SEC Filing | PTC Therapeutics, Inc.

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ptct-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-35969

PTC Therapeutics, Inc.

(Exact name of registrant as specified in its charter)


Delaware						04-3416587
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

100 Corporate Court

South Plainfield,

07080

(Address of principal executive offices)

(Zip Code)

(908) 222-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	PTCT	Nasdaq Global Select Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ☐

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


Large accelerated filer	þ	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of August 3, 2020, there were 67,703,214 shares of Common Stock, $0.001 par value per share, outstanding.


TABLE OF CONTENTS
PTC Therapeutics, Inc.

			Page No.
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)			4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			39

Item 3. Quantitative and Qualitative Disclosures About Market Risk			56

Item 4. Controls and Procedures			56

PART II—OTHER INFORMATION

Item 1. Legal Proceedings			57

Item 1A. Risk Factors			58

Item 6. Exhibits			60

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:

•expectations with respect to our gene therapy platform, including any potential regulatory submissions and potential approvals, including those related to our gene therapy for the treatment of Aromatic L-Amino Acid Decarboxylase, or AADC deficiency, or PTC-AADC, our manufacturing capabilities and the potential financial impact and benefits of our leased biologics manufacturing facility and the potential achievement of development, regulatory and sales milestones and contingent payments that we may be obligated to make;

•our ability to negotiate, secure and maintain adequate pricing, coverage and reimbursement terms and processes on a timely basis, or at all, with third-party payors for our products or product candidates that we commercialize or may commercialize in the future;

•our ability to maintain our marketing authorization of Translarna for the treatment of nonsense mutation Duchenne muscular dystrophy, or nmDMD, in the European Economic Area, or EEA, which is subject to the specific obligation to conduct and submit the results of Study 041 to the European Medicines Agency, or EMA, and annual review and renewal by the European Commission following reassessment of the benefit-risk balance of the authorization by the EMA;

•our ability to enroll, fund, and complete Study 041, a multicenter, randomized, double-blind, 18-month, placebo-controlled clinical trial of Translarna for the treatment of nmDMD followed by an 18-month open label extension, according to the protocol agreed with the EMA, and by the EMA’s deadline;

•the anticipated period of market exclusivity for Emflaza for the treatment of DMD in the United States under the Orphan Drug Act of 1983, or Orphan Drug Act, the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act;

•our ability to complete any dystrophin study necessary in order to resolve the matters set forth in the United States Food and Drug Administration's, or the FDA, denial of our appeal to the Complete Response Letter we received from the FDA in connection with our New Drug Application, or NDA, for Translarna for the treatment of nmDMD, and our ability to perform additional clinical trials, non-clinical studies or CMC assessments or analyses at significant cost;

•the timing and scope of our commercialization of our products and product candidates;

•our expectations with respect to the COVID-19 pandemic and related response measures and their effects on our business, operations, clinical trials, potential regulatory submissions and approvals, our collaborators, contract research organizations, suppliers and manufacturers;

•our ability to obtain additional and maintain existing reimbursed named patient and cohort early access programs, or EAP programs, for our products on adequate terms, or at all;

•our expectations with respect to the development, regulatory and commercial status of our product candidates and program directed against spinal muscular atrophy in collaboration with F. Hoffmann La Roche Ltd and Hoffmann La Roche Inc., which we refer to collectively as Roche, and the Spinal Muscular Atrophy Foundation, or the SMA Foundation, and our estimates regarding future revenues from sales-based royalty payments or the achievement of milestones in that program;

•our expectations and the potential financial impact and benefits related to our Collaboration and Licensing Agreement with Akcea Therapeutics, Inc., or Akcea, including with respect to the timing of regulatory approval of Tegsedi^TM (inotersen) and Waylivra^TM (volanesorsen) in countries in which we are licensed to commercialize them, the commercialization of Tegsedi and Waylivra, and our expectations with respect to contingent payments to Akcea

based on the potential achievement of certain regulatory milestones and royalty payments by us to Akcea based on our potential achievement of certain net sales thresholds;

•our estimates regarding the potential market opportunity for our products or product candidates, including the size of eligible patient populations and our ability to identify such patients;

•our estimates regarding expenses, future revenues, third-party discounts and rebates, capital requirements and needs for additional financing, including our ability to maintain the level of our expenses consistent with our internal budgets and forecasts and to secure additional funds on favorable terms or at all;

