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Table of Contents
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
 
or
 
         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,NJ07080
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per sharePTCTNasdaq 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 filerþAccelerated 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.
  
  
  
  
  
  
  
i


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 TegsediTM (inotersen) and WaylivraTM (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
1


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;
2


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.

3


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 securities340,430  398,535  
Trade receivables, net53,644  55,538  
Inventory, net18,373  19,285  
Prepaid expenses and other current assets34,116  17,898  
Total current assets605,024  779,284  
Fixed assets, net26,806  21,549  
Intangible assets, net708,814  710,500  
Goodwill82,341  82,341  
Deposits and other assets53,652  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 debt18,333  20,000  
Deferred revenue7,702  8,242  
Finance lease liabilities- current4,180    
Other current liabilities4,868  8,339  
   Deferred consideration payable2,384  40,000  
Total current liabilities201,843  235,857  
Deferred revenue- long term  3,415  
Long-term debt297,029  293,859  
Contingent consideration payable225,700  356,300  
Deferred tax liability130,862  130,862  
Finance lease liabilities- noncurrent22,031    
Other long-term liabilities26,678  9,159  
Total liabilities904,143  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 capital2,067,274  1,795,351  
Accumulated other comprehensive income(10,016) (10,584) 
Accumulated deficit(1,484,831) (1,190,499) 
Total stockholders’ equity572,494  594,330  
Total liabilities and stockholders’ equity$1,476,637  $1,623,782  
 
See accompanying unaudited notes.
4


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,
 2020201920202019
Revenues:    
Net product revenue$75,239  $85,476  $143,435  $138,530  
Collaboration and grant revenue  46  63  575  
Total revenues75,239  85,522  143,498  139,105  
Operating expenses:    
Cost of product sales, excluding amortization of acquired intangible assets5,304  3,211  9,389  5,587  
Amortization of acquired intangible assets8,731  6,575  16,679  12,652  
Research and development176,525  59,979  266,632  112,544  
Selling, general and administrative53,659  49,215  111,869  89,760  
Change in the fair value of deferred and contingent consideration 7,680  5,300  8,580  26,460  
  Settlement of deferred and contingent consideration10,613    10,613    
Total operating expenses262,512  124,280  423,762  247,003  
Loss from operations(187,273) (38,758) (280,264) (107,898) 
Interest expense, net(5,379) (2,074) (11,021) (4,362) 
Other income (expense), net11,309  (183) (2,523) (292) 
Loss before income tax expense(181,343) (41,015) (293,808) (112,552) 
Income tax expense(84) (774) (306) (1,350) 
Net loss attributable to common stockholders$(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.

5


PTC Therapeutics, Inc.
Consolidated Statements of Comprehensive Loss (unaudited)
In thousands
 
 Three Months Ended June 30,Six Months Ended June 30,
 2020201920202019
Net loss$(181,427) $(41,789) $(294,114) $(113,902) 
Other comprehensive (loss) income:    
Unrealized gain on marketable securities, net of tax2,718  839  2,655  898  
Foreign currency translation (loss) gain, net of tax(10,749) 278  (2,087) (438) 
Comprehensive loss$(189,458) $(40,672) $(293,546) $(113,442) 
 
See accompanying unaudited notes.

