements

Other Arrangements

Sale of HIV Protease Inhibitor Royalty Stream

In 2008, the Company sold to a third party its rights to receive royalty payments from GlaxoSmithKline plc, net of royalty amounts to be earned by and due to a third party, for a one-time cash payment of $160.0 million. These royalty payments relate to net sales of HIV protease inhibitors, which had been developed pursuant to a collaboration agreement between the Company and GlaxoSmithKline plc. As of March 31, 2015, the Company had $39.2 million in deferred revenues related to the one-time cash payment, which it is recognizing over the life of the collaboration agreement with GlaxoSmithKline plc based on the units-of-revenue method. In addition, the Company continues to recognize royalty revenues equal to the amount of the third-party subroyalty and an offsetting royalty expense for the third-party subroyalty payment.

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Product Revenues, Net (Tables)

3 Months Ended

Mar. 31, 2015

Product Revenues [Abstract]

Schedule of product revenue allowances and reserve categories

The following table summarizes activity in each of the product revenue allowance and reserve categories for the three months endedMarch 31, 2015:

	Trade Allowances			Rebates, Chargebacks and Discounts			Product Returns			Other Incentives			Total
	(in thousands)
Balance at December 31, 2014	$	1,463		$	29,102		$	4,713		$	745		$	36,023
Provision related to current period sales	1,297			9,027			79			830			11,233
Adjustments related to prior period sales	(87		)	(1,128		)	(410		)	—			(1,625		)
Credits/payments made	(1,366		)	(7,162		)	(2,788		)	(763		)	(12,079		)
Balance at March 31, 2015	$	1,307		$	29,839		$	1,594		$	812		$	33,552

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Stock-based Compensation Expense (Details 2) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award
Exercise price range, options outstanding (in shares)	12,682
Exercise price range, options outstanding, weighted-average remaining contractual life (in years)	7 years 3 months 11 days
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 65.17
Exercise price range, options exercisable (in shares)	5,410
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 47.36
$17.16 to $20.00
Share-based Compensation Arrangement by Share-based Payment Award
Exercise price, low end of range (usd per share)	$ 17.16
Exercise price, high end of range (usd per share)	$ 20.00
Exercise price range, options outstanding (in shares)	165
Exercise price range, options outstanding, weighted-average remaining contractual life (in years)	2 years 6 months 4 days
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 18.69
Exercise price range, options exercisable (in shares)	165
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 18.69
$20.01 to $40.00
Share-based Compensation Arrangement by Share-based Payment Award
Exercise price, low end of range (usd per share)	$ 20.01
Exercise price, high end of range (usd per share)	$ 40
Exercise price range, options outstanding (in shares)	3,207
Exercise price range, options outstanding, weighted-average remaining contractual life (in years)	4 years 2 months 27 days
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 34.97
Exercise price range, options exercisable (in shares)	2,711
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 34.73
$40.01 to $60.00
Share-based Compensation Arrangement by Share-based Payment Award
Exercise price, low end of range (usd per share)	$ 40.01
Exercise price, high end of range (usd per share)	$ 60
Exercise price range, options outstanding (in shares)	3,339
Exercise price range, options outstanding, weighted-average remaining contractual life (in years)	7 years 3 months 29 days
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 48.55
Exercise price range, options exercisable (in shares)	1,499
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 50.27
$60.01 to $80.00
Share-based Compensation Arrangement by Share-based Payment Award
Exercise price, low end of range (usd per share)	$ 60.01
Exercise price, high end of range (usd per share)	$ 80
Exercise price range, options outstanding (in shares)	1,837
Exercise price range, options outstanding, weighted-average remaining contractual life (in years)	8 years 7 months 2 days
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 76.07
Exercise price range, options exercisable (in shares)	492
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 74.88
$80.01 to $100.00
Share-based Compensation Arrangement by Share-based Payment Award
Exercise price, low end of range (usd per share)	$ 80.01
Exercise price, high end of range (usd per share)	$ 100
Exercise price range, options outstanding (in shares)	2,232
Exercise price range, options outstanding, weighted-average remaining contractual life (in years)	8 years 8 months 12 days
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 90.29
Exercise price range, options exercisable (in shares)	542
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 86.07
$100.01 to $120.00
Share-based Compensation Arrangement by Share-based Payment Award
Exercise price, low end of range (usd per share)	$ 100
Exercise price, high end of range (usd per share)	$ 120
Exercise price range, options outstanding (in shares)	1,898
Exercise price range, options outstanding, weighted-average remaining contractual life (in years)	9 years 10 months 2 days
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 109.23
Exercise price range, options exercisable (in shares)	1
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 110.59
$120.01 to $125.63
Share-based Compensation Arrangement by Share-based Payment Award
Exercise price, low end of range (usd per share)	$ 120
Exercise price, high end of range (usd per share)	$ 126
Exercise price range, options outstanding (in shares)	4
Exercise price range, options outstanding, weighted-average remaining contractual life (in years)	9 years 9 months 26 days
Exercise price range, options outstanding, weighted-average exercise price (in dollars per share)	$ 125.63
Exercise price range, options exercisable (in shares)	0
Exercise price range, options exercisable, weighted-average exercise price (in dollars per share)	$ 0.00