•the timing and conduct of our ongoing, planned and potential future clinical trials and studies in our gene therapy, splicing, Bio-e and oncology programs, studies of PTC923 for phenylketonuria, or PKU, and studies of PTC299 for COVID-19 as well as studies in our products for maintaining authorizations, label extensions and additional indications, including the timing of initiation, enrollment and completion of the trials and the period during which the results of the trials will become available;

•our ability to realize the anticipated benefits of our acquisitions or other strategic transactions, including the possibility that the expected impact of benefits from the acquisitions or strategic transactions will not be realized or will not be realized within the expected time period, significant transaction costs, the integration of operations and employees into our business, our ability to obtain marketing approval of our product candidates we acquired from the acquisitions or other strategic transactions and unknown liabilities;

•the rate and degree of market acceptance and clinical utility of any of our products or product candidates;

•the ability and willingness of patients and healthcare professionals to access our product and product candidates through alternative means if pricing and reimbursement negotiations in the applicable territory do not have a positive outcome;

•our ability to complete the FDA post-marketing requirements to the marketing authorization of Emflaza and any other post-marketing requirements for our products;

•the timing of, and our ability to obtain additional marketing authorizations for our products and product candidates;

•the ability of our products and our product candidates to meet existing or future regulatory standards;

•our ability to maintain the current labeling under the marketing authorization in the EEA or expand the approved product label of Translarna for the treatment of nmDMD;

•the potential receipt of revenues from future sales of our products or product candidates;

•the potential impact that enrollment, funding and completion of Study 041 may have on our revenue growth;

•our sales, marketing and distribution capabilities and strategy, including the ability of our third-party manufacturers to manufacture and deliver our products and product candidates in clinically and commercially sufficient quantities and the ability of distributors to process orders in a timely manner and satisfy their other obligations to us;

•our ability to establish and maintain arrangements for the manufacture of our products and product candidates that are sufficient to meet clinical trial and commercial launch requirements;

•our ability to establish and grow our manufacturing capabilities for our gene therapy platform;

•our expectations with respect to the potential financial impact and benefits of our leased biologics manufacturing facility and our ability to satisfy our obligations under the terms of the lease agreement for such facility;

•our ability to satisfy our obligations under the indenture governing our 3.00% convertible senior notes due August 15, 2022 and under the indenture governing our 1.50% convertible senior notes due September 15, 2026;

•our regulatory submissions, including with respect to timing and outcome of regulatory review;

•our plans to advance our earlier stage programs and pursue research and development of other product candidates, including our splicing, gene therapy, Bio-e and oncology programs;

•whether we may pursue business development opportunities, including potential collaborations, alliances, and acquisition or licensing of assets and our ability to successfully develop or commercialize any assets to which we may gain rights pursuant to such business development opportunities;

•the potential advantages of our products and any product candidate;

•our intellectual property position;

•the impact of government laws and regulations;

•the impact of litigation that has been or may be brought against us or of litigation that we are pursuing against others; and

•our competitive position.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in Part II, Item 1A. Risk Factors as well as in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2019, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2019 completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

In this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise requires, references to “PTC,” “PTC Therapeutics,” “the Company,” “we,” “us,” “our,” and similar references refer to PTC Therapeutics, Inc. and, where appropriate, its subsidiaries. The trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

All website addresses given in this Quarterly Report on Form 10-Q are for information only and are not intended to be an active link or to incorporate any website information into this document.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PTC Therapeutics, Inc.

Consolidated Balance Sheets (unaudited)

In thousands (except shares)


	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	158,461	$	288,028
Marketable securities	340,430		398,535
Trade receivables, net	53,644		55,538
Inventory, net	18,373		19,285
Prepaid expenses and other current assets	34,116		17,898
Total current assets	605,024		779,284
Fixed assets, net	26,806		21,549
Intangible assets, net	708,814		710,500
Goodwill	82,341		82,341
Deposits and other assets	53,652		30,108
Total assets	$	1,476,637	$	1,623,782
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	164,376	$	159,276
Current portion of long-term debt	18,333		20,000
Deferred revenue	7,702		8,242
Finance lease liabilities- current	4,180		—
Other current liabilities	4,868		8,339
Deferred consideration payable	2,384		40,000
Total current liabilities	201,843		235,857
Deferred revenue- long term	—		3,415
Long-term debt	297,029		293,859
Contingent consideration payable	225,700		356,300

Deferred tax liability	130,862		130,862
Finance lease liabilities- noncurrent	22,031		—
Other long-term liabilities	26,678		9,159
Total liabilities	904,143		1,029,452
Stockholders’ equity:
Common stock, $0.001 par value. Authorized 125,000,000 shares; issued and outstanding 67,240,679 shares at June 30, 2020. Authorized 125,000,000 shares; issued and outstanding 61,935,870 shares at December 31, 2019.	67		62
Additional paid-in capital	2,067,274		1,795,351
Accumulated other comprehensive income	(10,016)		(10,584)
Accumulated deficit	(1,484,831)		(1,190,499)
Total stockholders’ equity	572,494		594,330
Total liabilities and stockholders’ equity	$	1,476,637	$	1,623,782

See accompanying unaudited notes.