6


PTC Therapeutics, Inc.
Consolidated Statements of Stockholders' Equity (unaudited)
In thousands (except shares)
 Three months ended June 30, 2020
Common stockAdditional
paid-in
capital
Accumulated
other
comprehensive (loss) income
Accumulated
deficit
Total
stockholders’
equity
 SharesAmount
Balance, March 31, 202062,758,520  $62  $1,834,061  $(1,985) $(1,303,404) $528,734  
Issuance of common stock related to equity offering106,309    5,447  —  —  5,447  
Issuance of common stock related to acquisition845,364  1  42,868  —  —  42,869  
Issuance of common stock related to rights exchange2,821,176  3  150,525  150,528  
Exercise of options654,604  1  15,057  —  —  15,058  
Restricted stock vesting and issuance, net(3,985) —  —  —  —    
Issuance of common stock in connection with an employee stock purchase plan58,691    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, 202067,240,679  $67  $2,067,274  $(10,016) $(1,484,831) $572,494  
 Three months ended June 30, 2019
Common stockAdditional
paid-in
capital
Accumulated
other
comprehensive
income (loss)
Accumulated
deficit
Total
stockholders’
equity
 SharesAmount
Balance, March 31, 201958,418,790  $58  $1,523,115  $805  $(1,011,036) $512,942  
Issuance of common stock related to equity offering    106  —  —  106  
Exercise of options230,176  —  2,847  —  —  2,847  
Restricted stock vesting and issuance, net3,500  —  —  —  —    
Issuance of common stock in connection with an employee stock purchase plan54,719    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, 201958,707,185  $58  $1,539,530  $1,922  $(1,052,825) $488,685  
Six months ended June 30, 2020Common stockAdditional paid-in capitalAccumulated other comprehensive (loss) incomeAccumulated deficitTotal stockholders’ equity
SharesAmount
Balance, December 31, 201961,935,870  $62  $1,795,351  $(10,584) $(1,190,499) $594,330  
Issuance of common stock related to equity offering368,514    18,950  —  —  18,950  
Issuance of common stock related to acquisition845,364  1  42,868  —  —  42,869  
Issuance of common stock related to rights exchange2,821,176  3  150,525  —  —  150,528  
Exercise of options1,034,288  1  25,044  —  —  25,045  
Restricted stock vesting and issuance, net176,776  —  —  —  —    
Issuance of common stock in connection with an employee stock purchase plan58,691    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, 202067,240,679  $67  $2,067,274  $(10,016) $(1,484,831) $572,494  




7


Six months ended June 30, 2019Common stockAdditional paid-in capitalAccumulated other comprehensive income (loss)Accumulated deficitTotal stockholders’ equity
SharesAmount
Balance, December 31, 201850,606,147  $51  $1,288,137  $1,462  $(938,923) $350,727  
Issuance of common stock related to equity offering7,563,725  7  224,538  —  —  224,545  
Exercise of options311,002    4,129  —  —  4,129  
Restricted stock vesting and issuance, net171,592  —  —  —  —    
Issuance of common stock in connection with an employee stock purchase plan54,719    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, 201958,707,185  $58  $1,539,530  $1,922  $(1,052,825) $488,685  
See accompanying unaudited notes.
8


PTC Therapeutics, Inc.
Consolidated Statements of Cash Flows (unaudited) In thousands
Six Months Ended June 30,
 20202019
Cash flows from operating activities  
Net loss$(294,114) $(113,902) 
Adjustments to reconcile net loss to net cash used in operating activities:  
Depreciation and amortization19,445  14,760  
Non-cash operating lease expense2,401  1,256  
Non-cash finance lease amortization expense41,212    
Change in valuation of deferred and contingent consideration8,580  26,460  
Settlement of deferred and contingent consideration10,613    
Non-cash stock consideration, acquisition42,869    
Unrealized loss on equity investment1,600  (129) 
Unrealized loss on ClearPoint convertible debt security749    
Non-cash interest expense10,993  4,055  
Loss on disposal of asset26  50  
Amortization of discounts on investments, net(635) (907) 
Amortization of debt issuance costs510  280  
Share-based compensation expense32,130  20,184  
Unrealized foreign currency transaction (gains) losses, net(3,248) 62  
Changes in operating assets and liabilities:
Inventory, net943  (852) 
Prepaid expenses and other current assets(16,569) (7,250) 
Trade receivables, net1,860  (9,702) 
Deposits and other assets(175) (9,656) 
Accounts payable and accrued expenses(7,497) (7,546) 
Other long-term liabilities(4,132) 7,395  
Deferred revenue(3,925) 2,511  
Net cash used in operating activities$(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 securities428,490  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 offerings18,950  224,545  
Repayment of senior secured term loan(10,000) (1,667) 
Payments on deferred consideration obligation(35,829)   
Proceeds from employee stock purchase plan2,406