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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 June 30, 2023

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 August 1, 2023, there were 75,344,951 shares of Common Stock, $0.001 par value per share, outstanding.

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:

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;
expectations with respect to our ability to commercialize UpstazaTM (eladocagene exuparvovec) for the treatment of Aromatic L-Amino Acid Decarboxylase, or AADC deficiency, in the European Economic Area, or EEA, any potential regulatory submissions and potential approvals for our product candidates, 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 maintain our marketing authorization of TranslarnaTM (ataluren) for the treatment of nonsense mutation Duchenne muscular dystrophy, or nmDMD, in the 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 utilize results from Study 041 to support a conversion of the conditional marketing authorization for Translarna for the treatment of nmDMD in the EEA to a standard marketing authorization and to support a marketing approval for Translarna for the treatment of nmDMD in the United States;
the anticipated period of market exclusivity for Emflaza® (deflazacort) for the treatment of Duchenne muscular dystrophy in the United States under the Orphan Drug Act of 1983;
our expectations with respect to the commercial status of Evrysdi® (risdiplam) and our program directed against spinal muscular atrophy in collaboration with F. Hoffmann La Roche Ltd and Hoffmann La Roche Inc. and the Spinal Muscular Atrophy 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 License Agreement with a subsidiary of Ionis Pharmaceuticals, Inc. including with respect to the timing of regulatory approval of Tegsedi® (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 royalty payments by us based on our potential achievement of certain net sales thresholds;
the timing and scope of our commercialization of our products and product candidates;
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 ability to obtain additional and maintain existing reimbursed named patient and cohort early access programs for our products on adequate terms, or at all;

1

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 splicing, metabolic, Bio-e and oncology programs 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 products and product candidates through alternative means if pricing and reimbursement negotiations in the applicable territory do not have a positive outcome;
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 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;
the potential receipt of revenues from future sales of our products or product candidates;
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;
the extent, timing and financial aspects of the discontinuation of our preclinical and early research programs in gene therapy and reduction in workforce;
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 complete any post-marketing requirements imposed by regulatory agencies with respect to our products;
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;

2

our ability to satisfy our obligations under the terms of the credit agreement with funds and other affiliated entities advised or managed by Blackstone Life Sciences and Blackstone Credit and Wilmington Trust, National Association, as the administrative agent;
our ability to satisfy our obligations 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, metabolic, 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, 2022, 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, 2022 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, 

December 31, 

    

2023

    

2022

Assets

Current assets:

 

 

  

Cash and cash equivalents

$

208,393

$

279,834

Marketable securities

 

129,550

 

130,871

Trade and royalty receivables, net

 

177,503

 

155,614

Inventory, net

 

32,018

 

21,808

Prepaid expenses and other current assets

 

42,227

 

105,658

Total current assets

 

589,691

 

693,785

Fixed assets, net

 

82,129

 

72,590

Intangible assets, net

 

451,629

 

705,891

Goodwill

 

82,341

 

82,341

Operating lease ROU assets

96,686

102,430

Deposits and other assets

 

35,648

 

48,582

Total assets

$

1,338,124

$

1,705,619

Liabilities and stockholders’ deficit

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable and accrued expenses

$

358,562

$

320,366

Deferred revenue

 

 

1,351

Operating lease liabilities- current

10,199

9,370

Finance lease liabilities- current

2,230

3,000

Liability for sale of future royalties- current

105,351

72,149

Total current liabilities

 

476,342

 

406,236

Long-term debt

 

572,643

 

571,722

Contingent consideration payable

 

37,500

 

164,000

Deferred tax liability

 

51,928

 

102,834

Operating lease liabilities- noncurrent

100,425

100,860

Finance lease liabilities- noncurrent

17,184

18,675

Liability for sale of future royalties- noncurrent

661,229

685,737

Other long-term liabilities

141

2,641

Total liabilities

 

1,917,392

 

2,052,705

Stockholders’ deficit:

 

  

 

  

Common stock, $0.001 par value. Authorized 250,000,000 shares; issued and outstanding 75,318,233 shares at June 30, 2023. Authorized 250,000,000 shares; issued and outstanding 73,104,692 shares at December 31, 2022.

 

75

 

72

Additional paid-in capital

 

2,416,904

 

2,305,020

Accumulated other comprehensive (loss) income

 

(1,431)

 

4,796

Accumulated deficit

 

(2,994,816)

 

(2,656,974)

Total stockholders’ deficit

 

(579,268)

 

(347,086)

Total liabilities and stockholders’ deficit

$

1,338,124

$

1,705,619

See accompanying unaudited notes.

4

PTC Therapeutics, Inc.