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Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at balance sheet date	$ 917	$ (306)
Other comprehensive (loss) income before reclassifications	1,572	6
Amounts reclassified from accumulated other comprehensive loss	(1,698)	3
Total changes in other comprehensive loss	(126)	9
Balance at balance sheet date	791	(297)
Foreign Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at balance sheet date	(971)	(325)
Other comprehensive (loss) income before reclassifications	(608)	72
Amounts reclassified from accumulated other comprehensive loss	0	0
Total changes in other comprehensive loss	(608)	72
Balance at balance sheet date	(1,579)	(253)
Unrealized Holding Gains (Losses) on Marketable Securities
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at balance sheet date	(123)	42
Other comprehensive (loss) income before reclassifications	176	(27)
Amounts reclassified from accumulated other comprehensive loss	0	0
Total changes in other comprehensive loss	176	(27)
Balance at balance sheet date	53	15
Unrealized Gains (Losses) on Foreign Currency Forward Contracts
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at balance sheet date	2,011	(23)
Other comprehensive (loss) income before reclassifications	2,004	(39)
Amounts reclassified from accumulated other comprehensive loss	(1,698)	3
Total changes in other comprehensive loss	306	(36)
Balance at balance sheet date	$ 2,317	$ (59)

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 664,879	$ 625,259
Marketable securities, available for sale	516,255	761,847
Accounts receivable, net	80,332	75,964
Inventories	34,089	30,848
Prepaid expenses and other current assets	62,648	52,593
Total current assets	1,358,203	1,546,511
Property and equipment, net	708,616	715,812
Intangible assets	29,000	29,000
Goodwill	39,915	39,915
Restricted cash	22,141	176
Other assets	7,952	3,265
Total assets	2,165,827	2,334,679
Current liabilities:
Accounts payable	43,524	71,194
Accrued expenses	176,981	209,676
Deferred revenues, current portion	15,918	17,468
Accrued restructuring expenses, current portion	13,133	33,107
Capital lease obligations, current portion	19,672	17,806
Senior secured term loan, current portion	28,527	14,206
Other liabilities, current portion	4,683	4,797
Total current liabilities	302,438	368,254
Deferred revenues, excluding current portion	24,000	27,808
Accrued restructuring expenses, excluding current portion	8,355	12,748
Capital lease obligations, excluding current portion	46,471	39,293
Deferred tax liability	15,093	15,044
Fan Pier lease obligation, excluding current portion	472,971	473,073
Senior secured term loan, excluding current portion	266,266	280,569
Other liabilities, excluding current portion	32,696	21,707
Total liabilities	1,168,290	1,238,496
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued and outstanding at March 31, 2015 and December 31, 2014	0	0
Common stock, $0.01 par value; 300,000,000 shares authorized at March 31, 2015 and December 31, 2014; 243,580,032 and 241,764,398 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively	2,399	2,385
Additional paid-in capital	5,877,324	5,777,154
Accumulated other comprehensive income	791	917
Accumulated deficit	(4,904,056)	(4,705,450)
Total Vertex shareholders' equity	976,458	1,075,006
Noncontrolling interest	21,079	21,177
Total shareholders’ equity	997,537	1,096,183
Total liabilities and shareholders’ equity	$ 2,165,827	$ 2,334,679

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Product Revenues, Net

3 Months Ended

Mar. 31, 2015

Product Revenues [Abstract]

Product Revenues, Net

Product Revenues, Net

The Company sells its products principally to a limited number of specialty pharmacy providers and selected regional wholesalers in North America as well as government-owned and supported customers in international markets (collectively, its “Customers”). The Company's Customers in North America subsequently resell the products to patients and health care providers. The Company recognizes net revenues from product sales upon delivery to the Customer as long as (i) there is persuasive evidence that an arrangement exists between the Company and the Customer, (ii) collectibility is reasonably assured and (iii) the price is fixed or determinable.

