SecProbe.io

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 May 7, 2025

Charles Wagner
Executive Vice President and Chief Financial Officer
Vertex Pharmaceuticals, Inc.
50 Northern Avenue
Boston, MA 02210

 Re: Vertex Pharmaceuticals, Inc.
 Form 10-K for Fiscal Year Ended December 31, 2024
 File No. 0-19319
Dear Charles Wagner:

 We have completed our review of your filing. We remind you that the
company and
its management are responsible for the accuracy and adequacy of their
disclosures,
notwithstanding any review, comments, action or absence of action by the staff.

 Sincerely,

 Division of Corporation
Finance
 Office of Life Sciences
</TEXT>
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 May 5, 2025
 VIA EDGAR United States Securities and Exchange
Commission Division of Corporation Finance Office of Life
Sciences 100 F Street, N.E. Washington, D.C. 20549

 Attention:

 Tracie Mariner

 Kevin Vaughn

 Joshua Gorsky

 Tim Buchmiller

 Re:

 Vertex Pharmaceuticals, Inc.

 Form 10-K for Fiscal Year Ended December 31,
2024

 Filed February 13, 2025

 File No. 000-19319
 Ladies and Gentlemen, We are
writing in response to the comments that we received from you by letter dated April 7, 2025, regarding the above-referenced filing of Vertex Pharmaceuticals, Inc. (the “Company”, “we,” or “Vertex”).
 Set forth below are the Company’s responses to the Staff’s comments. For the Staff’s convenience, we have incorporated your comments into this
response letter in italics. Commercialization of CF Medicines, page 11

 1.
 We note your disclosure that ALYFTREK carries a lower royalty burden than your other CF medicines. However,
we also note from your disclosure on page 58 that there may be uncertainty regarding the calculations of royalties that you will pay on ALYFTREK to a third-party under the agreement with the Cystic Fibrosis Foundation and that you could be required
to pay a higher royalty percentage on ALYFTREK sales than you currently expect. If you expect patients to switch from TRIKAFTA to ALYFTREK, please quantify in your future filings your current royalty burden on TRIKAFTA, your primary CF medicine,
and, given the uncertainty described on page 58, provide an upper and lower bounded range of the royalty burden on ALYFTREK depending on the outcome of the calculations of the royalties that will be payable on ALYFTREK.

 Page 2
 Response: The Company respectfully acknowledges the Staff’s comment and will provide responsive disclosure in future filings.
 Cystic Fibrosis Foundation, page 15

 2.
 We note your collaboration agreement with the Cystic Fibrosis Foundation results in the payment of a
material amount of royalties. We also note your disclosure that, pursuant to the agreement, sales of combination products, such as TRIKAFTA/KAFTRIO, are allocated equally to each of the active pharmaceutical ingredients in the combination product,
and royalties are then paid for any royalty-bearing components included in the combination. In future filings, place revise to disclose the duration of the royalty terms associated with the active pharmaceutical ingredients in your material
combination products, such as TRIKAFTA/KAFTRIO, pursuant to this collaboration agreement. Response: The
Company respectfully acknowledges the Staff’s comment and will provide responsive disclosure in future filings.

 Sincerely,

 /s/ Christiana Stevenson

 Christiana Stevenson

 cc:
 Reshma Kewalramani, Chief Executive Officer and President
 Jonathan Biller, Chief Legal Officer
 Charles Wagner, Jr., Chief Financial Officer

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<TEXT>
 April 7, 2025

Charles Wagner
Executive Vice President and Chief Financial Officer
Vertex Pharmaceuticals, Inc.
50 Northern Avenue
Boston, MA 02210

 Re: Vertex Pharmaceuticals, Inc.
 Form 10-K for Fiscal Year Ended December 31, 2024
 Filed February 13, 2025
Dear Charles Wagner:

 We have reviewed your filing and have the following comments.

 Please respond to this letter within ten business days by providing the
requested
information or advise us as soon as possible when you will respond. If you do
not believe a
comment applies to your facts and circumstances, please tell us why in your
response.

 After reviewing your response to this letter, we may have additional
comments.

Form 10-K For Fiscal Year Ended December 31, 2024
Item 1. Business
Commercialization of CF Medicines, page 11

1. We note your disclosure that ALYFTREK carries a lower royalty burden
than your
 other CF medicines. However, we also note from your disclosure on page
58 that
 there may be uncertainty regarding the calculations of royalties that
you will pay on
 ALYFTREK to a third-party under the agreement with the Cystic Fibrosis
Foundation
 and that you could be required to pay a higher royalty percentage on
ALYFTREK
 sales than you currently expect. If you expect patients to switch from
TRIKAFTA to
 ALYFTREK, please quantify in your future filings your current royalty
burden on
 TRIKAFTA, your primary CF medicine, and, given the uncertainty described
on page
 58, provide an upper and lower bounded range of the royalty burden on
ALYFTREK
 depending on the outcome of the calculations of the royalties that will
be payable on
 ALYFTREK.
Cystic Fibrosis Foundation, page 15

2. We note your collaboration agreement with the Cystic Fibrosis Foundation
results in
 the payment of a material amount of royalties. We also note your
disclosure that,
 April 7, 2025
Page 2

 pursuant to the agreement, sales of combination products, such as
 TRIKAFTA/KAFTRIO, are allocated equally to each of the active
pharmaceutical
 ingredients in the combination product, and royalties are then paid for
any royalty-
 bearing components included in the combination. In future filings, place
revise to
 disclose the duration of the royalty terms associated with the active
pharmaceutical
 ingredients in your material combination products, such as
TRIKAFTA/KAFTRIO,
 pursuant to this collaboration agreement.
 We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence
of action by the staff.

 Please contact Tracie Mariner at 202-551-3744 or Kevin Vaughn at
202-551-3494 if
you have questions regarding comments on the financial statements and related
matters. Please contact Joshua Gorsky at 202-551-7836 or Tim Buchmiller at
202-551-3635
with any other questions.

 Sincerely,

 Division of
Corporation Finance
 Office of Life
Sciences
</TEXT>
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United States securities and exchange commission logo
October 4, 2022
Reshma Kewalramani
Chief Executive Officer and President
Vertex Pharmaceuticals Incorporated
50 Northern Avenue
Boston, Massachusetts 02210
Re:Vertex Pharmaceuticals Incorporated
Definitive Proxy Statement on Schedule 14A
Filed April 7, 2022
File No. 000-19319
Dear Reshma Kewalramani:
            We have completed our review of your filing.  We remind you that the company and its
management are responsible for the accuracy and adequacy of their disclosures, notwithstanding
any review, comments, action or absence of action by the staff.
Sincerely,
Division of Corporation Finance
Disclosure Review Program

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 Vertex Pharmaceuticals Incorporated

 50 Northern
Avenue

 Boston, MA

 02210-1862

Tel: 617-341-6100

www.vrtx.com

 September 26, 2022

VIA EDGAR

 U.S. Securities and Exchange
Commission

 Division of Corporation Finance

 100 F Street,
N.E.

 Washington, D.C. 20549

Attention:

Amanda Ravitz and Barbara Jacobs

Re:

Vertex Pharmaceuticals Incorporated

Definitive Proxy Statement on Schedule 14A

Filed April 7, 2022

File No. 000-19319

 Ladies and Gentlemen:

This letter is being submitted in response to the comment letter dated September 20, 2022 from the staff of the Division of Corporation
Finance (the “Staff”) of the Securities and Exchange Commission relating to the above-referenced Definitive Proxy Statement on Schedule 14A of Vertex Pharmaceuticals Incorporated (the “Company”). For reference purposes, we have
restated the comments contained in the Staff’s letter before our responses below.

 Definitive Proxy Statement on Schedule 14A filed April 7,
2022

 General

 1.    Please
expand your discussion of the reasons you believe that your leadership structure is appropriate, addressing your specific characteristics or circumstances. In your discussion, please also address the circumstances under which you would consider
having the Chair and CEO roles filled by a single individual, when shareholders would be notified of any such change, and whether you will seek prior input from shareholders. Please also address how the experience of your Lead Independent Director
is brought to bear in connection with your board’s role in risk oversight.

 Response to Comment 1:

The Company acknowledges the Staff’s comment, and will enhance its future proxy disclosures to expand its discussion of the reasons it
believes its leadership structure is appropriate. The discussion will address, among other matters, the circumstances under which the Company would consider having the Chair and CEO roles filled by a single individual, when shareholders would be
notified of any such change, and whether the Company will seek prior input from its shareholders. The discussion will also address how the experience of the Company’s Lead Independent Director is brought to bear in connection with the
board’s role in risk oversight.

Securities and Exchange Commission

 -
 2
 -

September 26, 2022

 2.    Please expand upon the role that your Lead Independent Director plays in the
leadership of the board. For example, please enhance your disclosure to address whether or not your Lead Independent Director may:

•

 represent the board in communications with shareholders and other stakeholders;

•

 require board consideration of, and/or override your CEO on, any risk matters; or

•

 provide input on design of the board itself.

Response to Comment 2:

 The Company
acknowledges the Staff’s comment, and will enhance its future proxy disclosures to expand its discussion of the role its Lead Independent Director plays in the leadership of the board. The disclosure will address, among other matters, whether
or not its Lead Independent Director may: (i) represent the board in communications with shareholders or other stakeholders, (ii) require board consideration of, and/or override the Company’s CEO on, any risk matters, and
(iii) provide input on the design of the board itself.

 3.    Please expand upon how your board administers its risk oversight
function. For example, please disclose:

•

 the timeframe over which you evaluate risks (e.g., short-term, intermediate-term, or long-term) and how you
apply different oversight standards based upon the immediacy of the risk assessed;

•

 whether you consult with outside advisors and experts to anticipate future threats and trends, and how often
you re-assess your risk environment;

•

 whether you have a Chief Compliance Officer and to whom this position reports; and

•

 how your risk oversight process aligns with your disclosure controls and procedure.

Response to Comment 3:

 The Company
acknowledges the Staff’s comment, and will enhance its future proxy disclosures to expand upon how its board administers its risk oversight function. The disclosures will address, among other matters, the timeframe over which the Company
evaluates risks and how its applies different oversight standards based upon the immediacy of the risks assessed, whether it consults with outside advisors and experts to anticipate future threats and trends and how often it re-assesses its risk environment, whether it has a Chief Compliance Officer and to whom this position reports, and how its risk oversight process aligns with its disclosure controls and procedures.

*        *        *

Securities and Exchange Commission

 -
 3
 -

September 26, 2022

 Please do not hesitate to call me at (617) 961-0518
with any questions with respect to the responses above.

Very truly yours,

 /s/ Joy Liu

Joy Liu

Senior Vice President, General Counsel

cc:
 Jonathan Biller, Executive Vice President and Chief Legal Officer

United States securities and exchange commission logo
September 20, 2022
Reshma Kewalramani
Chief Executive Officer and President
Vertex Pharmaceuticals Incorporated
50 Northern Avenue
Boston, Massachusetts 02210
Re:Vertex Pharmaceuticals Incorporated
Definitive Proxy Statement on Schedule 14A
Filed April 7, 2022
File No. 000-19319
Dear Dr. Kewalramani:
            We have limited our review of your most recent definitive proxy statement to those issues
we have addressed in our comments.
            Please respond to these comments by confirming that you will enhance your future proxy
disclosures in accordance with the topics discussed below as well as any material developments
to your risk oversight structure. For guidance, refer to Item 407(h) of Regulation S-K.
Definitive Proxy Statement on Schedule 14A filed April 7, 2022
General
1.Please expand your discussion of the reasons you believe that your leadership structure is
appropriate, addressing your specific characteristics or circumstances. In your discussion,
please also address the circumstances under which you would consider having the Chair
and CEO roles filled by a single individual, when shareholders would be notified of any
such change, and whether you will seek prior input from shareholders. Please also
address how the experience of your Lead Independent Director is brought to bear in
connection with your board’s role in risk oversight.
2.Please expand upon the role that your Lead Independent Director plays in the leadership
of the board. For example, please enhance your disclosure to address whether or not your
Lead Independent Director may:
•represent the board in communications with shareholders and other stakeholders;
•require board consideration of, and/or override your CEO on, any risk matters; or
•provide input on design of the board itself.
3.Please expand upon how your board administers its risk oversight function. For example,

 FirstName LastNameReshma Kewalramani
 Comapany NameVertex Pharmaceuticals Incorporated
 September 20, 2022 Page 2
 FirstName LastName
Reshma Kewalramani
Vertex Pharmaceuticals Incorporated
September 20, 2022
Page 2
please disclose:
•the timeframe over which you evaluate risks (e.g., short-term, intermediate-term, or
long-term) and how you apply different oversight standards based upon the
immediacy of the risk assessed;
•whether you consult with outside advisors and experts to anticipate future threats and
trends, and how often you re-assess your risk environment;
•whether you have a Chief Compliance Officer and to whom this position reports; and
•how your risk oversight process aligns with your disclosure controls and procedure.
            We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
            Please contact Amanda Ravitz at 202-551-3412 or Barbara Jacobs at 202-551-3735 with
any questions.
Sincerely,
Division of Corporation Finance
Disclosure Review Program

Mail Stop 4546

February  17, 2017

VIA E -mail
Dr. Jeffrey M. Leiden , M.D., Ph.D.
Chairman of the Board, Presid ent and Chief Executive  Officer
Vertex Pharmaceuticals Incorporated
50 Northern Avenue ,
Boston, Massachusetts 02210

Re: Vertex Pharmaceuticals Incorporated
 Form 10-K for Fis cal Year Ended December 31, 2015
Filed February 16 , 2016
File No. 000-19319

Dear Dr. Leiden :

We have completed our review of your filing. We remind you that the company and its
management are responsible for the accuracy and adequacy of their disclosures, notwithstanding
any review, comments, action or absence of action by the staff.

Sincerely,

 /s/ Sharon M. Blume

Sharon M. Blume
Accounting Branch  Chief
Office of Healthcare and Insurance

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VERTEX PHARMACEUTICALS INCORPORATED

50 NORTHERN AVENUE • BOSTON, MA 02210-1862

TEL. 617-341-6100 •  http://www.vrtx.com

FOIA Confidential Treatment Request

The entity requesting confidential treatment is

Vertex Pharmaceuticals Incorporated

50 Northern Avenue

Boston, MA 02210

Attn:

 Michael J. LaCascia

Senior Vice President and General Counsel

February 7, 2017

Delivered via Overnight Mail

Securities and Exchange Commission
Division of Corporation Finance

100 F Street, N.E.

Mail Stop 4546

Washington, DC 20549

Attn:    Jim Rosenberg, Senior Assistant Chief Accountant

Re:    Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31, 2015

Filed February 16, 2016

File No. 000-19319

Ladies and Gentlemen:

As a follow-up to the conversation with the staff (the “Staff”) of the Securities and Exchange Commission on January 27, 2017, Vertex Pharmaceuticals Incorporated (the “Company”) has prepared the following analysis to supplement its prior correspondence with the Staff and to provide clarifications with respect to the Company’s accounting for its licensing arrangement with Parion Sciences, Inc. (“Parion”).  Specifically, the Company noted that the Staff was interested in further analysis with respect to:

1)

 Does the License Agreement (as defined below) constitute a transfer of the Licensed Assets (as defined below) from Parion to the Company such that the Licensed Assets no longer represent an asset of Parion?

2)

 How did the Company consider the License Agreement pursuant to ASC 810-10-25-55 in determining whether the License Agreement constituted a variable interest?

The Company also understands from the discussions with the Staff that they do not have any additional questions regarding the Company’s determination that Parion is a variable interest entity or its evaluation of the primary beneficiary criteria (power and benefits).

Securities and Exchange Commission

February 7, 2017

Page 2

Background:

The Company entered into a strategic collaboration and license agreement (the “License Agreement”) with Parion pursuant to which the Company agreed to develop investigational ENaC inhibitors, including VX-371 (formerly P-1037) and VX-551 (formerly P-1055), for the potential treatment of cystic fibrosis and all other pulmonary diseases (the “Licensed Assets”).  Through the License Agreement, the Company was provided the following contractual rights and agreed to the following obligations:

•

 The Company obtained decision making control over the development of the Licensed Assets through the Company’s ability to control the joint steering committee (the “JSC”) established to make decisions with respect to the development of the Licensed Assets;

•

 The Company became responsible for substantially all costs related to the development of the Licensed Assets;

•

 The Company obtained the right to commercialize drug candidates that obtain marketing approval and to receive financial rewards from such commercialization, subject to the payment of royalties and milestones to Parion.

Does the License Agreement constitute a transfer of the Licensed Assets from Parion to the Company such that the Licensed Assets no longer represent an asset of Parion?

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #1

With respect to the accounting for the License Agreement, the Company first evaluated whether the License Agreement transferred the Licensed Assets from Parion to the Company. As part of the Company’s evaluation, the Company assessed whether the Licensed Assets continue to be an asset of Parion after the execution of the License Agreement, or if the execution of the License Agreement would result in Parion derecognizing the Licensed Assets.  In doing so, the Company considered the following:

•

 The legal form of the License Agreement is a license, not a purchase of assets or the assumption of liabilities.  Parion retained legal title to the Licensed Assets.  Neither the Company nor Parion have the ability to sell, assign or transfer the License Agreement to third parties without the consent of the other party.

•

 The Company has the right to terminate the License Agreement in its entirety, upon 90 days written notice prior to marketing approval and 180 days written notice post marketing approval. Upon termination of the License Agreement, the Company’s license terminates and the rights under the License Agreement revert to Parion. [**].

•

 Parion will participate in the future successful development of the Licensed Assets based on the milestone payments and future royalties upon commercialization, as identified in the License Agreement and further described in the Company’s comment letter response dated August 12, 2016 in response 6 and dated October 19, 2016 in response 1.

•

 Parion participates in the JSC.

Securities and Exchange Commission

February 7, 2017

Page 3

Based on Parion’s continuing involvement with the Licensed Assets, retention of title to the Licensed Assets and the termination rights as highlighted above, the Company does not believe that Parion would have derecognized, or sold, the Licensed Assets.  Therefore, further analysis is required to determine whether the License Agreement constitutes a controlling financial interest in Parion pursuant to ASC 810. The conclusion that Parion did not sell the Licensed Assets is consistent with Parion’s December 31, 2015 audited financial statements, which reflect the License Agreement as a licensing arrangement.

The Company respectfully requests that the information contained in the above response that have been marked [**] be treated as confidential information and that the Commission provide timely notice to Michael J. LaCascia, the Company’s Senior Vice President and General Counsel, 50 Northern Avenue, Boston, Ma 02210, (617) 961-7018, before it permits any disclosure of the information in the above response.

How did the Company consider the License Agreement pursuant to ASC 810-10-25-55 in determining that the License Agreement constituted a variable interest?

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #2

As the Licensed Assets are assets of Parion, the Company evaluated whether the Company’s interest in these specific assets of Parion represented a variable interest in Parion as a whole as contemplated under ASC 810-10-25-55. In applying ASC 810, the Company considered the variability that Parion was designed to create and distribute and which interests absorb the variability that Parion was designed to distribute.  The purpose and redesign of Parion was to advance the development and commercialization of the Licensed Assets by partnering with a company that is able to effectively develop and commercialize products for the treatment of cystic fibrosis and other pulmonary diseases.  ASC 810-10-25-55 indicates that “A variable interest in specified assets of a VIE (such as a guarantee or subordinated residual interest) shall be deemed to be a variable interest in the VIE only if the fair value of the specified assets is more than half of the total fair value of the VIE's assets…”

Pursuant to the Company’s discussions with the Staff on January 27, 2017, the Company understands that the Staff believes that for the purposes of applying ASC 810-10-25-55, the cash payment made from the Company to Parion upon execution of the License Agreement should be included in the total assets of Parion.  Based upon the Company’s analysis above, the Licensed Assets continue to represent an asset of Parion and therefore have been included in the analysis. The Company also included the fair value of other assets of Parion (as noted below).

The Company evaluated the License Agreement for inclusion in the fair value of Parion’s total assets.  With respect to the License Agreement, the Company determined that the License Agreement was an executory contract entered into at market terms and therefore the fair value of the License Agreement was zero.  Further, the Company considered whether the future contingent cash payments that Parion may receive from the Company separately represented an asset that should be included in the analysis.  Because the payments are part of an executory contract and are not a separate unit of account but rather a component of the executory contract, those contingent future payments do not individually represent “an asset” of Parion. In arriving at this conclusion, the Company believes the unit of account for the assessment is the License Agreement, rather than the individual future contingent cash payments.  The Company believes that the unit of account

Securities and Exchange Commission

February 7, 2017

Page 4

(the License Agreement) should be respected much the same way as the unit of account for other executory contracts are respected for the purposes of analysis (e.g. derivative instruments such as swaps).

In addition, by analogy, the Company considered the guidance in ASC 805, which states that an asset or liability acquired through an executory contract is recognized only to the extent that the contract contains terms that are not equivalent to market terms (e.g., off-market terms).  In this case, the Company determined that the economic terms of the License Agreement represent what a market participant would be willing to pay to acquire the Licensed Assets and therefore there were no off-market elements that needed to be recognized by Parion.

The following Table summarizes the total assets of Parion for the purposes of applying ASC 810-10-25-55:

Licensed Assets

 $255.3 million

Cash

 [**]

Other net assets

 [**]

At market license Agreement with the Company

$0.0 million

Total FV of Parion’s net assets

 [**]

Based on this analysis, approximately [**] of the fair value of Parion’s total assets was attributed to the Licensed Assets. Since the License Agreement represents a variable interest in specified assets (the Licensed Assets) and the Licensed Assets represent more than half of the total fair value of Parion’s total assets, the Company deemed that the License Agreement is a variable interest in Parion as a whole.

Upon determination that the Company had a variable interest in Parion, the Company applied the Variable Interest sections of ASC 810 and as previously described to the Staff concluded that Parion was a variable interest entity and that the Company is the primary beneficiary of Parion pursuant to ASC 810-10-25-38(a) since the Company has the (i) power to direct activities of Parion that most significantly impact Parion’s economic performance and (ii) the obligation to absorb losses of or the right to receive benefits of Parion that could potentially be significant to Parion.

The Company respectfully requests that the information contained in the above response that have been marked [**] be treated as confidential information and that the Commission provide timely notice to Michael J. LaCascia, the Company’s Senior Vice President and General Counsel, 50 Northern Avenue, Boston, Ma 02210, (617) 961-7018, before it permits any disclosure of the information in the above response.

Other Considerations:

While not determinative, the Company also considered other analogous circumstances to corroborate its conclusion that the License Agreement constituted a variable interest:

Leasing Arrangements

Securities and Exchange Commission

February 7, 2017

Page 5

The Company observes that a license arrangement is similar to a lease in that it is an executory contract that conveys a rights with respect to the use of underlying assets of an entity.  The variable interest model provides a specific exception for leases, otherwise a lessee commonly would have to evaluate the counterparty to an operating lease for potential consolidation. This may have potentially been in conflict with lease accounting in certain common structures.  This exception does not extend to other executory contracts and as such the License Agreement should be evaluated to determine whether it is a variable interest.

However the Company notes that if one were to analogize to a leasing exception and argue that an executory contract should be scoped out, while the executory contact would be not be a variable interest (via analogy), the upfront payment would be viewed as a “prepayment”.  Such prepayments are akin to a loan and as such would be a variable interest in the variable interest entity.

Derivative Contracts

The Company also notes that a derivative contract is an executory contract that one must evaluate to determine whether the underlying contract constitutes a variable interest in an entity.  While plain vanilla derivative contracts typically are deemed to be creators of variability and therefore would not constitute a variable interest, an executory contract for all (or substantially all) of an entity’s assets would be similar to a total return contract.  Total return swaps are variable interests because they by design absorb the variability that the entity creates and passes on to its variable interest holders.

Basis for Conclusions of FIN 46(R) – Interests in Specified Assets

While the consolidation model in ASC 810 has been the subject of several revisions over the past several years, the guidance on evaluating whether an interest in specified assets constitutes a variable interest in an entity as a whole has not been the subject of any of the amendments and traces back to the model in FIN 46(R).

The Basis for Conclusions for FIN 46(R) (the “Basis”) notes that the FASB Board members discussed the concept of whether an interest in specified assets constitutes a variable interest in an entity as a whole.  In those discussions, some Board members believed that any variable interest in specified assets is a variable interest in the entity as a whole regardless of the significance of those assets.  Others believed that the concept should only be applied when substantially all of the entity’s assets.  Ultimately the Board compromised at the 50% threshold.

Further the Basis notes that the “majority requirement is intended to prevent a transferor from avoiding the consolidation requirements by finding or creating a variable interest entity that commingles its transferred assets with a relative few unrelated assets.”

____________________________________________________________________________________

The Company acknowledges that:

1)      the Company is responsible for the adequacy and accuracy of the disclosure in its filings;

2)

 Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to its filings; and

Securities and Exchange Commission

February 7, 2017

Page 6

3)

 the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please contact me at (617) 961-5171 or Caroline Wishart at (617) 341-6864 if you have any questions or concerns with respect to this matter.

Very truly yours,

/s/ Paul Silva

Paul Silva

Senior Vice President and Corporate Controller (Principal Accounting Officer)

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VERTEX PHARMACEUTICALS INCORPORATED

50 NORTHERN AVENUE • BOSTON, MA 02210-1862

TEL. 617-341-6100 •  http://www.vrtx.com

FOIA Confidential Treatment Request

The entity requesting confidential treatment is

Vertex Pharmaceuticals Incorporated

50 Northern Avenue

Boston, MA 02210

Attn:

 Michael J. LaCascia

Senior Vice President and General Counsel

December 16, 2016

Delivered via EDGAR

Securities and Exchange Commission
Division of Corporation Finance

100 F Street, N.E.

Mail Stop 4546

Washington, DC 20549

Attn:    Jim Rosenberg, Senior Assistant Chief Accountant

Re:    Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31, 2015

Filed February 16, 2016

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to the comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to Jeffrey M. Leiden, dated December 5, 2016 (the “Comment Letter”), regarding the Company’s Form 10-K for the fiscal year ended December 31, 2015.  The comments from the Staff are reproduced below together with the Company’s responses.  The Company is seeking confidential treatment for portions of this letter pursuant to Rule 83 of the Freedom of Information Act (FOIA).

Notes to Consolidated Financial Statements

B. Collaborative Arrangements

Variable Interest Entities (VIE)

Parion Sciences, Inc., page F-19

Comment 1

We note from your response to comment 1 within your August 12, 2016 letter that your upfront payment and the related fair value of the contingent consideration provided significantly more than half of the financial support to Parion based on an analysis of the fair values of the interests in the legal entity. We further note your response to comment 6 of the same letter that de minimis value was attributed to Parion’s assets other than the Licensed Assets. Please explain to us your analysis under ASC 810-10-25-55, supporting your

Securities and Exchange Commission

December 16, 2016

Page 2

conclusion that the fair value of the specified assets is more than half of the total fair value of Parion’s assets after the execution of the Strategic Collaboration and License Agreement. Include within your response an explanation as to whether the fair value of Parion’s assets include both the fair value of the Licensed Assets (since the Licensed Assets remain in Parion) and the fair value of the consideration (upfront and contingent) received by Parion for the Licensed Assets and the basis for your conclusion.

Response 1

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #1

ASC 810-10-25-55 indicates that “A variable interest in specified assets of a VIE (such as a guarantee or subordinated residual interest) shall be deemed to be a variable interest in the VIE only if the fair value of the specified assets is more than half of the total fair value of the VIE's assets…”  As indicated in the Company’s response to Comment 1 within the August 12, 2016 Response Letter, significantly more than half of the total fair value of Parion Sciences, Inc. (“Parion”) was related to the Licensed Assets (defined in the Company’s response to Comment 1 within the August 12, 2016 Response Letter) which resulted in the Company having a variable interest in Parion as a whole.  In concluding that [**] was related to the Licensed Assets, the Company considered ASC 810-10-25-37 in determining at what point in time to perform the analysis.  ASC 810-10-25-37 indicates “The initial determination of whether a legal entity is a VIE shall be made on the date at which a reporting entity becomes involved with the legal entity. For purposes of the Variable Interest Entities Subsections, involvement with a legal entity refers to ownership, contractual, or other pecuniary interests that may be determined to be variable interests.”  Consistent with this guidance, the Company’s analysis was performed upon the execution of the strategic collaboration and license agreement (the “Agreement”) with Parion.

The fair value of Parion’s total assets upon the execution of the Agreement was $[**] and comprised of the following:

Licensed Assets

 $255.3 million

[**]

 $[**]

[**]

 $[**]

As previously discussed in the Company’s response to Comment 1 within the August 12, 2016 Response Letter, the Company performed valuation analyses for Parion’s other research and development programs, including P-321, which is being developed for the treatment of dry eye disease, and Parion’s trans-nasal pulmonary aerosol delivery (“tPAD”) system, which is being developed for use in the treatment of cystic fibrosis and chronic obstructive pulmonary disease.  In each case, the Company concluded that Parion’s other research and development programs [**].  Based upon the Company’s analysis at the time it became involved with Parion, approximately [**] of Parion’s total assets was attributed to the Licensed Assets.  Since the Agreement represents a variable interest in specified assets (the Licensed Assets) and, as detailed above, the Licensed Assets represent [**] of Parion’s total assets, the Company deemed that the Agreement is a variable interest in Parion.

Securities and Exchange Commission

December 16, 2016

Page 3

In performing its analysis, the Company concluded that the (i) $80 million upfront payment, (ii) the estimated fair value of the contingent research and development milestones potentially payable by the Company to the Parion legal entity and (iii) the estimated fair value of potential royalty payments payable by the Company to the Parion legal entity should not be included in the determination of total assets when performing that above referenced analysis.

ASC 810-10-55-19 states in part that “the identification of variable interests involves determining which assets, liabilities, or contracts create the legal entity’s variability and which assets, liabilities, equity, and other contracts absorb or receive that variability.  The latter are the legal entity’s variable interests.” In determining whether the Agreement with Parion represented a variable interest, the Company considered the variability that Parion was designed to create and determined that the variability related to the development and commercialization of the Licensed Assets.  Immediately prior to the Company’s involvement with Parion, the variability associated with the development and commercialization was absorbed by Parion’s equity holders. Through the Agreement, Vertex became exposed to variability related to the Licensed Assets and the equity holders’ exposure to variability in Parion was reduced.  As such, given that Vertex is exposed to the variability [**], the Company concluded that the Agreement constituted a variable interest. Because the upfront cash payment and any contingent future payments are part of the Agreement, the Company believes that including such amounts is inconsistent with the purpose of determining whether the Agreement is a creator of or absorber of variability (i.e. a variable interest).

The Company also noted that the execution of the Agreement did not, by design, create any new variability within Parion; and that the fair value of Parion would not have increased by virtue of executing the Agreement.  The Company believes this further supported its conclusion that the (i) $80 million upfront payment, (ii) the estimated fair value of the contingent research and development milestones potentially payable by the Company to the Parion legal entity and (iii) the estimated fair value of potential royalty payments payable by the Company to Parion should not be included in the analysis. The Company acknowledged that any value monetized by Parion upon execution of the Agreement would have been contemplated in the fair value of Parion, and thus there would be no change in the fair value of Parion right before and immediately after the execution of the Agreement. Therefore, the consideration of including both the value of the License Assets along with the consideration transferred to Parion would have effectively double counted the value of the License Assets.

The Company respectfully requests that the information contained in the above response that have been marked [**] be treated as confidential information and that the Commission provide timely notice to Michael J. LaCascia, the Company’s Senior Vice President and General Counsel, 50 Northern Avenue, Boston, Ma 02210, (617) 961-7018, before it permits any disclosure of the information in the above response.

Comment 2

We note your response to comment 5 of our letter dated September 30, 2016 regarding the calculation of goodwill upon consolidation of Parion. Please provide us with a quantitative breakdown of your calculation of the goodwill recognized upon consolidation of Parion in the following format:

Securities and Exchange Commission

December 16, 2016

Page 4

Item

 ASC Reference

 Amount

Fair value of consideration transferred

 ASC 805-30-30-1(a)(1)

Plus: Fair value of noncontrolling interest

 ASC 805-30-30-1(a)(2)

Less: Identifiable assets of Parion measured in accordance with Topic 805

 ASC 805-30-30-1(b)

Plus: Identifiable liabilities of Parion measured in accordance with Topic 805

 ASC 805-30-30-1(b)

Equals: Goodwill recognized at the acquisition date

 ASC 805-30-30-1

Response 2

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #2

The Company wishes to clarify its calculation of goodwill as a result of its consolidation of Parion using the following table format as requested by the Staff:

 Amount (in millions)

Fair value of consideration transferred 1

 $                                 -

Plus: Fair value of noncontrolling interest2

 164.3

Less: Identifiable assets of Parion measured in accordance with Topic 8053

 (255.30)

Plus: Identifiable liabilities of Parion measured in accordance with Topic 8054

 101.5

Equals: Goodwill recognized at the acquisition date

 $

 10.5

1

 The Company notes that while there was a transfer of $80 million to Parion, because Parion became a consolidated entity, the cash remained within Vertex’s consolidated financial statements and therefore does not constitute consideration transferred pursuant to ASC 805. Rather, the cash was reclassified as restricted cash within the consolidated balance sheet. Similarly, the value of any contingent future payments pursuant to the Agreement between Vertex and Parion eliminate in consolidation and therefore do not constitute consideration transferred under ASC 805. Thus, when determining the valuation of goodwill the fair value of consideration transferred is zero since there was no consideration transferred outside the consolidated group.

2

 The fair value of the noncontrolling interest represents the estimated value a market participant would pay for the common stock in Parion and was determined pursuant to ASC 820.

3

 The fair value of the identifiable assets includes the in-process research and development assets related to Parion’s pulmonary ENaC platform that are licensed by Parion to the Company.  As previously discussed in the Company’s response to Comment 1 within the August 12, 2016 Response Letter, the Company performed valuation analyses for Parion’s other programs, including P-321 and the tPAD system – and concluded that [**].

Securities and Exchange Commission

December 16, 2016

Page 5

4

 The fair value of the identifiable liabilities includes the deferred tax liability ($91.0 million) resulting from the basis difference in the Licensed Assets, as well as certain other net liabilities held by Parion ($10.5 million).

The Company respectfully requests that the information contained in the above response that have been marked [**] be treated as confidential information and that the Commission provide timely notice to Michael J. LaCascia, the Company’s Senior Vice President and General Counsel, 50 Northern Avenue, Boston, Ma 02210, (617) 961-7018, before it permits any disclosure of the information in the above response.

_____________________________________________________________________________________

The Company acknowledges that:

1)      the Company is responsible for the adequacy and accuracy of the disclosure in its filings;

2)

 Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to its filings; and

3)

 the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please contact me at (617) 961-5171 or Caroline Wishart at (617) 341-6864 if you have any questions or concerns with respect to this matter.

Very truly yours,

/s/ Paul Silva

Paul Silva

Senior Vice President and Corporate Controller (Principal Accounting Officer)

Mail Stop 4546

Dece mber  5, 2016

VIA E -mail
Dr. Jeffrey M. Leiden , M.D., Ph.D.
Chairman of the Board, Presid ent and Chief Executive  Officer
Vertex Pharmaceuticals Incorporated
50 Northern Avenue ,
Boston, Massachusetts 02210

Re: Vertex Pharmaceuticals Incorporated
 Form 10-K for Fis cal Year Ended December 31, 2015
Filed February 16 , 2016
File No. 000-19319

Dear Dr. Leiden :

We have reviewed  your October 19 , 2016  response to our comment letter  and have the
following comment s.  In some of  our comment s, we may ask you to provide us with information
so we may better understand your disclosure.

Please respond to these  comment s within ten  business days by providing th e requ ested
information or advise  us as soon as possible  when you will respond .  If you do not believe  a
comment  applies to your facts and circumstances, please tell us why in your response.

After reviewing  your response to the se comment s, we may have additional comments .

Notes to Consolidated Financial Statements
B. Collaborative Arrangements
Variable Interest Entities (VIE)
Parion Sciences, Inc., page F -19

1. We note from your response to comment 1 within your August 12 , 2016 letter  that your
upfront payment and the related fair value of the contingent consideration provided
significantly more than half of the financial support to Parion based on an analysis of the fair
values of the interests in the legal entity.    We further note your response to comment 6 of the
same letter that de minimis  value was attributed to Parion’s assets other than the Licensed
Assets.   Please explain to us your analysis under ASC 810 -10-25-55, supporting your
conclusion that the fair value of the specified assets is more than half of the total fair value of
Parion’s assets after the execution of the Strategic Collaboration and License
Agreement.    Include within your response an explanation as to whether  the fair value of

Dr. Jeffrey M. Leiden
Vertex Pharmaceuticals Incorporated
December 5, 2016
Page 2

 Parion’s assets include  both the fair value of the Licensed Assets (since the Licensed Assets
remain in Parion ) and the fair value of the consideration (upfront and contingent) received by
Parion for the Licensed Assets and t he basis for your conclusion.

2. We note your response to comment 5 of our letter date d September 30, 2016  regarding the
calculation of goodwill upon consolidation of Parion. Please provide us with a quantitative
breakdown of your calculation of the goodwill recognized upon consolidation of Parion in
the following format:

Item  ASC Reference  Amount
Fair value  of consideration transferred  ASC 805 -30-30-1(a)(1)
Plus: Fair value of noncontrolling interest  ASC 805 -30-30-1(a)(2)
Less: Identifiable assets of Parion measured in
accordance with Topic 805  ASC 805 -30-30-1(b)
Plus: Identifiable liabilities of Parion measured in
accordance with Topic 805  ASC 805 -30-30-1(b)
Equals: Goodwill recognized at the acquisition date  ASC 805 -30-30-1

You may contact Bonnie Baynes, Staff Accountant, at (202) 551 -4924 if you have any
questions  regarding the comment s.  In this regard, do not hesitate  to contact me at (202) 551 -
3679 .

