8-KMaterial AgreementsFinancial Events

VERTEX PHARMACEUTICALS INC / MA 8-K Report, Material Agreement (May 5, 2011)

Filed May 5, 2011For Securities:VRTX

Summary

Vertex Pharmaceuticals Incorporated (VRTX) filed an 8-K on May 5, 2011, to report the entry into significant lease agreements for approximately 1.1 million square feet of office and laboratory space in Boston, Massachusetts. These leases, for two buildings at Fan Pier (50 Northern Avenue and 11 Fan Pier Boulevard), are scheduled to commence upon completion in late 2013 and have an initial term of 15 years. The aggregate annual rent for both buildings is approximately $72.5 million, exclusive of operating expenses. A critical condition within these leases is their automatic termination if Vertex does not secure U.S. marketing approval for INCIVEK (telaprevir) by December 31, 2011. This filing highlights a substantial commitment to future operational expansion, contingent on the successful regulatory approval of a key product.

Key Highlights

  • 1Vertex Pharmaceuticals has entered into long-term lease agreements for approximately 1.1 million square feet of new office and laboratory space in Boston.
  • 2The leased space is located at Fan Pier, comprising two buildings: 50 Northern Avenue and 11 Fan Pier Boulevard.
  • 3The leases are for buildings under construction, with an expected commencement date in late 2013.
  • 4The initial lease term is 15 years from the commencement date.
  • 5Aggregate annual rent for the leased space is approximately $72.5 million, excluding operating expenses.
  • 6A crucial termination clause requires U.S. marketing approval for INCIVEK (telaprevir) by December 31, 2011, failing which the leases will be automatically terminated.
  • 7Vertex has an option to extend the lease term for an additional ten years.

Frequently Asked Questions

The primary purpose of this 8-K filing is to disclose Vertex Pharmaceuticals' entry into material definitive agreements, specifically two lease agreements for significant office and laboratory space in Boston, Massachusetts.

The leases represent a commitment of approximately $72.5 million per year in aggregate rent for both buildings during the initial 15-year term, exclusive of operating expenses. This amounts to a total potential rent of over $1 billion over the initial lease period.

The leases will automatically terminate if Vertex Pharmaceuticals does not obtain approval to market INCIVEK (telaprevir) in the United States by December 31, 2011. This makes the successful regulatory approval of INCIVEK a critical factor for the company's future real estate plans.

The leases are for buildings that are currently under construction and are scheduled to be completed in late 2013. The lease terms will commence upon the completion of these buildings.