Vertex Pharmaceuticals Incorporated
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant Filed by a Party other than the Registrant Check the appropriate box: Preliminary Proxy Statement Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) Definitive Proxy Statement Definitive Additional Materials Soliciting Material under §240.14a-12 VERTEX PHARMACEUTICALS INCORPORATED (Name of Registrant as Specified In Its Charter) Payment of Filing Fee (Check the appropriate box): No fee required. Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: Fee paid previously with preliminary materials. Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: Dear Shareholders: Since 2012 we have executed on our strategy of investing in scientific innovation to create transformative medicines for people with serious diseases - a strategy we believe maximizes benefits for patients and generates long-term value for shareholders. By all measures, 2018 was an extraordinary year for Vertex, as we accelerated our Phase 3 triple combination programs in cystic fibrosis, advanced and expanded our pipeline into disease areas outside of CF and delivered exceptional performance for our shareholders. Over the longer term, the successful execution of our strategy has caused Vertex to grow from a market capitalization of approximately $7 billion in early 2012 to over $45 billion in early 2019. In CF, we are on the brink of delivering a triple combination regimen that will provide superior benefit to the vast majority of CF patients, bringing us closer to our goal of creating highly effective treatments for all patients with CF. In 2018, we accelerated the clinical development of two triple combination regimens -initiating Phase 3 development in early 2018 and obtaining positive Phase 3 clinical data from both of these programs by early 2019. Based upon this data, we are on track to submit an NDA in the United States for a triple combination regimen in the third quarter of 2019, followed soon thereafter by regulatory submissions in the European Union and other jurisdictions. We believe that in 2020, just four years after the initial discovery of VX-445 and VX-659, we will begin delivering a triple combination regimen to CF patients, including many who have been waiting years for the first treatment for the underlying cause of their disease and others who are eligible for our current medicines but could benefit from improved treatment options. Beyond CF, we expanded our pipeline by advancing multiple programs into the clinic and obtaining important data from ongoing trials. In late 2018, we initiated a clinical trial for our first drug candidate with the potential to treat alpha-1 antitrypsin deficiency, a genetic disorder that results in life-shortening complications in the lung and liver. In pain, we have generated compelling Phase 2 data in three different pain types - acute pain, musculoskeletal pain and neuropathic pain - with VX-150, a non-opioid drug candidate that inhibits NaV1.8. In collaboration with CRISPR Therapeutics, we also initiated clinical trials to evaluate CTX001, a CRISPR/Cas9 gene editing therapy, as a potential treatment for sickle cell disease and beta thalassemia. In addition to these drug candidates, we expect that we will advance additional compounds into the clinic in 2019, including potential additional compounds targeting pain and alpha-1 antitrypsin deficiency and our first compound targeting focal segmental glomerulosclerosis, a serious kidney disease. This rapid expansion of our pipeline is the result of a research strategy that applies the lessons we learned in CF regarding the importance of: validated targets that address causal human biology; predictive lab assays and clinical biomarkers that give us an early indication of clinical efficacy; rapid paths to regulatory approval; and a focus on transformative medicines regardless of modality. Our ability to bring our CF medicines to many more patients resulted in $3.0 billion in total CF revenues in 2018, a 40% increase as compared to 2017, and we expect product revenues to continue to increase in 2019 and beyond. Our revenue growth, together with disciplined operating expense management, has created significant positive cash flows and expanding operating income, all while allowing us to continue investing in innovation to generate additional transformational medicines. While we are gratified that our accomplishments have been reflected in our business performance, we are proudest of the way that our medicines are positively impacting the lives of patients with CF. There is no more meaningful statement of the power of transformative medicines than their ability to change the way patients think about themselves and their future. Sincerely, Jeffrey M. Leiden, M.D., Ph.D. Chairman, Chief Executive Officer and President Notice of Annual Meeting of Shareholders Wednesday, June 5, 2019 9:30 a.m. 50 Northern Avenue Boston, Massachusetts 02210 Dear Shareholders: You are invited to attend Vertex Pharmaceuticals Incorporated’s 2019 Annual Meeting of Shareholders. At the meeting, shareholders will vote: to elect the six director nominees that are set forth in the attached proxy statement to one year terms expiring in 2020; to approve an amendment and restatement of our 2013 Stock and Option Plan, that, among other things, increases the number of shares authorized for issuance under this plan by 5.0 million shares; to approve an amendment and restatement of our Employee Stock Purchase Plan that, among other things, increases the number of shares authorized for issuance under this plan by 2.0 million shares; to ratify the selection of Ernst & Young LLP as our independent registered public accounting firm for 2019; to approve our named executive officers’ compensation in an advisory vote; and on two proposals submitted by our shareholders, if properly presented at the meeting. Shareholders also will transact any other business that may properly come before the annual meeting or any adjournment or postponement of the annual meeting. RECORD DATE: You can vote if you were a shareholder of record on April 10, 2019. Your vote matters. Whether or not you plan to attend the annual meeting, please ensure that your shares are represented by voting, signing, dating and returning your proxy in the enclosed envelope, which requires no postage if mailed in the United States. April 26, 2019 By Order of the Board of Directors Sabrina Yohai Secretary IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS. This proxy statement and the enclosed proxy card are first being mailed or furnished to our shareholders on or about April 29, 2019. This proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2018 are available to holders of record of our common stock at www.envisionreports.com/vrtx and to beneficial holders of our common stock at www.edocumentview.com/vrtx. SUMMARY By all measures, 2018 was an extraordinary year for Vertex, as we continued to execute on our strategy of investing in scientific innovation to create transformative medicines for people with serious diseases. In 2018, we obtained approval for and launched SYMDEKO/SYMKEVI, our third medicine for CF, and accelerated the development of our triple combination regimens, which we believe will allow us to treat the vast majority of patients with CF and will provide an improved treatment option for many patients currently taking our medicines. Outside of CF, we advanced our Phase 2 clinical program in pain, initiated our first clinical trial of a potential medicine for alpha-1 anti-trypsin deficiency and the first clinical trial for CTX001, which we are co-developing with CRISPR Therapeutics, as a potential treatment for beta thalassemia and sickle cell disease. Our exceptional performance in 2018 included 40% growth in total product revenues and increasing cash flows. As we enter 2019, we are on track to deliver more new transformative medicines for patients thereby increasing revenues, expanding operating income and creating long-term shareholder value. Financial Performance Our CF medicines, KALYDECO, ORKAMBI and SYMDEKO/SYMKEVI, are transforming the lives of eligible patients around the globe and driving our financial performance. Our CF net product revenues increased to $3.04 billion in 2018, up 40% as compared to 2017 We exceeded our initial CF net product revenue guidance in 2018 by $313 million ($3.04 billion as compared to the mid-point of our initial guidance of $2.73 billion) Our GAAP net income increased to $2.1 billion in 2018 from GAAP net income of $263 million in 2017 Our non-GAAP net income increased to $1.1 billion in 2018, up $564