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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 September 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, NJ

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 October 27, 2020, there were 68,235,739 shares of Common Stock, $0.001 par value per share, outstanding.

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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

45

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

63

 

Item 4. Controls and Procedures

63

 

PART II—OTHER INFORMATION

 

Item 1. Legal Proceedings

64

Item 1A. Risk Factors

64

 

Item 5. Other Information

66

Item 6. Exhibits

66

i

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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 EvrysdiTM (risdiplam) and our 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,

1

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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 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;

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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.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PTC Therapeutics, Inc.

Consolidated Balance Sheets (unaudited)

In thousands (except shares)

September 30, 

December 31, 

    

2020

    

2019

Assets

Current assets:

 

  

 

  

Cash and cash equivalents

$

433,970

$

288,028

Marketable securities

 

707,049

 

398,535

Trade receivables, net

 

56,786

 

55,538

Inventory, net

 

19,481

 

19,285

Prepaid expenses and other current assets

 

26,888

 

17,898

Total current assets

 

1,244,174

 

779,284

Fixed assets, net

 

28,141

 

21,549

Intangible assets, net

 

712,536

 

710,500

Goodwill

 

82,341

 

82,341

Operating lease ROU assets

85,810

13,693

Deposits and other assets

 

28,057

 

16,415

Total assets

$

2,181,059

$

1,623,782

Liabilities and stockholders’ equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable and accrued expenses

$

218,561

$

159,276

Current portion of long-term debt

 

 

20,000

Deferred revenue

 

5,992

 

8,242

Operating lease liabilities- current

5,859

5,153

Finance lease liabilities- current

1,251

Liability for sale of future royalties- current

22,159

Deferred consideration payable

 

 

40,000

Other current liabilities

 

 

3,186

Total current liabilities

 

253,822

 

235,857

Deferred revenue- long term

 

 

3,415

Long-term debt

 

302,971

 

293,859

Contingent consideration payable

 

234,100

 

356,300

Deferred tax liability

 

130,863

 

130,862

Operating lease liabilities- noncurrent

81,674

9,018

Finance lease liabilities- noncurrent

22,608

Liability for sale of future royalties- noncurrent

642,099

Other long-term liabilities

 

1,968

 

141

Total liabilities

 

1,670,105

 

1,029,452

Stockholders’ equity:

 

  

 

  

Common stock, $0.001 par value. Authorized 125,000,000 shares; issued and outstanding 67,809,560 shares at September 30, 2020. Authorized 125,000,000 shares; issued and outstanding 61,935,870 shares at December 31, 2019.

 

68

 

62

Additional paid-in capital

 

2,101,136

 

1,795,351

Accumulated other comprehensive income

 

(35,727)

 

(10,584)

Accumulated deficit

 

(1,554,523)

 

(1,190,499)

Total stockholders’ equity

 

510,954

 

594,330

Total liabilities and stockholders’ equity

$

2,181,059

$

1,623,782

See accompanying unaudited notes.

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PTC Therapeutics, Inc.

Consolidated Statements of Operations (unaudited)

In thousands (except shares and per share data)

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2020

    

2019

    

2020

    

2019

Revenues:

 

  

 

  

  

 

  

Net product revenue

$

82,708

$

71,369

$

226,143

$

209,899

Collaboration and grant revenue

 

35,000

 

47

 

35,063

 

622

Royalty revenue

696

696

Total revenues

 

118,404

 

71,416

 

261,902

 

210,521

Operating expenses:

Cost of product sales, excluding amortization of acquired intangible assets

 

4,667

 

3,006

 

14,056

 

8,593

Amortization of acquired intangible assets

 

9,630

 

7,025

 

26,309

 

19,677

Research and development

 

92,998

 

63,076

 

359,630

 

175,621

Selling, general and administrative

 

57,840

 

49,284

 

169,708

 

139,044

Change in the fair value of deferred and contingent consideration

 

8,400

 

9,500

 

16,980

 

35,960

Settlement of deferred and contingent consideration

10,613

Total operating expenses

 

173,535

 

131,891

 

597,296

 

378,895

Loss from operations

 

(55,131)

 

(60,475)

 

(335,394)

 

(168,374)

Interest expense, net

 

(21,039)

 

(2,666)

 

(32,060)

 

(7,028)

Other income, net

 

28,766

 

2,800

 

26,242

 

2,509

Loss before income tax expense

 

(47,404)

 

(60,341)

 

(341,212)

 

(172,893)

Income tax (expense) benefit

 

(22,288)

 

344

 

(22,594)

 

(1,006)

Net loss attributable to common stockholders

$

(69,692)

$

(59,997)

$

(363,806)

$

(173,899)

Weighted-average shares outstanding:

Basic and diluted (in shares)

 

67,641,171

 

56,463,528

 

65,068,281

 

57,798,968

Net loss per share—basic and diluted (in dollars per share)

$

(1.03)

$

(1.06)

$

(5.59)

$

(3.01)

See accompanying unaudited notes.