Sincerely,

 /s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief Accountant
Office of Healthcare and Insurance

CORRESP
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		Document

VERTEX PHARMACEUTICALS INCORPORATED

50 NORTHERN AVENUE • BOSTON, MA 02210-1862

TEL. 617-341-6100 •  http://www.vrtx.com

FOIA Confidential Treatment Request

The entity requesting confidential treatment is

Vertex Pharmaceuticals Incorporated

50 Northern Avenue

Boston, MA 02210

Attn:

 Michael J. LaCascia,

Senior Vice President and General Counsel

October 19, 2016

Delivered via EDGAR

Securities and Exchange Commission
Division of Corporation Finance

100 F Street, N.E.

Mail Stop 4546

Washington, DC 20549

Attn:    Sharon M. Blume, Accounting Branch Chief

Office of Healthcare and Insurance

Re:    Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31, 2015

Filed February 16, 2016

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to the comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to Jeffrey M. Leiden, dated September 30, 2016 (the “Comment Letter”), regarding the Company’s Form 10-K for the fiscal year ended December 31, 2015.  The comments from the Comment Letter are reproduced below together with the Company’s responses to the comments.  The Company is seeking confidential treatment for portions of this letter pursuant to Rule 83 of the Freedom of Information Act (FOIA).

Notes to Consolidated Financial Statements

B. Collaborative Arrangements

Variable Interest Entities (VIE)

Parion Sciences, Inc., page F-19

Comment 1

ASC 810-10-25-22 states that the variability to be considered in the consolidation analysis is based on an analysis of the design of the entity and provides a two-step test. Please describe for us your analysis of:

•

 Parion’s design, including the nature of the risks in the entity, and

Securities and Exchange Commission

October 19, 2016

Page 2

•

 The purpose for which Parion is created and the variability that Parion is designed to create and pass along to interest holders.

Response 1

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #1

As disclosed on its website, Parion Sciences, Inc. (“Parion”) was “originally founded on advancing [its] proprietary epithelial sodium channel (“ENaC”) blockers for pulmonary disease.” To further this purpose, Parion has focused its efforts on the research and development of investigational ENaC inhibitors, including VX-371 (formerly P-1037) and VX-551 (formerly P-1055), for the potential treatment of cystic fibrosis and all other pulmonary diseases.  Since its founding Parion has expanded its research and development into other disease areas, [**], including P-321, which is being developed by Parion for the treatment of dry eye disease, and Parion’s trans-nasal pulmonary aerosol delivery (“tPAD”) system, which is being developed by Parion for use in the treatment of cystic fibrosis and chronic obstructive pulmonary disease.  Each of these other research and development programs are either pre-clinical or in early stages of development.  Based on the foregoing, the purpose and design of Parion is [**] (the “Licensed Assets”) [**].

In connection with the above activities, Parion is exposed to the following significant risks: (i) research and development risks – including that pre-clinical and clinical data from its research and development programs may not support further development of its drug candidates due to safety, efficacy or other reasons, (ii) regulatory risks – including that Parion may be unable to obtain marketing approval for one or more of its drug candidates, (iii) commercialization risks, including that Parion may be unable to successfully commercialize a drug candidate that obtains marketing approval, whether it be due to safety or efficacy issues that arise, the introduction or greater acceptance of competing products, changes in reimbursement policies of payors or for any other reason and (iv) financial risks, including the potential of not having sufficient resources to bring a drug candidate through the development and commercialization process.  Prior to the date of the strategic collaboration and license agreement (the “Agreement”) with the Company, Parion’s stockholders were the sole variable interest holders in Parion and would absorb all potential expected losses if its research and development programs were unable to support commercialization of its drug candidates and would receive all potential residual returns from drug candidates that were successfully commercialized after obtaining marketing approval.

On May 31, 2015, Parion had [**].  Parion could have elected to seek to fund future research and development activities through the issuance of additional equity and/or debt, in which case Parion’s stockholders would have continued to absorb the variability associated with its research and development programs.  Instead Parion chose to collaborate with the Company by granting the Company a license (the “License”) to the Licensed Assets and ceded control over all significant decisions with respect to the research, development and potential commercialization of the Licensed Assets to the Company.

Pursuant to the Agreement, the parties agreed that the Company would (i) assume control over the development of the Licensed Assets, (ii) assume responsibility for all costs, subject to certain exceptions, related to the development of the Licensed Assets and (iii) have the right to commercialize drug candidates that obtain marketing approval and to receive financial rewards from such commercialization, subject to the payment of royalties and milestones to Parion.  The result of this contractual arrangement is that the Company will (a) absorb expected losses if further development does not support commercialization of the Licensed Assets and (b) receive a significant majority of the residual returns from the Licensed Assets if further development supports commercialization.  The

Securities and Exchange Commission

October 19, 2016

Page 3

fair value of the License therefore fluctuates in parallel with the development progress of the Licensed Assets. The Company, through the license, absorbs the expected losses in the fair value of the Licensed Assets (and the related decrease in the value of the License) because if the development activities under the Agreement do not support commercialization of the Licensed Assets and a program is terminated, the Company will have paid the upfront payment and potential milestone payments, as well as the cost of all of the development activities of the terminated program.  On the other hand, the Company will receive a significant majority of the potential residual returns from the Licensed Assets (and the related increase in the value of the License) if they are successfully developed since the Company has the right to commercialize any such approved drug candidate, subject only to the payment of royalties and milestones to Parion.

As a result of the Agreement, Parion was redesigned with the Company assuming a significant majority of the variability that the entity was designed to create and pass along to interest holders.

The Company respectfully requests that the information contained in the above response that have been marked [**] be treated as confidential information and that the Commission provide timely notice to Michael J. LaCascia, the Company’s Senior Vice President and General Counsel, 50 Northern Avenue, Boston, Ma 02210, (617) 961-7018, before it permits any disclosure of the information in the above response.

Comment 2

Please describe for us how the contractual arrangement between Vertex and Parion absorbs the variability that Parion was designed to create and pass along to interest holders.

Response 2

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #2

As stated above in the Company’s response to Comment #1, Parion’s purpose and design is to [**].  Prior to entering into the Agreement, Parion had [**].  Parion created the License in order to [**].  Please refer to the Company’s response to Comment #1 above, for how the License absorbs a significant majority of the variability that Parion is designed to create and pass along to its interest holders (i.e., the Company and Parion’s stockholders).

As set forth in the Company’s Response Letter dated August 12, 2016, the License is a contractual arrangement in specified assets [**].  Therefore, the Company determined that the License represented a variable interest in Parion as a whole.  This assessment was performed in accordance with ASC 810-10-25-55.

Comment 3

As noted in your response to comment 4 within your August 12 letter, you have determined that Parion's other research and development programs (i.e. the Non-Licensed Asset Programs) had minimal value and therefore any limitations over your power with respect to these activities is not significant. ASC 810-10-25-38B requires a reporting entity to identify which activities most significantly impact the VIE’s economic performance and determine whether it has the power to direct those activities. Notwithstanding the value of Parion’s assets as of the reporting date, please describe how you determined that (i) substantially all the activities of Parion are on the behalf

Securities and Exchange Commission

October 19, 2016

Page 4

of Vertex and (ii) the research, development, and commercialization of the licensed assets represent the activities of Parion expected to most significantly impact its economic performance. Please address the following in your response:

•

 The overall operational and financial decisions of Parion, as well as decisions over the $80M initial payment under the Agreement (and any contingent milestone payments) retained within Parion are directed by Parion Management or its Board of Directors.

•

 The Collaboration Agreement expires at the later of 1) the patent period of the Licensed Assets, or 2) 10 years after the first commercial sale per country, while Parion the entity appears to have an indefinite life.

•

 As stated on its website, Parion is a development stage company dedicated to research, development, and commercialization of treatments to restore innate mucosal surface defenses. Further describing the entity’s technologies as targeting both respiratory and ocular diseases.

•

 Parion’s website refers to press releases dated January 19, 2016 and May 2, 2016 which refer to further development and collaboration efforts over Parion Selected Assets.

The Company respectfully requests that the information contained in the above response that that have been marked [**] be treated as confidential information and that the Commission provide timely notice to Michael J. LaCascia, the Company’s Senior Vice President and General Counsel, 50 Northern Avenue, Boston, Ma 02210, (617) 961-7018, before it permits any disclosure of the information in the above response.

Response 3

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #3

Prior to entering into the Agreement, Parion [**]. Additionally, although the Company does not participate in the operational or financial decisions of Parion as an entity, the Company controls all significant decisions with respect to the research, development and potential commercialization of the Licensed Assets.   [**] are associated with development of the Licensed Assets and [**] from the Licensed Assets. As a result, Parion’s economic performance is tied to the development of the Licensed Assets over which the Company has ultimate decision making authority.  The Company determined that the research, development, and commercialization of the Licensed Assets represented (and continues to represent) [**].  Since the activities that significantly impact Parion’s economic performance are directed by multiple unrelated parties as discussed further below, the Company considered what activities are expected to most significantly impact its economic performance.  This assessment is consistent with the identification of a primary beneficiary as discussed in ASC 810-10-25-38E, which states:

“If the activities that impact the VIE’s economic performance are directed by multiple unrelated parties, and the nature of the activities that each party is directing is not the same, then a reporting entity shall identify which party has the power to direct the activities that most significantly impact the VIE’s economic performance. One party will have this power, and that party shall be deemed to have the characteristic in paragraph 810-10-25-38A(a).”

The significant activities of Parion include the following:

•

 Research and development of the Licensed Assets;

Securities and Exchange Commission

October 19, 2016

Page 5

•

 Commercialization of the Licensed Assets;

•

 Research, development and potential commercialization of non-licensed assets; and

•

 Operational and financial decisions of Parion as an entity.

The Company believes the activities related to the research and development of the Licensed Assets, as outlined below, [**], each of which are overseen by the Joint Steering Committee, [**] (as described in the Company’s responses to Comments #3 and #4 in the Company’s response letter dated August 12, 2016):

•

 Preparation of a development plan for each Licensed Asset and preparing clinical trial designs and protocols;

•

 Conducting clinical trials under the development plan and providing strategic oversight with respect to development of the Licensed Assets;

•

 Reviewing and analyzing all data (including clinical trial data) and updates with respect to development of the Licensed Assets;

•

 Selecting and overseeing clinical research organizations, manufacturers and other third party vendors undertaking development work with respect to the Licensed Assets; and

•

 Making decisions on whether to cease or progress development of a Licensed Asset.

In addition to the development activities above, the following activities represent the most significant commercialization activities that will apply to any Licensed Asset that receives marketing approval. The Company controls all significant decisions with respect to commercialization of the Licensed Assets including the following:

•

 Sales and distribution of the Licensed Assets;

•

 Securing commercial supply of the Licensed Assets;

•

 Activities related to obtaining reimbursement from payors;

•

 Promotion, advertising and other marketing activities;

•

 Establishment of a sales force;

•

 Performing market research and health economic studies;

•

 Conducting post-marketing studies not required to obtain marketing approval;

•

 Adverse event reporting; and

•

 Monitoring sales and medical affairs.

There are no significant development and commercialization decisions with respect to the Licensed Assets that are [**].

In concluding that research and development and commercialization of the Licensed Assets are the activities that most significantly impact Parion’s economic performance, the Company determined that (i) the [**] in Parion’s pipeline and that, when combined with the anticipated benefits from the development activities contemplated by the Agreement, the Licensed Assets represented (and continue to represent) [**], (ii) there are [**] and (iii) there is a likelihood that Parion’s [**]. These factors support the Company’s conclusion that there [**] and that Parion is designed so that [**].  Parion has devoted a [**] and has devoted [**].  For example, [**] since entering into the Agreement in June 2015 have been related to its activities under the Agreement. In addition, as of June 30, 2016 [**].[**].

Securities and Exchange Commission

October 19, 2016

Page 6

As noted above, the Company acknowledges that there ar

CORRESP
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		Document

VERTEX PHARMACEUTICALS INCORPORATED

50 NORTHERN AVENUE • BOSTON, MA 02210-1862

TEL. 617-341-6100 •  http://www.vrtx.com

October 17, 2016

Delivered via EDGAR

Securities and Exchange Commission
Division of Corporation Finance

100 First Street, N.E.

Mail Stop 4720

Washington, DC 20549

Attn:    Sharon M. Blume, Accounting Branch Chief,

Office of Healthcare and Insurance

Re:    Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31, 2015

Filed February 16, 2016

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to confirm receipt of comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to Jeffrey M. Leiden, dated September 30, 2016 (the “Comment Letter”), regarding the Company’s Form 10-K for the fiscal year ended December 31, 2015.

Based on the Company’s conversation with Ms. Bonnie Baynes, Staff Accountant for the Commission, with your permission the Company hereby agrees to submit its response to the Comment Letter no later than October 19, 2016.  The Company plans to use this extra time to more thoroughly address the Staff’s comments.

Please contact me at (617) 961-7018 if you have any questions or concerns with respect to this matter.

Very truly yours,

/s/ Michael J. LaCascia

Michael J. LaCascia

Senior Vice President and General Counsel

Mail Stop 4546

September  30, 2016

VIA E -mail
Dr. Jeffrey M. Leiden , M.D., Ph.D.
Chairman of the Board, Presid ent and Chief Executive  Officer
Vertex Pharmaceuticals Incorporated
50 Northern Avenue ,
Boston, Massachusetts 02210

Re: Vertex Pharmaceuticals Incorporated
 Form 10-K for Fis cal Year Ended December 31, 2015
Filed February 16 , 2016
File No. 000-19319

Dear Dr. Leiden :

We have considered your August 12 , 2016 response to our comment letter and related
conference call on September 26, 2016 and have the following comment s.  In some of  our
comment s, we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to these  comment s within ten  business days by provid ing the requ ested
information or advise  us as soon as possible  when you will respond .  If you do not believe  a
comment  applies to your facts and circumstances, please tell us why in your response.

After reviewing  your response to the se comment s, we may h ave additional comments .
Unless we note otherwise, our reference s to prior comments  are to comments in our June 30,
2016 letter .

Notes to Consolidated Financial Statements
B. Collaborative Arrangements
Variable Interest Entities (VIE)
Parion Sciences, Inc., page F -19

1. ASC 810 -10-25-22 states that the variability to be considered in the consolidation
analysis is based on an analysis of the design of the entity and provides a two -step test.
Please describe for us your analysis of:
 Parion’s design, including the nature of the risks in the entity, and
 The purpose for which Parion is created and the variability th at Parion is designed
to create and pass along to interest holders.

Dr. Jeffrey M. Leiden
Vertex Pharmaceuticals Incorporated
September 30, 2016
Page 2

 2. Please describe for us how the contractual arrangement between V ertex and Parion
absorbs the variability that Parion was designed to create and pass along to interest
holders.

3. As noted in your response to comment 4 within your August 12 letter, you have
determined that Parion's other research and development programs ( i.e. the Non -Licensed
Asset Programs) had minimal value and therefore any limitations over your power with
respect to these activities is not significant.  ASC 810 -10-25-38B requires a reporting
entity to identify which activities most significantly impact  the VIE’s economic
performance and determine whether it has the power to direct those activities.
Notwithstanding the value of Parion’s assets as of the reporting date, please describe how
you determined that (i) substantially all the activities of Pario n are on the behalf of
Vertex and (ii) the research, development, and commercialization of the licensed assets
represent the activities of Parion expected to most significantly impact its economic
performance.  Please address the following in your response :
 The overall operational and financial decisions of Parion, as well as decisions
over the $80M initial payment under the Agreement (and any contingent
milestone payments) retained within Parion are directed by Parion Management
or its Board of Directors.
 The Collaboration Agreement expires at the later of 1) the patent period of the
Licensed Assets, or 2) 10 years after the first commercial sale per country, while
Parion the entity appears to have an indefinite life.
 As stated on its website, Parion is a  development stage company dedicated to
research, development, and commercialization of treatments to restore innate
mucosal surface defenses.  Further describing the entity’s technologies as
targeting both respiratory and ocular  diseases.
 Parion’s website refers to press releases dated January 19, 2016 and May 2, 2016
which refer to further development and collaboration effor ts over Parion Selected
Assets .

4. We note from your response to comment 4 within your August 12 letter that the key
development and commercialization decision with respect to the Licensed Assets are
controlled by the Company.  Please clarify which activities of Parion you believe most
significantly impact Parion’s economic performance.

5. We note ASC paragraph 805 -30-30-1 states that goodwill in a business combination not
achieved in stages is initially measured as the excess the consideration transferred
(generally measured at acquisition date fair value) plus the fair value of any
noncontrolling interest in the acquire ov er the net of the acquisition -date amounts of the
identifiable assets acquired and liabilities assumed measured in accordance with Topic
805.  Please clarify for us your calculation of goodwill (including the fair value of any
noncontrolling interest) for the acquisition of Parion, and revise your disclosures as
appropriate.

Dr. Jeffrey M. Leiden
Vertex Pharmaceuticals Incorporated
September 30, 2016
Page 3

 You may contact Bonnie Baynes, Staff Accountant, at (202) 551 -4924 if you have any
questions  regarding the comment s.  In this regard, do not hesitate  to contact me at (202) 551 -
3474 .

Sincerely,

 /s/ Sharon M. Blume

Sharon M. Blume
Accounting Branch Chief
Office of Healthcare and Insurance

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VERTEX PHARMACEUTICALS INCORPORATED

50 NORTHERN AVENUE • BOSTON, MA 02210-1862

TEL. 617-341-6100 •  http://www.vrtx.com

FOIA Confidential Treatment Request

The entity requesting confidential treatment is

Vertex Pharmaceuticals Incorporated

50 Northern Avenue

Boston, MA 02210

Attn:

 Michael J. LaCascia

Senior Vice President and General Counsel

(617) 961-7018

August 12, 2016

Delivered via EDGAR

Securities and Exchange Commission
Division of Corporation Finance

100 First Street, N.E.

Mail Stop 4720

Washington, DC 20549

Attn:    Jim B. Rosenberg, Senior Assistant Chief Accountant

Re:    Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31, 2015

Filed February 16, 2016

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to the comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to Jeffrey M. Leiden, dated June 30, 2016 (the “Comment Letter”), regarding the Company’s Form 10-K for the fiscal year ended December 31, 2015.  The comments from the Comment Letter are reproduced below together with the Company’s responses to the comments.  The Company is seeking confidential treatment for portions of this letter pursuant to Rule 83 of the Freedom of Information Act (FOIA).

Notes to Consolidated Financial Statements

B. Collaborative Arrangements

Variable Interest Entities (VIE)

Parion Sciences, Inc., page F-19

Comment 1

We note from your response your analysis of ASC 810-10-15-17(d) related to scope exceptions. Please describe to us Parion’s capital structure, governance structure and operations prior to the license agreement with you and the changes to them brought about by the license agreement. Include in your response a

Securities and Exchange Commission

August 12, 2016

Page 2

description of the activities of Parion that will not be covered under the license agreement and demonstrate to us that the activities of Parion related to you represents substantially all of the activities of Parion.

Response 1

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #1

In June 2015, the Company entered into a strategic collaboration and license agreement (the “Agreement”) with Parion Sciences, Inc., a privately-held Delaware corporation (“Parion”), pursuant to which the Company received a license to investigational ENaC inhibitors, including VX-371 (formerly P-1037) and VX-551 (formerly P-1055), for the potential treatment of cystic fibrosis and all other pulmonary diseases (the “Licensed Assets”).  Immediately prior to execution of the Agreement, Parion’s research and development efforts were primarily focused on the Licensed Assets and Parion was devoting minimal resources to its other research and development programs, including P-321, which is being developed by Parion for the treatment of dry eye disease, and Parion’s trans-nasal pulmonary aerosol delivery (“tPAD”) system, which is being developed by Parion for use in the treatment of cystic fibrosis and chronic obstructive pulmonary disease. All significant activities of Parion, including research and development of the Licensed Assets, were directed by Parion’s board of directors and equity holders. Parion’s outstanding equity before and after the Agreement was comprised entirely of common stock.  The Company did not acquire an equity interest in Parion or a seat on Parion’s board of directors in connection with the Agreement.  Accordingly, the capital structure of Parion was not modified in connection with the Agreement.

As set forth in the Company’s response letter dated May 27, 2016 (the “Response Letter”), the Company determined that the governance and operations of Parion were significantly revised upon execution of the Agreement since Parion ceded control to the Company over the research, development and commercialization of the Licensed Assets, [**]. As a result, the governance of Parion changed significantly since, following execution of the Agreement, the Company controlled decision-making with respect to the Licensed Assets, as discussed further in the Company’s response to Comment 3 below. In supporting its conclusion, the Company considered the redesign of the entity, including the ownership of variable interests and the nature of the entity’s activities. Therefore, since the governance and variable interests in Parion were changed, this was considered a redesign of the entity.

The Company concluded that it had participated in the redesign of the operation of Parion’s business (as provided in ASC 810-10-15-17(d)(1)) and that Parion was redesigned so that substantially all of its activities either involved or were conducted on behalf of the Company (as provided in ASC 810-10-15-17(d)(2)).  In supporting its conclusion, the Company determined that the purpose and redesign of Parion was to advance the development and commercialization of the Licensed Assets with a company that is able to effectively develop and commercialize products for the treatment of cystic fibrosis and other pulmonary diseases.  The Company considered the following when it determined that substantially all of Parion’s activities either involved or were conducted on behalf of the Company:

•

 The right to develop and commercialize the Licensed Assets, [**], was obtained by the Company in connection with the Agreement;

•

 [**]; and

•

 The Company controls decision making with respect to the research, development and potential commercialization of the Licensed Assets.

Securities and Exchange Commission

August 12, 2016

Page 3

The Company’s determination that the purpose and design of Parion had been significantly revised as a result of the Agreement and as a result, while Parion is a business, it does not meet the business scope exception in ASC 810-10-15-17(d) since:

•

 The Company participated significantly in the redesign of Parion. [**]

•

 [**]; and

•

 The Company’s upfront payment and the related fair value of the contingent consideration [**].

Based on the above considerations, the Company does not believe that the business scope exception to the variable interest model described in ASC 810-10-15-17(d) is applicable.

The Company respectfully requests that the information contained in the above response that have been marked [**] be treated as confidential information and that the Commission provide timely notice to Michael J. LaCascia, the Company’s Senior Vice President and General Counsel, 50 Northern Avenue, Boston, Ma 02210, (617) 961-7018, before it permits any disclosure of the information in the above response.

Comment 2

We note from your response that you determined that you had a variable interest in the licensed assets. Please tell us how you considered the guidance in ASC 810-10-55-32 that states that assets held by a VIE almost always create variability and, thus, are not variable interests. In addition, tell us why the license agreement would not represent a variable interest of you as the licensee held by the licensor, whereby the license agreement would absorb, in part, your variability from development and commercialization of the licensed assets.

Response 2

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #2

When identifying variable interests, the Company first considered the variability that Parion was designed to create and distribute and then which interests absorb the variability that Parion was designed to distribute.  As described above, the purpose and redesign of Parion was to advance the development and commercialization of the Licensed Assets with a company that is able to effectively develop and commercialize products for the treatment of cystic fibrosis and other pulmonary diseases.  The Company determined that it had a variable interest in Parion based upon the Company obtaining a license for the exclusive worldwide rights to the Licensed Assets under the Agreement (the “License”) over the patent life of the Licensed Assets.

The License is a contractual arrangement created by Parion to expose its interest holders to increases and/or decreases in the fair value of the Licensed Assets. The License is a variable interest since it will (i) absorb potential losses in the fair value of the Licensed Assets if further development does not support commercialization of the Licensed Assets and (ii) receive potential residual returns from the Licensed Assets if further development supports commercialization.  As a result, the fair value of the License fluctuates in parallel with the development progress of the Licensed Assets.  As set forth in the Response Letter and in the Company’s response to Comment #1 above, since the Company concluded that more than half of the total fair value of Parion was related to the Licensed Assets [**], the Company also determined that the

Securities and Exchange Commission

August 12, 2016

Page 4

License represented a variable interest in Parion as a whole, rather than to specified assets in Parion (in accordance with ASC 810-10-25-55).

In addition, the Company considered and determined that Parion did not have a variable interest in the Company since it does not hold an interest that absorbs the variability that the Company was designated to distribute.

The Company respectfully requests that the information contained in the above response that have been marked [**] be treated as confidential information and that the Commission provide timely notice to Michael J. LaCascia, the Company’s Senior Vice President and General Counsel, 50 Northern Avenue, Boston, Ma 02210, (617) 961-7018, before it permits any disclosure of the information in the above response.

Comment 3

We note your reference to section 3.6 of the license agreement with Parion as the source of ultimate decision making authority with respect to the licensed assets. Please describe to us the joint steering committee’s authority and composition and why you believe you have ultimate decision making authority. In addition, please describe for us the reasons and significance for any activities under the license agreement that are governed differently.

Response 3

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #3

The Joint Steering Committee (the “JSC”) was established under Section 3.6 of the Agreement and is composed of an equal number of representatives of the Company and Parion.  The Agreement provides that the chair of the JSC is a representative of the Company.  The JSC is responsible for overseeing activities under the Agreement that cover the most significant decisions with respect to the research and development of the Licensed Assets, including, among other things, reviewing and approving (i) changes to the development plan for the collaboration and associated budgets, (ii) clinical trial protocols, (iii) the progress of development of the licensed compounds and (iv) the decision on whether  to proceed with or cease development of the Licensed Assets (see Section 3.6.2).

As set forth in the Response Letter, the Company obtained ultimate decision making authority with respect to the research and development of the Licensed Assets [**].  No significant decisions related to the research and development of the Licensed Assets are governed differently.

The JSC does not have jurisdiction over the commercialization of Licensed Assets that obtain marketing approval.  Instead, this contractual right is held exclusively by the Company (see Section 4.1) as Parion has ceded control over all commercialization activities, including manufacturing, marketing and distribution activities. The Company therefore concluded that the Company also controlled commercialization of the Licensed Assets.  There are no additional significant activities related to the Licensed Assets that are not governed by the JSC or that are not under the exclusive control of the Company.

Securities and Exchange Commission

August 12, 2016

Page 5

In summary, the Company’s conclusion that ultimate decision making authority with respect to the research, development and commercialization of the Licensed Assets is held by the Company is based upon (i) [**] and (ii) the Company’s contractual right to control commercialization decisions with respect to Licensed Assets that obtain marketing approval.

The Company respectfully requests that the information contained in the above response that have been marked [**] be treated as confidential information and that the Commission provide timely notice to Michael J. LaCascia, the Company’s Senior Vice President and General Counsel, 50 Northern Avenue, Boston, Ma 02210, (617) 961-7018, before it permits any disclosure of the information in the above response.

Comment 4

We note from your response that you concluded that Parion’s equity holders lack the power to direct the activities that most significantly impact Parion’s economic performance, as the power to direct Parion’s most valuable development program is held by you. Please describe to us the following:

a. The activities of Parion that most significantly impact its economic performance.

b. How decisions are made regarding each of those activities.

c. How you considered any limitations to your power over Parion’s activities, which for example, may arise from your power only covering a particular set of activities or the term of the license agreement.

d. How you expect the significant activities to shift over the life cycle of Parion.

Response 4

Confidential Treatment Requested by Vertex Pharmaceuticals Incorporated pursuant to Rule 83, Request #4

Part A

As set forth in the Company’s response to Comment #2 above, the purpose and redesign of Parion was to advance the development and commercialization of the Licensed Assets with a company that is able to effectively develop and commercialize products for the treatment of cystic fibrosis and other pulmonary diseases. The Company concluded that (i) [**].  As a result, [**] (as described in the Company’s response to Comment #3 above).

Part B

As set forth in the Company’s response to Comment #3 above, the JSC is responsible for overseeing research and development activities of the Licensed Assets.  [**] If research and development activities are successful and the Licensed Assets obtain marketing approval from regulatory agencies, the Company has the exclusive right to commercialize the Licensed Assets. As a result, the Company determined [**] with respect to the Licensed Assets are controlled by the Company.

Securities and Exchange Commission

August 12, 2016

Page 6

Part C

As set forth in the Company’s response to Comment #2 above, the purpose and redesign of Parion was to advance the development and commercialization of the Licensed Assets with a company that is able to effectively develop and commercialize products for the treatment of cystic fibrosis and other pulmonary diseases.  As previously stated, the Company concluded [**].  [**] as described in the Company’s response to Comment #3. Parion’s other research and development [**]. The Company considered any potential limitations of power when assessing ASC 810-10-25-38E which states “If the activities that impact the VIE’s economic performance are directed by multiple unrelated parties, and the nature of the activities that each party is directing is not the same, then a reporting entity shall identify which party has the power to direct the activities that most significantly impact the VIE’s economic performance. One party will have this power, and that party shall be deemed to have the characteristic in paragraph 810-10-25-38A(a).”

As a result of the Company’s [**] and contractual right to control decision making with respect to commerciali

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VERTEX PHARMACEUTICALS INCORPORATED

50 NORTHERN AVENUE • BOSTON, MA 02210-1862

TEL. 617-341-6100 •  http://www.vrtx.com

July 11, 2016

Delivered via EDGAR

Securities and Exchange Commission
Division of Corporation Finance

100 First Street, N.E.

Mail Stop 4720

Washington, DC 20549

Attn:    Jim B. Rosenberg, Senior Assistant Chief Accountant

Re:    Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31, 2015

Filed February 16, 2016

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to confirm receipt of comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to Jeffrey M. Leiden, dated June 30, 2016 (the “Comment Letter”), regarding the Company’s Form 10-K for the fiscal year ended December 31, 2015.

Based on the Company’s conversation with Ms. Bonnie Baynes, Staff Accountant for the Commission, with your permission the Company hereby agrees to submit its response to the Comment Letter no later than August 12, 2016.  The Company plans to use this extra time to more thoroughly address the Staff’s comments.

Please contact me at (617) 961-7018 if you have any questions or concerns with respect to this matter.

Very truly yours,

/s/ Michael J. LaCascia

Michael J. LaCascia

Senior Vice President and General Counsel

Mail Stop 4720

June 30, 2016

VIA E -mail
Dr. Jeffrey M. Leiden , M.D., Ph.D.
Chairman of the Board, Presid ent and Chief Executive  Officer
Vertex Pharmaceuticals Incorporated
50 Northern Avenue ,
Boston, Massachusetts 02210

Re: Vertex Pharmaceuticals Incorporated
 Form 10-K for Fis cal Year Ended December 31, 2015
Filed February 16 , 2016
File No. 000-19319

Dear Dr. Leiden :

We have review ed your May 27, 2016 response to our May 5, 2016 comment letter and
have the following comment s.  In our comment s, we may ask you to provide us with information
so we may better understand your disclosure.

Please respond to these  comment s within ten  business days by providin g the requ ested
information or advise  us as soon as possible  when you will respond .  If you do not believe  a
comment  applies to your facts and circumstances, please tell us why in your response.

After reviewing  your response to the se comment s, we may hav e additional comments .

Notes to Consolidated Financial Statements
B. Collaborative Arrangements
Variable Interest Entities (VIE)
Parion Sciences, Inc., page F -19

1. We note from your response your analysis of ASC 810 -10-15-17(d) related to scope
exceptions .   Please describe to us Parion’s capital structure, governance structure and
operations prior to the license agreement with you and the changes to them brought about
by the license agreement.  Include in your response a description of the activities of
Parion that will not be covered under the license agreement and demonstrate to us that the
activities of Parion related to you represents s ubstantially all of the activities of Parion.

2. We note from your response that you determined that you had a variable interest in the
licensed assets.  Please tell us how you considered the guidance in ASC 810 -10-55-32

Dr. Jeffrey M. Leiden
Vertex Pharmaceuticals Incorporated
June 30, 2016
Page 2

 that states that assets held by a VIE  almost always create variability and, thus, are not
variable interests.  In addition, tell us why the license agreement would not represent a
variable interest of you as the licensee held by the licensor, whereby the license
agreement would absorb, in par t, your variability from development and
commercialization of the licensed assets.

3. We note your reference to section 3.6 of the license agreement with Parion as the source
of ultimate decision making authority with respect to the licensed assets.  Please describe
to us the joint steering committee’s authority and composition and why you believe you
have ultimate decision making authority.  In addition, please describe for us the reasons
and significance for any activities under the license agreement that a re governed
differently.

4. We note from your response that you concluded that Parion’s equity holders lack the
power to direct the activities that most significantly impact Parion’s economic
performance, as the power to direct Parion’s most valuable develop ment program is held
by you.  Please describe to us the following:
a. The activities of Parion that most significantly impact its economic performance.
b. How decisions are made regarding each of those activities.
c. How you considered any limitations to your power  over Parion’s activities, which
for example, may arise from your power only covering a particular set of
activities or the term of the license agreement.
d. How you expect the significant activities to shift over the life cycle of Parion.

5. Please tell us whe ther decision -making rights change should Parion opt for the co -
development election, as described in section 3.2.6. of the license agreement.

6. Please explain to us why the $255,340,000 consideration paid to Parion differs from the
$164,317,000 net assets attributable to noncontrolling interest.   In addition, tell us how
you attribute interests in Parion to noncontrolling interest.

You may contact Bonnie Baynes, Staff Accountant, at (202) 551 -4924 if you have any
questions  regarding the comment s.  In this regard, do not hesitate to contact me at (202) 551 -
3679.

Sincerely,

 /s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief  Accountant
Office of Healthcare and Insurance

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VERTEX PHARMACEUTICALS INCORPORATED

50 NORTHERN AVENUE • BOSTON, MA 02210-1862

TEL. 617-341-6100 •  http://www.vrtx.com

May 27, 2016

Delivered via EDGAR

Securities and Exchange Commission
Division of Corporation Finance

100 First Street, N.E.

Mail Stop 4720

Washington, DC 20549

Attn:    Jim B. Rosenberg, Senior Assistant Chief Accountant

Re:    Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31, 2015

Filed February 16, 2016

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to a comment from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to Jeffrey M. Leiden, dated May 13, 2016 (the “Comment Letter”), regarding the Company’s Form 10-K for the fiscal year ended December 31, 2015.  The comment from the Comment Letter is reproduced below together with the Company’s response to the comment.

Notes to Consolidated Financial Statements

B. Collaborative Arrangements

Variable Interest Entities (VIE)

Parion Sciences, Inc., page F-19

Comment 1

Please provide us with your detailed analysis as to the application of ASC 810-10 that resulted in your consolidation of Parion. Include in your response the unredacted agreement with Parion and references to the specific paragraphs of the agreement that result in your consolidation of Parion.

Response 1

In June 2015, the Company entered into a strategic collaboration and license agreement (the “Agreement”) with Parion Sciences, Inc., a development stage biopharmaceutical company (“Parion”), to develop investigational ENaC inhibitors, including VX-371 (formerly P-1037) and VX-551 (formerly P-1055), for the potential treatment of cystic fibrosis and all other pulmonary diseases (the “Licensed Assets”).  The Company did not acquire an equity interest in Parion and as a result the voting model pursuant to Accounting Standards Codification (“ASC”) 810, “Consolidations”, did not apply.  However the Company concluded that it was required to consolidate Parion’s financial statements into the Company’s consolidated financial

Securities and Exchange Commission

May 27, 2016

Page 2

statements as of and for the year ended December 31, 2015 after application of the variable interest model pursuant to ASC 810.  The Company applied the variable interest model and made the following determinations, which collectively resulted in the conclusion to consolidate Parion:

•

 Parion is a legal entity;

•

 None of the scope exceptions to consolidation or the variable interest model apply to Parion;

•

 The Company has a variable interest in Parion;

•

 Parion is a variable interest entity; and

•

 The Company is the primary beneficiary of Parion.

Step 1:   Is Parion a legal entity?

Pursuant to ASC-810, the variable interest model applies to legal entities as set forth in ASC 810-10-20 (such as corporations, partnerships and limited liability companies), but does not apply to arrangements that are established by contract but are not conducted through a separate legal entity.   Parion is a Delaware corporation and is therefore subject to the application of the variable interest model.

Step 2:  Do any of the consolidation or variable interest model scope exceptions apply?

The Company determined that none of the scope exceptions set forth in ASC 810-10-15-12 or ASC 810-10-15-17 applied to Parion.

The Company’s analysis of the scope exceptions focused on the “business” scope exception set forth in ASC 810-10-15-17(d).  The business scope exception provides that the variable interest model does not apply to a “business” (defined pursuant to ASC-805 as an integrated set of activities and assets that are capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs, or other economic benefits directly to investors or other owners, members, or participants) unless one or more of the four conditions set forth in ASC 810-10-15-17(d)(1)-(4) exist.  The Company determined that Parion qualifies as a “business” because it has both inputs (intellectual property) and processes being applied to the inputs (employees and research and developments activities) that have the ability to create a return (drug compounds that can be developed to produce a return).  The out-license of certain of its assets under the Agreement demonstrates that Parion has the potential to generate a return for its investors through the receipt of license fees and through potential milestone and/or royalty payments.  However, the Company also determined that two of the four conditions set forth in ASC 810-10-15-17(d)(1)-(4) existed and that the variable interest model therefore applies to Parion.

This conclusion was based on the following:

•

 The Company considered whether or not it had participated in the design or redesign of Parion (as provided in ASC 810-10-15-17(d)(1)).  Although there were no changes to the legal or equity structure of Parion as a result of the Agreement, the Company concluded that the operations of Parion had been significantly revised since (i) the Licensed Assets include Parion’s lead investigational ENaC inhibitors and collectively represent Parion’s most significant assets (as discussed in more detail below) and (ii) the Company obtained ultimate decision making authority with respect to the research, development and commercialization of the Licensed Assets

Securities and Exchange Commission

May 27, 2016

Page 3

(Section 3.6 of the Agreement).  Based on the foregoing, Vertex concluded that it had participated in the redesign of Parion.

•

 The Company considered whether Parion was designed so that substantially all of its activities either involve or are conducted on behalf of the Company and its related parties (as provided in ASC 810-10-15-17(d)(2)). Under the terms of the Agreement, Parion is responsible for conducting certain development activities related to the Licensed Assets (Section 3.2.3 of the Agreement). The Company concluded that due to the significant fair value of the Licensed Assets, as compared to the fair value of assets comprising Parion’s other research and development programs, substantially all of Parion’s activities either involve or are being conducted on behalf of the Company.

Step 3:  Does the Company have a variable interest in Parion?