PTC Therapeutics, Inc.

Consolidated Statements of Operations (unaudited)

In thousands (except shares and per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenues:
Net product revenue	$	75,239	$	85,476	$	143,435	$	138,530
Collaboration and grant revenue	—		46		63		575
Total revenues	75,239		85,522		143,498		139,105
Operating expenses:
Cost of product sales, excluding amortization of acquired intangible assets	5,304		3,211		9,389		5,587
Amortization of acquired intangible assets	8,731		6,575		16,679		12,652
Research and development	176,525		59,979		266,632		112,544
Selling, general and administrative	53,659		49,215		111,869		89,760
Change in the fair value of deferred and contingent consideration	7,680		5,300		8,580		26,460
Settlement of deferred and contingent consideration	10,613		—		10,613		—
Total operating expenses	262,512		124,280		423,762		247,003
Loss from operations	(187,273)		(38,758)		(280,264)		(107,898)
Interest expense, net	(5,379)		(2,074)		(11,021)		(4,362)
Other income (expense), net	11,309		(183)		(2,523)		(292)
Loss before income tax expense	(181,343)		(41,015)		(293,808)		(112,552)
Income tax expense	(84)		(774)		(306)		(1,350)
Net loss attributable to common stockholders	$	(181,427)	$	(41,789)	$	(294,114)	$	(113,902)

Weighted-average shares outstanding:
Basic and diluted (in shares)	65,150,780		55,912,748		63,769,958		57,113,141
Net loss per share—basic and diluted (in dollars per share)	$	(2.78)	$	(0.75)	$	(4.61)	$	(1.99)

See accompanying unaudited notes.

PTC Therapeutics, Inc.

Consolidated Statements of Comprehensive Loss (unaudited)

In thousands


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net loss	$	(181,427)	$	(41,789)	$	(294,114)	$	(113,902)
Other comprehensive (loss) income:
Unrealized gain on marketable securities, net of tax	2,718		839		2,655		898
Foreign currency translation (loss) gain, net of tax	(10,749)		278		(2,087)		(438)
Comprehensive loss	$	(189,458)	$	(40,672)	$	(293,546)	$	(113,442)

See accompanying unaudited notes.

PTC Therapeutics, Inc.

Consolidated Statements of Stockholders' Equity (unaudited)

In thousands (except shares)


Three months ended June 30, 2020	Common stock					Additional paid-in capital		Accumulated other comprehensive (loss) income		Accumulated deficit		Total stockholders’ equity
	Shares	Amount
Balance, March 31, 2020	62,758,520	$	62	$	1,834,061	$	(1,985)	$	(1,303,404)	$	528,734

Issuance of common stock related to equity offering	106,309	—		5,447		—		—		5,447

Issuance of common stock related to acquisition	845,364	1		42,868		—		—		42,869
Issuance of common stock related to rights exchange	2,821,176	3		150,525						150,528
Exercise of options	654,604	1		15,057		—		—		15,058
Restricted stock vesting and issuance, net	(3,985)	—		—		—		—		—

Issuance of common stock in connection with an employee stock purchase plan	58,691	—		2,406		—		—		2,406
Share-based compensation expense	—	—		16,910		—		—		16,910



Net loss	—	—		—		—		(181,427)		(181,427)
Comprehensive loss	—	—		—		(8,031)		—		(8,031)
Balance, June 30, 2020	67,240,679	$	67	$	2,067,274	$	(10,016)	$	(1,484,831)	$	572,494


Three months ended June 30, 2019	Common stock					Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total stockholders’ equity
	Shares	Amount
Balance, March 31, 2019	58,418,790	$	58	$	1,523,115	$	805	$	(1,011,036)	$	512,942
Issuance of common stock related to equity offering	—	—		106		—		—		106
Exercise of options	230,176	—		2,847		—		—		2,847
Restricted stock vesting and issuance, net	3,500	—		—		—		—		—
Issuance of common stock in connection with an employee stock purchase plan	54,719	—		1,564		—		—		1,564
Share-based compensation expense	—	—		10,920		—		—		10,920
Receivable from investor	—	—		978		—		—		978
Net loss	—	—		—		—		(41,789)		(41,789)
Comprehensive income	—	—		—		1,117		—		1,117
Balance, June 30, 2019	58,707,185	$	58	$	1,539,530	$	1,922	$	(1,052,825)	$	488,685