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PTC Therapeutics, Inc.

Consolidated Statements of Comprehensive Loss (unaudited)

In thousands

Three Months Ended September 30, 

Nine Months Ended September 30, 

     

2020

     

2019

     

2020

     

2019

Net loss

$

(69,692)

$

(59,997)

$

(363,806)

$

(173,899)

Other comprehensive (loss) income:

 

  

 

  

 

  

 

  

Unrealized (loss) gain on marketable securities, net of tax

 

(1,016)

 

(463)

 

1,639

 

435

Foreign currency translation loss, net of tax

 

(24,695)

 

(843)

 

(26,782)

 

(1,281)

Comprehensive loss

$

(95,403)

$

(61,303)

$

(388,949)

$

(174,745)

See accompanying unaudited notes.

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PTC Therapeutics, Inc.

Consolidated Statements of Stockholders’ Equity (unaudited)

In thousands (except shares)

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Three months ended September 30, 2020

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

loss

    

deficit

    

equity

Balance, June 30, 2020

67,240,679

    

$

67

    

$

2,067,274

    

$

(10,016)

    

$

(1,484,831)

    

$

572,494

Issuance of common stock related to equity offering

173,956

9,141

9,141

Exercise of options

 

391,738

 

1

 

7,942

 

 

 

7,943

Restricted stock vesting and issuance, net

 

3,187

 

 

 

 

 

Share-based compensation expense

 

 

 

16,779

 

 

 

16,779

Net loss

 

 

 

 

 

(69,692)

 

(69,692)

Comprehensive loss

 

 

 

 

(25,711)

 

 

(25,711)

Balance, September 30, 2020

 

67,809,560

$

68

$

2,101,136

$

(35,727)

$

(1,554,523)

$

510,954

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Three months ended September 30, 2019

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

 income (loss)

    

deficit

    

equity

Balance, June 30, 2019

 

58,707,185

$

58

$

1,539,530

$

1,922

$

(1,052,825)

$

488,685

Issuance of common stock related to equity offering

 

2,539,174

 

3

 

99,208

 

 

 

99,211

Equity component of the convertible notes issuance, net

119,489

119,489

Exercise of options

 

334,433

 

 

7,088

 

 

 

7,088

Restricted stock vesting and issuance, net

 

(1,800)

 

 

 

 

 

Share-based compensation expense

 

 

 

10,484

 

 

 

10,484

Net loss

 

 

 

 

 

(59,997)

 

(59,997)

Comprehensive loss

 

 

 

 

(1,306)

 

 

(1,306)

Balance, September 30, 2019

 

61,578,992

$

61

$

1,775,799

$

616

$

(1,112,822)

$

663,654

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Nine months ended September 30, 2020

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

loss

    

deficit

    

equity

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

 

542,470

 

1

 

28,091

 

 

 

28,092

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

 

1,426,026

 

1

 

32,986

 

 

 

32,987

Restricted stock vesting and issuance, net

 

179,963

 

 

 

 

 

Issuance of common stock in connection with an employee stock purchase plan

 

58,691

 

 

2,406

 

 

 

2,406

Share-based compensation expense

 

 

 

48,909

 

 

 

48,909

Other

(218)

(218)

Net loss

 

 

 

 

 

(363,806)

 

(363,806)

Comprehensive loss

 

 

 

 

(25,143)

 

 

(25,143)

Balance, September 30, 2020

 

67,809,560

$

68

$

2,101,136

$

(35,727)

$

(1,554,523)

$

510,954

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Accumulated

 

 

 

Additional

 

other

 

Total

Nine months ended September 30, 2019

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

income (loss)

    

deficit

    

equity

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

 

10,102,899

 

10

 

323,746

 

 

 

323,756

Equity component of the convertible notes issuance, net

119,489

119,489

Exercise of options

 

645,435

 

 

12,195

 

 

 

12,195

Restricted stock vesting and issuance, net

 

169,792

 

 

 

 

 

Issuance of common stock in connection with an employee stock purchase plan

 

54,719

 

 

1,564

 

 

 

1,564

Share-based compensation expense

 

 

 

30,668

 

 

 

30,668

Net loss

 

 

 

 

 

(173,899)

 

(173,899)

Comprehensive loss

 

 

 

 

(846)

 

 

(846)

Balance, September 30, 2019

 

61,578,992

$

61

$

1,775,799

$

616

$

(1,112,822)

$

663,654

See accompanying unaudited notes.

