PTC Therapeutics, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Unaudited consolidated results; amounts below are in U.S. dollars unless noted. PTC is a global biopharmaceutical company focused on rare diseases, with commercial products including Translarna and Emflaza and a development pipeline spanning gene therapy, splicing, Bio-e, metabolic and oncology programs.
Financial results and liquidity
| Metric | Q1 2021 | Q1 2020 | Change / context |
|---|---|---|---|
| Total revenue | $117.9 million | $68.3 million | Up $49.7 million |
| Net product revenue | $91.3 million | $68.2 million | Up 34%; U.S. $43.5 million, international $47.8 million |
| Collaboration revenue | $20.0 million | $0.1 million | Primarily a Roche milestone following Evrysdi’s first EU commercial sale |
| Royalty revenue | $6.7 million | None | Evrysdi royalties |
| Research and development expense | $134.5 million | $90.1 million | Up 49% |
| Selling, general and administrative expense | $61.1 million | $58.2 million | Up 5% |
| Operating loss | $(98.1) million | $(93.0) million | Loss widened |
| Net loss | $(128.6) million | $(112.7) million | Loss per share: $(1.83), versus $(1.81) |
| Operating cash flow | $(100.2) million | $(81.6) million | Greater cash use |
The filing does not provide a clear reported gross margin. Product revenue growth was attributed mainly to Emflaza prescriptions, compliance and fewer discontinuations, along with Translarna growth in existing and new markets. R&D spending rose with increased investment in research and pipeline advancement. Net interest expense increased to $19.2 million from $5.6 million, primarily reflecting interest accretion on the royalty-sale liability.
At March 31, 2021, cash and cash equivalents were $146.6 million and marketable securities were $841.8 million, totaling $988.4 million. Current assets were $1.12 billion and current liabilities were $250.9 million. Total assets were $2.11 billion; stockholders’ equity was $292.6 million. Long-term debt was $430.0 million, and the liability for sold future royalties was $695.0 million in total ($33.1 million current and $661.8 million noncurrent). Management said cash flows from product sales and existing cash, cash equivalents and marketable securities were expected to fund operations for at least 12 months.
Material changes and unusual items
- Evrysdi’s first EU commercial sale triggered a $20.0 million Roche milestone; the company also recorded $6.7 million of Evrysdi royalties. PTC previously sold RPI 42.933% of specified future SMA royalties for $650.0 million; the related liability reached $695.0 million and incurred $18.1 million of noncash interest expense in Q1.
- PTC early adopted accounting standard ASU 2020-06 on January 1, 2021. The adoption changed accounting for convertible notes and adjusted opening additional paid-in capital, accumulated deficit and long-term debt by $175.2 million, $54.8 million and $120.4 million, respectively; it also reversed a $29.6 million deferred tax liability and increased the valuation allowance by the same amount.
- Cash and cash equivalents declined $62.2 million from year-end 2020. Marketable securities declined to $841.8 million from $894.8 million; PTC invested $200.0 million in equity mutual funds during the quarter.
- Inventory write-downs were $1.4 million, primarily for product approaching expiration, compared with $0.2 million in Q1 2020.
Outlook, commentary and principal risks
- Management expects continued significant operating losses and higher expenses from commercialization, manufacturing and research and development. PTC has never been profitable and says it may need additional financing; funding may not be available on acceptable terms.
- COVID-19 delayed PTC-AADC regulatory work: the company expected a CHMP opinion in Q3 2021 and said its U.S. BLA submission would be delayed by at least one quarter. COVID-related Brazilian government purchasing delays have caused, and may continue to cause, fluctuations in Translarna revenue.
- Translarna’s EEA authorization requires annual renewal and completion of Study 041, with final results due by the end of Q3 2022. PTC’s U.S. Study 045 did not meet its prespecified primary endpoint; FDA approval remains uncertain.
- Other stated expectations included a Q3 2021 Brazilian decision on Waylivra, subject to possible COVID delays; mid-2021 initiation of a Phase 3 PTC923 trial; Q3 2022 data from one vatiquinone trial; and 2023 data from another. The company also expected PTC299 COVID-19 trial data in H2 2021.
- Material risks include reimbursement and pricing negotiations, product access and adoption, clinical and regulatory outcomes, manufacturing and supply, and dependence on Translarna authorization and Study 041. PTC reported no material change to its previously disclosed risk factors, no material legal proceedings known to it, and no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether product-sales growth and the early Evrysdi milestone and royalty revenue persist in subsequent quarters.
- Cash burn and liquidity relative to management’s stated 12-month funding expectation, including the effect of the royalty-sale liability and convertible-note obligations.
- Translarna’s EEA renewal and Study 041 execution, and whether the FDA identifies a viable U.S. approval path after Study 045.
- COVID-19-related delays and their effects on PTC-AADC submissions, Brazilian product orders and clinical programs.
- Pipeline trial timing, future R&D spending and the potential need for additional financing or shareholder dilution.