After determining that none of the scope exceptions applied, the Company evaluated whether or not the Company has a variable interest in Parion.  Under ASC 810, an entity is deemed to have a “variable interest” in assets of another entity if the entity has an interest that will absorb portions of a variable interest entity’s expected losses or receive portions of the entity’s expected residual returns.  In addition, ASC 810-10-25-55 sets forth that a variable interest in specified assets of another entity shall be deemed to be a variable interest in such entity as a whole if the fair value of the specified assets is more than half of the fair value of the entity’s total assets.  The Company determined that (i) it had a variable interest in the Licensed Assets and (ii) the fair value of the Licensed Assets was more than half of the fair value of Parion’s total assets, resulting in the Company having a variable interest in Parion as a whole.

The determination that the Company has a variable interest in the Licensed Assets was based upon the Company’s receipt of worldwide development and commercialization rights to the Licensed Assets, which include Parion’s lead investigational ENaC inhibitors (Section 2.1 of the Agreement) and the Company’s option to select additional compounds discovered in Parion’s research (Section 2.7 of the Agreement).  The Company determined that the value of the development and commercialization rights was directly related to the value of the Licensed Assets and that the Company has a variable interest in the Licensed Assets since it (i) has the right to receive benefits from the Licensed Assets if they are successfully developed under the collaboration, primarily due to its commercialization rights and (ii) is responsible for all costs, subject to certain exceptions, related to the development and commercialization (Section 3.2 of the Agreement) of the Licensed Assets.

The determination that the fair value of the Licensed Assets was more than half of the fair value of Parion’s total assets was based on an evaluation of the fair value of the Licensed Assets, as compared to the fair value of the assets comprising Parion’s other research and development programs, including P-321, which is being developed by Parion for the treatment of dry eye disease, and Parion’s trans-nasal pulmonary aerosol delivery (“tPAD”) system, which is being developed by Parion for use in the treatment of cystic fibrosis and COPD.  As part of this evaluation, the Company considered information from discussions with Parion’s management team regarding the development status of the P-321 and tPAD programs as well as the management team’s expectations regarding the timing, future cost and commercial potential for each program. The Company also analyzed the competitive landscape for each of these programs based on current market conditions.  As a result of a comprehensive fair value analysis from a market participant perspective, the Company determined

Securities and Exchange Commission

May 27, 2016

Page 4

that the fair value of the Licensed Assets represented significantly more than half of the fair value of Parion’s total assets.

Step 4:  Is Parion a variable interest entity?

After determining that the Company has a variable interest in Parion, the Company evaluated whether Parion qualified as a variable interest entity (“VIE”).  ASC 810-10-15-14 defines a VIE to include, among other things, an entity whose at-risk equity holders lack the power through voting or similar rights to direct the entity’s activities that most significantly affect its economic performance.

Under the Agreement, the Company has worldwide development and commercialization rights to the Licensed Assets, which includes Parion’s lead investigational ENaC inhibitors (Section 2.1 of the Agreement) and the Company has the option to select additional compounds discovered in Parion’s research (Section 2.7 of the Agreement). As discussed above, the Company has ultimate decision making authority with respect to the research, development and commercialization of the Licensed Assets (Section 3.6 of the Agreement).  In addition, the Company is leading development activities for VX-371 and is responsible for all costs, subject to certain exceptions, related to VX-371 development and commercialization (Section 3.1 of the Agreement). The Company also leads development activities for VX-551, which is in pre-clinical development (Section 3.2 of the Agreement).  As a result, the Company concluded that Parion's equity holders lack the power to direct the activities that most significantly impact Parion’s economic performance, as the power to direct Parion’s most valuable development program is held by the Company.  Accordingly, the Company concluded that Parion is a VIE.

Step 5:  Is the Company Parion’s primary beneficiary?

The final step to the analysis of whether the Company is required to consolidate Parion, is evaluating whether or not the Company is the primary beneficiary of Parion.  ASC 810-10-25-38(a) sets forth that a company is the primary beneficiary of a VIE if the company has the (i) power to direct activities of the VIE that most significantly impact the VIE’s economic performance and (ii) obligation to absorb losses of or the right to receive benefits of the VIE that could potentially be significant to the VIE.

As previously discussed, the Company determined that it has the power to direct Parion’s most significant development program since it (i) has worldwide development and commercialization rights to the Licensed Assets (Section 2.1 of the Agreement), (ii) is leading development activities for VX-371 and is responsible for all costs, subject to certain exceptions, related to its development and commercialization (Section 3.2 of the Agreement) and (iii) has ultimate decision making authority with respect to the research, development and commercialization of the Licensed Assets (Section 3.6 of the Agreement).  In addition, the Company has the right to receive benefits from the Licensed Assets if they are successfully developed under the collaboration, primarily due to its commercialization rights, that could potentially be significant to Parion.

ASC 810-25-38(a) further requires that in considering whether an entity is the primary beneficiary of a VIE, it must consider the variable interests of all “related parties” (as defined by ASC 850) and any entities that qualify as “de facto agents” (as defined under the guidance in ASC 810).  Based primarily on the fact that there are no agreements between the Company and the stockholders of Parion and that there are no limitations on the ability of a stockholder to sell, transfer or encumber its interests in Parion without the Company’s

Securities and Exchange Commission

May 27, 2016

Page 5

consent, the Company concluded that there are no other related parties or de facto agents involved in the Agreement and that the Company was the primary beneficially of Parion.

Unredacted Version of Agreement

Based on the Company’s conversation with Ms. Bonnie Baynes, Staff Accountant for the Commission, with your permission the Company has not included an unredacted copy of the Agreement with this response letter, which is the subject of a confidential treatment request granted by the Commission on December 17, 2015 (File No. 0-19319-CF#32779 ).

_____________________________________________________________________________________

The Company acknowledges that:

1)      the Company is responsible for the adequacy and accuracy of the disclosure in its filings;

2)

 Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to its filings; and

3)

 the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please contact me at (617) 961-5171 or Caroline Wishart at (617) 341-6864 if you have any questions or concerns with respect to this matter.

Very truly yours,

/s/ Paul Silva

Paul Silva

Senior Vice President and Corporate Controller (Principal Accounting Officer)

Mail Stop 4720

May 13 , 2016

VIA E -mail
Dr. Jeffrey M. Leiden , M.D., Ph.D.
Chairman of the Board, Presid ent and Chief Executive  Officer
Vertex Pharmaceuticals Incorporated
50 Northern Avenue ,
Boston, Massachusetts 02210

Re: Vertex Pharmaceuticals Incorporated
 Form 10-K for Fis cal Year Ended December 31, 2015
Filed February 16 , 2016
File No. 000-19319

Dear Dr. Leiden :

We have limited our review of  your filing  to the financial statements and related
disclosures  and have the following comment.  In  our comment, we ask you to provide us with
information so we may better understand your disclosure.

Please respond to this  comment within 10  business days by providin g the requ ested
information or advise  us as soon as possible  when you will respond .  If you do not believe  the
comment  applies to your facts and circumstances, please tell us why in your response.

After reviewing  your response to this  comment , we may have additional comments .

Notes to Consolidated Financial Statements
B. Collaborative Arrangements
Variable Interest Entities (VIE)
Parion Sciences, Inc., page F -19

1. Please provide us with your detailed analysis as to the application of ASC 810 -10 that
resulted in your consolidation of Parion.  Include in your response the unredacted
agreement with Parion and references to the specific paragraphs of the agreement that
result in your consolidation of Parion.

Dr. Jeffrey M. Leiden
Vertex Pharmaceuticals Incorporated
May 13 , 2016
Page 2

 We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comment, please provide a written statement from the company
acknowledging that:
 the company is responsible for the adequacy and accuracy of the disclosure in the filing;
 staff comment or changes to disclosure in response to staff comment do not foreclose the
Commission from taking any action with respect to the filing s; and
 the company may not assert staff comment as a defense in any proceeding initiated by the
Commission or any person under the f ederal securities laws of the United States.

You may contact Bonnie Baynes, Staff Accountant, at (202) 551 -4924 if you have any
questions  regarding the comment . In this regard, do not hesitate to contact me at (202) 551 -3679.

Sincerely,

 /s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief  Accountant
Office of Healthcare and Insurance

May 21, 2015

Via E -mail
Jeffrey M. Leiden
President and Chief Executive Officer
Vertex Pharmaceuticals Incorporated
50 Northern Avenue
Boston, Massachusetts 02210

Re: Vertex Pharmaceuticals Incorporated
 Form 10 -K for the Fiscal Year Ended December 31, 2014
Filed February 13, 2015
File No. 000 -19319

Dear Mr. Leiden:

We have completed our review of your filing .  We remind you that our comments or
changes to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect to the company or the filing and the company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person u nder the
federal securities laws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the
information the Securities Exchange Act of 1934 and all  applicable rules require.

Sincerely,

 /s/ Daniel Greenspan for

Jeffrey P. Riedler
Assistant Director

CORRESP
1
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		SECCommentLetterResponseMay2015

 VERTEX PHARMACEUTICALS INCORPORATED

50 NORTHERN AVENUE • BOSTON, MA 02210-1862

TEL. 617-341-6100 •  http://www.vrtx.com

May 11, 2015

Delivered via EDGAR

Securities and Exchange Commission
Division of Corporation Finance

100 First Street, N.E.

Mail Stop 4720

Washington, DC 20549

Attn:    Daniel Greenspan, Assistant Director

Re:    Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31, 2014

Filed February 13, 2015

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to a comment from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to Jeffrey M. Leiden, dated April 28, 2015 (the “Comment Letter”), regarding the Company’s Form 10-K for the fiscal year ended December 31, 2014.  The comment from the Comment Letter is reproduced below together with the Company’s response to the comment.

Business

Collaborations, page 7-8

Comment 1

We note your disclosure regarding your 2014 collaboration agreements with BioAxone Biosciences, Inc. and Janssen Pharmaceuticals, Inc.  These agreements appear material to your business.  Accordingly, please file each of these agreements as exhibits to your annual report as required under Item 601(b)(10) of Regulation S-K.

Response 1

The Company’s business is focused on discovering, developing, manufacturing and commercializing small molecule drugs, primarily related to the treatment of cystic fibrosis. The Company’s lead product is KALYDECO®, which accounted for $464 million in net product revenues in 2014, and the Company is seeking approval for a second product, ORKAMBITM, which, if approved, would be used to treat a different, and larger group of patients with cystic fibrosis.  In addition, the Company is evaluating a third drug candidate for the treatment of cystic fibrosis in late-stage clinical trials.   Accordingly, the Company expects that over the next several years it will derive substantially all of its revenues from its cystic fibrosis products.  The Company also maintains a substantial investment in its research and development efforts and its annual operating expenses are in excess of $1.0 billion.

Securities and Exchange Commission

May 11, 2015

Page 2

Consistent with other companies in the biopharmaceutical industry, the Company enters into collaboration agreements in the ordinary course of its business (i) to acquire rights to technologies and/or development-stage assets and (ii) to outlicense drug candidates to third-party collaborators.  The Company analyzes each collaboration agreement it enters into for materiality when it enters into the agreement and periodically thereafter.  For example, the Company has determined that its collaboration agreement with the Cystic Fibrosis Foundation Therapeutics Incorporated is material and currently files it as an exhibit pursuant to Item 601(b)(10) of Regulation S-K.  The Company also filed agreements with its collaborators in the field of HCV infection for a number of years pursuant to Item 601(b)(10) of Regulation S-K until the Company decided to exit the HCV infection field and these agreements, therefore, ceased to be material to the Company’s business.

Item 601(b)(10)(ii) of Regulation S-K clarifies that if an agreement is such as ordinarily accompanies the kind of business conducted by the registrant, it will be deemed to be made in the ordinary course of business, and therefore not required to be filed, unless the agreement is, one “upon which the registrant’s business is substantially dependent.”   The Company assessed the materiality of the agreements with each of BioAxone Biosciences, Inc. (“BioAxone”) and Janssen Pharmaceuticals, Inc. (“Janssen”) under this framework and determined, as described below, that  (i) each agreement was made in the ordinary course of the Company’s business and (ii) the Company’s business is not substantially dependent on either of these agreements.  Accordingly, the Company did not file these agreements as exhibits to its Annual Report on Form 10-K for the period ended December 31, 2014.

Agreement with Janssen Pharmaceuticals, Inc.

The Company’s collaboration agreement with Janssen (the “Janssen Agreement”) provides for the grant by the Company to Janssen of a license to develop and commercialize VX-787 (and certain related compounds) for the treatment of influenza (“flu”) virus infection.  The flu compounds were outlicensed in connection with the Company’s decision to exit the field of anti-viral therapies (including the withdrawal from the market of INCIVEK, the Company’s product for HCV infection), and the Company’s business is not reliant on the Janssen Agreement from an operational or financial perspective.

The Company’s primary obligation under the Janssen Agreement is to coordinate an ongoing Phase 2 clinical trial that is funded by Janssen.  In 2014, approximately 5 FTEs (out of the Company’s approximately 1,800 employees) coordinated the conduct of this clinical trial through a clinical research organization and the Company believes that the number of FTEs on this program will decrease in future periods. The Company’s other obligations under the Janssen Agreement (for example, to transfer technical data and maintain certain patents) are not individually or in the aggregate material to the Company.  Consistent with the minimal effect that the Janssen Agreement has on the Company’s operations, the Company expects no revenues pursuant to the Janssen Agreement in 2015 and net expenses related to the Janssen Agreement of less than $2.0 million in 2015.

Agreement with BioAxone Biosciences, Inc.

The collaboration agreement with BioAxone (the “BioAxone Agreement”) provides for a license from BioAxone to the Company to pursue the development VX-210, which the Company is planning to evaluate as a potential treatment for spinal injuries.  The BioAxone Agreement represented a small investment by the Company in an early-stage asset in a disease area other than its core focus area of cystic fibrosis.

The Company made a payment of $10.0 million in connection with executing the BioAxone Agreement (representing less than 0.8% of the Company’s $1.39 billion in cash, cash equivalents and marketable securities as of December 31, 2014).  The Company’s only near-term obligation is to conduct a Phase 2

Securities and Exchange Commission

May 11, 2015

Page 3

clinical trial, which the Company does not expect to commence until later this year.  The BioAxone Agreement did not have a material effect on the Company's operating expenses in 2014 and the Company does not expect it to have a material effect on its operating expenses in 2015 or in future periods.

The Company respectfully submits that neither the Janssen Agreement nor the BioAxone Agreement is material to its business, and requests that the Company be permitted to continue to exclude these agreements from the agreements the Company files pursuant to Item 601(b)(10) of Regulation S-K.   Notwithstanding the Company’s determination that the agreements are not material under Item 601(b)(10) of Regulation S-K, the Company included disclosure about the agreements in its Form 10-K because it believes it provides meaningful information for investors regarding the Company’s third-party collaboration efforts. The Company hereby confirms that, in connection with future filings, it will continue to periodically evaluate its agreements with third parties (including the Janssen Agreement and the BioAxone Agreement) and will file pursuant to Item 601(b)(10) each agreement that it determines as of the date of the relevant filing is material to the Company’s business.

_____________________________________________________________________________________

The Company acknowledges that:

1)      the Company is responsible for the adequacy and accuracy of the disclosure in its filings;

2)

 Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to its filings; and

3)

 the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please contact me at (617) 961-7018 or Omar White at (617) 341-6396 if you have any questions or concerns with respect to this matter.

Very truly yours,

/s/ Michael J. LaCascia

Michael J. LaCascia

Vice President and Interim General Counsel

April 28 , 2015

Via E -mail
Jeffrey M. Leiden
President and Chief Executive Officer
Vertex Pharmaceuticals Incorporated
50 Northern Avenue
Boston, Massachusetts 02210

Re: Vertex Pharmaceuticals Incorprated
 Form 10-K for the Fiscal Year Ended December 31 , 2014
Filed February 13, 2015
File No. 000 -19319

Dear Mr. Leiden :

We have reviewed your filing an d have the following comment.

Please respond to this comment  within ten busine ss days by providing the requested
information or advis e us as soon as possible when you will respond.  If you do not believe our
comment apply to your facts and circumstances, please tell us why in your response.

After reviewing your response and any amendment you may file in response to this
comment , we may have additional comments.

Business
Collaborations, pages 7 -8

1. We note your disclosure regarding your 2014 collaboration agreements with BioAxone
Biosciences, Inc. and Janssen Pharmaceuticals, Inc. These agreements appe ar material to
your busines s.  Accordingly, p lease file each of these agreements as exhibits to your
annual report as required under Item 601(b)(10) of Regulation S -K.

Jeffrey M. Leiden
Vertex Pharmaceuticals Incorporated
April 28 , 2015
Page 2

 We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management ar e
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comments, please provide  a written statement from the company
acknowledging that :

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

Please contact Alla Berenshteyn at (202) 551 -4325 , Dan Greenspan at (202) 551 -3623 or
me at  (202) 551 -3715 with any quest ions.

Sincerely,

 /s/ Daniel Greenspan for

 Jeffrey P. Riedler
Assistant Director

May 21, 2013

Via E -mail
Jeffrey M. Leiden
Chief Executive Officer
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, MA  02139 -4242

Re: Vertex Pharmaceuticals Incorporated
 Form 10 -K for the Fiscal Year Ended December  31, 2012
 Filed March 1,  2013
 File No. 000-19319

Dear M r. Leiden :

We have completed our review of your filing.  We remind you that our comments or
changes to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect to the company or the filing and the company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person under the
federal securities la ws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the
information the Securities Exchange Act of 1934 and all applicable rules require.

Sincerely,

 /s/ Joel Parker

Joel Parker
Accounting Branch Chief

CORRESP
1
filename1.htm

		Response-SEC-April2013

VERTEX PHARMACEUTICALS INCORPORATED

130 WAVERLY STREET • CAMBRIDGE, MA 02139-4242

TEL. 617.341.6100 • FAX 857-263-4527

http://www.vrtx.com

April 26, 2013

Delivered via EDGAR

Securities and Exchange Commission
Division of Corporation Finance
Washington, DC 20549

Attn:

 Jim B. Rosenberg, Senior Assistant Chief Accountant
Joel Parker, Accounting Branch Chief
Tabatha Akins, Staff Accountant

Re:

 Vertex Pharmaceuticals Incorporated
Form 10-K for the Fiscal Year Ended December 31, 2012
Filed March 1, 2013
File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to the comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter dated April 12, 2013 to Jeffrey M. Leiden (the “Comment Letter”) regarding the Company’s filing with the Commission referenced above. The comments from the Comment Letter are reproduced below together with the Company’s responses to those comments.

General

Comment 1:

We note that you incorporate by reference into Part III of your Form 10-K certain information from your definitive proxy statement for your 2013 annual meeting of shareholders.  Please note that we may have further comments after reviewing this information and we will not be able to clear our review of your filing until we have the opportunity to resolve any resulting comments.

Response 1:

The Company recently filed its Definitive Proxy Statement on Schedule 14A for its 2013 Annual Meeting of Shareholders, which included the information required by Part III of Form 10-K.

Notes to Consolidated Financial Statements

I. Intangible Assets and Goodwill
Intangible Assets
Alios Collaboration, page F-27

Comment 2:

You state “there was no impairment to the program in the third quarter of 2012 because of the advancement of ALS-2200.”  Please tell us why ALS-2200 and ALS-2158 were not separately valued at the date of acquisition.  Cite the accounting guidance used in your determination.

Response 2:

On June 13, 2011 (the “Acquisition Date”), the Company obtained rights to Alios BioPharma, Inc.’s (“Alios”) HCV nucleotide analogue program pursuant to a license and collaboration agreement with Alios that contained an exclusive license to develop and commercialize ALS-2200 and ALS-2158 (the “Compounds”).  The Compounds were both pre-clinical drug candidates (in a class of compounds referred to as hepatitis C virus (“HCV”) nucleotide analogues) that the Company planned to develop for the treatment of patients with HCV infection.  Alios also is conducting a research program pursuant to the license and collaboration agreement focused on the discovery of additional HCV nucleotide analogues that had not been identified as of the Acquisition Date.  The license and collaboration agreement resulted in the consolidation of Alios, a variable interest entity, and the initial consolidation of Alios was treated as a business combination.  As of the Acquisition Date, the Company valued the HCV nucleotide analogue program, which included both ALS-2200 and ALS-2158, at $250.6 million.

All treatment regimens for HCV infection (including approved treatment regimens and treatment regimens currently in development) involve the administration of multiple drugs in combination.  As of the Acquisition Date, the Company planned to conduct a development program to evaluate treatment regimens for HCV infection that would include ALS-2200 and/or ALS-2158 in combination with other drugs and/or drug candidates, including potentially additional HCV nucleotide analogues discovered pursuant to the research program being conducted by Alios pursuant to the license and collaboration agreement.  The goal of this development program was to develop an all-oral treatment regimen for HCV infection that would not require co-administration of pegylated-interferon, a drug that must be administered by weekly injection.

The early-stage clinical trials in the HCV nucleotide analogue development program were intended to identify a single treatment regimen containing ALS-2200 and/or ALS-2158 (the “Selected Regimen”) that the Company would subsequently evaluate in later-stage clinical trials.  Due to the significant development and commercialization risks associated with the Compounds, which were pre-clinical development candidates on the Acquisition Date, the Company was not able to predict which Compound(s) would be included in the Selected Regimen.  If the later-stage clinical trials were successful, the Company would then seek approval to market the Selected Regimen as a treatment for HCV infection.  As a result, the valuation model that was used to determine the fair value of the HCV nucleotide analogue program included a single discounted cash flow based on projected sales of the Selected Regimen.

ASC 805-20 “Identifiable Assets and Liabilities, and any Noncontrolling Interest” does not directly address the question of whether to (i) value the HCV nucleotide analogue program as a single unit of account or (ii) value the Compounds separately.  The Company valued the HCV nucleotide analogue program as a single unit of account based primarily on its analysis of the factors listed below.  These factors were being discussed by AICPA at the time that the Company completed its initial valuation of the HCV nucleotide analogue program in the third quarter of 2011 and were included in the Working Draft of the AICPA Accounting and Valuation Guide titled “Assets Acquired to be Used in Research and Development Activities” that was released on November 18, 2011 (the “Practice Aid”).  While the Practice Aid has not been finalized, the Company believes it currently is the most relevant interpretive guidance with respect to this issue.  The Practice Aid notes that separately identifiable in-process research and development (“IPR&D”) assets that share similar characteristics may be combined into a single unit of account if they are substantially the same, while less closely related IPR&D projects may be valued separately. The Practice Aid suggests considering the following factors in making this determination:

•

 Whether there was an intent to manage costs for the developed asset(s) separately or on a combined basis in areas such as strategy, manufacturing, advertising, selling, etc.;

•

 The phase of development of the related IPR&D projects;

•

 The nature of activities and costs necessary to further the related IPR&D projects;

•

 The risks associated with the further development of the related IPR&D projects;

•

 The amount and timing of the benefits expected to be derived from the developed assets; and

•

 The expected economic life of the development assets.

The Company believes that the factors identified in the Practice Aid support combining the Alios HCV nucleotide analogue program into a single unit of account, as follows:

•

 The business purpose of the license and collaboration agreement with Alios was to acquire rights to the HCV nucleotide analogue program and to develop and commercialize a Selected Regimen to treat patients with HCV infection.  The Company’s intent was to manage all the activities and costs related to the development program on a combined basis.  The Company planned that the resulting Selected Regimen, whether it contained one or both of the Compounds, would be manufactured, marketed and sold as a single product for the treatment of HCV infection.

•

 The Compounds were at an identical, pre-clinical stage of development.

•

 The expected clinical and non-clinical activities required to develop the Compounds, and the anticipated costs of such activities, were identical.

•

 The Company believed based on pre-clinical data and other information that the risks related to the Compounds were identical.

•

 The Company estimated that the amount and timing of the benefits derived from the developed assets would be identical because the Company intended to develop and commercialize a single Selected Regimen.

•

 The Company intended to develop a single Selected Regimen, which it would market for as long as the Selected Regimen remained competitive.

P. Income Taxes, page F-34

Comment 3:

With respect to the tax rate reconciliation, please clarify for us:

•

 The nature of the foreign rate differential that increases the provision each year presented and to what foreign operations the differential relates considering that you incurred foreign pre-tax losses each year; and

•

 The nature of the benefited operating losses, to what operations (United States versus foreign) it relates and why it decreases the tax provisions in 2012 and 2011.

Provide us proposed revised disclosure to be included in future filings addressing these items.

Response 3:

In future filings that include a tax rate reconciliation, the Company proposes to include the following disclosure to clarify the tax rate reconciliation table:

“The foreign rate differential in the tax rate reconciliation table reflects the effect of operations in jurisdictions with tax rates that are different from the United States.  As set forth in the components of income (loss) before provision for (benefit from) income taxes, the Company had losses in foreign jurisdictions in 2012 and 2011.  Due to lower foreign tax rates, particularly in the Cayman Islands, Ireland and Switzerland, the Company’s tax benefit in foreign loss jurisdictions is less than the “expected” tax benefit that would have resulted from losses in these jurisdictions at corporate tax rates in the United States.  The difference between the tax benefit at foreign corporate tax rates and the “expected” benefit based on corporate tax rates in the United States is reflected in the tax reconciliation table under the caption “foreign rate differential.”

The unbenefitted operating losses in the tax rate reconciliation table primarily reflect a change in the valuation allowance on deferred tax assets related to the United States, Canada, Ireland and Switzerland.  In 2012 and 2011, there was a favorable effect on the tax provision (benefit) in the tax rate reconciliation table due to a reduction of the valuation allowance in the United States resulting from the utilization of U.S. federal net operating losses.  In Canada, Ireland and Switzerland losses have been incurred that cannot be benefitted due to uncertainty in the Company’s ability to use them in future periods resulting in an unfavorable effect on the tax provision.”

Comment 4:

You state it is not “practical” to determine the amount of unrecognized deferred U.S. federal income tax liability.  Please provide us proposed disclosure to be included in future filings that complies with ASC 740-30-50-2.c. which requires disclosure of the amount of unrecognized deferred tax liability, if practicable, or a statement that determination is not practicable.

Response 4:

In future filings, beginning with its Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, the Company proposes to include the following disclosure:

“At [Date], 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.”

______________________________________________________________________________

The Company hereby confirms that in future filings the Company will enhance its overall disclosures by complying with the comments provided by the Commission in the manner set forth in the responses above, subject in all cases to any changes with respect to the facts underlying the Company’s disclosures.

In addition, the Company acknowledges that:

1)

 the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

2)

 Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and

3)

 the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please contact me at 617-961-0878 in the event that you have any questions or concerns with respect to this matter.

Very truly yours,

/s/   Kenneth L. Horton

Kenneth L. Horton
Executive Vice President & Chief Legal Officer

April 12, 2013

Via E -mail
Jeffrey M. Leiden
Chief Executive Officer
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, MA  02139 -4242

Re: Vertex Pharmaceuticals Incorporated
 Form 10 -K for the Fiscal Year Ended December  31, 2012
 Filed March 1,  2013
 File No. 000-19319

Dear M r. Leiden :

We have reviewed your filing and have the following comments.  In our comment s, we
ask you to provide us with information so we may better understand your disclosure.

Please respond to this letter within 10 business days by providing the requested
information or by advising us when you will provide the requested response.  If you  do not
believe a commen t applies to your facts and circumstances, please tell us why in your response.
Please furnish us a letter on EDGAR under the form type label CORRESP that keys your
response s to our comment s.

After reviewing the information provided, we may raise additional comments and/or
request that you amend your filing.

General

1. We note that you incorporate by reference into Part III of your Form 10 -K certain
information from your definitive proxy statement fo r your 2013 annual meeting of
shareholders. Please note that we may have further comments after reviewing this
information and we will not be able to clear our review of your filing until we have the
opportunity to resolve any resulting comments.

Notes to Consolidated Financial Statements

I. Intangible Assets and Goodwill
Intangible Assets
Alios Collaboration, page F -27

2. You state “there was no impairment to the program in the third quarter of 2012 because of
the advancement of ALS -2200 .”  Please tell us why ALS -2200 and ALS -2158 were not

Jeffrey M. Leiden
Vertex Pharmaceuticals Incorporated
April 12, 2013
Page 2

 separately valued at the date of acquisition.   Cite the accounting guidance used in your
determination.

P. Income Taxes, page F -34

3. With respect to the tax rate reconciliation, please clarify for us :

 The nature of  the foreign rate differential  that increases the provision each year presented
and to what  foreign operations the differential relates considering that you incurred
foreign  pre-tax losses  each year ; and
 The nature of  the unbenefited operating losses , to what operations (United States versus
foreign) it relates  and why it decr eases  the tax provision  in 2012 and 2011.

Provid e us proposed revised  disclosure  to be included in future filings  addressing the se items.

4. You state it is not “practical” to determine the amount of unrecognized deferred U.S. federal
income tax liability. Please provide us proposed  disclosure to be included in future filings
that complies  with ASC 740 -30-50-2.c. which requires disclosure of the amount of
unrecognized deferred tax liability, if practicable, or a statement that determination is not
practicable .

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filin g include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for th e accuracy
and adequacy of the disclosures they have made.

In responding to our comment s, please provide a written statement from the company
acknowledging that:
 the company is responsible for the adequacy and accuracy of the disclosure in the filing;
 staff comment s or changes to disclosure in response to staff comment s do not foreclose
the Commission from taking any action with respect to the filing; and
 the company may not assert staff comment as a defense in any proceeding initia ted by the
Commission or any person under the federal securities laws of the United States.

 You may contact Tabatha Akins, Staff Accountant, at (202) 551 -3658 or Joel Parker ,
Account ing Branch  Chief , at (202) 551 -3651 if you have any questions regarding the
comments.   In this  regard, do not hesitate to contact me at (202) 551 -3679.

Sincerely,

  /s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief Accountant

December 4,  2012

Via E -mail
Ian F. Smith
Executive Vice President ,
And Chief Financial Officer
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, Massachusetts 02139

Re: Vertex Pharmaceuticals Incorporated
Form 10-K for the Fiscal Year Ended December 31, 2011
Filed February 22, 2012
File No. 000-19319

Dear Mr. Smith :

We have completed our review of your filing s.  We remind you that our comments or
changes to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect to the company or the filing s and the company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filing s to be certain that the filing s include the
information the Securities Exchange Act of 1934 and all applicable rules require.

Sincerely,

        /s/ Joel Parker

Joel Parker
        Accounting Branch Chief

CORRESP
1
filename1.htm

VERTEX   PHARMACEUTICALS INCORPORATED

130   WAVERLY STREET · CAMBRIDGE, MA 02139-4242

TEL. 617.341.6100 · FAX 857.263.4527

http://www.vrtx.com

November 5,   2012

Delivered via EDGAR

Securities and Exchange Commission
 Division of Corporation Finance

100 First Street, N.E.

Mail Stop 4720

Washington, DC 20549

Attn:

Jim B. Rosenberg, Senior Assistant Chief Accountant

Lisa Vanjoske, Assistant Chief Accountant

James Peklenk, Staff Accountant

Re:

Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31,   2011

Filed February 22, 2012

Form 10-Q for the Quarterly Period Ended   March 31, 2012

Filed May 10, 2012

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to a comment from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to Ian F. Smith dated October 19, 2012 (the “Comment Letter”) regarding the Company’s filings with the Commission referenced above.  The Comment Letter was issued in response to the Company’s letter to the Commission dated September 17, 2012. The comment from the Comment Letter is reproduced below together with the Company’s response to the comment.

Form 10-K for the Fiscal Year Ended December 31, 2011

Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Operating Costs and Expenses

Cost of product revenues, page 63

Comment 1

We do not believe that you have demonstrated that costs incurred for commercial sale or possible commercial sale of product by you or your collaborative partners and not for use in your clinical trials represent research and development expense.  In this regard, you have not demonstrated that these costs are excluded from those described in ASC 730-10-15-4.c nor have your demonstrated how these costs are identified with research and development activities described in ASC 730-10-25-2.  Please confirm to us

that, in future filings, you will reclassify these costs out of research and development expenses for each period presented and tell us the line item within your statements of operations in which you will classify these costs, or tell us why you believe no reclassification is necessary.

Response 1

The Company believes that no reclassification of its drug supply costs is necessary because its investment in drug supply was incurred “at risk” and had no alternative future use, and classification of these drug supply costs as research and development expenses is consistent with the classification of similar costs incurred by other companies in its industry.  Development of pharmaceutical products is extremely risky, and the Company could not be sure whether or not the Company and its collaborators would successfully complete the required clinical trials evaluating telaprevir, a hepatitis C virus (“HCV”) protease inhibitor for genotype 1 HCV infection, or if the trials were successfully completed, whether or not regulatory authorities would grant the approvals necessary to market telaprevir (branded as INCIVEK in the United States) in the relevant jurisdictions. The Company and its collaborators chose to make significant at-risk investments in INCIVEK, including building significant pre-launch inventories, in advance of completing the clinical trials and obtaining regulatory approval, to ensure that commercial inventory was available at the earliest possible date that telaprevir could be made available to patients, in part due to long lead times needed to manufacture INCIVEK and in part to have sufficient inventory to satisfy demand immediately upon approval, if granted.  The Company expected that initial demand for telaprevir would be significant because market research indicated that physicians were planning to treat a significant number patients with telaprevir if it received approval from the United States Food and Drug Administration.

In order to clearly identify these drug supply costs as significant at-risk investments, the Company separately disclosed them in its discussion of research and development expenses in Management’s Discussion and Analysis in each period presented, beginning in 2006.

Accordingly, the Company respectfully proposes to maintain its historical classification of these drug supply costs as research and development expenses in future filings.

The Company acknowledges that:

1)            the Company is responsible for the adequacy and accuracy of the disclosure in its filings;

2)                                     Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to its filings; and

3)                                     the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please contact Paul M. Silva, Senior Vice President and Corporate Controller, at 857-263-4171, or me at 617-961-0878 in the event that you have any questions or concerns with respect to this matter.  In the event that I am not available, please contact my colleague, Valerie L. Andrews, Vice President and General Counsel, at 617-341-6227.

2

Very   truly yours,

/s/   Kenneth L. Horton

Kenneth   L. Horton

Executive   Vice President and Chief Legal Officer

3

October 19 , 2012

Via E -mail
Ian F. Smith
Executive V ice President ,
And Chief Financial Officer
Vertex Pharmaceuticals I ncorporated
130 Waverly Street
Cambridge, Massachusetts 02139

Re: Vertex Pharmaceuticals Incorporated
Form 10-K for  the Fiscal Year Ended December 31 , 201 1
Filed February 22, 201 2
Form 10 -Q for the Quarterly Period Ended March 31, 2012
Filed May 10, 2012
File No. 000-19319

Dear Mr. Smith:

We have reviewed your September 17 , 2012 response to our August  20, 2012 letter and
have the following comment.

Please respond to this letter within 10 business days by prov iding the requested
information or by advising us when you will provide the requ ested response .  If you do not
believe the comment  applies to your facts and circumstances, please tell us why in your
response.   Please furnish us a letter on EDGAR under the form type label CORRESP that key s
your responses to our comment.

After reviewin g the information you provide in response to th is comment, we may have
additional comments.

Form 10 -K for the Fiscal Year Ended December 31, 2011
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Results Of O perations
Operating Costs and Expenses
Cost of product revenues, page 63

1. We do not believe that you have demonstrated that costs incurred for commercial sale or
possible commercial sale of product by you or your collaborative partners and not for use
in your clinical trials represent research and development expense.   In this regard, you
have not demonstrated that these costs are excluded from those described in ASC 730 -10-

5
Ian F. Smith
Executive Vice President ,
And Chief Financial Officer
Vertex Pharmaceuticals Incorporated
October 19 , 2012
Page 2

 15-4.c nor have you demonstrated how these costs are identified with research and
development activities described in ASC 730 -10-25-2.  Please confirm to us that , in
future filings,  you will reclassify these costs out of research and development expenses
for each period  presented and tell us the line item within your statements of operations in
which you will clas sify these costs,  or tell us why you believe no reclassification is
necessary.

Please contact James Peklenk, Staff Accountant, at (202) 551 -3661 or Lisa Vanjoske,
Assistant Chief Accountant, at (202) 551 -3614 , if you have any questions regarding the
comment s.  In this regard, do not hesitate to contact me at (202) 551 -3679.

Sincerely,

/s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief Accountant

CORRESP
1
filename1.htm

VERTEX   PHARMACEUTICALS INCORPORATED

130   WAVERLY STREET · CAMBRIDGE, MA 02139-4242

TEL. 617.444.6100 · FAX   617.444.7117

http://www.vrtx.com

September 17,   2012

Delivered via EDGAR

Securities and Exchange Commission
 Division of Corporation Finance

100 First Street, N.E.

Mail Stop 4720

Washington, DC 20549

Attn:

Jim B. Rosenberg, Senior Assistant Chief Accountant

Lisa Vanjoske, Assistant Chief Accountant

James Peklenk, Staff Accountant

Re:

Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31,   2011

Filed February 22, 2012

Form 10-Q for the Quarterly Period Ended   March 31, 2012

Filed May 10, 2012

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to the comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to Ian F. Smith dated August 20, 2012 (the “Comment Letter”) regarding the Company’s filings with the Commission referenced above.  The Comment Letter was issued in response to the Company’s letter to the Commission dated July 11, 2012 responding to the Staff’s original comment letter dated June 26, 2012. The comments from the Comment Letter are reproduced below together with the Company’s responses to those comments.

Comment 1

Refer to your response to our comments two and five.  Please tell us how you considered the guidance in ASC 730-10-15-4 a. through e. in determining that classifying the drug supply costs incurred prior to 2011 totaling $203.8 million as research and development expenses in your statements of operations complies with GAAP.

Response 1

The Company’s drug supply costs incurred prior to 2011 for telaprevir (an hepatitis C virus (“HCV”) protease inhibitor, which the Company markets under the brand name INCIVEK™ for the treatment of patients with genotype 1 HCV infection) are set forth below. These drug supply costs

consisted of (i) commercial drug supply costs including (a) raw materials and manufacturing costs, (b) costs incurred by the Company to establish the third-party infrastructure required to manufacture telaprevir and (c) costs of validating these third-party manufacturers’ systems, and (ii) costs for manufacturing services provided to the Company’s telaprevir research and development collaborators, Janssen Pharmaceutica, N.V. (“Janssen”) and Mitsubishi Tanabe Pharma Corporation (“Mitsubishi”).