Consolidated Statements of Operations (unaudited)

In thousands (except shares and per share amounts)

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2023

    

2022

    

2023

    

2022

Revenues:

 

  

 

  

  

 

  

Net product revenue

$

174,592

$

143,701

$

362,149

$

273,534

Collaboration revenue

 

 

6

 

7

Royalty revenue

36,853

21,825

67,684

40,721

Manufacturing revenue

2,363

4,351

Total revenues

 

213,808

 

165,526

 

434,190

 

314,262

Operating expenses:

Cost of product sales, excluding amortization of acquired intangible assets

 

12,731

9,639

 

26,875

 

19,774

Amortization of acquired intangible assets

 

47,397

26,294

 

86,812

 

49,767

Research and development

 

185,874

157,263

 

380,998

 

297,341

Selling, general and administrative

 

88,449

79,892

 

175,363

 

153,162

Change in the fair value of contingent consideration

 

(128,900)

(15,200)

 

(126,500)

 

(26,900)

Intangible asset impairment

217,800

217,800

Total operating expenses

 

423,351

 

257,888

 

761,348

 

493,144

Loss from operations

 

(209,543)

 

(92,362)

 

(327,158)

 

(178,882)

Interest expense, net

 

(29,415)

(21,976)

 

(56,745)

 

(45,490)

Other income (expense), net

 

1,479

(34,357)

 

11,434

 

(46,214)

Loss before income tax benefit (expense)

 

(237,479)

 

(148,695)

 

(372,469)

 

(270,586)

Income tax benefit (expense)

 

38,596

(3,392)

 

34,627

 

(8,227)

Net loss attributable to common stockholders

$

(198,883)

$

(152,087)

$

(337,842)

$

(278,813)

Weighted-average shares outstanding:

Basic and diluted (in shares)

 

74,730,433

71,372,940

 

74,232,624

 

71,294,458

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

$

(2.66)

$

(2.13)

$

(4.55)

$

(3.91)

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, 

     

2023

     

2022

     

2023

     

2022

Net loss

$

(198,883)

$

(152,087)

$

(337,842)

$

(278,813)

Other comprehensive income (loss):

 

  

 

  

 

 

  

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

 

397

(156)

 

451

 

(3,069)

Foreign currency translation (loss) gain, net of tax

 

(241)

29,015

 

(6,678)

 

37,602

Comprehensive loss

$

(198,727)

$

(123,228)

$

(344,069)

$

(244,280)

See accompanying unaudited notes.

6

PTC Therapeutics, Inc.

Consolidated Statements of Stockholders’ (Deficit) Equity (unaudited)

In thousands (except shares)

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Three months ended June 30, 2023

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

(loss) income

    

deficit

    

deficit

Balance, March 31, 2023

74,012,034

    

$

73

    

$

2,339,886

    

$

(1,587)

    

$

(2,795,933)

    

$

(457,561)

Exercise of options

 

481,051

1

14,273

14,274

Restricted stock vesting and issuance, net

 

50,382

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

 

117,304

3,805

3,805

Issuance of common stock in connection with a milestone payable

657,462

1

29,569

29,570

Share-based compensation expense

 

29,371

29,371

Net loss

 

(198,883)

(198,883)

Comprehensive income

 

156

156

Balance, June 30, 2023

 

75,318,233

$

75

$

2,416,904

$

(1,431)

$

(2,994,816)

$

(579,268)

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Three months ended June 30, 2022

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

(loss) income

    

deficit

    

deficit

Balance, March 31, 2022

 

71,337,041

    

$

71

    

$

2,152,639

    

$

(18,608)

    

$

(2,224,683)

    

$

(90,581)

Exercise of options

 

27,832

754

754

Restricted stock vesting and issuance, net

 

49,753

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

91,263

3,107

3,107

Share-based compensation expense

 

27,730

27,730

Net loss

 

 

 

 

(152,087)

 

(152,087)

Comprehensive income

 

 

 

 

28,859

 

28,859

Balance, June 30, 2022

 

71,505,889

$

71

$

2,184,230

$

10,251

$

(2,376,770)

$

(182,218)

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Six months ended June 30, 2023

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

income (loss)

    

deficit

    

deficit

Balance, December 31, 2022

 

73,104,692

$

72

$

2,305,020

$

4,796

$

(2,656,974)

$

(347,086)

Exercise of options

 

692,612

1

20,324

 

20,325

Restricted stock vesting and issuance, net

 

746,163

1

 

1

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

 

117,304

3,805

 

3,805

Issuance of common stock in connection with a milestone payable

657,462

1

29,569

29,570

Share-based compensation expense

 

58,186

 

58,186

Net loss

 

