Vertex Pharmaceuticals Announces Layoffs Amid Diabetes Asset Discontinuation

Vertex Pharmaceuticals, a leading biotech company, has announced significant layoffs following the discontinuation of its diabetes therapy program. The move comes as part of a broader restructuring effort and consolidation of facilities in Rhode Island.

Layoffs and Facility Consolidation

Vertex is set to part ways with 140 employees, with the majority of the impact felt in its Rhode Island operations. According to a Worker Adjustment and Retraining Notification (WARN) letter, 125 employees in the state will be affected as the company consolidates its three Providence sites into a single location.

The layoffs, scheduled to take effect on August 5, are directly linked to the discontinuation of the company's diabetes therapy program, VX-264. A Vertex spokesperson confirmed that "certain roles related specifically to the VX-264 program have been eliminated."

VX-264 Discontinuation and Financial Impact

In March, Vertex halted the development of VX-264, its cell therapy–device combo for type 1 diabetes, following underwhelming Phase I/II data. The trial results showed that while the therapy was safe, it failed to significantly increase C-peptide levels during a mixed-meal tolerance test, indicating insufficient insulin production.

The discontinuation of VX-264 resulted in a substantial financial hit for Vertex, with the company absorbing a $400 million impairment charge. This setback, coupled with broader market challenges, has contributed to recent financial underperformance. In the first quarter of 2025, Vertex reported revenue of $2.77 billion, representing a 3% year-on-year growth but falling 3% below analyst consensus estimates.

Broader Challenges and Strategic Shifts

Vertex's recent struggles extend beyond its diabetes program. The company has faced headwinds in the gene therapy space, where it has been striving to establish leadership. In response to these challenges, Vertex was compelled to cut a gene therapy pact with Verve in February and discontinue work on adeno-associated virus vector technology last month.

Despite these setbacks, Vertex remains optimistic about other areas of its business. The company has highlighted the strong launch of its non-opioid pain therapy, Journavx, with Senior Vice President for Investor Relations Susie Lisa emphasizing the "tremendous receptivity" to the new treatment during a recent earnings call.

As Vertex navigates these challenges, the company has stated that it will provide affected staff with severance packages and career counseling, as well as consider them for other internal opportunities.