2006- 2008

2009

2010

Total
   for period
   prior to
   2011

(in thousands)

INCIVEK (telaprevir) drug supply costs:

Commercial drug supply costs:

Raw materials and manufacturing costs

$

42,387

$

10,849

$

38,975

$

92,211

Third-party manufacturing infrastructure costs

18,374

1,503

772

20,649

Third-party validation expenses

31,061

1,872

592

33,525

Total commercial drug supply costs

91,822

14,224

40,339

146,385

Manufacturing services (collaborator supply)

28,350

6,170

22,922

57,442

Total INCIVEK drug supply costs

$

120,172

$

20,394

$

63,261

$

203,827

In determining to classify all of these drug supply costs as research and development expenses, the Company considered the guidance in ASC 730 “Research and Development,” including as described below the guidance in ASC 730-10-15-4 a. through e. (which requires that the costs of certain transactions and activities be excluded from research and development expenses).

Commercial Drug Supply Costs

(i)        The Company’s commercial drug supply costs include costs of purchasing raw materials; manufacturing costs incurred to convert these raw materials into active pharmaceutical ingredient (“API”) and finished goods; and costs incurred to establish the Company’s supply chain, which the Company was required to design, test and validate in order to obtain approval for INCIVEK (telaprevir) from the United States Food and Drug Administration (the “FDA”). These commercial drug supply costs did not include any costs of research and development activities conducted for others under contractual arrangements, which would be excluded from research and development expenses pursuant to ASC 730-10-15-4 a.

(ii)       ASC 730-10-15-4 b. does not apply to the Company’s commercial drug supply costs because this guidance applies solely to the costs of activities that are unique to companies in extractive industries.

(iii)      The Company’s commercial drug supply costs did not include any costs related to the acquisition, development or improvement by the Company of processes for use in selling activities or administrative activities that would be excluded from research and development expenses pursuant to ASC 730-10-15-4 c.

(iv)      ASC 730-10-15-4 d. excludes from research and development expenses costs of routine or periodic alterations to existing products, production lines and manufacturing processes.  The Company evaluated the activities related to its commercial drug supply costs incurred prior to 2011, including activities related to the design, testing and validation of the INCIVEK production lines and manufacturing processes, and determined that none of the costs related to

2

these activities should be excluded from research and development expenses pursuant to ASC 730-10-15-4 d. because (a) INCIVEK was not yet a marketed product (as it was not approved by the FDA until May 23, 2011) and (b) none of the activities related to the manufacturing processes were routine or periodic alterations, because they remained subject to FDA review and approval until May 23, 2011.

(v)       The Company’s commercial drug supply costs did not include any costs for market research or market testing activities that would be excluded from research and development expenses pursuant to ASC 730-10-15-4 e.

Manufacturing Services (Collaborator Supply)

(i)        The Company applied ASC 808-10-15 to its research and development arrangements with Janssen and Mitsubishi and determined that they are properly classified as collaborative arrangements.  The Company conducted research and development activities related to the development of telaprevir, including the evaluation of telaprevir in multiple clinical trials and the development of the commercial manufacturing process and supply chain for telaprevir, pursuant to contracts providing for the Company’s collaborations with Janssen and Mitsubishi. Under the Company’s collaborative telaprevir arrangements, (1) the Company led the clinical development program for telaprevir, (2) the parties shared responsibility and costs for conducting research and development activities, (3) the Company licensed to its collaborators the rights to manufacture and commercialize telaprevir in their territories in return for royalties and/or milestone payments and (4) the Company retained the exclusive right to manufacture and commercialize telaprevir in North America.  These activities included (a) the design and validation of the Company’s third-party manufacturing network and (b) arranging for the Company’s third-party contract manufacturers to supply Janssen with raw materials and Mitsubishi with work-in-process.  These raw materials and work-in-process were necessary to support the clinical trials of telaprevir conducted by Janssen and Mitsubishi and the initial commercial launch of telaprevir by Janssen and Mitsubishi during the period in which they were each establishing their independent manufacturing supply chain for telaprevir in their respective territories.  The expenses related to supplying the Company’s collaborators are reflected in the above table under the caption “Manufacturing services (collaborator supply).”

In applying the guidance in ASC 808-10-15, the Company concluded that its arrangements with Janssen and Mitsubishi were collaborative arrangements because (A) each of the parties was actively participating in the collaboration and (B) the parties shared in significant risks and rewards that were dependent on the successful development of telaprevir.  Accordingly, the Company determined that its telaprevir research and development expenses were costs incurred in connection with collaborative arrangements in which the Company retained significant potential benefits and that, conversely, ASC 730-10-15-4 a., which applies to costs of research and development activities conducted for others under a contractual arrangement, did not apply.

(ii)       ASC 730-10-15-4 b. did not apply to the Company’s manufacturing services (collaborator supply) costs because this guidance applies solely to the costs of activities that are unique to companies in extractive industries.

3

(iii)      The Company’s manufacturing services (collaborator supply) costs did not include any costs related to the acquisition, development or improvement by the Company of processes for use in selling activities or administrative activities that would be excluded from research and development expenses pursuant to ASC 730-10-15-4 c.

(iv)      The Company’s manufacturing services (collaborator supply) costs did not include any costs related to routine or periodic alterations to existing products, production lines or manufacturing processes that would be excluded from research and development expenses pursuant to ASC 730-10-15-4 d.

(v)       The Company’s manufacturing services (collaborator supply) costs did not include any costs for market research or market testing activities that would be excluded from research and development expenses pursuant to ASC 730-10-15-4 e.

Accordingly, the Company reflected all of the INCIVEK drug supply costs incurred prior to 2011 as research and development expenses.

Comment 2

Refer to your response to our comment three.  In your response you state that, as of January 1, 2011, you had expensed, in periods prior to 2011, $84 million in INCIVEK inventory which you refer to as “Zero Cost Inventory”.  You state that these Inventory costs were charged to R&D expense in your Statements of Operations for periods prior to 2011 because you had not received FDA approval to commercialize INCIVEK until May 2011.  Further you state that this inventory is to be sold to your customers when they reach the finished goods stage and that the future Revenue from Product Sales of this $84 million in “Zero Cost Inventory” approximates $1.8 billion.  Finally you stated that this inventory should be sold by the end of 2013 although your table on page 6 indicates that there would still be $10 million in inventory at December 31, 2013.  We have the following additional comments:

·      To the extent that costs included in the $84 million are not part of the drug supply costs referred to in comment one above, tell us how you considered the guidance in ASC 730-10-15-4 a. through e. in determining that classifying these costs incurred prior to 2011 as research and development expenses in your statements of operations complies with GAAP.

·      Tell us why a material portion of the $112.4 million and $126.9 million Inventory at December 31, 2011 and March 31, 2012 should not be classified as “non-current” assets since your accounting is on a FIFO basis and you estimate that you will still have over $10 million of “Zero Cost Inventory” unsold at December 31, 2013.

·      Tell us what the shelf life is for INCIVEK and why you believe you will be able to realize inventory held at December 31, 2011, March 31, 2012 and June 30, 2012.

Response 2

·      The entire $84 million in Zero Cost Inventory is included in the commercial drug supply costs referred to in comment one above.

·      The $10 million in Zero Cost Inventory that the Company estimated would remain unsold at December 31, 2013 represented the costs of the final raw materials that the Company purchased

4

prior to 2011, which it expected would be converted into finished goods and sold after December 31, 2013. Even though the Company uses FIFO, the Company expected that a significant portion of the inventories reflected on the Company’s balance sheets as of December 31, 2011 and March 31, 2012 would be realized prior to the date that the Company realized the final portion of the Zero Cost Inventory. This is due to the costs incurred after January 1, 2011 (to advance raw materials and work-in-process that were previously expensed through the supply chain and to convert them into finished goods) that are capitalized as part of inventories and then expensed as cost of product revenues when the finished goods are sold.

The INCIVEK manufacturing process requires a minimum period of 18 months from the placement of orders for raw materials until the production of finished goods, which is similar to the lead times required to manufacture other pharmaceutical products. The Company manages its inventories in order to mitigate the risk of potential product shortages that could result from increases in demand, risks of disruptions at manufacturing facilities and the potential for product quality issues.  During the quarters ended December 31, 2011 and March 31, 2012, the Company continued to build additional INCIVEK inventories due to the higher than expected demand for INCIVEK in the initial launch period and the forecasted demand for INCIVEK (the Company would later reduce its expectations regarding future INCIVEK demand based on the factors discussed in detail below in response to comment three).  Applying the guidance in ASC 210-10-20 and ASC 210-10-45-1 and consistent with the classification of inventories by other companies in the pharmaceutical industry, the Company classified its inventories as current assets because it expected these inventories to be consumed through commercial sale and none of these inventories were subject to any contractual or labeling restrictions.

·      INCIVEK tablets (which correspond to the Company’s finished goods inventories) have a shelf life of two years. The API in INCIVEK has a shelf life of approximately six years (including initial conversion into an intermediate form, which must be done within four years, and the conversion of the intermediate form into INCIVEK tablets, which must be done within two years).  Raw materials do not have a specified shelf-life, but the Company has stability data indicating that they can be stored for several years prior to conversion into API.

In order to estimate whether it will be able to realize its inventories, the Company evaluates inventories at each stage of the supply chain, taking into account the conversion process and timing as well as the shelf life of the inventories at each stage in the process, and comparing the available inventories with the Company’s expectations regarding future demand for INCIVEK.  This analysis requires the Company to make significant estimates and judgments.  As of December 31, 2011 and March 31, 2012, the Company estimated that all of its inventories would be realizable.

As described in greater detail in response to comment three below, in the second quarter of 2012, the Company recorded a lower of cost or market charge relating to excess and obsolete inventories following an adverse change in the Company’s commercial outlook for INCIVEK and expectations of decreased demand.  At June 30, 2012, based on the Company’s analysis of inventories at each stage in the Company’s supply chain and its revised commercial outlook for INCIVEK, the Company (a) impaired a significant portion of raw materials and work-in-process inventories that the Company no longer estimated would be realized, but (b) did not impair any finished goods because it continued to expect to sell all of the INCIVEK finished goods prior to

5

the expiration of the two-year shelf life for these tablets. The raw materials and work-in-process that were impaired as of June 30, 2012 included raw materials and work-in-process that the Company had estimated as of December 31, 2011 and March 31, 2012 would be realizable, bas

CORRESP
1
filename1.htm

VERTEX   PHARMACEUTICALS INCORPORATED
   130 WAVERLY STREET · CAMBRIDGE, MA 02139-4242
   TEL. 617.444.6100 · FAX   617.444.7117
   http://www.vrtx.com

August 28,   2012

Delivered via EDGAR

Securities   and Exchange Commission

Division of Corporation Finance

100   First Street, N.E.

Mail   Stop 4720

Washington,   DC 20549

Attn:

Jim B. Rosenberg, Senior Assistant Chief Accountant

Lisa Vanjoske, Assistant Chief Accountant

James Peklenk, Staff Accountant

Re:

Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31,   2011

Filed February 22, 2012

Form 10-Q for the Quarterly Period Ended   March 31, 2012

Filed May 10, 2012

File No. 000-19319

Ladies and Gentlemen:

This letter relates to comments from the staff (the “Staff”) of the Securities and Exchange Commission to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to the Company, dated August 20, 2012 (the “Comment Letter”), regarding the above referenced Company filings.  As discussed with a representative of the Staff on August 23, 2012, the Company hereby confirms that the Company (i) has received the Comment Letter and (ii) will file its response to the Comment Letter on or before September 17, 2012.

Please contact me at 617-444-6227 in the event that you have any questions or concerns with respect to this matter.

Very   truly yours,

/s/   Valerie L. Andrews

Valerie   L. Andrews

Vice   President and General Counsel

August 20, 2012

Via E -mail
Ian F. Smith
Executive V ice President ,
And Chief Financial Officer
Vertex Pharmaceuticals I ncorporated
130 Waverly Street
Cambridge, Massachusetts 02139

Re: Vertex Pharmaceuticals Incorporated
Form 10-K for  the Fiscal Year Ended December 31 , 201 1
Filed February 22, 201 2
Form 10 -Q for the Quarterly Period Ended March 31, 2012
Filed May 10, 2012
File No. 000-19319

Dear Mr. Smith:

We have reviewed your July 11, 2012 response to our June 26, 2012 letter and have the
following comments.

Please respond to this letter within 10 business days by providing the requested
information, or  by advising us when you will provide the requested response .  If you do not
believe a comment  applies to your facts and circumstances, please tell us why in your response.
Please furnish us a letter on EDGAR under the form type label CORRESP that key s your
responses to our comments.

After reviewing the information you provide in response to th ese comment s, we may
have additional comments.

Form 10 -K for the Fiscal Year Ended December 31, 2011
Item 7.   Management’s Discussion and Analysis of Financial Co ndition and Results of
Operations

Results Of Operations
Operating Costs and Expenses
Cost of product revenues, page 63

1. Refer to your response to our comment s two and five .  Please t ell us how you considered
the guidance in ASC 730 -10-15-4 a. through e. in determining that classifying the  drug
supply  costs incurred prior to 2011totaling $203.8 million as research and development
expenses  in your statements of operations  complies with GAAP.

5
Ian F. Smith
Vertex Pharmaceuticals Incorporated
August 20, 2012
Page 2

2. Refer to your response to our comment three.  In your response you state that, as of
January 1, 2011, you had expensed , in periods prior to 2011,  $84 million in INCIVEK
inventory which you refer to as “Zero Cost Inventory” .  You state that these Inventory
costs were charged to R&D expense in your Statements o f Operations for periods prior to
2011 because you had not received FDA approval to commercialize INCIVEK  until May
2011.   Further you state that this inventory is to be sold to your customers when they
reach the finished goods stage and that the future Re venue from Product Sales of this $84
million in “Zero Cost Inventory” approximates $1.8 billion.   Finally you stated that this
inventory should be sold by the end of 2013  although your table on page 6 indicates that
there would still be $10 million in inve ntory at December 31, 2013 . We have the
following additional comments:
 To the extent that costs included in the $84 million are not part of the drug supply
costs referred to in comment one above, t ell us how you considered  the guidance
in ASC 730 -10-15-4 a. through e. in determining that classifying the se costs
incurred prior to 2011 as research and development expenses in your statements
of operations complies with GAAP.
 Tell us why a material portion of the $112.4 million and $126.9 million Inventor y
at December 31, 2011 and March 31, 2012 should not be classified as “non -
current” assets since your accounting is on a FIFO basis and you estimate that you
will still have over $10 million of “Zero Cost Inventory” unsold at December 31,
2013.
 Tell us wha t the shelf life is for INCIVEK  and why you believe you will be able
to realize inventory  held at December 31, 2011, March 31, 2012 and June 30,
2012.

3. We have the following comments regarding the $78 million reserve  you recorded for the
quarterly period e nded June 30, 2012   “to reserve against the potential for excess
INCIVEK inventory ”:
 Tell us how you considered the guidance in ASC 330 -10-50-2 which  indicate s
that it would be desirable to  separately identi fy the $78 million charge  in your
statement of operations .
 Please clarify what is meant by “ reserve against the potential for excess INCIVEK
inventory ”  to indicate whether and, if so, to what extent  it refer s to the carrying
value of inventory  or to expected future sales returns under your policy of
allowing products to be returned up to twelve months after the labeled expiration
date.
 Tell us if you believe there is excess inventory in your distribution channel and
whether you expect to incur a material increase in INCIVEK product returns.
 Describe th e events and timeline leading to your decision  to record  the $78
million reserve  in the quarter ended June 30, 2012 .
 Provide us analyses demonstrating why a similar charge was not necessary at
either December 31, 2011 and/or  at March 31, 2012 .  In your r esponse, tell us the
facts and circumstances that existed before issuing the financial statements for

5
Ian F. Smith
Vertex Pharmaceuticals Incorporated
August 20, 2012
Page 3

 those dates that supported your assertion that inventory amounts reflected on the
December 31, 2011 and March 31, 2012 balance sheets w ere stated at lower  of
cost or market.   In doing so, please address your statement in the April 26, 2012
“Earnings Call” that INCIVEK Revenues of $357 million, down from $456.8
million in the 4th Quarter of 2011, were “affected by a reduction of approximately
$22 million in  inventory levels by wholesalers between December 31, 2011, and
March 31, 2012.”

4. On page 41 of your Form 10 -Q for the period ended June 30, 2012, you state “we
recorded within cost of product revenues a $78.0  million charge for excess and obsolete
INCIVE K inventories, which included an accrual for estimated expenses related to our
non-cancelable purchase commitments. ”  We have the following comments:
 Please name these “non -cancelable” purchase commitments and provide us a
description of the key terms and commitments included therein.
 Clarify if they contain mandatory minimum periodic purchases of product and, if
so, summarize those commitments and explain why they were not included in
your Form 10 -K disclosure and Contractual Obligations table.
 Describe th e source, nature and amount of the “accrual for estimated expenses”
referred to above.

Please contact James Peklenk, Staff Accountant, at (202) 551 -3661 or Lisa Vanjoske,
Assistant Chief Accountant, at (202) 551 -3614 , if you have any questions regarding the
comment s.  In this regard, do not hesitate to contact me at (202) 551 -3679.

Sincerely,

/s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief Accountant

CORRESP
1
filename1.htm

VERTEX   PHARMACEUTICALS INCORPORATED

130   WAVERLY STREET ·   CAMBRIDGE, MA 02139-4242

TEL. 617.444.6100 · FAX 617.444.7117

http://www.vrtx.com

July 11,   2012

Delivered via EDGAR

Securities and Exchange Commission
 Division of Corporation Finance

100 First Street, N.E.

Mail Stop 4720

Washington, DC 20549

Attn:

Jim B. Rosenberg, Senior Assistant Chief Accountant

Lisa Vanjoske, Assistant Chief Accountant

James Peklenk, Staff Accountant

Re:

Vertex Pharmaceuticals Incorporated

Form 10-K for the Fiscal Year Ended December 31,   2011

Filed February 22, 2012

Form 10-Q for the Quarterly Period Ended   March 31, 2012

Filed May 10, 2012

Form 8-K dated April 26, 2012

Filed April 26, 2012

Form 8-K dated February 2, 2012

Filed February 2, 2012

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to the comments from the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter to Ian F. Smith dated June 26, 2012 (the “Comment Letter”) regarding the Company’s filings with the Commission referenced above. The comments from the Comment Letter are reproduced below together with the Company’s responses to those comments.

Form 8-K filed February 2, 2012 and Form 8-K filed April 26, 2012

Exhibit 99.1

Comment 1

In these exhibits you present entire statements of operations to reconcile your GAAP earnings to non-GAAP earnings.  Please represent to us that you will no longer present these tables in future Item 2.02 Forms 8-K or elsewhere.  Please see Question 102.10 of our Compliance & Disclosure Interpretations for Non-GAAP Financial Measures (http://www.sec.gov/divisions/corpfin/guidance/-

nongaapinterp.htm).   Please also see Instruction 2 to Item 2.02 of Form 8-K which indicates that the provisions of Item 10(e)(1)(i) apply to these public disclosures.

Response 1

The Company confirms that in future earnings releases, Item 2.02 Forms 8-K and elsewhere, it will no longer present its GAAP/non-GAAP reconciliation in tables in the form that was included in its earnings releases for the three months and year ended December 31, 2011 and the three months ended March 31, 2012.

In preparing the Company’s earnings releases and related tables and its Forms 8-K, the Company considered the importance of providing information to investors as clearly as possible, the relative prominence of the GAAP and non-GAAP financial measures included in its earnings releases, and the Staff’s interpretive guidance in Question 102.10 of its Compliance & Disclosure Interpretations and related regulations.  The Company provides non-GAAP net income (loss) excluding certain items, as a complement to results provided in accordance with GAAP, in order to help indicate underlying trends in the Company’s business and to allow meaningful comparisons of current results with prior period results. The Company also uses non-GAAP financial measures to establish budgets and operational goals that are communicated internally and externally, and to manage the Company’s business and to evaluate its performance.  In particular, the Company believes that providing information regarding the Company’s collaboration with Alios BioPharma, Inc., which is accounted for as a variable interest entity, in a line-item format enhances clarity and helps investors better understand how the Company accounts for this variable interest entity and how that accounting affects both the Company’s GAAP income (loss) and non-GAAP income (loss).  The Company has taken steps to avoid giving undue prominence to the non-GAAP financial measures by (1) having the table showing the GAAP statements of operations precede the tables showing the reconciliation of GAAP to non-GAAP financial information and (2) providing less detailed information on a line-item basis in the GAAP/non-GAAP reconciliation than the information provided in the GAAP statements of operations.

The Company proposes to modify its approach in future earnings releases by including tables in substantially the form included as Exhibit A to this letter presenting data for the three months ended March 31, 2012 and 2011.  These tables reformat the tables to provide the non-GAAP information in a manner distinct from the format of Company’s full statement of operations, and provide fewer line items than in the original earnings releases at issue.  In this manner, the Company proposes to address the Staff’s concern, expressed in Question 102.10 of its Compliance & Disclosure Interpretations, that the presentation of the non-GAAP reconciliation not attach undue prominence to the non-GAAP information, while preserving the benefit to investors of the insight provided by the non-GAAP information.

2

Form 10-K for the Fiscal Year Ended December 31, 2011

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results Of Operations

Operating Costs and Expenses

Cost of product revenues, page 63

Comment 2

You state herein that you expensed most of the manufacturing costs of INCIVEK sold in 2011 as research and development expenses in periods prior to January 1, 2011 and expect your cost of INCIVEK to increase as a percentage of net sales in future periods.  In your Form 10-Q for the quarterly period ended March 31, 2012, you indicate that you expensed most of the manufacturing costs of INCIVEK and KALYDECO sold in the first quarter as research and development expenses in prior periods and expect your cost of revenues to increase as a percentage of net sales in future periods.  Please tell us the nature and amount of the manufacturing costs that you expensed as research and development expenses for each of the following periods:

·                  prior to January 1, 2011;

·                  the year ended December 31, 2011; and

·                  the quarter ended March 31, 2012.

Reconcile these amounts to the “drug supply cost” in comment 4 below and for any differences, provide us your analysis supporting classification as research and development expense.  Also, for the year ended December 31, 2011 and the quarter ended March 31, 2012, tell us the amount of third-party royalties included in cost of product revenues for each period.

Response 2 (this response includes the Company’s response to Comment 5 of the Comment Letter)

Drug supply costs

The “drug supply costs” in the Company’s detailed table for its development expenses included as part of its discussion of “Results of Operations” included all external manufacturing costs expensed as research and development expenses during the periods.  These drug supply costs consisted of:

(i)                                     Commercial drug supply costs incurred in connection with manufacturing telaprevir (which the Company markets under the brand name INCIVEK) and ivacaftor (which it markets under the brand name KALYDECO) prior to the dates that the Company began capitalizing manufacturing costs for these drug candidates. The costs incurred in connection with manufacture of drug candidates consisted of (a) raw material and manufacturing costs, (b) costs incurred for the Company’s third-party manufacturers to establish their infrastructure required to manufacture commercial supplies of the Company’s products and (c) costs of validating these third-party manufacturers’ systems, machinery and processes. The Company began capitalizing manufacturing costs for its first product, telaprevir (INCIVEK), on January 1, 2011 and for its second product, ivacaftor (KALYDECO), on January 1, 2012.  After the Company began capitalizing manufacturing costs for each product, the Company continued to establish second sources of supply for the products and incurred costs for infrastructure and validation at third-party

3

manufacturers that did not meet the criteria for capitalization.  These costs were expensed as research and development expenses.

(ii)                                  Costs for manufacturing services the Company provided to its telaprevir research and development collaborators (both Mitsubishi Tanabe Pharma Corporation and Janssen Pharmaceutica, N.V. — see discussion below) through the Company’s third-party manufacturing network in connection with the research and development collaborations.

The following table sets forth the Company’s drug supply costs for the period from 2006 (when the Company began separately tracking drug supply costs) through the first quarter of 2012:

2006-2008

2009

2010

Total
   for period
   prior to
   January 1,
   2011

2011

Q1
   2012

(in thousands)

Telaprevir   (INCIVEK):

Commercial   drug supplies:

Raw   materials and manufacturing costs

$

42,387

$

10,849

$

38,975

$

92,211

$

—

$

—

Third-party   manufacturing infrastructure costs

18,374

1,503

772

20,649

—

—

Third-party   validation expenses

31,061

1,872

592

33,525

—

—

Costs   for establishing second source of supply

—

—

—

—

3,762

1,070

Manufacturing   services (collaborator supply)

28,350

6,170

22,922

57,442

28,258

6,376

Total   INCIVEK costs

$

120,172

$

20,394

$

63,261

$

203,827

$

32,020

$

7,446

Ivacaftor   (KALYDECO):

Commercial   drug supplies:

Raw   materials and manufacturing costs

$

—

$

—

$

—

$

—

$

383

$

—

Third-party   manufacturing infrastructure costs

182

81

27

290

401

—

Third-party   validation expenses

—

1,116

2,614

3,730

1,329

—

Costs   for establishing second source of supply

—

—

—

—

—

576

Total   KALYDECO costs

$

182

$

1,197

$

2,641

$

4,020

$

2,113

$

576

Total   drug supply costs

$

120,354

$

21,591

$

65,902

$

207,847

$

34,133

$

8,022

Basis for classification

Commercial Drug Supplies — telaprevir and ivacaftor

The Company applied guidance in ASC 330-10 and Statement of Financial Accounting Concepts No. 6, paragraph 25, in each period, to determine whether or not to capitalize the manufacturing costs related to its commercial supplies of telaprevir and ivacaftor (including raw materials and manufacturing costs).  Due to the stage of development of its drug candidates and the uncertainty of realizing future economic benefit, and consistent with established industry practices, the Company expensed INCIVEK manufacturing costs as research and development expenses until January 1, 2011, and expensed KALYDECO manufacturing costs as research and development expenses until January 1, 2012.  The Company determined that there was a high likelihood of marketing approval for INCIVEK effective on January 1, 2011 and for KALYDECO effective on January 1, 2012, and therefore began capitalizing the manufacturing costs related to the respective drug candidates as of such dates. Once the Company determined it was appropriate to begin capitalizing inventories for the applicable drug candidate, no drug supply costs related to the manufacture of the Company’s commercial quantities of the applicable drug candidate were expensed as research and development expenses.

4

Manufacturing Services — telaprevir

The Company began clinical development of telaprevir in 2004.  The Company considered the guidance in ASC 730-10 and determined that all amounts incurred in connection with the research and development of telaprevir should be expensed as incurred and should be classified as research and development expenses.

Subsequently, the Company entered into agreements to collaborate on the research and development of telaprevir with (i) Mitsubishi Tanabe Pharma Corporation (“Mitsubishi Tanabe”), a Japanese pharmaceutical company, in 2004, for certain countries in Asia and (ii) Janssen Pharmaceutica, N.V. (“Janssen”), a Johnson & Johnson company, in 2006, worldwide except for North America and Mitsubishi Tanabe’s territories.  The Company led the clinical development program for telaprevir, with Mitsubishi Tanabe and Janssen providing financial and other support pursuant to these collaboration arrangements.

In accordance with ASC 605-45 and ASC 730-10, the Company considered the nature and contractual terms of its arrangement with each collaborator and the nature of the Company’s business operations to determine the classification of all costs, including manufacturing services provided by the Company, under these collaborations.  The Company determined that because (i) the manufacturing services were performed in connection with the research and development collaboration arrangements pursuant to which the Company was sharing, among other things, the risks associated with developing telaprevir, and (ii) the Company is not otherwise engaged in the business of providing manufacturing services, the costs for manufacturing services should be reflected as research and development expenses (and included in drug supply costs) and corresponding revenues should be reflected as collaborative revenues.  This accounting treatment for manufacturing services pursuant to the Company’s collaboration agreements is consistent with the manner in which the Company accounts for all other costs associated with these collaborations.

Third-party royalties

The requested information regarding third-party royalties included in the cost of product revenues is set forth in the Company’s response to Comment 3.

Comment 3

It appears your cost of product revenues (including third party royalty expense on net sales) was only 6.7% of net product revenues for year 2011 and 6.9% for the quarter ended March 31, 2012.  Please tell us, by product (i.e. INCIVEK, KALYDECO) the amount of estimated revenues represented by inventory on hand at December 31, 2011 and March 31, 2012 for which manufacturing costs were expensed in prior periods as research and development expenses.  Tell us when you expect to finish selling these inventories.

Response 3

The following table sets forth the Company’s total cost of product revenues, broken out by cost of inventories and third-party royalties, as a percentage of total net product revenues for the year ended December 31, 2011 and the three months ended March 31, 2012:

5

2011

Q1 2012

(in thousands, except percentages)

Cost of inventories

$

6,489

0.7

%

$

3,470

0.9

%

Third-party royalties

57,136

6.0

%

22,448

6.0

%

Total

$

63,625

6.7

%

$

25,918

6.9

%

On January 1, 2011, when the Company began capitalizing its manufacturing costs for supply of telaprevir, its supply chain for telaprevir included previously expensed raw materials, work-in-process and finished goods, and on January 1, 2012, when the Company began capitalizing its manufacturing costs for supply of ivacaftor, its supply chain for ivacaftor included previously expensed raw materials and work-in-process (collectively, “Zero Cost Inventories”). The following table sets forth (i) the “inventory” value of these Zero Cost Inventories for each of INCIVEK and KALYDECO as of January 1, 2011, December 31, 2011 and March 31, 2012 and (ii) the projected estimated “inventory” value of Zero Cost Inventories of each of INCIVEK and KALYDECO as of December 31, 2012 and December 31, 2013:

As of January
   1, 2011

As of December
   31, 2011

As of March 31,
   2012

Estimated as
   of December
   31, 2012

Estimated as
   of December
   31, 2013

(in thousands)

Value of Zero Cost Inventory:

INCIVEK

$

84,000

$

52,000

$

39,000

$

26,000

$

10,000

KALYDECO

—

3,800

3,600

2,500

850

The Company valued the Zero Cost Inventories based on the manufacturing costs of each of the raw materials, work-in-process and finished goods.

The following table sets forth the estimated value of net product revenues represented by Zero Cost Inventories on hand at December 31, 2011 and March 31, 2012:

December 31, 2011

March 31, 2012

(in thousands)

INCIVEK

$

1,800,000

$

1,400,000

KALYDECO

315,000

305,000

The estimate of net product revenues represented by Zero Cost Inventories on h

June 26, 2012

Via E -mail
Ian F. Smith
Executive V ice President ,
And Chief Financial Officer
Vertex Pharmaceuticals I ncorporated
130 Waverly Street
Cambridge, Massachusetts 02139

Re: Vertex Pharmaceuticals Incorporated
Form 10-K for  the Fiscal Year Ended December 31 , 201 1
Filed February 22, 201 2
Form 10 -Q for the Quarterly Period Ended March 31, 2012
Filed May 10, 2012
Form 8 -K dated April 26, 2012
Filed April 26, 2012
Form 8 -K dated February 2, 2012
Filed February 2, 2012
File No. 000-19319

Dear Mr. Smith:

We have limited our review  to only your financial statements and related disclosures and
do not intend to expand our review to other portions of your document .  In our  comment s, we ask
you to provide us with information so we may better understand your disclosure.

Please respond to this letter within 10 business days by providing the requested
information or by advising us when you will provide the requested response.   If you do not
believe  a comment appl ies to your facts and circumstances, please tell us why in your response.
Please furnish us a letter on EDGAR under the form type label CORRESP that keys your
response s to our comment s.

After reviewing the informati on provided, we may have additional comments and/or
request that you amend your filing s.

Form 8 -K filed February 2, 2012 and Form 8 -K filed April 26, 2012
Exhibit 99.1

1. In these exhibits you present entire statements of operations to reconcile your GAAP
earnings to non -GAAP earnings.   Please represent to us that you will no longer present
these tables in future Item 2.02 Form s 8-K or elsewhere.   Please see Question 102.10 of
our Compliance & Disclosure Interpretations for Non -GAAP Financial Measures

5
Ian F. Smith
Executive Vice President ,
And Chief Financial Officer
Vertex Pharmaceuticals Incorporated
June 26, 2012
Page 2

 (http://www.sec.gov/divisions/corpfin/guidance/nongaapinterp.htm  ).  Please also see
Instruction 2 to Item 2.02 of Form 8 -K which indicates that the provisions of Item
10(e)(1)(i) app ly to these public disclosures.

Form 10 -K for the Fiscal Year Ended December 31, 201 1
Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Results Of Operations
Operating Costs and Expenses
Cost of product revenues, page 63

2. You state  herein t hat you expensed most of the manufacturing costs of INCIVEK sold in
2011 as research and development expenses in periods  prior to January 1, 2011 and
expect your cost of INCIVEK to increase as a percentage of net sales in future periods.
In your Form 10 -Q for the quarterly period ended March 31, 2012, you indicate that you
expensed most of the manufacturing costs of INCIVEK and KALYDECO sold in the first
quarter as research and development expenses in prior periods and expect your cost of
revenues to increase as a percentage of net sales in future periods.  Please tell us the
nature and amount of the manufacturing costs that you expensed as research and
development expenses for each of the following periods:
 prior to Jan uary 1, 2011 ;
 the year ended December 31, 2011; and
 the quarter ended March 31, 2012.

Reconcile these amounts to the “drug supply cost” in comment 4 below  and for any
differences, provide us your analysis supporting classification as research and
develop ment expense .  Also , for the year ended December 31, 2011 and the quarter
ended March 31, 2012, tell us the amount of third -party royalties included in cost of
product revenues  for each period .

3. It appears your cost of product revenues (including third party royalty expense on net
sales) was only 6.7% of net product revenues for year 2011 and 6.9% for the quarter
ended  March 31, 2012 .  Please tell us, by product (i.e. INCIVEK, KALYDECO) the
amount of estimated revenues represented by inventory on hand at  December 31, 2011
and March 31, 2012 for which manufacturing  costs were expensed in prior periods as
research and development expenses.  Tell us when you expect to finish selling these
inventories.

5
Ian F. Smith
Executive Vice President ,
And Chief Financial Officer
Vertex Pharmaceuticals Incorporated
June 26, 2012
Page 3

 Critical Accounting Policies And Estimates

Revenue  Recognition
Product Revenues, Net , page 71

4. Although you discuss certain the aspects of health care reform legislation that affect the
company (page 23), you do not quantify its historical impact on your financial statements
for year 2011, particularly as  to “rebates” expensed, nor do you disclose an estimate or
range of estimates for the impact for year 2012.   In this regard, please provide us
proposed revised disclosure for year 2011 and for the quarterly period ended March 31,
2012 to be included in fu ture periodic reports, indicating the amount of the reduction to
revenues for the increased Medicaid rebate and for additional rebates associated with the
Medicare Part D “donut hole”.   Also, include in your proposed revised disclosure the
amount of the b randed prescription drug fee, if any, you recorded in your statement of
earnings in 2011, in which line item it is classified therein and highlight that this fee is
not tax deductible.  Finally, if you believe that the expected effects of health care refor m
legislation in 2012 and beyond will be materially different than the 2011 trends, include
the expected effects in the proposed revised disclosure.

Research and Development Expenses, page 76

5. It appears from the Table (page 65) that you expensed, as R&D  Expenses, “ drug supply
costs” of $8.0 million, $34.1million, $65.9 million and $21. 6 million in the quarter ended
March 31, 2012 and the years 2011, 2010 and 2009 respectively. You further state that
“Our total development expenses have been affected by t he variable level of drug supply
costs, which include costs of raw materials and work in process that are incurred before
we begin capitalizing inventories for a drug candidate and costs of manufacturing
services that we provided our collaborators through our third -party manufacturing
network.”  Please tell us, citing specific authoritative literature, the basis for classifying
“drug supply costs”  as R&D expenses .  Quantify and address in your analysis each type
or category of cost.

We urge all persons wh o are responsible for the accuracy and adequacy of the disclosure
in the filing s to be certain that the filing s include the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management  are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comment s, please provide a written statement from the company
acknowledging t hat:
 the company is responsible for the adequacy and accuracy of the disclosure in the filing s;

5
Ian F. Smith
Executive Vice President ,
And Chief Financial Officer
Vertex Pharmaceuticals Incorporated
June 26, 2012
Page 4

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing s; and
 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federal securities laws of the United States.

Please contact James Peklenk, Staff Accountant, at (202) 551 -3661 or Lisa Vanjoske,
Assistant Chief Accountant, at (202) 551 -3614  if you have any questions regarding the
comment s.  In this regard, do not hesitate to contact me at (202) 551 -3679.

Sincerely,

/s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief Accountant

June 1, 2011

Matthew W. Emmens Chief Executive Officer Vertex Pharmaceuticals Incorporated 130 Waverly Street Cambridge, Massachusetts 02139-4242
Re: Vertex Pharmaceuticals Incorporated  Form 10-K
Filed February 17, 2010 File No. 000-19319
 Dear Mr. Emmens:
We have completed our review of your f iling.  We remind you that our comments or
changes to disclosure in res ponse to our comments do not for eclose the Commission from taking
any action with respect to the company or th e filing and the company may not assert staff
comments as a defense in any proceeding ini tiated by the Commission or any person under the
federal securities laws of the United States.  We urge all pers ons who are responsible for the
accuracy and adequacy of the disclosure in the fi ling to be certain that the filing includes the
information the Securities Exchange Act of 1934 and all applicable rules require.
 Sincerely,

 Jeffrey Riedler
Assistant Director

CORRESP
1
filename1.htm

VERTEX PHARMACEUTICALS INCORPORATED

130   WAVERLY STREET · CAMBRIDGE, MA 02139-4242

TEL. 617.444.6100 · FAX   617.444.7117

http://www.vrtx.com

May 20, 2011

Delivered via EDGAR

Securities and Exchange Commission

Division of Corporation Finance

Washington, DC  20549

Attn:       Jeffrey Riedler

Johnny Gharib

Re:          Vertex Pharmaceuticals Incorporated

Form 10-K

Filed February 17, 2011

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to the comments provided by the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”) to Vertex Pharmaceuticals Incorporated (the “Company”) in a letter dated May 11, 2011.  The comments are reproduced below together with the Company’s responses to those comments.