In order to conclude that the price is fixed or determinable, the Company must be able to (i) calculate its gross product revenues from sales to Customers and (ii) reasonably estimate its net product revenues upon delivery to its Customer's locations. The Company calculates gross product revenues based on the price that the Company charges its Customers. The Company estimates its net product revenues by deducting from its gross product revenues (a) trade allowances, such as invoice discounts for prompt payment and Customer fees, (b) estimated government and private payor rebates, chargebacks and discounts, (c) estimated reserves for expected product returns and (d) estimated costs of incentives offered to certain indirect customers, including patients. The Company makes significant estimates and judgments that materially affect the Company's recognition of net product revenues. In certain instances, the Company may be unable to reasonably conclude that the price is fixed or determinable at the time of delivery, in which case it defers the recognition of revenues. Once the Company is able to determine that the price is fixed or determinable, it recognizes the revenues associated with the units in which revenue recognition was deferred.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the three months endedMarch 31, 2015:

	Trade Allowances			Rebates, Chargebacks and Discounts			Product Returns			Other Incentives			Total
	(in thousands)
Balance at December 31, 2014	$	1,463		$	29,102		$	4,713		$	745		$	36,023
Provision related to current period sales	1,297			9,027			79			830			11,233
Adjustments related to prior period sales	(87		)	(1,128		)	(410		)	—			(1,625		)
Credits/payments made	(1,366		)	(7,162		)	(2,788		)	(763		)	(12,079		)
Balance at March 31, 2015	$	1,307		$	29,839		$	1,594		$	812		$	33,552

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2015

Earnings Per Share [Abstract]

Potential gross common equivalent shares

The Company did not include the securities described in the following table in the computation of the net loss from continuing operations per share attributable to Vertex common shareholder calculations because the effect would have been anti-dilutive during each period:

	Three Months Ended March 31,
	2015	2014
	(in thousands)
Stock options	12,682	16,078
Unvested restricted stock and restricted stock units	3,474	2,842

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Earnings Per Share (Details) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share (in shares)	12,682	16,078
Unvested restricted stock and restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share
Antidilutive securities excluded from computation of earnings per share (in shares)	3,474	2,842

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Stock-based Compensation Expense

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation Expense

Stock-based Compensation Expense

The Company issues stock options, restricted stock and restricted stock units with service conditions, which are generally the vesting periods of the awards. The Company also has issued, to certain members of senior management, restricted stock and restricted stock units that vest upon the earlier of the satisfaction of (i) a performance condition or (ii) a service condition, stock options that vest upon the earlier of the satisfaction of (a) performance conditions or (b) a service condition and restricted stock and restricted stock units that vest upon the satisfaction of (i) a performance condition and (ii) a service condition. In addition, the Company issued pursuant to a retention program restricted stock awards to certain members of senior management that will vest upon the satisfaction of both (i) a performance condition and (ii) a service condition. In addition, the Company issues shares pursuant to an employee stock purchase plan ("ESPP").

Effective for equity awards granted on or after February 5, 2014, the Company provides to employees who have rendered significant service to the Company and meet certain age requirements, partial or full acceleration of vesting of these equity awards, subject to certain conditions, upon a termination of employment other than for cause.  Less than 5% of the Company’s employees were eligible for partial or full acceleration of any of their equity awards as of March 31, 2015.  The Company recognizes stock-based compensation expense related to these awards over the service period from the date of grant until the qualified employees become eligible for partial or full acceleration of vesting.

During the three months ended March 31, 2015 and 2014, the Company recognized the following stock-based compensation expense included in loss from continuing operations:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Stock-based compensation expense by type of award:
Stock options	$	28,959		$	25,127
Restricted stock and restricted stock units	27,169			18,993
ESPP share issuances	2,140			2,667
Less stock-based compensation expense capitalized to inventories	(884		)	(207		)
Total stock-based compensation included in costs and expenses	$	57,384		$	46,580
Stock-based compensation expense by line item:
Research and development expenses	$	38,217		$	32,900
Sales, general and administrative expenses	19,167			13,680
Total stock-based compensation included in costs and expenses	$	57,384		$	46,580

The following table sets forth the Company's unrecognized stock-based compensation expense, net of estimated forfeitures, by type of award and the weighted-average period over which that expense is expected to be recognized:

	As of March 31, 2015
	Unrecognized Expense, Net of Estimated Forfeitures		Weighted-average Recognition Period
	(in thousands)		(in years)
Type of award:
Stock options	$	199,256	2.31
Restricted stock and restricted stock units	$	201,465	2.88
ESPP share issuances	$	2,205	0.45

The following table summarizes information about stock options outstanding and exercisable at March 31, 2015:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-average Remaining Contractual Life	Weighted-average Exercise Price		Number Exercisable	Weighted-average Exercise Price
	(in thousands)	(in years)	(per share)		(in thousands)	(per share)
$17.16–$20.00	165	2.51	$	18.69	165	$	18.69
$20.01–$40.00	3,207	4.24	$	34.97	2,711	$	34.73
$40.01–$60.00	3,339	7.33	$	48.55	1,499	$	50.27
$60.01–$80.00	1,837	8.59	$	76.07	492	$	74.88
$80.01–$100.00	2,232	8.70	$	90.29	542	$	86.07
$100.01–$120.00	1,898	9.84	$	109.23	1	$	110.59
$120.01–$125.63	4	9.82	$	125.63	—	$	—
Total	12,682	7.28	$	65.17	5,410	$	47.36