(337,842)

 

(337,842)

Comprehensive loss

 

(6,227)

 

(6,227)

Balance, June 30, 2023

 

75,318,233

$

75

$

2,416,904

$

(1,431)

$

(2,994,816)

$

(579,268)

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Six months ended June 30, 2022

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

(loss) income

    

deficit

    

equity (deficit)

Balance, December 31, 2021

 

70,828,226

$

71

$

2,123,606

$

(24,282)

$

(2,097,957)

$

1,438

Exercise of options

125,020

 

 

3,198

 

 

3,198

Restricted stock vesting and issuance, net

461,380

 

 

 

 

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

 

91,263

 

 

3,107

 

 

 

3,107

Share-based compensation expense

 

 

 

54,319

 

 

 

54,319

Net loss

 

 

 

 

 

(278,813)

 

(278,813)

Comprehensive income

 

 

 

 

34,533

 

 

34,533

Balance, June 30, 2022

 

71,505,889

$

71

$

2,184,230

$

10,251

$

(2,376,770)

$

(182,218)

See accompanying unaudited notes.

7

PTC Therapeutics, Inc.

Consolidated Statements of Cash Flows (unaudited)

In thousands

Six Months Ended June 30, 

    

2023

    

2022

Cash flows from operating activities

Net loss

$

(337,842)

$

(278,813)

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

 

  

Depreciation and amortization

 

93,830

55,494

Non-cash operating lease expense

 

5,674

4,295

Non-cash royalty revenue related to sale of future royalties

(29,059)

(17,482)

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

37,753

37,825

Intangible asset impairment

217,800

Change in valuation of contingent consideration

 

(126,500)

(26,900)

Unrealized loss (gain) on ClearPoint Equity Investments

 

1,112

(2,369)

Unrealized loss (gain) on ClearPoint convertible debt security

1,539

(1,995)

Unrealized (gain) loss on marketable securities- equity investments

(4,364)

11,356

Realized loss for the sale of Clearpoint Equity Investment

782

Non-cash stock consideration, milestone payment

29,570

Disposal of asset

133

82

Deferred income taxes

(50,907)

Amortization of (discounts) premiums on investments, net

 

(88)

1,540

Amortization of debt issuance costs

 

1,001

935

Share-based compensation expense

 

58,186

54,319

Unrealized foreign currency transaction (gains) losses, net

 

(13,332)

36,359

Changes in operating assets and liabilities:

 

Inventory, net

 

(9,795)

27

Prepaid expenses and other current assets

 

63,951

16,431

Trade and royalty receivables, net

 

(18,022)

(29,549)

Deposits and other assets

 

6,936

(974)

Accounts payable and accrued expenses

 

32,437

(9,060)

Other liabilities

 

(3,055)

(4,167)

Deferred revenue

 

(1,351)

Net cash used in operating activities

$

(43,611)

$

(152,646)

Cash flows from investing activities

 

 

Purchases of fixed assets

$

(16,515)

$

(18,012)

Purchases of marketable securities- available for sale

(40,429)

Purchases of marketable securities- equity investments

(18,159)

Sale and redemption of marketable securities- available for sale

21,544

257,534

Sale and redemption of marketable securities- equity investments

4,249

3,630

Sale and redemption of ClearPoint Equity Investments

2,594

Acquisition of product rights and licenses

(46,436)

(81,426)

Net cash (used in) provided by investing activities

$

(52,723)

$

121,297

Cash flows from financing activities

 

  

 

Proceeds from exercise of options

$

20,325

$

3,198

Proceeds from employee stock purchase plan

 

3,805

3,107

Debt issuance costs related to senior secured term loan

(197)

Payment of finance lease principal

(1,379)

(1,276)

Net cash provided by financing activities

$

22,554

$

5,029

Effect of exchange rate changes on cash

 

2,351

3,347

Net decrease in cash and cash equivalents

 

(71,429)

 

(22,973)

Cash and cash equivalents, and restricted cash beginning of period

 

295,925

197,218

Cash and cash equivalents, and restricted cash end of period

$

224,496

$

174,245

Supplemental disclosure of cash information

 

  

 

Cash paid for interest

$

22,310

$

8,273

Cash paid for income taxes

9,196

2,949

Supplemental disclosure of non-cash investing and financing activity

 

 

  

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

$

451

$

(3,069)

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

68,642

Acquisition of product rights and licenses

36,879

26,687

Debt issuance costs related to senior secured term loan

38

Capital expenditures unpaid at the end of period

36

Milestone payable

2,500

50,000

See accompanying unaudited notes.

8

PTC Therapeutics, Inc.

Notes to Consolidated Financial Statements (unaudited