Form 10-K, filed February 17, 2011

Corporate Collaborations, page 13

Comment 1:

1.     We note your response to prior comment 1 regarding your collaboration agreement with CFFT.  We also note that in your disclosure in your 8-K (filed April 7, 2011) as provided in Exhibit A of your response letter, you state, “CFFT may terminate its funding obligations under the April 2011 Amendment in certain circumstances, in which case there will be a proportional adjustment to the royalty rates and commercial milestones for certain corrector compounds.”  Section 4.4 of the original agreement also states that CFFT will be obligated to pay Vertex “clinical trial commencement milestones.”  We note that VX-770 and VX-809 have already commenced clinical trials, and that VX-661 may potentially commence clinical trials in the future.  Please provide proposed disclosure to be included in future filings regarding aggregate milestone payments you have received to date and future aggregate milestones you may receive under the collaboration agreement with CFFT.  Please integrate this disclosure with the disclosure you provided in your Form 8-K filed April 7, 2011 which included the information we requested in our prior comment regarding the agreement with CFFT.  Also, please confirm that you will include the entire disclosure in future filings including your next Form 10-K.

Response 1:

For collaboration agreements that contain milestone payments that are material in amount, such as the Company’s agreement with Janssen Pharmaceutica, N.V., the Company customarily includes both aggregate milestone payments received to date and potential future aggregate milestone payments.  The Company does not believe the collaboration agreement with CFFT contains material milestone payments.  Section 4.4 of the original agreement (captioned “Clinical Trial Commencement Milestone”), which is referenced in the Staff’s comment above, relates to a milestone that was payable with respect to the first drug candidate to be evaluated in a clinical trial involving human subjects.  This milestone payment of $1.5 million was earned in 2006 when the Company commenced the first clinical trial to evaluate VX-770.  The collaboration agreement with CFFT, as amended, does not contain any other milestone payments payable by CFFT with respect to VX-770, VX-809, VX-661 or any future drug candidates that may be identified as part of the collaboration.

In order to clarify its disclosure regarding the CFFT collaboration agreement, the Company proposes to include the following disclosure:

“In 2006, the Company received a $1.5 million milestone payment from CFFT.  There are no additional milestones payable by CFFT to the Company pursuant to the collaboration agreement, as amended.”

The Company confirms that it will provide the entire disclosure that was contained in the Form 8-K referenced above, together with the disclosure proposed in this Response 1 in (i) its Quarterly Report on Form 10-Q for the three months ending June 30, 2011, (ii) its Annual Report on Form 10-K for the year ending December 31, 2011 and (iii) in other future filings in which the Company provides detailed disclosure regarding the Company’s collaboration agreement with CFFT.

Comment 2:

2.     We note your response to prior comment 2 that in your Quarterly report on Form 10-Q for the quarter ended March 31, 2011, you will incorporate by reference as an exhibit the Research and Development Agreement (the “Lilly Agreement”) between Eli Lilly and the Company.  Please confirm that you will incorporate by reference the Lilly Agreement in your next Form 10-K as well.

Response 2:

The Company confirms it will incorporate the Lilly Agreement by reference in its Annual Report on Form 10-K for the year ending December 31, 2011.

Please contact me at 617-444-6417 in the event that you have any questions or concerns with respect to this matter.

Very   truly yours,

/s/   Kenneth S. Boger

Kenneth   S. Boger

Senior   Vice President and Chief Legal Officer

May 11, 2011

Matthew W. Emmens Chief Executive Officer Vertex Pharmaceuticals Incorporated 130 Waverly Street
Cambridge, Massachusetts 02139-4242

Re: Vertex Pharmaceuticals Incorporated  Form 10-K
Filed February 17, 2010 File No. 000-19319
 Dear Mr. Emmens:
 We have reviewed your response letter dated April 13, 2011 and have the following
comments.
 Please respond to this letter within te n business days by providing the requested
information or by advising us when you will provide the requested response.  If you do not believe our comments apply to your facts and circum stances, please tell us w hy in your response.
 After reviewing the information you provide in response to these comments, we may
have additional comments.
Form 10-K, filed February 17, 2011

Corporate Collaborations, page 13

1. We note your response to prior comment 1 regarding your collaboration agreement
with CFFT.  We also note th at in your disclosure in your  8-K (filed April 7, 2011) as
provided in Exhibit A of your response le tter, you state, “CFFT  may terminate its
funding obligations under the April 2011 Am endment in certain circumstances, in
which case there will be a proportional adjustment to the royalty rates and
commercial milestones  for certain corrector compounds.”   Section 4.4 of the original
agreement also states that CFFT will be obligated to pay Vertex “clinical trial
commencement milestones.”  We note that VX-770 and VX-809 have already commenced clinical trials, and that VX-661 may potentially commence clinical trials
in the future.  Please provide proposed disclosure to be included in future filings regarding aggregate milestone payments you have received to date and future
aggregate milestones you may receive under the collaboration agreement with CFFT.  Please integrate this disclosure with th e disclosure you provided in your Form 8-K
filed April 7, 2011 which included the in formation we requested in our prior

Matthew W. Emmens Vertex Pharmaceuticals Incorporated May 11, 2011 Page 2

comment regarding the agreement with C FFT.  Also, please confirm that you will
include the entire disclosure in future filings including your next Form 10-K.

2. We note your response to prior comment 2 th at in your Quarterly Report on Form
10-Q for the quarter ended March 31, 2011, you will incorporate by reference as an exhibit the Research and Development Ag reement (the “Lilly Agreement”) between
Eli Lilly and the Company.  Please confirm that you will incorporate by reference the
Lilly Agreement in your next Form 10-K as well.
 Please contact Johnny Gharib at (202) 551- 3170 or me at (202) 551-3715 with any
questions.
Sincerely,
       Jeffrey Riedler
Assistant Director

CORRESP
1
filename1.htm

VERTEX   PHARMACEUTICALS INCORPORATED

130   WAVERLY STREET ·   CAMBRIDGE, MA 02139-4242

TEL. 617.444.6100 · FAX 617.444.7117

http://www.vrtx.com

April 13, 2011

Delivered via EDGAR

Securities and Exchange Commission
 Division of Corporation Finance

Washington, DC 20549

Attn:

Jeffrey Riedler

Johnny Gharib

Re:

Vertex Pharmaceuticals Incorporated

Form 10-K

Filed February 17, 2011

File No. 000-19319

Ladies and Gentlemen:

The purpose of this letter is to respond to the comments provided by the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”) to Vertex Pharmaceuticals Incorporated (the “Company”) in a letter dated March 31, 2011.  The comments are reproduced below together with the Company’s responses to those comments.

Form 10-K, filed February 17, 2011

Corporate Collaborations, page 13

Comment 1:

In view of the current developmental status of your pipeline products, we believe that additional information regarding some of your collaboration agreements is material.  Please provide draft disclosure to be included in future filings providing the following information:

·          The material terms related to both the duration and potential earlier termination of the agreements with Janssen Pharmaceutical, Mitsubishi Tanabe and Cystic Fibrosis Foundation Therapeutics Inc. including information regarding the duration of any patents to the extent the duration of the agreements are conditioned upon the duration of patents; and

·                  A range of royalties payable on the agreement with Cystic Fibrosis Foundation Therapeutics Inc. expressed within ten percentage points (i.e. single digits, teens, twenties, etc.).

Response 1:

Cystic Fibrosis Foundation Therapeutics Incorporated

On April 7, 2011, the Company filed a Current Report on Form 8-K disclosing an amendment to its collaboration agreement with the Cystic Fibrosis Foundation Therapeutics Incorporated (“CFFT”).  The Company included in this Form 8-K the information requested by the Staff regarding the collaboration agreement with CFFT.  The text of the Current Report on Form 8-K is included as Exhibit A attached hereto (with responsive language emphasized).

Janssen Pharmaceutica, N.V.

The Company proposes to expand its disclosure regarding its collaboration agreement with Janssen Pharmaceutica, N.V. in future periodic filings (commencing with its Quarterly Report on Form 10-Q for the quarter ended March 31, 2011) to provide additional information regarding the duration and potential earlier termination of the collaboration agreement as follows (with supplemental language emphasized):

“Janssen may terminate the agreement (A) prior to the receipt of marketing approval for telaprevir, without cause at any time upon six months’ notice to the Company or (B) if marketing approval has been obtained, upon the later of (i) one year’s advance notice and (ii) such period as may be required to assign and transfer to the Company specified filings and approvals.  The agreement also may be terminated by either party for a material breach by the other, subject to notice and cure provisions.  Unless earlier terminated, the agreement will continue in effect until the expiration of Janssen’s royalty obligations, which expire on a country-by-country basis with the last-to-expire patent covering telaprevir.  In the European Union, the Company has a patent covering the composition-of-matter of telaprevir through 2021 and expects to obtain extensions to the term of this patent through 2026.”

Mitsubishi Tanabe Pharma Corporation

The Company proposes to expand its disclosure regarding its collaboration agreement with Mitsubishi Tanabe Pharma Corporation in future periodic filings (commencing with its Quarterly Report on Form 10-Q for the quarter ended March 31, 2011) to provide additional information regarding the duration and potential earlier termination of the collaboration agreement as follows (with supplemental language emphasized):

“Mitsubishi Tanabe may terminate the agreement at any time without cause upon 60 days’ prior written notice to the Company.  The  agreement also may be terminated by either party for a material breach by the other, subject to notice and cure provisions.  Unless earlier terminated, the agreement will continue in effect until the expiration of the last-to-expire patent covering telaprevir.  In Japan, the Company has a patent covering the composition-of-matter of telaprevir through 2021.”

2

Comment 2:

On page 2 of your filing, we note that telaprevir was discovered in your collaboration with Eli Lilly, which has now ended.  However, we also note that you expect to pay Eli Lilly certain royalties on future sales of telaprevir if the product is commercialized.  Please file the agreement with Eli Lilly as an exhibit pursuant to Item 601(b)(10)(ii)(B) of Regulation S-K and provide draft disclosure to be included in future filings describing the terms of the agreement that will still be applicable if telaprevir is commercialized including the range of royalty payments within ten percentage points.  Alternatively, tell us the basis for your believe that the agreement is no longer material.

Response 2:

In its Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, the Company will incorporate by reference as an exhibit the Research and Development Agreement (the “Lilly Agreement”) between Eli Lilly and Company (“Eli Lilly”) and the Company, effective June 11, 1997, which was originally filed as Exhibit 10.1 to the Company’s Quarterly Report for the period ended June 30, 1997.   The Lilly Agreement was terminated in the first quarter of 2003, and pursuant to Section 19.1(c) of the Lilly Agreement, (A) Eli Lilly granted the Company an exclusive license to patents solely or jointly owned by Eli Lilly covering telaprevir, (B) the Company agreed to pay to Eli Lilly a low single digit royalty calculated as a percentage of net sales of telaprevir. The Company proposes to include in its future periodic filings the following disclosure:

“We have agreed to pay Eli Lilly a low single digit royalty calculated as a percentage of net sales of telaprevir. We expect to pay this royalty during the term of the patents covering the composition-of-matter of telaprevir, which are scheduled to expire in the United States in 2025 and in Japan in 2021.  Janssen is responsible for this royalty payment in its territories.”

General

Comment 3:

We note that you intend to provide your Part III information in your definitive proxy statement.  We plan to review that information prior to clearing the filing and may have additional comments.

Response 3:

The Company filed its Definitive Proxy Statement on Schedule 14A on April 8, 2011, which included the information required by Part III of Form 10-K.

The Company hereby confirms that in future filings the Company will enhance its overall disclosures by complying with the comments provided by the SEC in the manner set forth in the responses above, subject in all cases, to any changes with respect to the facts underlying the Company’s disclosures.

The Company acknowledges that:

1)                                      the Company is responsible for the adequacy and accuracy of the disclosure in its filings;

3

2)                                      Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and

3)                                      the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Please contact me at 617-444-6227 in the event that you have any questions or concerns with respect to this matter.

Very   truly yours,

/s/   Valerie L. Andrews

Valerie   L. Andrews

Vice   President and General Counsel - Corporate

4

Exhibit A

Disclosure in Current Report on Form 8-K (Filed April 7, 2011)

On April 4, 2011, we entered into an amendment, which we refer to as the April 2011 Amendment, to our existing collaboration agreement with Cystic Fibrosis Foundation Therapeutics Incorporated, or CFFT, pursuant to which CFFT will 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.

We entered into the original collaboration agreement in 2004 and in 2006, entered into two amendments to provide partial funding for our cystic fibrosis drug discovery and development efforts through early 2008.  Under the April 2011 Amendment, CFFT will provide us with up to $75.0 million in funding over approximately five years for corrector-compound research and development activities.  Vertex retains the rights to develop and commercialize VX-770, VX-809, VX-661 and any other compounds discovered during the course of the research collaboration with CFFT.

In the original agreement, as amended prior to the April 2011 Amendment, we agreed to pay CFFT tiered royalties calculated as a percentage, ranging from the high single digits to the sub-teens, of annual net sales of any approved drugs discovered during the research term that ended in 2008.  The April 2011 Amendment provides for a tiered royalty at the same levels on net sales of corrector compounds discovered during the research term that begins in 2011.  We also are obligated to make two one-time commercial milestone payments upon achievement of certain sales levels for a potentiator compound such as VX-770 and two one-time commercial milestone payments upon achievement of certain sales levels for a corrector compound such as VX-809 or VX-661.

CFFT may terminate its funding obligations under the April 2011 Amendment in certain circumstances, in which case there will be a proportional adjustment to the royalty rates and commercial milestones for certain corrector compounds.  For each compound commercialized under the agreement, we will have royalty obligations to CFFT until the expiration of patents covering that compound.  For VX-770, which we are evaluating in a registration program, we have patents in the United States and European Union covering the composition of matter of VX-770 that expire in 2025, subject to potential patent life extensions.  The collaboration agreement also may be terminated by either party for a material breach by the other, subject to notice and cure provisions.

March 31, 2011

Matthew W. Emmens Chief Executive Officer Vertex Pharmaceuticals Incorporated 130 Waverly Street
Cambridge, Massachusetts 02139-4242

Re: Vertex Pharmaceuticals Incorporated  Form 10-K
Filed February 17, 2010 File No. 000-19319
 Dear Mr. Emmens:
 We have reviewed your filing and have the following comments.    Please respond to this letter within te n business days by providing the requested
information or by advising us when you will provide the requested response.  If you do not believe our comments apply to your facts and circum stances, please tell us w hy in your response.
 After reviewing the information you provide in response to these comments, we may
have additional comments.
Form 10-K, filed February 17, 2011

Corporate Collaborations, page 13
 1. In view of the current developmental status  of your pipeline products, we believe that
additional information regarding some of your  collaboration agreements is material.
Please provide draft disclosure to be incl uded in future filings providing the following
information:
• The material terms related to both the durat ion and potential earlier termination of
the agreements with Janssen Pharmaceutical, Mitsubishi Tanabe and Cystic
Fibrosis Foundation Therapeutics Inc.  including informa tion regarding the
duration of any patents to the extent  the duration of the agreements are
conditioned upon the duration of patents; and
• A range of royalties payable on the agr eement with Cystic Fibrosis Foundation
Therapeutics Inc. expressed within ten percentage points (i.e. single digits, teens,
twenties, etc.).

Matthew W. Emmens Vertex Pharmaceuticals Incorporated March 31, 2011 Page 2

2. On page 2 of your filing, we note that te laprevir was discovered in your collaboration
with Eli Lilly, which has now ended.  However, we also note that you expect to pay Eli Lilly certain royalties on future sa les of telaprevir if the product is
commercialized.  Please file the agreement w ith Eli Lilly as an exhibit pursuant to
Item 601(b)(10)(ii)(B) of Regulation S-K and provide draft disclosure to be included
in future filings describing the terms of the agreement that will still be applicable if
telaprevir is commercialized including a range of royalty payments within ten
percentage points.  Alternatively, tell us th e basis for your belief that the agreement is
no longer material.
 General

 3. We note that you intend to provide your Pa rt III information in your definitive proxy
statement.  We plan to review that info rmation prior to clearing the filing and may
have additional comments.
 We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.
 In responding to our comments, please provi de a written statement from the company
acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclo sure in the filing;

• staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

• the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of  the United States.

Please contact Johnny Gharib at (202) 551- 3170 or me at (202) 551-3715 with any
questions.

Sincerely,
       Jeffrey Riedler
Assistant Director

Via Facsimile and U.S. Mail
Mail Stop 4720

                                                                                               October 23, 2009

Mr. Kenneth Boger
Senior Vice President and General Counsel
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, MA  02139-4242

Re: Vertex Pharmaceuticals Incorporated
Form 10-K for the Period Ended December 31, 2008
Form 10-Q for the Quarterly Period Ended March 31, 2009
Definitive Proxy Statement on Schedule 14A filed April 8, 2009
File No. 000-19319

Dear Mr. Boger:

We have reviewed your August 31, 2009 res ponse to our July 8, 2009 letter and
have the following comments.  In our comments, we ask you to provide us with
information to better understand your di sclosure. Where a comment requests you to
revise disclosure, the information you provide should show us what the revised disclosure
will look like and identify the annual or interi m filing, as applicable, in which you intend
to first include it.  If you do not believe that  revised disclosure is  necessary, explain the
reason in your response.  Pleas e note that comments two and three were previously issued
verbally to you on October 7, 2009.  After re viewing the information provided, we may
raise additional comments and/or request that you amend your filing.

Definitive Proxy Statement on Sc hedule 14A filed on April 13, 2009

Compensation Discussion and Analysis
2008 Compensation Decisions for Perfor mance-Based Elements, page 29

1. We note your response to our prior comment  4.  However, your response does not
appear to address our concerns.  To the extent that your four high-level goals are
more specifically defined than the disclosure in your document, they should be more specifically described.  For example, one of the goals is to “meet or exceed
timelines in clinical, regulatory, quality, manufacturing and commercial
operations toward a successful launch of telaprevir.”  If the goals, as
communicated to your executives, are more specific as to these timelines, these
timelines should be described.  If you belie ve that a more specific disclosure of
these goals would be competitively harmful,  please provide us with an analysis
supporting your belief.  The analysis should identify the information that you

Mr. Kenneth Boger
Vertex Pharmaceuticals Incorporated
October 23, 2009
Page 2
 believe would cause competitive harm, describe the competitive harm you are
likely to experience if the informati on is disclosed and explain why this
information is not material to investors.  We will not be in a position to assess the
likelihood of competitive harm if we do not know what the specific goals are.  Please be advised that you may request confidential treat ment for portions of your
response pursuant to Rule 83.  Please pr ovide proposed disclosure for your 2010
proxy statement.

Additionally, comment 4 indicated that wh en information relating to targets and
goals is not provided on the basis that disc losure is not material and is likely to
cause competitive harm, you must disc uss how difficult it will be for the
executive or how likely it will be for the company to achieve the undisclosed
goals or targets.  Your response directs our  attention to the disclosure relating to
the level of achievement which is not the same as a discussion of the level of
difficulty to achieve the stated goals and ta rgets.  If you continue to believe that
your goals and targets qualify for confiden tial treatment, please discuss the level
of difficulty related to the undi sclosed goal(s) or target(s).

Form 10-Q for the Quarterly Period Ended March 31, 2009

9.  Acquisition of ViroChem Pharma Inc.

Preliminary Allocation of Asse ts and Liabilities, page 18

2. We acknowledge your response to comment  seven (a).  Although the nature,
timing and estimated costs of the efforts to complete the development of VX-222
and VX-759 are subject to risks and un certainties, we do not understand why
meaningful estimates are not available when  it would appear that these costs are a
significant component of the cash flow a ssumptions inherent in your fair value
assessment of these projects.  Please revise  your disclosure to provide the nature,
timing and estimated costs to complete thes e projects as utilized in your fair value
assessment.

3. We acknowledge your response to comment  seven (c).  Please address the
following additional comments:
• You indicate that you did not ascribe va lue to ViroChem’s other preclinical
programs and other technologies becaus e market participants would be
unlikely to ascribe value to them.  Please tell us how many other preclinical programs and other technologies you acquired from ViroChem and the
associated treatment indications.
• It appears that you based the $7.2 milli on fair value assigned to the VCH-286
intangible asset based on the de velopment costs incurred through the
acquisition date.  Please demonstrat e to us how the value assigned is
consistent with that derived by a market  participant and how it complies with
the guidance in paragraph 33 of SFAS 141R .  Please revise your disclosure
accordingly.

Mr. Kenneth Boger
Vertex Pharmaceuticals Incorporated
October 23, 2009
Page 3

*    *    *    *

 Please provide us the information request ed within 10 busine ss days or tell us
when you will provide us with a response.  Pl ease furnish a cover le tter with your response
that keys your response to our comments.  De tailed cover letters gr eatly facilitate our
review.  Please furnish your letter on EDGAR under the form type label CORRESP.

Please contact Kei Ino, Staff Accountant,  at (202) 551-3659 or  Mark Brunhofer,
Senior Staff Accountant, at (202) 551-3638 if you have  questions regarding the
processing of your response as well as any questions regarding comments on the financial
statements and related matters.  You may c ontact Mike Rosenthall, Staff Attorney at
(202) 551-3674 or Jennifer Riegel, Staff Atto rney at (202) 551-3575 with questions on
the Definitive Proxy Statement comment.  In th is regard, do not hesitate to contact me, at
(202) 551-3679.

Sincerely,

Jim B. Rosenberg
Senior Assistant Chief Accountant

Mail Stop 4720
April 15, 2010
 Mr. Joshua Boger Chief Executive Officer Vertex Pharmaceuticals Incorporated 130 Waverly Street Cambridge, MA 02139-4242
Re:  Vertex Pharmaceuticals Incorporated
Form 10-K for the Period Ended December 31, 2008 Definitive Proxy Statement on Schedule 14A filed April 8, 2009
Response filed March 31, 2010 File No. 000-19319

Dear Mr. Boger:
  We have completed our review of your Form 10-K and related filings and have no
further comments at this time.           S i n c e r e l y ,

          J e f f r e y  P .  R i e d l e r          A s s i s t a n t  D i r e c t o r

CORRESP
1
filename1.htm

  VERTEX PHARMACEUTICALS
  INCORPORATED

  130 WAVERLY STREET ·
  CAMBRIDGE, MA 02139-4242

  TEL. 617.444.6100 · FAX
  617.444.7117

  http://www.vrtx.com

  March 31,
  2010

Delivered via EDGAR

Securities
and Exchange Commission
 Division of Corporation Finance

100
First Street, N.E.

Mail
Stop 4720

Washington,
DC 20549

  Attn:

  Jeffrey P. Riedler, Assistant Director

  Mike Rosenthall, Staff Attorney

  Re:

  Vertex Pharmaceuticals Incorporated

  Form 10-K for the Period Ended
  December 31, 2008

  Definitive Proxy Statement on Schedule 14A filed
  April 8, 2009

  File No. 000-19319

Ladies
and Gentlemen:

The purpose of this letter is to respond to the
comments provided by the staff (the “Staff”) of the Securities and
Exchange Commission (the “SEC”) to Vertex Pharmaceuticals Incorporated
(the “Company”) in a letter dated February 19, 2010 to the
Company.  The comments from the comment
letter are reproduced below together with the Company’s responses to those
comments.

Schedule 14A

Compensation Discussion and Analysis

2008 Compensation Decisions for
Performance-Based Elements, page 29

Comment 1:

We note that your response
to our prior comment 1 indicates you expect that the board of directors will
evaluate corporate performance with regard to the factors indicated but that
the factors considered is at the discretion of the board of directors.  Please confirm that your next proxy statement
will include the following:

·                                          Confirmation that no
corporate performance targets are set at the beginning of each fiscal year to
be used at the end of the fiscal year to gauge corporate or executive
performance;

·                                          The analysis performed by
the board of directors used to determine performance at the end of each fiscal
year; and

·                                          How the performance
evaluation was used to determine the amount of bonuses awarded to each named
executive officer based on the extent of achievement determined by the board.

Response 1:

As the Company discussed with a representative of
the Staff, the Company’s board of directors sets goals for Company’s
performance early in the year and uses these goals to evaluate the Company’s
performance at the beginning of the following year (while retaining discretion
to consider all factors it deems relevant to such performance evaluation). The
four goals set during 2009 and used in February 2010 to determine the
Company’s 2009 rating were to:  meet or exceed
mission critical milestones toward a successful launch of telaprevir, and
strengthen our HCV franchise; maintain financial strength; build organizational
strength; and demonstrate increase in portfolio value beyond HCV.  The Company confirms that in its 2010
Definitive Proxy Statement (i) it will disclose these goals, (ii) it
will describe the analysis performed by the board of directors to determine
performance at the end of the year and (iii) it will describe how the
performance evaluation was used to determine the amount of the bonuses and
equity awards awarded to each executive officer for 2009 performance.  The disclosure regarding the Company’s 2009
compensation decisions for performance-based elements will be substantially as
set forth in Exhibit A and Exhibit B to this letter.

In
addition, the Company confirms that in its 2010 definitive proxy statement (i) it
will disclose that 50% of the shares subject to both the Company’s 2007 PARS
awards and the Company’s 2008 PARS awards will vest if the Company’s common
stock achieves and maintains a market price of $60.00 per share and (ii) it
will add disclosure regarding the reason that Dr. Boger’s salary was
increased to the midpoint of the range for CEOs in our comparator company
group.

The Company hereby confirms that in future filings
the Company will enhance its overall disclosures by complying with the comments
provided by the SEC in the manner set forth in the responses above, subject in
all cases, to any changes with respect to the facts underlying the Company’s
disclosures.

The Company acknowledges that:

1)                                      the Company is
responsible for the adequacy and accuracy of the disclosure in its filings;

2)                                      Staff comments
or changes to disclosure in response to Staff comments do not foreclose the
Commission from taking any action with respect to the filing; and

3)                                      the Company may
not assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United
States.

2

Please contact me at 617-444-6227 in the event that
you have any questions or concerns with respect to this matter.

  Very truly yours,

  /s/ Valerie L. Andrews

  Valerie L. Andrews

  Deputy General Counsel

3

Exhibit A

Disclosure in Compensation
Discussion and Analysis

2009 Compensation Decisions for Performance-Based
Elements.

Company
Rating—Our board of directors evaluated overall 2009 company performance
against four goals that it established early in 2009:

·                                          meet or exceed
mission critical milestones toward a successful launch of telaprevir, and
strengthen our HCV franchise;

·                                          maintain
financial strength;

·                                          build
organizational strength; and

·                                          demonstrate
increase in portfolio value beyond HCV.

The MDCC recommended and the
board determined that our company performance rating for 2009 was “Leading.”  The board set the company performance factor
for the 2009 executive bonus pool at 150%, which is the highest possible
performance factor under our program. This rating was based on our having
achieved or exceeded all four of the pre-determined goals. In reaching this
determination, the board considered the following:

·                  Telaprevir
and HCV Franchise—We advanced toward a successful future launch of
telaprevir by successfully completing patient enrollment and dosing in all
Phase 3 telaprevir clinical trials, demonstrating readiness for commercial
supply of telaprevir and building inventory for commercial launch, conducting
appropriate value analyses for telaprevir, executing on the telaprevir
life-cycle plan through BID dosing and HCV/HIV co-infection clinical trials,
and we successfully strengthened our HCV franchise by securing rights to
VX-222, consistent with our strategy of investigating “STAT-C” (oral
combination) therapy for HCV infection, through the acquisition of Virochem
Pharma, Inc.

·                  Financial
Strength—We demonstrated financial strength by finishing the
2009 fiscal year with approximately $1.285 billion in cash, cash equivalents
and marketable securities, including cash realized from restructuring our
Mitsubishi Tanabe license arrangement and through financial transactions
relating to our rights to future milestone payments under our Janssen
Pharmaceutica collaboration agreement, and managing our net cash loss to
approximately $510 million.

·                  Organizational
strength—We successfully managed a series of leadership
transitions in our executive ranks, involving our CEO, Chief Commercial
Officer, Chief Medical Officer and head of Global Research &
Development; established a 5-year corporate vision and long-range plan, and
effectively expanded our capabilities in the areas of research, development and
pharmaceutical commercialization.

·                  Portfolio
Value—We demonstrated increased value in our non-HCV programs, including
progression of our CF program through a Phase 3 clinical program for VX-770, a
Phase 2 clinical trial of VX-809 and definition of a regulatory pathway for a
CF corrector/potentiator combination; preparing our JAK-3 inhibitor, VX-509,
for Phase 2 clinical investigation in patients with RA; submitting a
satisfactory protocol for Phase 2 clinical trials of VX-765 in epilepsy; and
continuing research productivity by producing several early-stage molecules
suitable for further study.

Although the directors discuss and analyze our
performance as a group, each director makes his or her own judgment about which
factors are important, and how to weight those factors in reaching a conclusion.

Individual
Ratings for Named Executive Officers—The MDCC recommends to the
board for approval both a results-based and a values-based rating for each of
our executives.  The results-based rating
recommendation for each named executive is the combined result of the committee
members’ observations and review of the officer’s role in the accomplishment of
the corporate goals, and factors and recommendations provided to the MDCC by
our chief executive officer, Mr. Emmens, made on the basis of Mr. Emmens’
independent assessment of each executive officer’s performance in 2009.  The MDCC and Mr. Emmens discussed the
recommendations at length, on both an individual-by-individual basis, and on a
comparative basis.   Upon completion of
these discussions, the MDCC finalized its recommendation for the results-based
rating for each executive, taking into account Mr. Emmens’
recommendations, factors considered in the discussions, and the opinions of
committee members based on the executive’s contributions and the members’
interactions with the executive.  When
considering the more subjective values-based rating, the MDCC also discussed Mr. Emmens’
recommendations, giving them greater weight than for the results-based rating,
because the values-based rating is pertinent to the executive’s daily
interactions in carrying out his or her duties, and the MDCC believes that in
his role as CEO, Mr. Emmens has greater visibility than the committee
members into the quality of these interactions.

Mr. Emmens also
discussed his own performance in 2009 with the MDCC. Mr. Emmens noted that
Vertex’s performance rating was the highest possible under our system, due to
our exceptional performance across all aspects of the business. The board of
directors determined that Mr. Emmens’ rating similarly should be at the
highest possible level, and rated Mr. Emmens’ 2009 performance as “leading.”
For values-based behavior, the board of directors believes that Mr. Emmens
is an exceptional leader who exhibits exemplary values-based behavior, and
accordingly, assigned Mr. Emmens a values-based rating of “exemplary
demonstration.”

The MDCC recommended
results-based and values-based ratings for each of Dr. Mueller, Mr. Sachdev
and Mr. Smith to the board of directors. Ms. Wysenski joined us in December 2009,
and thus was ineligible for year-end bonus or equity awards on account of 2009
performance. The MDCC recommended and the board of directors approved a
results-based rating of “leading” for Dr. Mueller, because in addition to
consistent and excellent research productivity, Dr. Mueller oversaw a year
of extraordinary success for the pharmaceutical operations and the chemistry,
manufacturing and controls programs, particularly for the telaprevir
Phase 3 clinical trial and launch preparation. He also successfully took
on additional

responsibility for our development organization
mid-year.  Dr. Mueller was rated “exemplary”
for values-based behavior in his leadership of our entire scientific
organization.   Similarly, the MDCC’s
recommendation for Mr. Sachdev’s performance rating of “leading,” based in
part on a number of initiatives in the public sector that have the potential to
increase the value of our HCV franchise, was adopted by the board.  Mr. Smith’s organization, which includes
finance and accounting, real estate, operations, information systems and
strategic communications, also performed at a high level in supporting
achievement of the corporate objectives detailed above, particularly in
accessing over $1 billion through debt and equity offerings and other
financial transactions, causing the MDCC to recommend and the board to approve
a results-based rating of “leading” for Mr. Smith.  With respect to values-based evaluation, the
MDCC recommended that each of Mr. Smith and Mr. Sachdev be rated “living
the values” because they demonstrated strong values-based behavior.

Based on the foregoing, the
named executive officers earned the following performance ratings and
individual performance factors on account of 2009 performance.

  Results—Based

  Rating

  Values—Based

  Rating

  2009
  Overall

  Performance

  Rating

  Individual

  Performance

  Factor

  Matthew W. Emmens

  Leading

  Exemplary Demonstration

  Leading/Exemplary

  150

  %

  Ian F. Smith

  Leading

  Living the Values

  Leading

  145

  %

  Peter Mueller

  Leading

  Exemplary Demonstration

  Leading/Exemplary

  150

  %

  Amit Sachdev

  Leading

  Living the Values

  Leading

  145

  %

Annual
Cash Bonus and Equity Awards—The annual cash bonuses and
annual equity awards for 2009 resulting from the company and individual
performance ratings are set forth in the tables under the headings Compensation and Equity Tables—Summary Compensation
Table—Non-Equity Incentive Plan Compensation—Cash Bonus and Compensation and Equity Tables—Summary Compensation
Table—Stock Awards and Options Awards.

Exhibit B

Disclosure Referenced in
Compensation Discussion and Analysis

and Presented under

Compensation and Equity Tables

Stock Awards and Options Awards

The total equity awards made
to each of the named executives on account of 2009 performance are as
follows.  Pursuant to applicable rules only
the grant date value of the stock options awarded in July 2009 are
included in the table above and the grant date values of the awards granted in February 2010
will be included as 2010 compensation.

  Individual

  Performance

  Rating

  Stock
  Options

  Awarded in

  July 2009

  Stock
  Options

  Awarded in

  February 2010

  Total Stock

  Options

  Awarded for 2009

  Performance

  Restricted

  Stock Awarded

  in February 2010

  for 2009 Performance

  Matthew W. Emmens

  Leading/Exemplary

  n/a

  354,000

  354,000

  47,201

  Ian F. Smith

  Leading

  36,250

  54,375

  90,625

  12,084

  Peter Mueller

  Leading/Exemplary

  36,250

  72,500

  108,750

  14,501

  Amit Sachdev

  Leading

  30,500

  45,750

  76,250

  10,166

Non-Equity
Incentive Plan Compensation—Cash Bonus

The amounts set forth under
the caption “Non-Equity Incentive Plan Compensation” represent cash bonuses for
2009, 2008 and 2007 performance, each of which was paid in the first quarter of
the next year.   The cash bonus awards to
the named executive officers for 2009 performance were determined as follows:

  2009 Base

  Salary

  Level

  Individual

  Incentive

  Target

  2009

  Target

  Bonus

  Company

  Performance

  Factor

  Individual

  Performance

  Factor

  2009

  Bonus

  Matthew W. Emmens

  $

  1,100,000

  115

  %

  $

  1,265,000

  150

  %

  150

  %

  $

  2,846,251

  Ian F. Smith

  $

  463,500

  40

  %

  $

  185,400

  150

  %

  145

  %

  $

  403,245

  Peter Mueller

  $

  550,000

  40

  %

  $

  220,000

  150

  %

  150

  %

  $

  495,000

  Amit Sachdev

  $

  365,907

  35

  %

  $

  128,067

  150

  %

  145

  %

  $

  278,547

Mail Stop 4720
February 19, 2010
 Mr. Joshua Boger Chief Executive Officer Vertex Pharmaceuticals Incorporated 130 Waverly Street Cambridge, MA 02139-4242
Re:  Vertex Pharmaceuticals Incorporated
Form 10-K for the Period Ended December 31, 2008 Definitive Proxy Statement on Schedule 14A filed April 8, 2009
Response filed December 22, 2009 File No. 000-19319

Dear Mr. Boger:

We have reviewed your filing and have the following comments.  Where the comments
request you to revise disclosure, the informati on you provide should show us what the revised
disclosure will look like and identify the annual or quarterly filing, as applicable, in which you
intend to first include it.  If you do not believe that revised disc losure is necessary, explain the
reason in your response.  After reviewing the information provided, we may raise additional
comments and/or request that you amend your filing.   Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requir ements and to enhance the overall disclosure in
your filing.  We look forward to working with you in these respects.  We welcome any questions
you may have about our comment or on any other aspect  of our review.  Feel free to call us at the
telephone numbers listed at th e end of this  letter.
 Schedule 14A

 Compensation Discussion and Analysis

 2008 Compensation Decisions for Perf ormance-Based Elements, page 29

1. We note that your response to our prior commen t 1 indicates you expect  that the board of
directors will evaluate corporate performance w ith regard to the factors indicated but that
the factors considered is at th e discretion of the board of dire ctors.  Please confirm that
your next proxy statement will include the following:

Mr. Joshua Boger
Vertex Pharmaceuti cals Incorporated
February 19, 2010
Page 2 of 3

• Confirmation that no corporate performance targets are set at the beginning of each
fiscal year to be used at the end of the fiscal year to gauge corporate or executive
performance;
• The analysis performed by the board of directors used to  determine performance at
end of each fiscal year; and
• How the performance evaluation was used to determine the amount of bonuses
awarded to each named executive officer based on the extent of achievement
determined by the board.

* * *

Please respond to these comments within 10 business days or tell us when you will
provide us with responses.  Please furnish a letter that keys your response to our comments and
provide the requested information.  Detailed letters greatly facilita te our review.  Please furnish
your letter on EDGAR under the form type label CORRESP.
  We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing in cludes all information re quired under the Securities
Exchange Act of 1934 and that they have provi ded all information investors require for an
informed investment decision.  Since the compa ny and its management are in possession of all
facts relating to a company’s disclosure, they are responsible for the acc uracy and adequacy of
the disclosures they have made.     In connection with responding to our co mments, please provide, in your letter, a
statement from the company acknowledging that:
• the company is responsible for the adequacy an d accuracy of the disclo sure in the filing;
• staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and
• the company may not assert staff comments as  a defense in any proceeding initiated by
the Commission or any person under the federa l securities laws of  the United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the sta ff of the Division of Corporati on Finance in our review of your
filing or in response to our comment on your filing.
Please contact Michael Rosent hall at (202) 551-3674 or me  at (202) 551-3715 with any
questions.