Six months ended June 30, 2020	Common stock					Additional paid-in capital		Accumulated other comprehensive (loss) income		Accumulated deficit		Total stockholders’ equity
	Shares	Amount
Balance, December 31, 2019	61,935,870	$	62	$	1,795,351	$	(10,584)	$	(1,190,499)	$	594,330

Issuance of common stock related to equity offering	368,514	—		18,950		—		—		18,950

Issuance of common stock related to acquisition	845,364	1		42,868		—		—		42,869
Issuance of common stock related to rights exchange	2,821,176	3		150,525		—		—		150,528
Exercise of options	1,034,288	1		25,044		—		—		25,045
Restricted stock vesting and issuance, net	176,776	—		—		—		—		—
Issuance of common stock in connection with an employee stock purchase plan	58,691	—		2,406		—		—		2,406
Share-based compensation expense	—	—		32,130		—		—		32,130
Other	—	—		—		—		(218)		(218)


Net loss	—	—		—		—		(294,114)		(294,114)
Comprehensive income	—	—		—		568		—		568
Balance, June 30, 2020	67,240,679	$	67	$	2,067,274	$	(10,016)	$	(1,484,831)	$	572,494


Six months ended June 30, 2019	Common stock					Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total stockholders’ equity
	Shares	Amount
Balance, December 31, 2018	50,606,147	$	51	$	1,288,137	$	1,462	$	(938,923)	$	350,727

Issuance of common stock related to equity offering	7,563,725	7		224,538		—		—		224,545

Exercise of options	311,002	—		4,129		—		—		4,129
Restricted stock vesting and issuance, net	171,592	—		—		—		—		—

Issuance of common stock in connection with an employee stock purchase plan	54,719	—		1,564		—		—		1,564
Share-based compensation expense	—	—		20,184		—		—		20,184
Receivable from investor	—	—		978		—				978
Net loss	—	—		—				(113,902)		(113,902)
Comprehensive income	—	—		—		460		—		460
Balance, June 30, 2019	58,707,185	$	58	$	1,539,530	$	1,922	$	(1,052,825)	$	488,685
See accompanying unaudited notes.


PTC Therapeutics, Inc. Consolidated Statements of Cash Flows (unaudited) In thousands
	Six Months Ended June 30,
	2020		2019
Cash flows from operating activities
Net loss	$	(294,114)	$	(113,902)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	19,445		14,760
Non-cash operating lease expense	2,401		1,256
Non-cash finance lease amortization expense	41,212		—
Change in valuation of deferred and contingent consideration	8,580		26,460
Settlement of deferred and contingent consideration	10,613		—
Non-cash stock consideration, acquisition	42,869		—
Unrealized loss on equity investment	1,600		(129)
Unrealized loss on ClearPoint convertible debt security	749		—
Non-cash interest expense	10,993		4,055
Loss on disposal of asset	26		50
Amortization of discounts on investments, net	(635)		(907)
Amortization of debt issuance costs	510		280
Share-based compensation expense	32,130		20,184

Unrealized foreign currency transaction (gains) losses, net	(3,248)		62
Changes in operating assets and liabilities:
Inventory, net	943		(852)
Prepaid expenses and other current assets	(16,569)		(7,250)
Trade receivables, net	1,860		(9,702)
Deposits and other assets	(175)		(9,656)
Accounts payable and accrued expenses	(7,497)		(7,546)
Other long-term liabilities	(4,132)		7,395
Deferred revenue	(3,925)		2,511
Net cash used in operating activities	$	(156,364)	$	(72,931)
Cash flows from investing activities
Purchases of fixed assets	$	(8,183)	$	(4,851)
Purchase of convertible debt security	(10,000)		—
Purchases of marketable securities	(367,102)		(226,261)
Sale and redemption of marketable securities	428,490		58,424
Acquisition of product rights and licenses	(2,422)		(11,981)
Purchase of equity investment	—		(4,000)
Net cash provided by (used in) investing activities	$	40,783	$	(188,669)
Cash flows from financing activities
Proceeds from exercise of options	$	25,045	$	4,129
Net proceeds from public offerings	18,950		224,545
Repayment of senior secured term loan	(10,000)		(1,667)
Payments on deferred consideration obligation	(35,829)		—
Proceeds from employee stock purchase plan	2,406