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PTC Therapeutics, Inc.

Consolidated Statements of Cash Flows (unaudited)

In thousands

Nine Months Ended September 30, 

    

2020

    

2019

Cash flows from operating activities

Net loss

$

(363,806)

$

(173,899)

Adjustments to reconcile net loss to net cash used in operating activities:

 

  

 

  

Depreciation and amortization

 

31,088

 

22,903

Non-cash operating lease expense

 

4,295

 

2,446

Non-cash finance lease amortization expense

41,382

Non-cash royalty revenue related to sale of future royalties

(299)

Non-cash interest expense on liability related to sale of future royalties

14,557

Change in valuation of deferred and contingent consideration

 

16,980

 

35,960

Settlement of deferred and contingent consideration

10,613

Non-cash stock consideration, acquisition

42,869

Unrealized gain on equity investment

 

(852)

 

(2,529)

Unrealized gain on ClearPoint convertible debt security

(633)

Non-cash interest expense

16,678

6,583

Loss on disposal of asset

25

Amortization of discounts on investments, net

 

(559)

 

(1,374)

Amortization of debt issuance costs

 

766

 

434

Share-based compensation expense

 

48,909

 

30,668

Unrealized foreign currency transaction (gains) losses, net

 

(27,077)

 

205

Changes in operating assets and liabilities:

 

 

  

Inventory, net

 

390

 

(1,574)

Prepaid expenses and other current assets

 

(9,289)

 

(11,771)

Trade receivables, net

 

121

 

5,879

Deposits and other assets

 

(217)

 

(1,073)

Accounts payable and accrued expenses

 

54,390

 

695

Other liabilities

 

(4,096)

 

(3,567)

Deferred revenue

 

(5,940)

 

1,581

Net cash used in operating activities

$

(129,705)

$

(88,433)

Cash flows from investing activities

 

  

 

  

Purchases of fixed assets

$

(11,491)

$

(9,104)

Purchase of convertible debt security

(10,000)

Purchases of marketable securities

(1,006,946)

(239,386)

Sale and redemption of marketable securities

700,627

114,500

Acquisition of product rights and licenses

(25,618)

(20,250)

Purchase of equity investment

 

 

(4,000)

Net cash provided by (used in) investing activities

$

(353,428)

$

(158,240)

Cash flows from financing activities

 

  

 

  

Proceeds from issuance of convertible notes

$

$

279,571

Proceeds from exercise of options

32,987

12,195

Termination and exit fees related to payoff of secured term loan

 

(597)

Net proceeds from public offerings

 

28,092

 

324,262

Repayment of senior secured term loan

 

(28,333)

 

(6,667)

Payments on deferred consideration obligation

(38,100)

Proceeds from employee stock purchase plan

2,406

1,564

Payment of finance lease principal

(17,829)

Cash consideration received from Royalty Purchase Agreement

650,000

Net cash provided by financing activities

$

628,626

$

610,925

Effect of exchange rate changes on cash

 

449

 

(2,673)

Net decrease in cash and cash equivalents

 

145,942

 

361,579

Cash and cash equivalents, and restricted cash beginning of period

 

295,528

 

169,498

Cash and cash equivalents, and restricted cash end of period

$

441,470

$

531,077

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Supplemental disclosure of cash information

 

  

 

  

Cash paid for interest

$

9,802

$

7,042

Cash paid for income taxes

1,562

1,931

Supplemental disclosure of non-cash investing and financing activity

 

  

 

  

Unrealized gain on marketable securities, net of tax

$

1,639

$

435

Right-of-use assets obtained in exchange for operating lease obligations

76,657

16,120

Right-of-use assets obtained in exchange for finance lease obligations

41,382

Acquisition of product rights and licenses

13,786

7,432

Issuance of common stock related to rights exchange

150,528

Accrued transaction costs related to public offerings

506

Accrued transaction costs related to issuance of convertible notes

298

See accompanying unaudited notes.