Mr. Joshua Boger
Vertex Pharmaceuti cals Incorporated
February 19, 2010
Page 3 of 3
 Sincerely,
           J e f f r e y  P .  R i e d l e r          A s s i s t a n t  D i r e c t o r

CORRESP
1
filename1.htm

  VERTEX
  PHARMACEUTICALS INCORPORATED

  130
  WAVERLY STREET ·
  CAMBRIDGE, MA 02139-4242

  TEL.
  617.444.6100 · FAX
  617.444.7117

  http://www.vrtx.com

  December 22, 2009

Delivered via EDGAR

Securities
and Exchange Commission

Division of Corporation Finance

100
First Street, N.E.

Mail
Stop 4720

Washington,
DC 20549

  Attn:

  Jim B. Rosenberg, Senior Assistant Chief Accountant

  Kei Ino, Staff Accountant

  Mark Brunhofer, Senior Staff Accountant

  Mike Rosenthall, Staff Attorney

  Jennifer Riegel, Staff Attorney

  Re:

  Vertex Pharmaceuticals Incorporated

  Form 10-K for the Period Ended December 31, 2008

  Form 10-Q for the Quarterly Period Ended
  March 31, 2009

  Definitive Proxy Statement on Schedule 14A filed
  April 8, 2009

  File No. 000-19319

Ladies
and Gentlemen:

The
purpose of this letter is to respond to the comments provided by the staff (the
“Staff”) of the Securities and Exchange Commission (the “SEC”) to
Vertex Pharmaceuticals Incorporated (the “Company”) in a letter dated October 23,
2009 to Kenneth S. Boger, Senior Vice President and General Counsel of the
Company.  This letter supplements the
Company’s letter to the SEC dated November 18, 2009.  The comments from the Comment Letter are
reproduced below together with the Company’s responses to those comments.

Definitive Proxy Statement on Schedule 14A filed April 8,
2009

Compensation Discussion and Analysis

2008 Compensation Decisions for
Performance-Based Elements, page 29

Comment 1:

We note your response to our prior comment 4.  However, your response does not appear to
address our concerns.  To the extent that
your four high-level goals are more specifically defined than the disclosure in
your document, they should be more specifically described.  For example, one of the goals is to “meet or
exceed timelines in clinical, regulatory, quality, manufacturing and commercial
operations toward a successful launch of telaprevir.”  If the goals, as communicated to your
executives, are more

specific as to these timelines, these timelines
should be described.  If you believe that
a more specific disclosure of these goals would be competitively harmful,
please provide us with an analysis supporting your belief.  The analysis should identify the information
that you believe would cause competitive harm, describe the competitive harm
you are likely to experience if the information is disclosed and explain why
this information is not material to investors.
We will not be in a position to assess the likelihood of competitive
harm if we do not know what the specific goals are.  Please be advised that you may request
confidential treatment for portions of your response pursuant to Rule 83.  Please provide proposed disclosure for your
2010 proxy statement.

Additionally, comment 4 indicated that when
information relating to targets and goals is not provided on the basis that
disclosure is not material and is likely to cause competitive harm, you must
discuss how difficult it will be for the executive or how likely it will be for
the company to achieve the undisclosed goals or targets.  Your response directs our attention to the
disclosure relating to the level of achievement which is not the same as a
discussion of the level of difficulty to achieve the stated goals and
targets.  If you continue to believe that
your goals and targets quality for confidential treatment, please discuss the
level of difficulty related to the undisclosed goal(s) or target(s).

Response:

The Company does not expect that any of the
performance targets material to the board of director’s compensation decisions
for 2009 performance will involve confidential trade secrets or confidential
commercial or financial information, and accordingly, the Company expects to
disclose all such material performance targets in its 2010 Proxy
Statement.  While the Company’s board of
directors maintains discretion to consider all factors it deems relevant in
establishing the Company’s performance rating in any year, for 2009 the Company
expects that its board of directors will evaluate the Company’s performance and
progress with respect to each of the following:

·                                          Meet or exceed mission-critical milestones toward a successful launch of
telaprevir in 2011; strengthen HCV franchise

·                                          Maintain financial strength

·                                          Build organizational strength

·                                          Demonstrate increase in portfolio value beyond HCV

After 2009 year-end, the Company expects that the
board of directors will evaluate the Company’s overall performance in each of
these areas in light of relevant facts and circumstances, and that the board of
directors will weight some areas more heavily than others.  In particular, the Company expects that the
board of directors will place greater weight on the first two categories
(telaprevir/HCV and maintain financial strength).

The Company expects that the board of directors’
evaluation in the first area (telaprevir/HCV) will  include a review of the company’s performance
in (a) assuring telaprevir launch and chemistry, manufacturing and
controls (CMC) readiness; (b) building the new drug application (NDA)
dossier for a timely filing (to support a 2011 launch); (c) ensuring that
product inventory will be in place; (d) building a commercial
infrastructure; (e) developing a life cycle plan for telaprevir; and (f) securing
rights to a STAT-C compound (such as VX-222) and initiating

2

development of a combination therapy with
telaprevir.  Similarly, the Company
expects that the board of directors will consider factors applicable to each of
the other three categories.

While the Company expects the board of directors
will assign an overall weight to each category, it expects that the board of
directors will reach this decision on the basis of a general facts and
circumstances analysis of factors such as those listed above, and will not
specifically weight each factor.  On the
basis of that assessment, the board of directors will assign the Company a
performance rating and establish the size of the bonus pool.  The Company expects that its 2010 proxy statement
will include disclosure of the performance rating, together with detail about
each of the factors that were material to the board’s assessment.

Since there may be considerable variability from
year to year in the types of performance targets considered by the board of
directors, it may be that in future years these objectives will involve
information that remains confidential beyond the period during which
compensation decisions are made.  For
example, in 2009, the Company has been focused on conducting late-stage
clinical trials of its hepatitis C protease inhibitor, telaprevir.  For each pharmaceutical drug candidate, the
competitive landscape and development pathway, including timelines, are more
uncertain in the earlier stages and become clearer as the asset advances
through development.  By 2009, the
potential projected launch in 2011 for telaprevir was well-established and was
disclosed. In contrast, in 2008, the nature of likely competition from
telaprevir’s nearest competitors, both in terms of product profile and
time-to-market, was much less clear, and the Company’s goals included a
confidential contingency plan (including timelines for certain activities) for
different possible scenarios, the disclosure of which would have provided an
advantage to competitors and competitive harm to the Company.  The Company’s performance objectives in the
future with respect to earlier stage drug candidates may include competitive
information of this sort.  In addition,
once the Company has a commercial product, the board of directors may establish
performance objectives that include confidential commercial information such as
market share or pricing information.  For
its Proxy Statement in years beyond 2010, the Company undertakes to omit only
those material factors for which it has a reasoned basis to conclude that
disclosure would cause competitive harm to the Company, to discuss how
difficult it will be to achieve the undisclosed factors, if any, and to
supplementally provide both the confidential performance target and a
competitive harm analysis to the Staff upon request.

Form 10-Q for the Quarterly Period Ended March 31,
2009

Preliminary Allocation of Assets and
Liabilities, page 18

Comment 2:

We acknowledge your response to comment seven
(a).  Although the nature, timing and
estimated costs of the efforts to complete the development of VX-222 and VX-759
are subject to risks and uncertainties, we do not understand why meaningful
estimates are not available when it would appear that these costs are a significant
component of the cash flow assumptions inherent in your fair value assessment
of these projects.  Please revise your
disclosure to provide the nature, timing and estimated costs to complete these
projects as utilized in your fair value assessment.

3

Response 2:

The Company hereby supplements its response to
Comment 2 contained in its November 18, 2009 letter to the SEC as follows:

The Company will augment its disclosure regarding the acquisition of
ViroChem in the Company’s Annual Report on Form 10-K for the year ending December 31,
2009, to be updated if circumstances dictate, as follows:

“Projections
of the duration and cost of non-clinical studies and clinical trials vary
significantly over the life of a project depending on developments in the
program over time, but in order to estimate the fair value on the acquisition
date we made the following assumptions from the perspective of a market
participant regarding the potential timing and costs to develop VX-222 and/or
VX-759.  We assumed if a drug candidate
were successfully developed in the United States it would take approximately
five to nine years from the date of the acquisition in order to obtain such
approval.  In addition, for the valuation,
we assumed an estimate of cost from acquisition to launch to develop a drug
candidate that was within a range of $400 million to $700 million”.

Comment 3

We acknowledge your response to comment seven
(c).  Please address the following
additional comments:

·                                          You indicate that you did
not ascribe value to ViroChem’s other preclinical programs and other
technologies because market participants would be unlikely to ascribe value to
them.  Please tell us how many other
preclinical programs and other technologies you acquired from ViroChem and the
associated treatment indications.

·                                          It appears that you based
the $7.2 million fair value assigned to the VCH-286 intangible asset based on
the development costs incurred through the acquisition date.  Please demonstrate to us how the value
assigned is consistent with that derived by a market participant and how it
complies with the guidance in paragraph 33 of SFAS 141R.  Please revise your disclosure accordingly.

Response 3

The
Company hereby supplements its response to Comment 3 contained in its November 18,
2009 letter to the SEC as follows:

The
“other technologies” that were identified by the Company are patents and patent
applications unrelated to the ViroChem drug development projects and candidates
that we valued separately.  The Company
determined that market participants would not ascribe any value to these
patents and patent applications because the Company did not identify any
commercial potential for the covered subject matter.  The determination that there was no
commercial potential for the subject matter was based on a variety of reasons
including the patents or patent applications related to (i) drug candidates for
which development had been terminated as a result of adverse safety or efficacy
data and (ii) early research projects that did not result in the identification
of a drug candidate.

The
Company hereby confirms that in future filings the Company will enhance its
overall disclosures by complying with the comments provided by the SEC in the
manner set forth in the

4

responses
above, subject in all cases, to any changes with respect to the facts
underlying the Company’s disclosures.

The
Company acknowledges that:

1)                                      the Company is
responsible for the adequacy and accuracy of the disclosure in its filings;

2)                                      Staff comments
or changes to disclosure in response to Staff comments do not foreclose the
Commission from taking any action with respect to the filing; and

3)                                      the Company may
not assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United
States.

Please
contact me at 617-444-6417 in the event that you have any questions or concerns
with respect to this matter.  In the
event that I am not available, please contact my colleague, Valerie Andrews, at
617-444-6227.

  Very
  truly yours,

  /s/
  Kenneth S. Boger

  Kenneth
  S. Boger

  Senior
  Vice President and General Counsel

5

CORRESP
1
filename1.htm

  VERTEX
  PHARMACEUTICALS INCORPORATED

  130
  WAVERLY STREET · CAMBRIDGE, MA
  02139-4242

  TEL.
  617.444.6100 · FAX 617.444.7117

  http://www.vrtx.com

  November 18, 2009

Delivered via EDGAR

Securities and Exchange
Commission

Division of Corporation Finance

100 First Street, N.E.

Mail Stop 4720

Washington, DC 20549

  Attn:

  Jim B.
  Rosenberg, Senior Assistant Chief Accountant

  Kei
  Ino, Staff Accountant

  Mark
  Brunhofer, Senior Staff Accountant

  Mike
  Rosenthall, Staff Attorney

  Jennifer
  Riegel, Staff Attorney

  Re:

  Vertex
  Pharmaceuticals Incorporated

  Form 10-K
  for the Period Ended December 31, 2008

  Form 10-Q
  for the Quarterly Period Ended March 31, 2009

  Definitive
  Proxy Statement on Schedule 14A filed April 8, 2009

  File
  No. 000-19319

Ladies and Gentlemen:

The purpose of this
letter is to respond to the comments provided by the staff (the “Staff”)
of the Securities and Exchange Commission (the “SEC”) to Vertex
Pharmaceuticals Incorporated (the “Company”) in a letter dated
October 23, 2009 to Kenneth S. Boger, Senior Vice President and General
Counsel of the Company.  The comments
from the Comment Letter are reproduced below together with the Company’s
responses to those comments.

Definitive
Proxy Statement on Schedule 14A filed April 8, 2009

Compensation
Discussion and Analysis

2008 Compensation
Decisions for Performance-Based Elements, page 29

Comment
1:

We note your response to
our prior comment 4.  However, your
response does not appear to address our concerns.  To the extent that your four high-level goals
are more specifically defined than the disclosure in your document, they should
be more specifically described.  For
example, one of the goals is to “meet or exceed timelines in clinical,
regulatory, quality, manufacturing and commercial operations toward a
successful launch of telaprevir.”  If the
goals, as communicated to your executives, are more specific as to these
timelines, these timelines should be described.
If you believe that a more specific

disclosure of these goals
would be competitively harmful, please provide us with an analysis supporting
your belief.  The analysis should
identify the information that you believe would cause competitive harm,
describe the competitive harm you are likely to experience if the information
is disclosed and explain why this information is not material to
investors.  We will not be in a position
to assess the likelihood of competitive harm if we do not know what the
specific goals are.  Please be advised
that you may request confidential treatment for portions of your response
pursuant to Rule 83.  Please provide
proposed disclosure for your 2010 proxy statement.

Additionally, comment 4
indicated that when information relating to targets and goals is not provided
on the basis that disclosure is not material and is likely to cause competitive
harm, you must discuss how difficult it will be for the executive or how likely
it will be for the company to achieve the undisclosed goals or targets.  Your response directs our attention to the
disclosure relating to the level of achievement which is not the same as a
discussion of the level of difficulty to achieve the stated goals and
targets.  If you continue to believe that
your goals and targets quality for confidential treatment, please discuss the level
of difficulty related to the undisclosed goal(s) or target(s).

Response:

The
Company confirms that as set forth in the Company’s letter to the Commission
dated November 6, 2009, the Company will respond to Comment 1 via EDGAR on
or before December 22, 2009 (shortly after the next meeting of the
Company’s Management Development and Compensation Committee).

Form 10-Q
for the Quarterly Period Ended March 31, 2009

Preliminary
Allocation of Assets and Liabilities, page 18

Comment
2:

We acknowledge your
response to comment seven (a).  Although
the nature, timing and estimated costs of the efforts to complete the
development of VX-222 and VX-759 are subject to risks and uncertainties, we do
not understand why meaningful estimates are not available when it would appear
that these costs are a significant component of the cash flow assumptions
inherent in your fair value assessment of these projects.  Please revise your disclosure to provide the
nature, timing and estimated costs to complete these projects as utilized in
your fair value assessment.

Response
2:

The
Company acknowledges that it used estimates of the nature, timing and costs of
efforts to develop VX-222 and VX-759 in order to generate cash flow assumptions
inherent in the Company’s fair value assessment of these projects.  However, because VX-222 and VX-759 are novel
compounds in early-stage testing the development path for these compounds is
very uncertain.  The number and size of
clinical trials, and the costs and timelines for development, necessarily will
be determined on the basis of experimental outcomes in clinical trials that
will be conducted in the future and which are difficult to predict.

Accordingly,
the Company used a range of cash-flow assumptions based on its experience with
other development programs. These assumptions were informed by general industry
standards for

2

development of
antiviral drug candidates and included a number of alternative scenarios. The
Company believes the disclosure of the specific aggregate estimated costs used
in its model would therefore not be meaningful to investors as a reliable
estimate of its future costs and could in fact imply unjustified certainty
regarding how much it will actually cost to develop VX-222 or VX-759.

The
Company estimates that the development of drug candidates from Phase 1 to
launch typically takes between 4-10 years.
These estimates along with a description of the various stages of drug
development are set forth on page 20 of the Company’s Annual Report on Form
10-K (2 to 4 years to complete Phase 2 development, 2 to 4 years to complete
Phase 3 clinical development and a further 6 months to 2 years to obtain
approval). In addition, in the text of the critical accounting policy
discussion regarding the valuation models used to estimate the values of VX-222
and X-759, the Company states “a market participant would assume that it would
take several years to complete each phase of clinical trials for a drug
candidate for the treatment of patients with HCV.” The Company believes that
these disclosures provide investors with the meaningful information needed to
determine that it will take at least four or more years before any potential
launch of VX-222 or VX-759.  The Company
believes that more specific disclosure regarding the estimated timing for
completion of the development of VX-222 and/or VX-759 could be inappropriately
interpreted as a projection of when the Company expects to launch VX-222 or
VX-759 as a new treatment for HCV, when in fact the timing will depend
significantly on data from future clinical trials which has not been collected
and will not be collected for some time.
The Company believes any such projection would be premature and
misleading to investors and patients infected with HCV (and could subject the
Company to scrutiny from the FDA).

Comment
3

We
acknowledge your response to comment seven (c).
Please address the following additional comments:

·                                          You indicate that you did not ascribe value to
ViroChem’s other preclinical programs and other technologies because market
participants would be unlikely to ascribe value to them.  Please tell us how many other preclinical
programs and other technologies you acquired from ViroChem and the associated
treatment indications.

·                                          It appears that you based the $7.2 million fair value
assigned to the VCH-286 intangible asset based on the development costs
incurred through the acquisition date.
Please demonstrate to us how the value assigned is consistent with that
derived by a market participant and how it complies with the guidance in
paragraph 33 of SFAS 141R.  Please revise
your disclosure accordingly.

Response
3

a)             ViroChem had limited resources, including less than 75
employees and limited funding, and as a result focused most of its efforts on
its lead programs, including VX-222, VX-759 and VCH-286.  At the time of the acquisition, ViroChem had
two preclinical programs (one targeted at drug candidates for the treatment of
HCV and the other targeted at drug candidates for the treatment of HIV).  Neither program had progressed sufficiently
to permit the identification of specific compounds for potential clinical
development. The Company determined that because of the uncertainties related
to the safety, efficacy and commercial viability of any potential drug
candidate that might be identified through these programs,

3

and the significant
additional investments that would be required to even identify compounds for
clinical development through these programs, market participants would not
ascribe value to either of these programs as of the acquisition date. Because
ViroChem was using industry-accepted methods to identify promising drug
candidates, there were no “other technologies” that the Company identified that
the Company believed would have value to a market participant.

b)            The Company evaluated whether to account for VCH-286 as
an asset held for sale under paragraph 33 of SFAS 141(R) “Business Combinations” and SFAS 144 “Accounting for the Impairment or Disposal of
Long-Lived Assets.” In estimating the fair value of VCH-286 at an
amount equal to $7.2 million (based on development costs through the acquisition
date), the Company considered the three potential valuation techniques (the
cost approach, the market approach and the income approach) set forth in
paragraph 18 of SFAS 157 “Fair Value Measurements.”  Furthermore, the Company considered the AICPA
Audit and Accounting Practice Aid Series, “Assets
Acquired in a Business Combination to Be Used in Research and Development
Activities: A Focus on Software, Electronic Devices and Pharmaceutical
Industries” (the AICPA Guide). The Company determined that for VCH-286,
the cost approach, which provides a systematic framework for estimating the
value of intangible asset based on the cost to a market participant to acquire
a substitute asset of comparable utility, was appropriate to estimate the fair
value of the asset. Given the uncertainties regarding whether any market
participant would continue the development of VCH-286 based on the clinical
data obtained through the acquisition date and the numerous drugs that are
already being marketed for the treatment of HIV, the Company (i) does not
believe that reliable forecasts of future benefits of VCH-286 exist and
(ii) believes that there may be no market for the sale or transfer of
assets comparable to VCH-286. Thus the cost approach is the most appropriate
method to value this compound.  The
Company believes that this conclusion is consistent with the AICPA Guide,
paragraph 2.1.04. Overall, the Company believes that this valuation is
reasonable in light of the limited resources ViroChem was allocating to this
asset at the time of acquisition, the limited interest that third parties had
expressed in acquiring this asset at the time of acquisition and the Company’s
internal evaluation of this program.

While the Company has
disclosed that it may seek to “license rights” to ViroChem’s non-HCV assets,
the Company has not committed to any specific sale of VCH-286, and does not
know what form any potential license might take.  As a result, the Company determined that it
has not met criteria set forth in paragraph 30 of SFAS 144 for an “asset held
for sale” with respect to VCH-286.  For
example, the Company has not committed “to a plan to sell the asset” as
required by clause (a) of paragraph 30 of SFAS 144 and the Company has not
met the requirement pursuant to paragraph (d) of SFAS 144 that the sale of
the asset be probable. As a result, the Company does not believe that paragraph
33 of SFAS 141(R) is applicable to VCH-286, and is accounting for VCH-286
as an identified intangible indefinite-lived asset.

The Company acknowledges
that:

1)                                      the Company is responsible for the
adequacy and accuracy of the disclosure in its filings;

2)                                      Staff comments or changes to disclosure
in response to Staff comments do not foreclose the Commission from taking any
action with respect to the filing; and

3)                                      the Company may not assert Staff comments
as a defense in any proceeding initiated by the Commission or any person under
the federal securities laws of the United States.

4

Please contact me at
617-444-6417 in the event that you have any questions or concerns with respect
to this matter.  In the event that I am
not available, please contact my colleague, Valerie Andrews, at 617-444-6227.

  Very truly yours,

  /s/ Kenneth S. Boger

  Kenneth S. Boger

  Senior Vice President
  and General Counsel

5

CORRESP
1
filename1.htm

  VERTEX
  PHARMACEUTICALS INCORPORATED

  130
  WAVERLY STREET ·
  CAMBRIDGE, MA 02139-4242

  TEL.
  617.444.6100 · FAX
  617.444-7117

  http://www.vrtx.com

November 6,
2009

Delivered by EDGAR

Securities
and Exchange Commission

Division
of Corporation Finance

100 F Street, N.E.

Washington,
DC 20549

  Attn:

  Keira
  Ino, Staff Accountant

  Mike
  Rosenthall, Staff Attorney

  Re:

  Vertex Pharmaceuticals Incorporated

  Form 10-K for the Period Ended December 31, 2008

  Form 10-Q for the Quarterly Period Ended
  March 31, 2009

  Definitive Proxy Statement on Schedule 14A filed
  April 8, 2009

  File No. 000-19319

Ladies
and Gentlemen:

This
letter relates to comments from the staff (the “Staff”) of the
Securities and Exchange Commission (the “Commission”) to Vertex
Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s
letter to the Company, dated October 23, 2009 (the “Comment Letter”),
regarding the above referenced Company filings.
The Company hereby confirms that the Company (i) has received the
Comment Letter and (ii) will file its response to (A) Comment 1 via
EDGAR on or before December 22, 2009 (shortly after the next meeting of
the Company’s Management Development and Compensation Committee) and (B) Comments
2 and 3 via EDGAR on or before November 18, 2009.  The Company believes that the additional time
required to respond to Comment 1 will ensure that the Company’s Management
Development and Compensation Committee will be able to provide adequate input
regarding Comment 1, which requests proposed disclosure for the Company’s 2010
proxy statement.

In
addition, the Company acknowledges that:

1)  The Company is responsible for the adequacy
and accuracy of the disclosure in its filings;

2)  Staff comments or changes to disclosure in
response to Staff comments do not foreclose the Commission from taking any
action with respect to the filing; and

3)  The Company may not assert Staff comments as
a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

Please contact me at 617-444-6417 in the event that
you have any questions or concerns with respect to this matter.  In the event that I am not available, please
contact my colleague, Valerie Andrews, at 617-444-6227.

  Very
  truly yours,

  /s/
  Kenneth S. Boger

  Kenneth
  S. Boger

  Senior Vice President and General Counsel

cc:   Jim B. Rosenberg, Senior Assistant Chief
Accountant

Mark Brunhofer, Senior Staff Accountant

Jennifer Riegel, Staff Attorney

2

CORRESP
1
filename1.htm

  VERTEX
  PHARMACEUTICALS INCORPORATED

  130 WAVERLY STREET ·
  CAMBRIDGE, MA 02139-4242

  TEL.
  617.444.6100 ·
  FAX 617.444.6483

  http://www.vrtx.com

  August 31, 2009

Delivered via EDGAR

Securities
and Exchange Commission
 Division of Corporation Finance

100
First Street, N.E.

Mail
Stop 4720

Washington,
DC 20549

  Attn:

  Jim B. Rosenberg, Senior Assistant Chief Accountant

  Kei Ino, Staff Accountant

  Mark Brunhofer, Senior Staff Accountant

  Mike Rosenthall, Staff Attorney

  Jennifer Riegel, Staff Attorney

  Re:

  Vertex Pharmaceuticals Incorporated

  Form 10-K for the Period Ended December 31, 2008

  Form 10-Q for the Quarterly Period Ended
  March 31, 2009

  Definitive Proxy Statement on Schedule 14A filed
  April 8, 2009

  File No. 000-19319

Ladies
and Gentlemen:

The
purpose of this letter is to respond to the comments from the staff (the “Staff”)
of the Securities and Exchange Commission (the “SEC”) to Vertex
Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s
letter to Joshua Boger dated July 8, 2009 (the “Comment Letter”)
regarding the Company’s filings with the SEC referenced above. The comments
from the Comment Letter are reproduced below together with the Company’s
responses to those comments.

Form 10-K for the Period Ended December 31, 2008

Item 1. Business

Intellectual Property, page 15

Comment 1

We
note that you disclose that you have the rights to a number of U.S. and foreign
patents covering your potential drug targets, compounds you are developing to
modulate those targets, methods of making or using those compounds and
proprietary elements of your drug discovery platform.  Please expand your disclosure here to include
the number of patents related to each material potential drug target, compound,
method and/or proprietary element and the expiration dates for those patents.

Response 1

The
Company proposes to expand its disclosure regarding its intellectual property
in future periodic filings (commencing with its Annual Report on Form 10-K
for the year ending December 31, 2009) to provide additional information
in both narrative and tabular form regarding the patents and pending patent
applications that claim the composition-of-matter of its Phase 2 and Phase 3
drug candidates.  The expanded disclosure
would include (i) whether or not the patents have been granted in the
United States and the European Union, and (ii) expiration dates for the
issued patents and anticipated expiration dates for claims that are the subject
of patent applications.

As
part of its patent strategy, the Company seeks to augment its intellectual
property estate by filing patent applications covering pharmaceutical
compositions, related solid forms, formulations, dosing regimens, methods of
use and manufacturing methods for each of its drug candidates, as appropriate,
and as a result the Company currently has more than 800 patents and patent
applications in the Company’s intellectual property portfolio for the United
States alone.  However,
composition-of-matter claims are generally the most significant patent claims
for that segment of the pharmaceutical industry that focuses, like the Company,
on small molecule drug candidates that are new chemical compounds, and the
Company currently has patents or patent applications with composition-of-matter
claims for each of its more advanced clinical drug candidates.  Therefore, the Company believes that a focus
on composition-of-matter claims covering the Company’s more advanced clinical
drug candidates will provide the most meaningful disclosure to investors while avoiding
the investor confusion that could be engendered through disclosure regarding
the Company’s numerous secondary patents/patent applications.

The
Company expects that the expanded disclosure, to be updated as circumstances
dictate, would be substantially as follows:

We hold issued
patents and pending patent applications in the United States, and in foreign
countries we deem appropriate, claiming intellectual property developed as part
of each of our significant research and development programs, but we cannot be
certain that issued patents will be enforceable or provide adequate protection
or that pending patent applications will result in issued patents. While we
have numerous issued patents and pending patent applications in our patent
portfolio, we believe that the patents and patent applications in the United
States and European Union that claim the composition-of-matter of our drug
candidates that have progressed at least into Phase 2 clinical trials are the
most important to our business.  The following
table sets forth the status of the primary patents and patent applications in
the United States and the European Union covering the composition-of-matter of
these drug candidates:

  Drug Candidate

  Status of U.S. Patent

  (Anticipated Expiration,

  Subject to Potential Extensions)

  Status of European Union Patent

  (Anticipated Expiration,

  Subject to Potential Extensions)

  Telaprevir

  Application Pending
  (2021)

  Granted (2021)

  VX-770

  Granted (2025)

  Application Pending
  (2025)

  VX-809

  Application Pending
  (2026)

  Application Pending
  (2026)

2

Management’s Discussion and Analysis of Financial
Conditions and Results of Operations

Critical Accounting Policies and Estimates, page 55

Comment 2

In
your discussion regarding the recognition of revenue associated with up-front
license fees, you indicate that your estimates regarding the period of
performance have changed in the past and may change in the future and that any
change could result in substantial changes to the period over which up-front
license fee revenues are recognized.
Please revise your disclosure to specifically discuss the magnitude of
your historical changes in estimate and the resulting financial statement
impact as well as the impact of reasonably likely changes in your current
period estimate.

Response 2

In
the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2009 (the “Second Quarter 10-Q”), the Company supplemented its
discussion of its critical accounting policies and estimates with respect to
up-front license fees as follows (with the supplemental language emphasized,
from pages 37 and 38 of the Second Quarter 10-Q):

“We recognize revenues
from nonrefundable, up-front license fees related to collaboration agreements,
including the $165.0 million we received from Janssen in 2006, on a
straight-line basis over the contracted or estimated period of performance. The
period of performance over which the revenues are recognized is typically the
period over which the research and/or development is expected to occur. As a
result, we often are required to make estimates regarding drug development and
commercialization timelines for compounds being developed pursuant to a
collaboration agreement. Because the drug development process is lengthy and
our collaboration agreements typically cover activities over several years,
this approach often has resulted in the deferral of significant amounts of
revenue into future periods. In addition, we periodically evaluate our estimates
in light of changes and anticipated changes in the development plans for our
drug candidates and because of the many risks and uncertainties associated with
the development of drug candidates, our estimates regarding the period of
performance have changed in the past and may change in the future. Our
estimates regarding the period of performance under the Janssen collaboration
agreement were adjusted in 2007 as a result of changes in the global
development plan for telaprevir. This adjustment was made on a prospective
basis beginning in the period in which the change was identified and resulted
in a decrease in the amount of revenues we were recognizing from the Janssen
collaboration by $2.6 million per fiscal quarter after the adjustment.
Any future adjustment in our estimates of the period of performance under our
collaborations could result in substantial changes to the period over which the
revenues from an up-front license fee related to each such collaboration are
recognized. If we adjusted our estimates as of July 1, 2009 to increase
the period of performance under the Janssen agreement by one year, it would
result in a decrease in the amount of deferred revenues we recognize from our
Janssen collaboration of approximately $1.1 million per fiscal quarter
beginning in the third quarter of 2009.”

3

Results  of
Operations

Research and Development Expenses, page 61

Comment 3

We
acknowledge your July 30, 2004 response to comment 1 of our June 28,
2004 letter in which you indicated that you did not track research and
development expenses by project.  Please
tell us whether you have since modified your systems to track these expenses by
project.  If so, please revise your
disclosure to add discussion of these expenses by project.  If not, please specifically disclose that
fact, explain why you do not maintain and evaluate research and development
costs by project and provide other quantitative or qualitative disclosure that
indicates the amount of the company’s resources being used on each project.

Response 3

Since
the Company’s prior response to the Staff dated July 30, 2004, the Company
has not modified its systems to track expenses for individual drug
candidates.  Specifically, the Company
does not assign to individual drug candidates internal costs such as salary and
benefits, stock-based compensation expense, laboratory supplies and
infrastructure costs, because employees within the Company’s research and
development programs typically are deployed across multiple research and
development programs and the Company manages its research and development
groups on a consolidated basis. While the Company does track external costs by
individual drug program, such as the costs of services provided to the Company
by clinical research organizations and costs of other outsourced research
activities, the Company’s internal costs are usually significantly greater than
these external costs, and disclosure of only external costs would provide an
incomplete and potentially misleading picture of the research and development
costs on a drug candidate basis.  In the
Second Quarter 10-Q, the Company supplemented its disclosure regarding research
and development expenses to explain why it does not track expenses for individual
drug candidates, as follows (page 41 of the Second Quarter 10-Q):

“Our research and development expenses
include internal and external costs incurred for our drug candidates, including
telaprevir and VX-770. We do not assign to individual drug candidates our
internal costs such as salary and benefits, stock-based compensation expense,
laboratory supplies and infrastructure costs because the employees within our
research and development groups are typically 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 do allocate by
individual drug program.”

The
Company believes that it is the overall expansion of its research and
development expenses in response to the progress that has been made with
respect to the development of its lead drug candidates, and in particular
telaprevir, that is of most interest to its investors and the Company has
provided significant disclosure regarding this expansion of its research and
development expenses.   For example, in
its Annual Report on Form 10-K for the year ended December 31, 2007,
the Company stated that it was “focusing a high proportion of our financial and
management resources on telaprevir,” that “successfully commercializing
telaprevir will require a substantial additional financial investment over the
next several years” and that “[i]n 2008 and the following years, we expect to
invest significant resources to expand our capabilities in clinical
development, regulatory affairs, quality control and commercial operations and
to build and manage a commercial supply chain as we continue development

4

and
prepare for the potential commercial launch of telaprevir.”  In addition, in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2008 and in the Second
Quarter 10-Q, the Company disclosed that “[o]ver the next several years, we
expect to focus a substantial portion of our resources on the development and
potential commercialization of telaprevir.”
In the Second Quarter 10-Q, on page 42, the Company added the
following to provide additional qualitative disclosures about resources being
used on telaprevir: “[o]ur lead drug candidate telaprevir represents the
largest portion of our development costs for our clinical drug candidates.”

Finally,
the Company considered the Staff’s guidance regarding accounting and disclosure
by companies engaged in research and development activities that was referenced
in the SEC’s comment letter, dated June 28, 2004, and the Company added in
the Second Quarter 10-Q the following supplemental disclosure regarding
telaprevir in its discussion of its research and development expenses (page 42
of Second Quarter 10-Q):

“Based on the
completion of enrollment of our Phase 3 clinical trials of telaprevir in February 2009,
we anticipate that our ongoing Phase 3 clinical trials will be completed
in mid 2010, but that development costs associated with other clinical trials
of telaprevir may continue after the completion of the registration trials. If
we are able to successfully commercialize telaprevir in accordance with current
development timelines, we anticipate revenues and cash flows from the sales of
telaprevir to commence in 2011. Our other drug candidates are less advanced and
as a result any estimates regarding development timelines for these drug
candidates are highly subjective and subject to change, and we cannot at this
time make a meaningful estimate when, if ever, these drug candidates, including
the drug candidates we acquired from ViroChem, will generate revenues and cash
flows.”

Definitive Proxy Statement on Schedule 14A filed April 8,
2009

Compensation Discussion and Analysis

2008 Compensation Decisions for Performance-Based
Elements, page 29

Comment 4

You
disclose that you “consider aspects of [your] annual corporate goals to be
confidential information and closely guard this information.”  Please supplementally describe the “aspects
of [your] corporate goals” that you believe constitute confidential
information.  Please present a
comprehensive analysis supporting your conclusion that the disclosure of this
information is not material to investors and would cause competitive harm if it
is disclosed.  Additionally, when
information regarding targets and goals is not provided on the basis that
disclosure would cause competitive harm, you must discuss how difficult it will
be for the executive or how likely it will be for your company to achieve the
undisclosed targets or goals.  Please see
Instruction 4 to Item 402(b) of Regulation S-K.  Please note that you may request confidential
treatment for portions of your analysis pursuant to Rule 83.

Response
4

(i)                                     Supplemental Description of
Aspects of Corporate Goals Constituting Confidential Information.

5

In
the definitive proxy statement for the 2009 Annual Meeting of Stockholders (the
“2009 Proxy”), the Company provided substantial disclosure regarding the
Company goals for and performance in 2008.
This discussion included full disclosure of the four top-level Company
goals for 2008 (page 29 of the 2009 Proxy).  Following the disclosure of these goals, the
Company provided a more detailed discussion of the Company’s accomplishments
with respect to these goals in 2008 (page 29 of the 2009 Proxy).  The Company

CORRESP
1
filename1.htm

  VERTEX
  PHARMACEUTICALS INCORPORATED

  130
  WAVERLY STREET ·
  CAMBRIDGE, MA 02139-4242

  TEL.
  617.444.6100 · FAX
  617.444-6483

  http://www.vrtx.com

July 21,
2009

Delivered
by EDGAR

Securities
and Exchange Commission

Division
of Corporation Finance

100 F Street, N.E.

Washington,
DC 20549

  Attn:

  Keira
  Ino, Staff Accountant

  Mike
  Rosenthall, Staff Attorney

  Re:

  Vertex Pharmaceuticals Incorporated

  Form 10-K for the Period Ended December 31, 2008

  Form 10-Q for the Quarterly Period Ended
  March 31, 2009

  Definitive Proxy Statement on Schedule 14A filed
  April 8, 2009

  File
  No. 000-19319

Ladies
and Gentlemen:

This
letter relates to comments from the staff (the “Staff”) of the
Securities and Exchange Commission (the “Commission”) to Vertex
Pharmaceuticals Incorporated (the “Company”) set forth in the Staff’s letter
to the Company, dated July 8, 2009 (the “Comment Letter”),
regarding the above referenced Company filings.
The Company hereby confirms that the Company has (i) received the
Comment Letter and (ii) will file its response to the Comment Letter via
EDGAR on or before August 31, 2009.
The Company believes that the additional time for the response will
ensure that the legal and finance personnel responsible for responding to the
Comment Letter, who are also responsible for a number of important Company
activities and initiatives during the 30-day period immediately following
receipt of the Comment Letter, including a meeting of the Company’s Board of
Directors, several ongoing potential transactions and preparation of the
Company’s quarterly report on Form 10-Q for the three months ended June 30,
2009 (which is due on August 10, 2009 and will include additional
disclosure regarding the Company’s acquisition of ViroChem Pharma, Inc.),
will be able to give optimal attention to the Company’s response to the Comment
Letter.

In
addition, the Company acknowledges that:

1)  The Company is responsible for the adequacy
and accuracy of the disclosure in its filings;

2)  Staff comments or changes to disclosure in
response to Staff comments do not foreclose the Commission from taking any
action with respect to the filing; and

3)  The Company may not assert Staff comments as
a defense in any proceeding initiated by the Commission or any person under the
federal securities laws of the United States.

Please
contact me at 617-444-6417 in the event that you have any questions or concerns
with respect to this matter.  In the
event that I am not available, please contact my colleague, Omar White, at
617-444-6396.

  Very
  truly yours,

  /s/
  Kenneth S. Boger

  Kenneth
  S. Boger

  Senior
  Vice President and General Counsel

  cc:

  Jim
  B. Rosenberg, Senior Assistant Chief Accountant

  Mark
  Brunhofer, Senior Staff Accountant

  Jennifer
  Riegel, Staff Attorney

2

Via Facsimile and U.S. Mail
Mail Stop 4720

                                                                                               July 8, 2009

Mr. Joshua Boger
Chief Executive Officer
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, MA  02139-4242

Re: Vertex Pharmaceuticals Incorporated
Form 10-K for the Period Ended December 31, 2008
Form 10-Q for the Quarterly Period Ended March 31, 2009
Definitive Proxy Statement on Schedule 14A filed April 8, 2009
File No. 000-19319

Dear Mr. Boger:

We have reviewed your filings and have the following comments. In our
comments, we ask you to provide us with  information to better understand your
disclosure. Where a comment requests you to  revise disclosure, the information you
provide should show us what the revised disc losure will look like and identify the annual
or quarterly filing, as ap plicable, in which you intend to firs t include it.    If you disagree,
we will consider your explanation as to why our comments are inapplicable or a revision
is unnecessary.  After reviewing the info rmation provided, we may raise additional
comments and/or request that you amend your filing.

 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our  comments or on any other aspect of our
review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Form 10-K for the Period Ended December 31, 2008

Item 1. Business
Intellectual Property, page 15

1. We note that you disclose that you have the rights to a number of U.S and foreign
patents covering your potential drug targ ets, compounds you are developing to
modulate those targets, methods of making or using those compounds and
proprietary elements of your drug disc overy platform.  Please expand your
disclosure here to include the number of pa tents related to each material potential
drug target, compound, method and/or propr ietary element and the expiration
dates for those patents.

Mr. Joshua Boger
Vertex Pharmaceuticals Incorporated July 8, 2009 Page 2

Management’s Discussion and Analysis of  Financial Conditions and Results of
Operations
Critical Accounting Policies and Estimates, page 55

2. In your discussion regarding the recogniti on of revenue associated with up-front
license fees, you indicate that your estimat es regarding the period of performance
have changed in the past and may change in the future and that any change could
result in substantial changes to th e period over which up- front license fee
revenues are recognized.  Please revise your disclosure to specifically discuss the
magnitude of your historical changes in  estimate and the resulting financial
statement impact as well as the impact of reasonably likely changes in your
current period estimate.

Results of Operations
Research and Development Expenses, page 61

3. We acknowledge your July 30, 2004 response to comment 1 of our June 28, 2004
letter in which you indicated that you did not track research and development
expenses by project.  Please tell us wh ether you have since modified your systems
to track these expenses by project.  If  so, please revise your  disclosure to add
discussion of these expenses by project.  If not, please specifically disclose that
fact, explain why you do not maintain and evaluate research and development
costs by project and provide other quantitative or quali tative disclosure that
indicates the amount of the company’s re sources being used on each project.

Definitive Proxy Statement on Schedule 14A filed April 8, 2009

Compensation Discussion and Analysis
2008 Compensation Decisions for Perf ormance-Based Elements, page 29

4. You disclose that you “consider aspects of [your] annual corp orate goals to be
confidential information and closely guard this information.”  Please
supplementally describe the “aspects of [your] corporate goals” that you believe
constitute confidential in formation.  Please present a comprehensive analysis
supporting your conclusion that the disclosure  of this information is not material
to investors and would cause competitive harm if it is disclosed.  Additionally,
when information regarding targets and goals is not provide d on the basis that
disclosure would cause competitive harm, you must discuss how difficult it will
be for the executive or how likely it will be for your company to achieve the
undisclosed targets or goals. Please see In struction 4 to Item 402(b) of Regulation
S-K.  Please note that you may request c onfidential treatment for portions of your
analysis pursuant to Rule 83.

Mr. Joshua Boger
Vertex Pharmaceuticals Incorporated July 8, 2009 Page 3
 Form 10-Q for the Quarterly Period Ended March 31, 2009

Note 9.  Acquisition of ViroChem Pharma Inc.

Purchase Price, page 18

5. Please revise your disclosure to descri be the primary reasons for the business
combination and the factors that make up the goodwill recognized.  Refer to
paragraphs 68d and 68e  of SFAS 141(R).

Preliminary Allocation of Asse ts and Liabilities, page 18

6. Please revise your disclosure to indi cate when you expect  to finalize your
valuations of the intangible assets acquired.

7. You disclose that the $525.9 million of inta ngible assets in your preliminary fair
value estimates at the acquisition date rela te entirely to in-process research and
development, or IPR&D, assets.  Please address the following comments:
a. You disclose that your IPR&D assets primarily relate to ViroChem’s two
polymerase inhibitors, VCH-222 and VCH-759.  On page 32, you indicate
that you would incur signif icant charges if, in particular VCH-222, were to
become impaired.  Consistent with the guidance in paragraph 4.2.03 of the
AICPA Practice Aid on IPR&D, please revise  your disclosure related to these
IPR&D assets here and in MD&A to:
• Indicate separately the values of VCH-222 and VCH-759;
• Clarify the differences between th e two projects and why VCH-222 is
apparently more valuable than VCH-759;
• Indicate the nature, timing and estimate d costs of the efforts necessary to
complete the projects, and the anticipated completion dates;
• Disclose significant appraisal assumptions, such as:
o The period in which material net cash inflows from significant projects
are expected to commence;
o Material anticipated changes from  historical expense levels; and
o The risk adjusted discount rate applied to each project’s cash flows.
• Discuss in periods after the acquisition the status of efforts to complete the
projects, and the impact of any delays  on your expected investment return,
results of operations and financial condition.
b. Please explain to us why you did not iden tify any other intangible assets at
acquisition.  In your respons e, please specifically indi cate why you apparently
do not believe that you acquired core  technologies for which you have
alternative future uses in research an d development, or otherwise.  Also,
please specifically explain why you appa rently do not identify any of the
technology-based intangible assets indicated in paragraph A51 of SFAS
141(R). Please reference for us the au thoritative literature you rely upon to
support your accounting.
c. On page 30 you indicate that you are evaluating ViroChem’s non-HCV
programs and that you may seek to license  rights to ViroChem’s other assets
to a third-party collaborator.   Plea se explain to us how you accounted for

Mr. Joshua Boger
Vertex Pharmaceuticals Incorporated July 8, 2009 Page 4
 these programs and assets in your acqui sition accounting and reference for us
the authoritative literature you rely  upon to support your accounting.

*    *    *    *

Please respond to these comments within  10 business days or tell us when you
will provide us with a response.  Please furnish a letter that  keys your responses to our
comments and provides the requested information.  Detailed letters greatly facilitate our
review.  Please furnish your letter on EDGAR under the form type label CORRESP.

 We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.

 In connection with responding to our co mments, please provide, in your letter, a
statement from the company acknowledging that:

• the company is responsible for the adequacy  and accuracy of the disclosure in the
filing;
• staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.

Please contact Kei Ino, Staff Accountant,  at (202) 551-3659 or  Mark Brunhofer,
Senior Staff Accountant, at (202) 551-3638 if you have  questions regarding the
processing of your response as well as any questions regarding comments on the financial
statements and related matters.  You may c ontact Mike Rosenthall, Staff Attorney at
(202) 551-3674 or Jennifer Riegel, Staff Atto rney at (202) 551-3575 with questions on
any of the other comments.  In this regard, do not hesitate to cont act me, at (202) 551-
3679.

Sincerely,

Jim B. Rosenberg
Senior Assistant Chief Accountant

Mail Stop 6010
  February 29, 2008
 Kenneth S. Boger
Senior Vice President and General Counsel
Vertex Pharmaceuticals Incorporated 130 Waverly Street Cambridge, Massachusetts 02139
Re: Vertex Pharmaceuticals Incorporated  Definitive Proxy Statement
Filed April 12, 2007
 File No. 000-19319
 Dear Mr. Boger:
We have completed our review of your executive compensation and related
disclosure and have no further comments at this time.
Please note that the company is responsib le for the adequacy and accuracy of the
disclosure in its filing.  We  are not approving any proposed  disclosure you may have
included in your response lette r or any disclosure you include in your future filings in
response to our comments.
If you have any further questions regardi ng our review of your filing, please call
me at (202) 551-3635.          S i n c e r e l y ,             T i m  B u c h m i l l e r          S e n i o r  A t t o r n e y

CORRESP
1
filename1.htm

                                                                                                                                                                                                VERTEX
PHARMACEUTICALS INCORPORATED

                                                                                                                                                                                                                                                                                                                                                130
WAVERLY STREET ·
CAMBRIDGE, MA 02139-4242

                                                                                                                                                                                                                                                                                                                                                TEL.
617.444.6100 ·
FAX 617.444-7117

                                                                                                                                                                                                                                                                                                                                                http://www.vrtx.com

February 28, 2008

Delivered by EDGAR

Securities and Exchange Commission

Division of Corporate Finance

100 F Street, N.E.

Mail Stop 6010

Washington, DC  20549

Attn:
Tim Buchmiller, Senior Attorney

Re:          Vertex Pharmaceuticals Incorporated

                Definitive
Proxy Statement

                Filed
April 12, 2007

                File
No. 000-19319

Ladies and Gentlemen:

This letter is a response to
comments from the staff of the Securities and Exchange Commission (the “Commission”)
directed to Vertex Pharmaceuticals Incorporated (the “Company”), as set
forth in the staff’s letter to Mr. Kenneth S.  Boger, dated January 16, 2008 (the “Second
Comment Letter”).  The Second
Comment Letter was itself a response to the Company’s letter dated October 23,
2007, submitted in response to the staff’s letter to Dr. Joshua Boger
dated August 21, 2007”, regarding the Company’s Definitive Proxy
Statement, which was filed with the Commission on April 12, 2007 (the “Proxy
Statement”).

For convenient reference,
the Company has set forth below in italics each of the Staff’s comments set
forth in the Second Comment Letter and has keyed the Company’s responses to the
numbering of the comments and the headings used in the Second Comment Letter.

Comment 1:                              We note
from the first paragraph of your response to prior comment 4, in the sentence
which begins “[f]or example,” you have provided additional detail regarding the
company-wide goals that were established in order for the named executive
officers to earn their respective annual cash bonus and equity awards.  Please confirm that, in addition to the
greater detail that you have undertaken to make with respect to the difficulty
of achieving the annual performance goals, your future filings, to the extent
applicable, will include at least as much detail as you have provided in the
portion of your response that we have noted and that you will provide all
information with respect to these goals that is material to your shareholders’
understanding of your compensation policies and decisions with respect to your
named executive officers.

Response 1:                              In addition to
the greater detail that the Company  has
undertaken to provide with respect to the difficulty of achieving annual
Company-wide performance goals, the Company will include in its future filings,
to the extent applicable, at least as much detail as was provided in the
portion of the response noted by the staff, and it will provide all information
with respect to the Company-wide performance goals that is material to the
Company’s shareholders’ understanding of the Company’s compensation policies
and decisions with respect to the named executive officers.

Comment 2:                              We note
your response to prior comment 7.  Please
confirm that you will include the disclosure in your future filings, as
applicable, that was requested by that comment to the extent that it could
affect a fair understanding of any of the named executive officer’s
compensation for the last fiscal year.
In addition, for each specific target that you believe you have a basis
to omit, please provide us with a more detailed analysis of how disclosure of
the specific quantitative or qualitative company-wide and individual
performance goals would result in competitive harm.  Disclosure in the proxy statement and your
response suggests that there may be a significant number of company-wide and
individual performance goals, yet your response only makes a brief competitive
harm argument as to those performance goals that you deem to be trade secrets
and does not provide a competitive harm argument as to the subset of
performance goals you do not consider to be confidential trade secrets.  Identify in a response letter to us the
specific company-wide and individual goals you consider to be trade secrets and
explain in detail how a competitor could either use such information to cause
you commercial harm or derive other information from such goals that could then
be used to negatively impact the company.
Provide a similar discussion for those goals you do not consider to be
confidential trade secrets, such as financial objectives and as noted on page 15
of your disclosure, “other aspects of company performance that [you] believe
drive stockholder value.”

Response 2:                              The Board of
Directors establishes performance goals at the beginning of each fiscal year,
and measures performance against those goals after the year has been
completed.  Goals in place for the current
year therefore are not applicable to the named executive officers’ compensation
for the last fiscal year, and disclosure of their content could not affect a
fair understanding of any of the named executive officers’ compensation based
on performance for the last fiscal year.
Accordingly, under the Company’s existing compensation policies and with
respect to compensation decisions made on account of prior years’ performance,
the Company does not expect that it will disclose current year performance goals.  The Company further confirms that if, in the
future, the current year performance goals do affect a fair understanding of
the prior year’s compensation decisions for the named executive officers, it
will perform the same competitive harm analysis and provide the same level of
detail and information that it has undertaken to provide with respect to the
last year’s performance goals in its responses to Comments 1 and 3 in the
Second Comment Letter.

Comment 3:                              We note
your responses to prior comments 5 and 7.
Item 402(b)(2)(vii) of Regulation S-K requires that a company
disclose, if material, how specific forms of compensation are

2

                                                                                                structured
and implemented to reflect a named executive officer’s individual performance
and/or individual contribution.  As part
of this, a company must identify the elements of individual performance and/or
contribution that are taken into account.
As such, to the extent material, you need to describe each of the individual
performance goals that were in place for each named executive officer and how
each named executive officer actually performed relative to such individual
goals.  Please confirm you will do so in
future filings.

Response 3:                              The Board’s
evaluation of the named executive officers’ performance in 2007 did not take
specific individual goals into account.
The Company confirms that it will describe all information with respect
to the factors considered in assigning a performance rating for each named
executive officer for 2007 that is material to the Company’s shareholders’
understanding of its compensation policies and decisions with respect to the
named executive officers.  The Company
further confirms that, in the future, it will describe each of the individual
performance goals that were in place for each named executive officer and how
each named executive officer actually performed relative to such individual
goals, to the extent such goals were taken into account in making compensation
decisions and are material to the Company’s shareholders’ understanding of its
compensation policies and decisions with respect to the named executive
officers.

Comment 4:                              We note
your response to prior comment 9 and we disagree with your conclusion that
disclosure of the specific target prices in the proxy statement would not be
material to your shareholders’ understanding of the level of executive
compensation.  Please either confirm you
will disclose in future filings the specific target prices or provide us with
the competitive harm analysis requested in prior comment 9.

Response 4:                              Based on our
telephone conversation, the Company will disclose that the “Target Price”  that must be achieved in order to accelerate
the vesting of 50% of the PARS shares for all such grants made to date is at
least 50% higher than the fair market value of the Company’s common stock on
the date of grant.  The Company also will
clearly refer the Company’s shareholders to the section of the proxy statement
that addresses the Company’s equity granting practices, to make clear that the
Company’s practice has been to award PARS on the date of the Board’s first
regularly scheduled meeting of each fiscal year, in conjunction with the Board’s
review of the prior year’s performance.
The Company further will disclose the Target Price for PARS for which
the Target Price has been achieved.

Comment 5:                              We note
your response to prior comment 11.  While
we appreciate the concern that inclusion of the definitions of the referenced
legal terms in the proxy statement may potentially complicate your disclosure,
referring your shareholders to the applicable agreement with each named
executive officer for the meanings of such terms is not consistent with the
guidelines discussed in Section VI of Commission Release 33-8732A.  However, in light of your concerns, it would
appear appropriate to follow the guidelines in the Commission Release regarding
use of a glossary.  In future filings, please
include the meanings of the defined terms in a glossary or other section of
your document rather than referencing your shareholders to the agreements that
have been previously filed

3

                                                                                                with
the Commission.  To mitigate your
concerns, consider including such glossary in a section other than your
compensation discussion and analysis, but clearly refer your shareholder to
that section.

Response 5:                              The Company
confirms that it will, in future filings, include the meanings of the defined
terms referenced in the staff’s prior comment 11 in a section of the proxy
statement, and clearly refer the Company’s shareholders to that section.

In addition, the Company
hereby confirms that in future filings, the Company will enhance its overall
disclosure by complying with the comments provided by the Commission in the
manner set forth in the responses above, subject in all cases, to any change
with respect to the policies, programs, agreements and other facts underlying
the Company’s disclosures.

Please contact me at
617-444-6417 in the event that you have any questions or concerns with respect
to this matter.  In the event that I am
not available, please contact my colleague, Valerie Andrews, at 617-444-6227.

  Very truly yours,

   /s/ Kenneth S. Boger

  Kenneth S. Boger

  Senior Vice President and
  General Counsel

4

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filename1.htm

  VERTEX PHARMACEUTICALS
  INCORPORATED

  130 WAVERLY STREET · CAMBRIDGE, MA 02139-4242

  TEL. 617.444.6100 · FAX 617.444-6227

  http://www.vrtx.com

February 22, 2008

Delivered by EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Mail Stop 6010

Washington, DC 20549

Attn:  Tim Buchmiller, Senior Attorney

  Re:

  Vertex
  Pharmaceuticals Incorporated

  Definitive
  Proxy Statement

  Filed
  April 12, 2007

  File No.
  000-19319

Ladies
and Gentlemen:

This
letter relates to (i) comments from the staff of the Securities and
Exchange Commission (the “Commission”) to Vertex Pharmaceuticals
Incorporated (the “Company”) set forth in the staff’s letter to Kenneth
S. Boger, dated January 16, 2008 (the “Comment Letter”), regarding the
Company’s Definitive Proxy Statement, which was filed with the Commission on April 12,
2007, and (ii) a dialogue between a representative of the Company’s legal
department and a representative of the staff of the Commission, which occurred
on February 21, 2008.  During such
dialogue, the staff of the Commission (i) requested that the Company file
this letter with the Commission on or before February 22, 2008 and (ii) confirmed
that the Company’s proposed schedule for responding to the Comment Letter, as
set forth in this letter, was acceptable to the Commission.

The
Company hereby confirms:

1)              That the Company has
received the Comment Letter.

2)              That the Company is in the
process of drafting its response to the Comment Letter.

3)              That the Company will file
its response to the Comment Letter via EDGAR on or before February 29, 2008.

Please contact me at 617-444-6227 in the event that
you have any questions or concerns with respect to this matter.

  Very truly yours,

  /s/ Valerie L. Andrews

  Valerie L. Andrews

  Deputy General Counsel

2

CORRESP
1
filename1.htm

  VERTEX PHARMACEUTICALS
  INCORPORATED

  130 WAVERLY STREET · CAMBRIDGE, MA 02139-4242

  TEL. 617.444.6100 · FAX 617.444-6483

  http://www.vrtx.com

January 30, 2008

Delivered by EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Mail Stop 6010

Washington, DC 20549

Attn:  Tim Buchmiller, Senior Attorney

  Re:

  Vertex
  Pharmaceuticals Incorporated

  Definitive
  Proxy Statement

  Filed
  April 12, 2007

  File No.
  000-19319

Ladies
and Gentlemen:

This
letter relates to (i) comments from the staff of the Securities and
Exchange Commission (the “Commission”) to Vertex Pharmaceuticals
Incorporated (the “Company”) set forth in the staff’s letter to Dr. Joshua
Boger, dated January 16, 2008 (the “Comment Letter”), regarding the
Company’s Definitive Proxy Statement, which was filed with the Commission on April 12,
2007, and (ii) a dialogue between a representative of the Company’s legal
department and a representative of the staff of the Commission, which occurred
on January 28, 2008.  During such
dialogue, the staff of the Commission (i) requested that the Company file
this letter with the Commission on or before January 30, 2008 and (ii) confirmed
that the Company’s proposed schedule for responding to the Comment Letter, as
set forth in this letter, was acceptable to the Commission.

The
Company hereby confirms:

1)              That the Company has
received the Comment Letter.

2)              That the Company is in the
process of drafting its response to the Comment Letter.

3)              That the Company desires to
discuss its response to the Comment Letter at the regularly scheduled February
7, 2008 meeting of the Company’s Management Development and Compensation
Committee.

4)              That the Company will file
its response to the Comment Letter via EDGAR on or before February 22, 2008.

Please contact me at 617-444-6417 in the event that
you have any questions or concerns with respect to this matter.  In the event that I am not available, please
contact my colleague, Valerie Andrews, at 617-444-6227.

  Very truly yours,

  /s/ Kenneth S. Boger

  Kenneth S. Boger

  Senior Vice President
  and General Counsel

2

Mail Stop 6010
  August 21, 2007

Joshua S. Boger, Ph.D.
Chief Executive Officer Vertex Pharmaceuticals Incorporated 130 Waverly Street Cambridge, Massachusetts 02139
Re: Vertex Pharmaceuticals Incorporated  Definitive Proxy Statement
Filed April 12, 2007
 File No. 000-19319
 Dear Dr. Boger:
We have limited our review of your definitive proxy statement to your executive
compensation and other related disclosure a nd have the following comments.  Our review
of your filing is part of the Division’s focused review of executive compensation disclosure.
Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filings.  We look forward to working with you in these respects.  We
welcome any questions you may have about our comments or any other aspect of our review.  Feel free to call me at the telephone  number listed at the end of this letter.
  In some comments we have asked you to provide us with additional information so we may better understand your disclosure.  Pl ease do so within the time frame set forth
below.  You should comply with the remain ing comments in all future filings, as
applicable.  Please confirm in writing that you will do so and also explain to us how you
intend to comply.  Please unders tand that after ou r review of all of your responses, we
may raise additional comments.   If you disagree with any of these commen ts, we will consider your explanation as
to why our comment is inapplicable or a revisi on is unnecessary.  Please be as detailed as
necessary in your explanation.

Vertex Pharmaceuticals Incorporated
August 21, 2007 Page 2   Compensation Discussion and Analysis, page 11

 1. We see from your Summary Compensation Table that in 2006 your Chief
Executive Officer received option awards that were significantly more valuable than those received by your other Na med Executive Officers.  Given this
disparity, please include a more detailed discussion and analysis of how and why
the awards granted to your Chief Executive Officer differed from the awards granted to the other named executive officers.   If policies or d ecisions relating to a
named executive officer are materially differe nt than those applicable to the other
officers, this should be discussed on an individualized basis.  Refer to
Section II.B.1 of Commi ssion Release No. 33-8732A.

Role of Compensation Consultant, page 12

2. With respect to the engagement of He witt Associates, please provide the full
disclosure required by Item 407(e)(3)( iii) of Regulation S-K including a
description of the nature a nd scope of the consultant's assignment or the material
elements of the instructions or directions  given to the consultant with respect to
the performance of its duties under the engagement.

Elements of Compensation, page 12

3. Given that the management developm ent and compensation committee used a
"tally sheet" of all components of the named executive officers' compensation in
reviewing and establishing each named executive officer's compensation for 2006, please include disclosure addressing th e extent to which the information in
the tally sheet comprised information in  addition to or different from the
information presented in your Summar y Compensation Table and how and why
the MDCC found the tally sheet useful in determining the various elements of compensation for the named executive officers.  The MDCC’s analysis of the tally sheet and how it resulted in specific awards should be described in complete
detail.

Performance-Based Elements of Compensation..., page 15

4. You disclose that the amount of the annua l cash bonus and equity awards awarded
to each named executive are determined on the basis of annual company performance goals.  Although we note that  you have described these goals as
"very ambitious" and "very unlikely" to achieve, please expand your disclose to
provide a specific quantitative or qualit ative discussion of the actual company-
wide goals to be achieved in order for named executive officers to earn their
respective annual cash bonus and equity awards.  Pleas e disclose the specific
company-wide goals that were required in  order for the executive officers to earn

Vertex Pharmaceuticals Incorporated
August 21, 2007 Page 3
their respective annual cash bonus and equity awards.  To the extent you believe
that disclosure of the information would result in competitive harm such that the information could be excluded under Instruct ion 4 to Item 402(b), please provide
us with a detailed explana tion supporting your conclusion.   To the extent that it is
appropriate to omit specific targets or pe rformance objectives, you are required to
provide appropriate disclosure pursuant to Instruction 4 to Item 402(b) of
Regulation S-K.  Refer also to Questi on 3.04 of the Item 402 of Regulation S-K
Interpretations available on our website at www.sec.gov
.  In discussing how
difficult or likely it will be for the registra nt to achieve the target levels or other
factors, you should provide as much deta il as necessary without disclosing
information that poses a reasonable risk of competitive harm.
 5. Your disclosure indicates that the annu al cash bonuses and equity awards are
determined, in part, on the basis of ex ecutive performance.  Please expand your
Compensation Discussion and Analysis to provide a more specific discussion and
analysis of how the applicable elemen ts of your compensation packages are
structured and implemented to reflect your named executive officer's individual
performance.  Describe the elements of individual performance that are taken into
account in determining the various forms of compensation.  Refer to
Item 402(b)(2)(vii) of Regulation S-K.
 6. You disclose that your board conducts a year-end evaluati on of performance
against the pre-determined goals and assi gns a company-wide performance rating.
Please describe in more detail how your rating system is designed, including, for example, the various levels that can be  achieved, and discuss and analyze how the
board determined that your rating for 2006 was "leading."
 7. Your disclosure indicates that you set individual performance goals for each
executive, and company-wide performance goals, at or near the beginning of each calendar year.  Please expand your Comp ensation Discussion and Analysis to
include a discussion of the goals you have set for the current year and provide an
analysis of how such goals will affect th e calculation of amounts awarded to your
named executive officers under the various  elements of your compensation
program.  Refer to the text of Secu rities Act Release 33-8732A marked by
footnote 86.

Cash Bonus Awards to Named Executive Officers for 2006 Performance, page 17

8. Your disclosure indicates that the range of performance factors for executives is
from 0% to 150%, and, that in January 2007, your board determined that the company performance factor for execu tives under the annual cash bonus program
for 2006 should be 140%.  Please discuss and analyze how the board determined where to set the performan ce factor within the range and how it determined that

Vertex Pharmaceuticals Incorporated
August 21, 2007 Page 4
140% was appropriate for 2006.  In this regard we note your earlier disclosure
indicating that your rating for 2006 was "leading" which is the highest level
achievable under your rating system.  Pleas e discuss and analyze the factors that
the board considered in reducing the comp any performance factor to 140%, out of
a possible 150%, given that the highest le vel under the performance rating system
was achieved in 2006.

Annual Equity Awards, page 17

9. You disclose that all restricted stoc k awards made under your annual program
vest on the fourth anniversar y of the grant date, subject to accelerated vesting for
certain performance based factors wh ich you consider to  be confidential
information.  Please disclose the specific pr ice target and related target index that
factor into the accelerated vesting of the awards.  To the extent you believe that
disclosure of the information would result in competitive harm such that the information could be excluded under Instruct ion 4 to Item 402(b), please provide
us with a detailed explana tion supporting your conclusion.   To the extent that it is
appropriate to omit specific targets or pe rformance objectives, you are required to
provide appropriate disclosure pursuant to Instruction 4 to Item 402(b) of
Regulation S-K.  Refer also to Questi on 3.04 of the Item 402 of Regulation S-K
Interpretations available on our website at www.sec.gov
.  In discussing how
difficult or likely it will be for the registra nt to achieve the target levels or other
factors, you should provide as much deta il as necessary without disclosing
information that poses a reasonable risk of competitive harm.
 10. Given that you generally target approx imately the median of the comparator
group in determining the number of sh ares underlying each stock option award
and restricted stock grant, please specify how these elements of your
compensation packages related to the da ta you analyzed from the comparator
companies and include a discussion of wh ere your actual stock option awards and
restricted stock grants actually fell in re lation to the companies in the comparator
group.  Also include the supplemental gran ts of equity compensation described on
page 20 in your analysis.  For example,  indicate whether the aggregate of the
stock options and restricted stock awards  described in the tables on page 19 and
the supplemental grants described on  page 20 put this element of your
compensation package below, at or above the median as compared to the similar
grants made by your comparator group.  If the aggregate of such grants were significantly above or below the median, please provide discussion and analysis as to why you departed from your general st rategy of targeting such grants at the
median of your comparator group.

Vertex Pharmaceuticals Incorporated
August 21, 2007 Page 5   Employment Contracts and Change of Control Arrangements, page 30

 11. You disclose that the various severan ce payments are payable to your named
executive officers upon termination "wit hout cause" or for "good reason" and
before and after a "change of control."  Please briefly indicate the definitions of
these terms.  In your discussion of the definition of "change of control," please indicate the basis for selecting particular events as triggering payments.  Refer to
Item 402(b)(2)(xi) of Regulation S-K.
 12. We note that the employment contracts a nd change-in-control agreements with
each of the named executive officers contain terms that vary with respect to the
amount of severance payments, provisions  for accelerated equity award vesting,
continuation of benefits and other terms.   Please discuss and analyze how these
varying terms were negotiated and how a nd why the most significant terms were
agreed to by the company and why ther e was material variation among the terms
agreed to with the different named executive officers.
 Approval of Related Person Transactions and Transactions with Related Persons, page 38

 13. Provide the information required by Item 404( b) of Regulation S-K.  For example,
describe your policies and procedures for the review, approval, or ratification of
any transaction required to be reported under Item 404(a), including, to the extent
applicable, the material features  described in Item 404(b)(1).

*  *  *  *  *
  Please respond to our comments by September 21, 2007, or tell us by that time when you will provide us with a response.
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy  of the disclosures they have made.
  When you respond to our comments, please provide, in writing, a statement from the company acknowledging that:

• the company is responsible for the adequacy and accuracy of the disclosure in
the filing;

Vertex Pharmaceuticals Incorporated August 21, 2007 Page 6
• staff comments or changes to disclo sure in response to comments do not
foreclose the Commission from taking a ny action with respect to the filing;
and

• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any pers on under the federal s ecurities laws of
the United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Di vision of Corporation Finance in connection
with our review of your filing or in response to comments.

Please contact me at (202) 551-3635 with any questions.

Sincerely,    Tim Buchmiller Senior Attorney

Mail Stop 6010

 January 16, 2008
 Kenneth S. Boger
Senior Vice President and General Counsel
Vertex Pharmaceuticals Incorporated 130 Waverly Street Cambridge, Massachusetts 02139
Re: Vertex Pharmaceuticals Incorporated  Definitive Proxy Statement
Filed April 12, 2007
 File No. 000-19319
 Dear Mr. Boger:
We have reviewed your response letter  dated October 23, 2007 and have the
following comments.  Please respond to our  comments by January 30, 2008 or tell us by
that time when you will provide us with a re sponse.  If the comments request revised
disclosure in future filings, please confir m in writing that you will comply with the
comments in your future filings and also ex plain to us how you intend to comply.  We
welcome any questions you may have about our comments or any other aspect of our review.  1. We note from the first paragraph of your  response to prior comment 4, in the
sentence which begins "[f]or example," you have provided additional detail regarding the company-wide goals that we re established in order for the named
executive officers to earn their respectiv e annual cash bonus and equity awards.
Please confirm that, in addition to the gr eater detail that you have undertaken to
make with respect to the difficulty of achieving the annual performance goals, your future filings, to the extent applicable , will include at least as much detail as
you have provided in the portion of your res ponse that we have noted and that you
will provide all information with respect to  these goals that is material to your
shareholders' understanding of your compensation policies and decisions with respect to your named executive officers.
 2. We note your response to prior comment 7.  Please confirm that you will include
the disclosure in your future filings, as applicable, that was requested by that comment to the extent that it could affect  a fair understanding of any of the named
executive officer's compensation for the la st fiscal year.  In addition, for each
specific target that you believe you have a ba sis to omit, please provide us with a
more detailed analysis of how disclosure  of the specific quantitative or qualitative

Vertex Pharmaceuticals Incorporated
January 16, 2008 Page 2
company-wide and individual performance goals would result in competitive harm.  Disclosure in the proxy statemen t and your response suggests that there
may be a significant number of company-wi de and individual performance goals,
yet your response only makes a brief competitive harm argument as to those performance goals that you deem to be  trade secrets and does not provide a
competitive harm argument as to the subset of performance goals you do not
consider to be confidential trade secrets.  Identify in a response letter to us the
specific company-wide and individual goals  you consider to be trade secrets and
explain in detail how a competitor could either use such information to cause you commercial harm or derive other informati on from such goals that could then be
used to negatively impact the company.  Provide a similar discussion for those
goals you do not consider to be confiden tial trade secrets, such as financial
objectives and as noted on page 15 of your disclosure, “other aspects of company
performance that [you] belie ve drive stockholder value.”
 3. We note your responses to prior comments 5 and 7.  Item 402(b)(2)(vii) of
Regulation S-K requires that a company disclose, if material, how specific forms
of compensation are structured and imp lemented to reflect a named executive
officer’s individual performance and/or indi vidual contribution.  As part of this, a
company must identify the elements of individual performance and/or
contribution that are taken into account.  As such, to the extent material, you need
to describe each of the individual perfo rmance goals that were in place for each
named executive officer and how each named executive officer actually performed relative to such individual goals.  Please confirm you will do so in future filings.
 4. We note your response to prior comment 9 and we disagree with your conclusion
that disclosure of the spec ific target prices in the proxy statement would not be
material to your shareholders' understanding of the level of executive compensation.  Please either confirm you will disclose in future filings the specific target prices or provide us with  the competitive harm analysis requested
in prior comment 9.
 5. We note your response to prior comment 11.  While we appreciate the concern
that inclusion of the defi nitions of the referenced  legal terms in the proxy
statement may potentially complicate your disclosure, referring your shareholders
to the applicable agreement with each named executive officer for the meanings
of such terms is not consistent with th e guidelines discussed in Section VI of
Commission Release 33-8732A.  However, in light of your concerns, it would
appear appropriate to follow the guidelines in the Commission Release regarding use of a glossary.  In future filings, please include the meanings of the defined terms in a glossary or other section of your document rather than referencing your
shareholders to the agreements that have been previously filed with the

Vertex Pharmaceuticals Incorporated January 16, 2008 Page 3
Commission.  To mitigate your concerns, c onsider including such glossary in a
section other than your compensation disc ussion and analysis, but clearly refer
your shareholders to that section.

If you have any questions, pleas e contact me at (202) 551-3635.
         S i n c e r e l y ,             T i m  B u c h m i l l e r          S e n i o r  A t t o r n e y

CORRESP
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filename1.htm

  VERTEX PHARMACEUTICALS
  INCORPORATED

  130 WAVERLY STREET · CAMBRIDGE, MA 02139-4242

  TEL. 617.444.6100 • FAX
  617.444-6483

  http://www.vrtx.com

October 23, 2007

Delivered by EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Mail Stop 6010

Washington, DC 20549

  Attn:  Tim Buchmiller, Senior Attorney

  Re:

  Vertex
  Pharmaceuticals Incorporated

  Definitive
  Proxy Statement

  Filed
  April 12, 2007

  File No. 000-19319

Ladies and Gentlemen:

This letter is intended to
provide responses to comments from the staff of the Securities and Exchange
Commission (the “Commission”) to Vertex Pharmaceuticals Incorporated
(the “Company”) set forth in the staff’s letter to Dr. Joshua Boger,
dated August 21, 2007 (the “Comment Letter”), regarding the Company’s
Definitive Proxy Statement, which was filed with the Commission on April 12,
2007 (the “Proxy Statement”).

For convenient reference,
the Company has set forth below in italics each of the Staff’s comments set
forth in the Comment Letter and has keyed the Company’s responses to the
numbering of the comments and the headings used in the Comment Letter.

Compensation Discussion and
Analysis, page 11

Comment 1.                               We see
from your Summary Compensation Table that in 2006 your Chief Executive Officer
received option awards that were significantly more valuable than those
received by your other Named Executive Officers.  Given this disparity, please include a more
detailed discussion and analysis of how and why the awards granted to your
Chief Executive Officer differed from the awards granted to the other named
executive officers.  If policies or
decisions relating to a named executive officer are materially different than
those applicable to the other officers, this should be discussed on an
individualized basis.  Refer to Section
II.B.1 of Commission Release No. 33-8732A.

Response 1.          The Company does not apply materially different policies in making equity
grants to its Chief Executive Officer and President compared to equity grants
to its other named executive officers.
The stock-based compensation expense set forth in the Summary
Compensation Table referenced in Comment 1, reflects the cumulative effect

of
awards received by each of the named executive officers during the four
preceding years and relates to a number of factors, including the changing
roles of these executive officers during the four-year period.  As noted in the tables on page 19 of the
Proxy Statement under the caption “Annual Equity Awards,” the Company’s Chief
Executive Officer and President did receive substantially larger equity awards
related to 2006 performance than the Company’s other named executive
officers.  This disparity resulted
nonetheless, from the application of the same principles and programs that
apply to all of the Company’s named executive officers.  These policies and programs are described in
the Compensation Discussion and Analysis, as well as in the narrative
accompanying the compensation tables. The basic underlying principle of all of
the Company’s programs is that they reflect both the level of responsibility of
the executive within the Company and the executive’s performance.  The disparity between the Chief Executive
Officer and President’s award and those of the other named executive officers
derives in this case from the difference in responsibility level of these
positions.  The Company anticipates in
future filings under the Exchange Act that, if there is a disparity in the size
of the equity awards granted to one or more of its executive officers, it will
disclose that this disparity is the result of the structure of the Company’s
executive team, the differing levels of responsibility assumed by the Company’s
executives and, where applicable, different levels of performance.

Role of Compensation Consultant,
page 12:

Comment 2.                               With respect to the engagement of Hewitt
Associates, please provide the full disclosure required by Item 407(e)(3)(iii)
of Regulation S-K  including a
description of the nature and scope of the consultant’s assignment or the
material elements of the instructions or directions given to the consultant
with respect to the performance of its duties under the engagement.

Response 2:                              In its Proxy Statement, under the heading “Role of the
Compensation Consultant,” the Company disclosed that the MDCC has,
on occasion, engaged Hewitt Associates to provide certain services.  The MDCC engages Hewitt on an as-needed basis
to provide information and data helpful to the MDCC in fulfilling its responsibilities
with respect to executive compensation.
These duties vary from year to year.
Accordingly, the Company’s disclosure about Hewitt’s role for 2006
describes Hewitt’s assignments from the MDCC during that period only. There
were three such assignments, which each are described in the Proxy
Statement.  These three assignments were
to (1) consult with the MDCC regarding the Company’s approach to setting
executive base salary levels; (2) provide a list of possible comparator
companies using criteria established by the MDCC; and (3) collect and collate
proxy statement data about executive compensation at comparator companies.  Further information about the Company’s
criteria for choosing comparator companies and about the MDCC’s rationale for
changing the process for setting executive base salary levels, both of which
were informed by input from Hewitt, appears in the Compensation Discussion and
Analysis under the captions “Analysis of Compensation
Practices of Comparator Companies” and “Base Salary.”