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PTC Therapeutics, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 30, 2020

In thousands (except per share data unless otherwise noted)

1.        The Company

PTC Therapeutics, Inc. (the “Company” or “PTC”) is a science-driven global biopharmaceutical company focused on the discovery, development and commercialization of clinically-differentiated medicines that provide benefits to patients with rare disorders. The Company’s ability to globally commercialize products is the foundation that drives its continued investment in a robust diversified pipeline of transformative medicines and its mission to provide access to best-in-class treatments for patients who have an unmet medical need. The Company’s strategy is to bring best-in-class therapies with differentiated clinical benefit to patients affected by rare disorders and to leverage its global commercial infrastructure to maximize value for its patients and other stakeholders.

The Company has two products, Translarna(ataluren) and Emflaza™ (deflazacort), for the treatment of Duchenne muscular dystrophy, or DMD, a rare, life threatening disorder. Translarna has marketing authorization in the European Economic Area (the “EEA”) for the treatment of nonsense mutation Duchenne muscular dystrophy (“nmDMD”), in ambulatory patients aged 2 years and older and in Brazil for the treatment of nmDMD in ambulatory patients aged 5 years and older, subject to annual renewal and other conditions. In July 2020, the European Commission approved the removal of the statement “efficacy has not been demonstrated in non-ambulatory patients” from the indication statement for Translarna. Emflaza is approved in the United States for the treatment of DMD in patients two years and older.

The Company has a pipeline of gene therapy product candidates for rare monogenic diseases that affect the central nervous system (“CNS”) including PTC-AADC for the treatment of Aromatic L-Amino Acid Decarboxylase (“AADC deficiency”), a rare CNS disorder arising from reductions in the enzyme AADC that results from mutations in the dopa decarboxylase gene. The Company is preparing a biologics license application ("BLA") for PTC-AADC for the treatment of AADC deficiency in the United States and it anticipates submitting a BLA to the United States Food and Drug Administration ("FDA") in the first half of 2021. In January 2020, the Company submitted a marketing authorization application ("MAA") to the European Medicines Agency (“EMA”) for PTC-AADC for the treatment of AADC deficiency in the EEA, and the Company expects an opinion from the Committee for Medical Products for Human Use (“CHMP”) in the first half of 2021.

The Company holds the rights for the commercialization of Tegsedi™ (inotersen) and Waylivra™ (volanesorsen) for the treatment of rare diseases in countries in Latin America and the Caribbean pursuant to the Company’s Collaboration and License Agreement with Akcea Therapeutics, Inc. (“Akcea”). Tegsedi has received marketing authorization in the United States, the European Union (the “EU”) and Brazil for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hereditary transthyretin amyloidosis (“hATTR amyloidosis”). Waylivra has received marketing authorization in the EU for the treatment of familial chylomicronemia syndrome (“FCS”). The Company filed for marketing authorization for Waylivra for the treatment of FCS with ANVISA, the Brazilian health regulatory authority, in June 2020 and, subject to potential delays in the review process related to the COVID-19 pandemic, expects a regulatory decision on approval from ANVISA in 2021.

The Company also has a spinal muscular atrophy ("SMA") collaboration with F. Hoffman-La Roche Ltd and Hoffman-La Roche Inc., referred to collectively as Roche, and the Spinal Muscular Atrophy Foundation ("SMA Foundation"). The SMA program has one approved product, Evrysdi™ (risdiplam), which was approved in August 2020 by the FDA for the treatment of SMA in adults and children two months and older. Evrysdi also received marketing authorization for the treatment of SMA in Brazil in October 2020 and the EMA accepted the MAA filed by Roche for Evrysdi for the treatment of SMA in August 2020.

On October 25, 2019, the Company completed the acquisition of substantially all of the assets of BioElectron Technology Corporation (“BioElectron”), a Delaware corporation, including certain compounds that the Company has begun to develop as part of its Bio-e platform, (the “Asset Acquisition”) pursuant to an asset purchase agreement by and between the Company and BioElectron, dated October 1, 2019 (the “Asset Acquisition Agreement”). The transaction was

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accounted for as an asset acquisition. The two most advanced molecules in the Company’s Bio-e platform are vatiquinone and PTC857. The Company initiated a registration-directed Phase 2/3 placebo-controlled trial of vatiquinone in approximately 60 children with mitochondrial disease and associated refractory epilepsy in the third quarter of 2020. The Company expects to initiate a registration-directed Phase 3 trial of vatiquinone in approximately 100 patients with Friedrich ataxia in the fourth quarter of 2020. In the second quarter of 2020, the Company initiated a Phase 1 trial in healthy volunteers to evaluate the safety and pharmacology of PTC857, which the Company believes has the potential to address multiple CNS disorders with glucocerebrosidase Parkinson’s disease as its first planned indication. The Company completed dosing within the single ascending dose study and expects to complete dosing within the multiple ascending dose study from the Phase 1 trial by the end of 2020.

In June 2020, the FDA authorized the initiation of a Phase 2/3 clinical trial evaluating PTC299, a dihydroorotate dehydrogenase inhibitor that the Company has also been developing in oncological indications, as a potential treatment for COVID-19. The integrated Phase 2/3 study, which has been initiated and is being conducted in two stages, will evaluate the efficacy and safety of PTC299 in patients hospitalized with SARS-CoV-2 infection. The Company expects Stage 1 of the clinical trial to be completed in the fourth quarter of 2020 and it anticipates reporting top-line results from both stages in the first half of 2021.

In addition, the Company has a pipeline of product candidates and discovery programs that are in early clinical, pre-clinical and research and development stages focused on the development of new treatments for multiple therapeutic areas, including rare diseases and oncology.

The Company’s marketing authorization for Translarna in the EEA is subject to annual review and renewal by the European Commission following reassessment by the EMA of the benefit-risk balance of the authorization, which the Company refers to as the annual EMA reassessment. This marketing authorization is further subject to the specific obligation to conduct and submit the results of a multi-center, randomized, double-blind, 18-month, placebo-controlled trial, followed by an 18-month open-label extension, according to an agreed protocol, in order to confirm the efficacy and safety of Translarna. The final report on the trial and open-label extension is to be submitted by the Company to the EMA by the end of the third quarter of 2022. The Company refers to the trial and open-label extension together as Study 041.

The marketing authorization in the EEA was last renewed in June 2020 and is effective, unless extended, through August 5, 2021. The renewal was based on the Company’s commitment to conduct Study 041 and the totality of the clinical data available from its trials and studies of Translarna for the treatment of nmDMD, including the safety and efficacy results of the Phase 2b and Phase 3 clinical trials. The primary efficacy endpoint was not achieved in either trial within the pre-specified level of statistical significance.

Translarna is an investigational new drug in the United States. During the first quarter of 2017, the Company filed a New Drug Application (“NDA”), over protest with the FDA, for which the FDA granted a standard review. In October 2017, the Office of Drug Evaluation I of the FDA issued a complete response letter for the NDA, stating that it was unable to approve the application in its current form. In response, the Company filed a formal dispute resolution request with the Office of New Drugs of the FDA. In February 2018, the Office of New Drugs of the FDA denied the Company’s appeal of the Complete Response Letter. In its response, the Office of New Drugs recommended a possible path forward for the ataluren NDA submission based on the accelerated approval pathway. This would involve a re-submission of an NDA containing the current data on effectiveness of ataluren with new data to be generated on dystrophin production in nmDMD patients’ muscles. The Company intends to follow the FDA’s recommendation and will collect, using newer technologies via procedures and methods that the Company designed, such dystrophin data in a new study, Study 045, which the Company initiated in the fourth quarter of 2018. The final study muscle biopsies for the patients in Study 045 were completed in October 2020 and the Company has begun the process of analyzing the samples according to its protocol.  The Company expects to report top-line results from Study 045 in the first quarter of 2021 followed by a potential resubmission of the NDA for Translarna for the treatment of nmDMD thereafter. Additionally, should a re-submission of an NDA receive accelerated approval, the Office of New Drugs stated that Study 041, which is currently enrolling, could serve as the confirmatory post-approval trial required in connection with the accelerated approval framework.

On August 23, 2018, the Company completed its acquisition of Agilis Biotherapeutics, Inc. (“Agilis”), pursuant to an Agreement and Plan of Merger, dated as of July 19, 2018 (the “Merger Agreement”), by and among the Company, Agility

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Merger Sub, Inc., a Delaware corporation and the Company’s wholly owned, indirect subsidiary, Agilis and, solely in its capacity as the representative, agent and attorney-in-fact of the equityholders of Agilis, Shareholder Representative Services LLC, (the "Merger").

Upon the closing of the Merger, the Company paid to Agilis equityholders total upfront consideration comprised of $49.2 million in cash and 3,500,907 shares of the Company’s common stock (the “Closing Stock Consideration”). The Closing Stock Consideration was determined by dividing $