                                                                                                In future filings under the Exchange Act, the Company will expand its
disclosure regarding the material elements of the MDCC’s instructions to its
compensation consultant in its discussion of the “Role of the
Compensation Consultant” and will

2

include
cross-references to other captions where the MDCC’s use of the compensation
consultant’s work product is discussed.

Elements of Compensation, page 12:

Comment 3.                               Given
that the management development and compensation committee used a “tally sheet”
of all components of the named executive officers’ compensation in reviewing
and establishing each named executive officer’s compensation for 2006, please
include disclosure addressing the extent to which the information in the tally
sheet comprised information in addition to or different from the information
presented in your Summary Compensation Table and how and why the MDCC found the
tally sheet useful in determining the various elements of compensation for the
named executive officers.  The MDCC’s
analysis of the tally sheet and how it resulted in specific awards should be
described in complete detail.

Response 3:                              The tally sheet tool used by the MDCC contains categories of information
similar to that provided in the Summary Compensation Table and other tables set
forth in the Proxy Statement.  However,
because the tally sheets are used by the MDCC to make forward-looking
compensation decisions, different values are sometimes used in the tally sheets
than are used in the proxy statement tables.
In particular, the tally sheets use market prices for the Company’s
common stock that are more current than the prices used to calculate values for
the proxy statement tables.  For example,
detailed information about possible severance payouts is determined for the
tally sheets by assuming that any change-in-control termination would take
place at least three months in the future and that a buyer would pay a premium
over the market price of the Company’s common stock.  This permits the MDCC to anticipate the
potential payouts under these contract provisions, should they be triggered
during the year.

In general, the review of the tally sheets
does not “result in specific rewards.”
There is a formal action item on the MDCC’s agenda, when setting
compensation levels for the upcoming year, to make a determination, using the
tally sheets, among other resources, that the proposed aggregate compensation
for each executive is reasonable and not excessive.  Otherwise, the MDCC uses the tally sheets to
provide background information in considering action on one or more components
of pay. Each committee member uses the tally sheets as he or she determines
best when making compensation decisions.

The
Company anticipates that, in future filings under the Exchange Act, the Company
will include information in its disclosure regarding the content of the tally
sheets and the manner in which they are used.

Performance-Based
Elements of Compensation…, page 15:

Comment 4.                               You disclose that the amount of the annual cash
bonus and equity awards awarded to each named executive are determined on the
basis of annual company performance goals.
Although we note that you have described these goals as “very ambitious”
and “very unlikely” to achieve, please expand your disclosure to provide a
specific quantitative or qualitative discussion of the actual company-wide
goals to be achieved in

3

order for named executive officers to earn their
respective annual cash bonus and equity awards.
Please disclose the specific company-wide goals that were required in
order for the executive officers to earn their respective annual cash bonus and
equity awards.  To the extent you believe
that disclosure of the information would result in competitive harm such that
the information could be excluded under Instruction 4 to Item 402(b), please
provide us with a detailed explanation supporting your conclusion.  To the extent that it is appropriate to omit
specific targets or performance objectives, you are required to provide
appropriate disclosure pursuant to Instruction 4 to Item 402(b) of Regulation
S-K.  Refer also to Question 3.04 of the
Item 402 of Regulation S-K Interpretations available on our website at www.sec.gov.  In discussing how difficult or likely it will
be for the registrant to achieve the target levels or other factors, you should
provide as much detail as necessary without disclosing information that poses a
reasonable risk of competitive harm.

Response 4:                              The Company believes that disclosure of the specific annual company-wide
goals against which the Board of Directors measures performance would result in
competitive harm, and that such information can be excluded under Instruction 4
to Item 402(b).   As disclosed in the Proxy Statement on page
15, “key corporate performance factors for the year include achievement of
specific financial objectives, research productivity, development progression
with respect to both internal development efforts and collaborative
development, the pace and success of our internal growth, and other aspects of
company performance that we believe drive stockholder value.”  For each category of high level goals, as
characterized above, the Board and the Company agree on detailed, specific,
measurable subgoals that are integral to execution of the Company’s long-term
strategic plan.  For example, the Company’s
2006 performance goals included several goals addressing the advancement of the
Company’s lead drug candidate, telaprevir, including the initiation or
completion of specified clinical studies of the drug candidate, manufacture of
specific quantities of drug material by a specified date, completion of
research about specified potential markets for the drug candidate, and specific
goals relating to drug formulation and manufacturing processes.  The Company’s competitors could use this
information to alter the design and timing of their own development programs
and to assess the Company’s likelihood of success in achieving the Company’s
goals on a timeline competitive with their own timelines.  The majority of the Company’s performance
goals are confidential trade secrets, comprising commercial or financial
information about the Company.  While a
small subset of the performance goals are not confidential trade secrets, the
Company believes that disclosure of those goals alone would be misleading and
would give undue prominence to those goals that happen to fall outside the
disclosure exception for trade secrets.

                                                                                                The Company’s performance goals for any given year, which include both
long and short term goals, are designed to be aspirational and to reflect
superior achievement.  Thus, those
performance goals that do in fact overlap in type or character with the Company’s
financial and other public forecasts are usually more aggressive than the
quantifiable and qualitative expectations for the year that are communicated to
the Company’s investors.  The Company
believes disclosure of the Company’s performance goals, to the extent that they
are different from the Company’s stated expectations, is likely to confuse
investors.  The Company is also concerned
that, in some cases, the goals are stated in ways that characterize the Company’s
aspirations for efficacy or safety of a drug candidate, and that

4

their
disclosure could be construed to violate FDA regulations governing statements
that can be made about drug candidates before market approval.

                                                                                                The Company also believes that if disclosure of its performance goals as
currently constituted were required, the Company would be forced to consider
changing its current performance management program, due to the competitive
risk of disclosing its goals.  This would
cause competitive harm of a different nature.
The Company believes that its current performance management tools are a
very effective means of aligning the management’s priorities and activities
with the Company’s long-range strategic plan.
The Company’s goals are appropriate and meaningful to a company at the
Company’s stage of development in the pharmaceutical industry.  The Company believes that “watering down” the
goals so that they are suitable for public disclosure would undermine the
program’s effectiveness and perhaps harm the Company’s execution of its plan.

                                                                                                Under these circumstances, the Company believes that it has provided as
much detail as possible without disclosing information that poses a reasonable
risk of competitive harm.  As described
above, the Company has provided a qualitative summary of the categories into
which the goals fall.  The Company also
provided more qualitative information about the goals with respect to 2006,
under the caption “Cash Bonus Awards to Named Executive Officers for 2006
Performance.”  In that discussion, the
Company describes a number of goals that were accomplished in 2006.  Specifically, the Company disclosed that “[w]e
met or exceeded a very high proportion of our annual goals for 2006 across all
significant aspects of our business, including advancement of our telaprevir
clinical development program to position that investigational compound to
initiate a Phase 3 clinical trial in 2007 and securing a key collaborative
relationship with Janssen Pharmaceutica for development and potential
commercialization of telaprevir; achievement of key development milestones for
earlier stage compounds, including the completion of a Phase 2 clinical trial
for VX-702 and a Phase 1 clinical trial for VX-770, and the advancement of
VX-680 into a pivotal Phase 2 clinical trial; and accomplishment of certain
financial objectives, including the completion of a $330 million common stock
offering and reduction of our outstanding con

CORRESP
1
filename1.htm

  VERTEX PHARMACEUTICALS INCORPORATED

  130 WAVERLY STREET · CAMBRIDGE, MA 02139-4242

  TEL. 617.444.6100 • FAX 617.444-6483

  http://www.vrtx.com

September 20, 2007

Delivered by EDGAR

Securities
and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Mail Stop 6010

Washington, DC 20549

Attn:  Tim Buchmiller, Senior Attorney

  Re:

  Vertex Pharmaceuticals Incorporated

  Definitive Proxy Statement

  Filed April 12, 2007

  File No. 000-19319

Ladies
and Gentlemen:

This letter relates to (i) comments from the staff of the Securities
and Exchange Commission (the “Commission”) to Vertex Pharmaceuticals
Incorporated (the “Company”) set forth in the staff’s letter to Dr.
Joshua Boger, dated August 21, 2007 (the “Comment Letter”), regarding
the Company’s Definitive Proxy Statement, which was filed with the Commission
on April 12, 2007, and (ii) a conversation between a representative of the
Company’s legal department and a representative of the staff of the Commission,
which occurred on September 12, 2007.
During such conversation, the staff of Commission (i) requested that the
Company file this letter with the Commission on or before September 21, 2007
and (ii) confirmed that the Company’s proposed schedule for responding to the
Comment Letter, as set forth in this letter, was acceptable to the Commission.

The Company hereby confirms:

1)              That the Company has received the Comment
Letter.

2)              That the Company is in the process of
drafting its response to the Comment Letter.

3)              That the Company desires to discuss its
response to the Comment Letter at the regularly scheduled October 17, 2007
meeting of the Company’s Management Development and Compensation Committee.

4)              That the Company will file its response to
the Comment Letter via EDGAR on or before October 23, 2007.

Please contact me at 617-444-6417 in the event that
you have any questions or concerns with respect to this matter.  In the event that I am not available, please
contact my colleague, Valerie Andrews, at 617-444-6227.

  Very truly yours,

  /s/ Kenneth S. Boger

  Kenneth S. Boger

  Senior Vice President and General Counsel

 2

Via Facsimile and U.S. Mail
Mail Stop 6010

May 25, 2006

Joshua S. Boger
Chief Executive Officer
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, Massachusetts 02139-4242

Re: Vertex Pharmaceuticals Incorporated
 Form 10-K for Fiscal Year Ended December 31, 2005
 Filed March 16, 2006
 File No. 000-19319

Dear Mr. Boger:

We have completed our review of your Form 10-K and have no further comments
at this time.

        S i n c e r e l y ,

        J i m  A t k i n s o n
        A c c o u n t i n g  B r a n c h  C h i e f

CORRESP
1
filename1.htm

  Vertex Pharmaceuticals Incorporated

  130 Waverly Street • Cambridge, MA
  02139-4242

  Tel: 617.444.6100 • Fax: 617.444.6680

  www.vrtx.com

May 2, 2006

Submitted via
EDGAR

Securities and Exchange Commission

450 Fifth Street, N.W.

Mail Stop 3-9

Washington, DC 20549

  Attn:

  Jim B. Rosenberg, Senior Assistant Chief Accountant

  Oscar Young, Senior Accountant

  James Peklenk, Staff Accountant

  Division of Corporation Finance

  Re:

  Vertex Pharmaceuticals Incorporated

  Form 10-K for the Fiscal Year Ended December 31, 2005

  File No. 000-19319

  Addendum to Response Letter dated April 27, 2006

Ladies and Gentlemen:

Reference is made to the letter, dated April 27,
2006 (the “Response Letter”), submitted to the Securities and Exchange
Commission (the “Commission”) by Vertex Pharmaceuticals Incorporated
(the “Company”) in response to comments received from the staff of the
Securities and Exchange Commission in the form of a letter, dated April 14,
2006.

In connection with the Company’s submission of the Response Letter, the
Company hereby acknowledges and confirms:

•                  the
Company is responsible for the adequacy and accuracy of the disclosure in the
filings;

•                  staff
comments or changes to disclosure in staff comments do not foreclose the
Commission from taking any action with respect to the filing; and

•                  the
Company may not assert staff comments as a defense in any proceeding
imitated by the Commission or any person under federal securities laws of the
United States.

Please feel free to contact me in the event that you have any questions
with respect to this matter.

  Very truly yours,

  /s/ Kenneth S. Boger

  Kenneth S. Boger

  Senior Vice President and General Counsel

CORRESP
1
filename1.htm

  VERTEX
  PHARMACEUTICALS INCORPORATED

  130 WAVERLY
  STREET • CAMBRIDGE, MA 02139 • USA

  TEL.
  617.444.6100 • FAX 617.444.6344

  http://www.vrtx.com

April 27, 2006

Delivered by
facsimile

Securities and Exchange Commission

450 Fifth Street, N.W.

Mail Stop 3-9

Washington, DC 20549

  Attn:

  Jim B. Rosenberg, Senior Assistant Chief
  Accountant

  Oscar Young, Senior Accountant

  James Peklenk, Staff Accountant

  Division of Corporation Finance

  Re:

  Vertex Pharmaceuticals Incorporated

  Form 10-K for the Fiscal Year Ended December 31,
  2005

  File No. 000-19319

Ladies and Gentlemen:

This letter is intended to provide responses
to comments from the staff of the Securities and Exchange Commission to Vertex
Pharmaceuticals Incorporated (“the Company”) set forth in the Staff’s letter to
Dr. Joshua Boger, dated April 14, 2006 (the “Comment Letter”),
regarding the Company’s 2005 Annual Report on Form 10-K.

The Comment Letter is reproduced below
together with our response thereto.

Comment 1.

We have the following
comments regarding your revenue recognition policy related to substantive
milestone payments that are reasonably assured:

a)            When
you have evidence of fair value for your remaining obligations, please clarify
for us why it is appropriate to then recognize that payment as earned. In this
regard, it is unclear whether you consider the milestone payment and the
remaining obligations to be separate units of accounting. If so, it is unclear
whether the portion of the payment attributable to the remaining obligations
should instead be deferred and recognized upon the satisfaction of the
obligation.

b)            When
you do not have fair value for your remaining obligations, please clarify for
us why it is appropriate to recognize the payments over the period of performance.
In this regard, it is unclear whether you consider the substantive milestone
payments and the remaining obligations as a single unit of accounting. If so,
it is unclear whether all the obligations are satisfied over a period of time
or if the payment should instead be deferred until the satisfaction of all
obligations.

c)             To
the extent that your policy is not appropriate, please provide us proposed
revisions to the policy and tell us whether those revisions would have had a
material impact on previously reported financial condition or results of
operations.

Response 1.

1(a)                           In
those circumstances where collection of a substantive milestone is reasonably
assured, the Company has remaining obligations to perform under its
collaboration arrangements, and the Company has evidence of fair value for
these remaining obligations, management considers the milestone payment and the
remaining obligations to be separate units of accounting. In these
circumstances, the Company uses the residual method under Emerging Issues Task
Force (EITF) Issue No. 00-21, Revenue Arrangements with
Multiple Deliverables to allocate revenue among the milestones and
the remaining obligations of the arrangement. To date, the Company has not
recognized any revenue from milestone payments in circumstances where the
Company has remaining obligations for which management believes it has
sufficient evidence of fair value for these obligations.

1(b)                           In
those circumstances where collection of a substantive milestone is reasonably
assured, the Company has remaining obligations to perform under it
collaboration arrangements, and the Company does not have sufficient evidence
of fair value for these remaining obligations, management considers the
milestone payment and the remaining obligations on the contract as a single
unit of accounting. Primarily, the Company’s collaborations include obligations
to provide research and/or development services that are performed by the
Company for the collaborator over a specified period of time. In these
circumstances, the Company’s collaborations do not require specific
deliverables at specific times or at the end of the contract term, but rather
the Company’s obligations are satisfied over a period of time. In these
instances substantive milestones are recognized over the period of performance.
In those circumstances where a collaboration requires a specific deliverable
separate and distinct from any ongoing research and/or development activities
and for which the Company does not have evidence of fair value, the substantive
milestone payment are combined with any remaining obligations and deferred
until the satisfaction of all obligations.

1(c)                           The
Company believes that its policy for revenue recognition is in accordance EITF
00-21, and SEC Staff Accounting Bulletin No. 104, “Revenue
Recognition”. The Company proposes to add additional disclosure
relative to the its disclosure of its revenue recognition policies in future
periodic filings, commencing with the Quarterly Report on Form 10-Q for
the period ended March 31, 2006. Specifically, the Company will add the
text underlined below to the “Revenue Recognition” footnote to its Consolidated
Balance Sheets (reproduced in its entirety for your reference).

Revenue
Recognition

The Company recognizes revenue in accordance with the Securities and
Exchange Commission’s (“SEC”) Staff Accounting Bulletin No. 101, “Revenue
Recognition in Financial Statements” (“SAB 101”), as amended by SEC Staff
Accounting Bulletin No. 104, “Revenue Recognition,” (“SAB 104”) and
for revenue arrangements entered into after June 30, 2003, Emerging Issues
Task Force Issue

2

No. 00-21,
“Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”).

The Company’s revenues are generated primarily through collaborative
research, development and commercialization agreements. The terms of the
agreements typically include payment to Vertex of non-refundable up-front
license fees, funding of research and development efforts, milestone payments
and/or royalties on product sales.

Agreements containing multiple elements are divided into separate units
of accounting if certain criteria are met, including whether the delivered
element has stand-alone value to the customer and whether there is objective
and reliable evidence of fair value of the undelivered obligation(s). The
consideration received is allocated among the separate units based on their
respective fair values or the residual method, and the applicable revenue
recognition criteria are applied to each of the separate units.

The Company recognizes revenues from non-refundable, up-front license
fees on a straight-line basis over the contracted or estimated period of
performance, which is typically the research or development term. Research and
development funding is recognized as earned, ratably over the period of effort.

Substantive milestones realized in collaboration
arrangements are recognized as earned when the corresponding payment is
reasonably assured, subject to the following policies in those circumstances
where the Company has obligations remaining after achievement of the milestone:

In those circumstances where
collection of a substantive milestone is reasonably assured, the Company has
remaining obligations to perform under its collaboration arrangements, and
the Company has evidence of fair value for its remaining obligations,
management considers the milestone payment and the remaining obligations to be
separate units of accounting. In these circumstances, the Company uses the
residual method under Emerging Issues Task Force (EITF) Issue No. 00-21,
Revenue Arrangements with Multiple Deliverables to allocate revenue among the milestones and the
remaining obligations.

In those circumstances where
collection of a substantive milestone is reasonably assured, the Company has
remaining obligations to perform under its collaboration arrangements, and
the Company does not have sufficient evidence of fair value for its remaining
obligations, management considers the milestone payment and the remaining
obligations on the contract as a single unit of accounting. In those
circumstances where our collaboration does not require specific deliverables at
specific times or at the end of the contract term, but rather our obligations are satisfied over a
period of time, substantive milestones are recognized over the period of performance. This typically results in a

3

portion of the milestone payment being recognized as
revenue at the date the milestone is achieved, which portion is equal to the
applicable percentage of the performance period that has elapsed as of the date
the milestone is achieved, with the balance being deferred and recognized over
the remaining period of performance.

The Company evaluates whether milestones are substantive at the
inception of the agreement based on the contingent nature of the milestone,
specifically reviewing factors such as the technological risk that must be
overcome as well as the level of effort and investment required to achieve the
milestone. Milestones that are not considered substantive and do not meet the
separation criteria are accounted for as license payments and recognized on a
straight-line basis over the remaining period of performance.

Payments received after performance obligations are met completely are
recognized when earned.

Royalty revenue is recognized based upon actual and estimated net sales
of licensed products in licensed territories as provided by the licensee and is
recognized in the period the sales occur. Differences between actual royalty
revenues and estimated royalty revenues, which have not historically been
significant, are reconciled and adjusted for in the quarter they become known.

Comment 2.

When you
issued shares to holders of your notes in exchange for those notes, please tell
us why it was appropriate to calculate the loss on extinguishment based on the
incremental shares issued over the number that would have previously been
issued upon conversion of the notes under the original terms. In so doing,
please refer to paragraphs 3(c), 20 and 21 of APB 26 and explain why you did
not calculate the loss based on the excess of the fair value of the shares
issued over the carrying amounts of the notes.

Response 2:

In connection with the transactions that
occurred in 2005 in which the Company issued common stock in exchange for
convertible notes outstanding, the Company considered Accounting Principles
Board (APB) Opinion No, 26. APB 26, paragraph 2 indicates that APB 26 does not
apply to conversions of convertible debt when conversion privileges included in
terms of the debt at issuance are changed, or additional consideration is paid,
to induce conversion of the debt to equity securities as described in FASB
Statement (SFAS) No. 84, Induced Conversions of
Convertible Debt. Since the exchange offers were exercisable for a
limited period of time and included the issuance of more equity securities than
were otherwise issuable pursuant to the conversion privileges included in the
original terms of the debt the Company determined that the provisions of APB 26
would not apply and the exchanges should be accounted for in accordance with
SFAS 84. In accordance with paragraphs 3 and 4 of SFAS 84, we recorded the loss
on the

4

exchange as the difference in the fair value of all securities
transferred in the transaction and the fair value of the securities issuable
pursuant to the original conversion terms.

***

Please contact me at 617-444-6417 in the
event that you have any questions or concerns with respect to this matter. In
the event that I am not available, please contact my colleague, Jeffrey
Donohue, at 617-444-6131.

  Very truly yours,

  /s/ Kenneth S. Boger

  Kenneth S. Boger

  Senior Vice President and General Counsel

  cc:

  Ian F. Smith, Executive Vice President and
  Chief Financial Officer

  Johanna Messina-Power, Corporate Controller

  Jeffrey Donohue, Corporate Counsel

5

Via Facsimile and U.S. Mail
Mail Stop 6010

                                                                                                April 14, 2006

Joshua S. Boger
Chief Executive Officer
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, Massachusetts 02139-4242

Re: Vertex Pharmaceuticals Incorporated
 Form 10-K for Fiscal Year Ended December 31, 2005
 Filed March 16, 2006
 File No. 000-19319

Dear Mr. Boger:

We have limited our review of your filing to  the issues we have addressed in our
comments.  In our comments, we ask you to provide us with information so we may
better understand your disclosure.  Please be as de tailed as necessary in  your explanation.
After reviewing this information, we may raise additional comments.

 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filings.  We look forward to working with you in these respects.  We
welcome any questions you may have about our comments or on any other aspect of our
review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Notes To Consolidated Financial Statements, page F-7

B.  Accounting Policies, page F-7

Revenue Recognition, page F-11
1. We have the following comments rega rding your revenue recognition policy
related to substantive milestone paym ents that are reasonably assured:

a. When you have evidence of fair value for your remaining obligations, please clarify for us why it is approp riate to then recognize that payment
as earned.  In this regard, it is uncl ear whether you consider the milestone

Joshua S. Boger
Vertex Pharmaceuticals Incorporated
April 13, 2006  Page 2
payment and the remaining obligations to be separate units of accounting.  If so, it is unclear whet her the portion of the payment attributable to the
remaining obligations should instead be deferred and recognized upon the
satisfaction of the obligations.
b. When you do not have fair value for your remaining obligations, please clarify for us why it is appropriate  to recognize the payments over the
period of performance.  In this regard, it is unclear whether you consider the substantive milestone payments and the remaining obligations as a single unit of accounting.  If so, it is unclear whether all the obligations are
satisfied over a period of time or if the payment should instead be deferred until the satisfaction of all obligations.
c. To the extent that your policy is not appropriate, pl ease provide us
proposed revisions to the policy and te ll us whether those revisions would
have had a material impact on previ ously reported financial condition or
results of operations.

K. Convertible Subordinated Notes, page F-24
2. When you issued shares to holders of your  notes in exchange for those notes,
please tell us why it was a ppropriate to calculate the loss on extinguishment based
on the incremental shares issued over the number that would have previously been
issued upon conversion of the notes under the original terms.  In so doing, please
refer to paragraphs 3(c), 20 and 21 of APB 26 and explain why you did not calculate the loss based on the excess of th e fair value of the shares issued over
the carrying amounts of the notes.
*    *    *    *

Please respond to these comments within  10 business days or tell us when you
will provide us with a response.  Please furnish a letter that keys your responses to our comments and provide the requested information.  Detailed letters gr eatly facilitate our
review.  Please file your letter on E DGAR under the form type label CORRESP.

 We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing include all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.

 In connection with responding to our co mments, please provide, in your letter, a
statement from the company acknowledging that:

Joshua S. Boger
Vertex Pharmaceuticals Incorporated
April 13, 2006  Page 3

• the company is responsible for the adequacy  and accuracy of the disclosure in the
filings;
• staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.

You may contact James Pe klenk, Staff Accountant, at (202) 551-3661, or Oscar
Young, Senior Accountant, at (202) 551-3622 if you have questions regarding the
comment.  In this regard, do not hesi tate to contact me, at (202) 551-3679.

Sincerely,

Jim B. Rosenberg
Senior Assistant Chief Accountant

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

Mail Stop 0309	February 10, 2005

Mr. Joshua S. Boger
Chief Executive Officer
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, Massachusetts 02139-4242

Re:  	Vertex Pharmaceuticals Incorporated
	Amendment No. 1 Registration Statement on Form S-3 filed
January
19, 2005
	File No. 333-120055

Dear Mr. Boger:

	We have limited our review of the above referenced filing to
only the matters addressed herein.  Please understand that the
purpose of our review process is to assist you in your compliance
with the applicable disclosure requirements and to enhance the
overall disclosure in your filing.  We look forward to working
with
you in these respects.  We welcome any questions you may have
about
our comments or on any other aspect of our review.  Feel free to
call
us at the telephone numbers listed at the end of this letter.
1. We note your response to our prior comment 1.  Please revise
your
disclosure to indicate which selling stockholders are broker-
dealers
and which are only affiliates of broker-dealers.  In particular,
we
refer to your disclosure in footnote 3 to the selling security
holder
table.  It should be clear from your disclosure who is a broker-
dealer and who is an affiliate of a broker-dealer.

      We will consider a written request for acceleration of the
effective date of the registration statement as a confirmation of
the
fact that those requesting acceleration are aware of their
respective
responsibilities under the Securities Act of 1933 and the
Securities
Exchange Act of 1934 as they relate to the proposed public
offering
of the securities specified in the above registration statement.
We
will act on the request and, pursuant to delegated authority,
grant
acceleration of the effective date.

      We direct your attention to Rules 460 and 461 regarding
requesting acceleration of a registration statement.  Please allow
adequate time after the filing of any amendment for further review
before submitting a request for acceleration.  Please provide this
request at least two business days in advance of the requested
effective date.

	Please direct any questions to Sonia Barros at (202) 824-5304
or
Suzanne Hayes at (202) 942-1789.

         	               					Sincerely,

                 	          					Jeffrey
Riedler
                           					Assistant
Director

cc:	Michael L. Fantozzi, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC
One Financial Center
Boston, MA 02111

??

??

??

??

Mr. Joshua S. Boger
February 10, 2005
Page 1

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CORRESP
1
filename1.htm

'

VERTEX PHARMACEUTICALS INCORPORATED

130 WAVERLY STREET  •  CAMBRIDGE, MA 02139-4242

TEL. 617.444.6100  •  FAX 617.444-6483

http://www.vrtx.com

February 14,
2005

Filed by EDGAR

Securities
and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

Attn: Sonia Barros, Esq.

Re:Vertex Pharmaceuticals Registration Statement on Form S-3/A

SEC File No. 333-120055

Ladies
and Gentlemen:

        Reference
is hereby made to a certain pre-effective Amendment No. 2 to the Registration Statement on Form S-3/A of Vertex Pharmaceuticals
Incorporated (the "Registrant"), registration number 333-120055 (the "Amended Registration
Statement") filed earlier today.

        In
connection with the Registrant's request for effectiveness of the Amended Registration Statement, the Registrant confirms that:

•should
the Commission or the Staff, acting pursuant to delegated authority, declare the Amended Registration Statement effective, it does not foreclose the Commission or the
Staff from taking any action with respect to the Amended Registration Statement;

•the
action of the Commission or the Staff, acting pursuant to delegated authority, in declaring the filing effective does not relieve the Registrant from its full
responsibility for the adequacy and accuracy of the disclosure in the filing; and

•the
Registrant may not assert any such action as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United
States.

        The
Registrant hereby requests that the Commission take appropriate action to cause the above-referenced Registration Statement on Form S-3/A to become effective at
4:45 p.m., Eastern Time, on February 14, 2005.

Very truly yours,

/s/  JEFFREY P. DONOHUE       Jeffrey P. Donohue

Corporate Counsel

Vertex Pharmaceuticals Incorporated

CORRESP
1
filename1.htm

VERTEX PHARMACEUTICALS INCORPORATED

130 WAVERLY STREET • CAMBRIDGE, MA 02139-4242

TEL. 617.444.6100 • FAX 617.444-6483

http://www.vrtx.com

Delivered by FedEx and EDGAR

December 10, 2004

United States Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, D.C. 20549

Attn:

Sonia Barros, Esq.

Division of Corporation Finance

Re: Vertex Pharmaceuticals Incorporated

Registration Statement on Form S-3 filed October 28, 2004
  File No. 333-120055

Ladies and Gentlemen:

        This
letter is intended to provide responses to comments from the staff of the Securities and Exchange Commission (the "Staff") to Vertex
Pharmaceuticals Incorporated (the "Registrant") set forth in the Staff's letter to the Registrant, dated November 9, 2004 (the
"Comment Letter"), regarding the Registrant's Registration Statement on Form S-3, as originally filed with the Securities and
Exchange Commission on October 28, 2004 (the "Registration Statement"), and the prospectus included therein (the
"Prospectus").

        The
relevant text of the Comment Letter is reproduced below together with the Registrant's response thereto, including text that the Registrant proposes to add to the Prospectus in
response to the Staff's comments. If the Staff does not object to the Registrant's proposed responses, the Registrant will file an amendment to the Registration Statement incorporating these changes
as well as certain other updates to the Prospectus.

Comment 1.

Please tell us whether UBS Securities LLC is a broker-dealer or an affiliate of a broker-dealer. If UBS Securities LLC is a broker-dealer or affiliate of a broker-dealer, tell
us supplementally whether they received these shares as underwriting compensation. We may have additional comments. Please be advised that we consider the resale of securities by broker-dealers to be
an indirect primary offering. In that regard, the prospectus must state that such broker-dealer is an underwriter.

Response 1.

        The 53/4% Convertible Senior Subordinated Notes due 2011 (the "New Notes") were issued by the
Registrant in an exchange offer (the "Exchange") to holders of the Registrant's 5% Subordinated Convertible Notes due 2007 (the
"2007 Notes"). The Exchange was completed on September 17, 2004. Consistent with the terms of the Exchange, UBS Securities LLC
("UBS") received a New Note in exchange for 2007 Notes that it held (which had been previously purchased by UBS through the PORTAL market). UBS is a
registered broker-dealer and UBS was engaged to act as a dealer-manager in connection with the Exchange and was paid cash for those services.

        The
securities held by UBS that are to be registered by the Registration Statement were not issued or sold as underwriting compensation.

        In
response to Comment 1, the Registrant proposes to add a new footnote (2) to the entry regarding UBS Securities LLC in the selling securityholder table set forth on page 38 of
the Prospectus. The text of the proposed footnote would state:

(2)
UBS Securities LLC, a registered broker-dealer, acted as a dealer-manager in connection with the exchange of our old notes for the new notes. The securities to be sold by UBS Securities LLC
hereunder were not issued or sold as underwriting compensation.

        Furthermore,
the Registrant proposes to amend the seventh paragraph under the section titled "Plan of Distribution" to state:

The
selling holders may be, and any underwriters, broker-dealers or agents that participate in the sale of the notes and common stock are, "underwriters" within the meaning of Section 2(11) of
the Securities Act. Any discounts, commissions, concessions or profit earned by "underwriters" within the meaning of Section 2(11) of the Securities Act on any resale of the shares will
constitute underwriting discounts and commissions under the Securities Act. Selling holders who are "underwriters" within the meaning of Section 2(11) of the Securities Act will be subject to
the prospectus delivery requirements of the Securities Act.

Comment 2.

Please confirm to us and also revise your disclosure to state that you will file a post-effective amendment to identify any additional selling
securityholders.

Response 2.

        The Registrant confirms that it will file post-effective amendments to the Registration Statement to identify additional selling securityholders as
their identities become known to the Registrant, to the extent so required by the rules of the Securities and Exchange Commission. In response to Comment 2, the Registrant proposes to amend the ninth
paragraph under the section titled "Plan of Distribution" to state:

The
specific notes or shares of our common stock to be sold, the names of the selling holders, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter,
and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if required by the rules of the Securities and Exchange
Commission, a post-effective amendment to the registration statement of which this prospectus is a part.

Comment 3.

Please note that in order to substitute new names for the names of selling security holders identified in an effective registration statement you can file a
Rule 424(b)(5) prospectus only if the change is not material, the number of securities or dollar amount registered does not change, and the new owners' securities can be traced to those covered
by the original registration statement. A change that does not meet these requirements must be made by a post-effective amendment. In addition, you must either file a prospectus
supplement or a post-effective amendment, as applicable, to substitute new names except from certain donees in the circumstances described in our telephone interpretation H.3 (see 1997
manual of telephone interpretations). Please confirm to us that you will comply with these requirements. In addition, in that regard we refer to your statement on page 38 that, "Selling holders,
including their transferees, pledges or their successors, may from time to time offer and sell any or all of the notes and the common stock into which the

2

 notes are convertible pursuant to this prospectus." Please revise your disclosure to indicate that you may need to amend this registration statement to substitute new names.

Response 3.

        The Registrant notes the Staff's comment with respect to the use of Rule 424(b)(5) prospectuses and post-effective amendments and will comply
with those requirements.

        The
Registrant proposes to amend the indicated text on page 38 of the Prospectus to state:

Selling
holders, including their transferees, pledges or their successors, may from time to time offer and sell any or all of the notes and the common stock into which the notes are convertible
pursuant to this prospectus. Under the rules of the Securities and Exchange Commission, we may be required to file prospectus supplements or amendments prior to the offer and sale of securities of
securities held by transferees, pledgees, or successors hereunder.

* * *

        Please
contact the undersigned in the event that you have any questions or concerns with respect to this matter. The undersigned can be reached at 617-444-6417.
In the event that the undersigned is not available, please contact my colleague, Jeffrey Donohue, at 617-444-6131.

Very truly yours,

/s/  KENNETH S. BOGER

Kenneth S. Boger

Senior Vice President and General Counsel

3

<DOCUMENT>
<TYPE>LETTER
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>

Mail Stop 0309	November 9, 2004

Mr. Joshua S. Boger
Chief Executive Officer
Vertex Pharmaceuticals Incorporated
130 Waverly Street
Cambridge, Massachusetts 02139-4242

Re:  	Vertex Pharmaceuticals Incorporated
Registration Statement on Form S-3 filed October 28, 2004
File No. 333-120055

Dear Mr. Boger:

	We have limited our review of the above referenced filing to only
the matters addressed herein.  Please understand that the purpose of
our review process is to assist you in your compliance with the
applicable disclosure requirements and to enhance the overall
disclosure in your filing.  We look forward to working with you in
these respects.  We welcome any questions you may have about our
comments or on any other aspect of our review.  Feel free to call us
at the telephone numbers listed at the end of this letter.
1. Please tell us whether UBS Securities LLC is a broker-dealer or an
affiliate of a broker-dealer.  If UBS Securities LLC is a broker-
dealer or affiliate of a broker-dealer, tell us supplementally whether
they received these shares as underwriting compensation.  We may have
additional comments.  Please be advised that we consider the resale of
securities by broker-dealers to be an indirect primary offering.  In
that regard, the prospectus must state that such broker-dealer is an
underwriter.
2. Please confirm to us and also revise your disclosure to state that
you will file a post-effective amendment to identify any additional
selling securityholders.
3. Please note that in order to substitute new names for the names of
selling securityholders identified in an effective registration
statement you can file a Rule 424(b) prospectus only if the change is
not material, the number of securities or dollar amount registered
does not change, and the new owners` securities can be traced to those
covered by the original registration statement.  A change that does
not meet these requirements must be made by a post-effective
amendment.  In addition, you must either file a prospectus supplement
or a post-effective amendment, as applicable, to substitute new names
except for certain donees in the circumstances described in our
telephone interpretation H.3 (see 1997 manual of telephone
interpretations).  Please confirm to us that you will comply with
these requirements.  In addition, in that regard we refer to your
statement on page 38 that, "Selling holders, including their
transferees, pledgees or their successors, may from time to time offer
and sell any or all of the notes and the common stock into which the
notes are convertible pursuant to this prospectus."  Please revise
your disclosure to indicate that you may need to amend this
registration statement to substitute new names.

We urge all persons who are responsible for the accuracy and adequacy
of the disclosure in the filings reviewed by the staff to be certain
that they have provided all information investors require for an
informed decision.  Since the company and its management are in
possession of all facts relating to a company`s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have
made.

	Notwithstanding our comments, in the event the company requests
acceleration of the effective date of the pending registration
statement, it should furnish a letter, at the time of such request,
acknowledging that:

?	should the Commission or the staff, acting pursuant to delegated
authority, declare the filing effective, it does not foreclose the
Commission from taking any action with respect to the filing;

?	the action of the Commission or the staff, acting pursuant to
delegated authority, in declaring the filing effective, does not
relieve the company from its full responsibility for the adequacy and
accuracy of the disclosure in the filing; and

?	the company may not assert this action as a defense in any
proceeding initiated by the Commission or any person under the federal
securities laws of the United States.

	In addition, please be advised that the Division of Enforcement
has access to all information you provide to the staff of the Division
of Corporation Finance in connection with our review of your filing or
in response to our comments on your filing.

We will consider a written request for acceleration of the effective
date of the registration statement as a confirmation of the fact that
those requesting acceleration are aware of their respective
responsibilities under the Securities Act of 1933 and the Securities
Exchange Act of 1934 as they relate to the proposed public offering of
the securities specified in the above registration statement.  We will
act on the request and, pursuant to delegated authority, grant
acceleration of the effective date.

We direct your attention to Rules 460 and 461 regarding requesting
acceleration of a registration statement.  Please allow adequate time
after the filing of any amendment for further review before submitting
a request for acceleration.  Please provide this request at least two
business days in advance of the requested effective date.

	Please direct any questions to Sonia Barros at (202) 824-5304 or
Suzanne Hayes at (202) 942-1789.

         	               					Sincerely,

                 	          					Jeffrey Riedler
                           					Assistant Director

cc:	Michael L. Fantozzi, Esq.
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, PC
One Financial Center
Boston, MA 02111

Mr. Joshua S. Boger
November 9, 2004
Page 1

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