PTC Therapeutics, Inc. — Q2 2020 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2020. Unaudited consolidated financial statements. PTC is a commercial-stage biopharmaceutical company focused on rare diseases, with products including Translarna and Emflaza and a development pipeline spanning gene therapy, Bio-e, splicing, and other programs.
Financial performance and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Total revenue | $75.2 million | $85.5 million | $143.5 million | $139.1 million |
| Net product revenue | $75.2 million | $85.5 million | $143.4 million | $138.5 million |
| Research and development | $176.5 million | $60.0 million | $266.6 million | $112.5 million |
| Operating loss | $187.3 million | $38.8 million | $280.3 million | $107.9 million |
| Net loss | $181.4 million | $41.8 million | $294.1 million | $113.9 million |
| Basic and diluted loss per share | $2.78 | $0.75 | $4.61 | $1.99 |
- Q2 product revenue comprised $36.2 million in U.S. sales, primarily Emflaza, and $39.0 million outside the U.S., primarily Translarna and Tegsedi. Six-month U.S. sales were $63.6 million and non-U.S. sales were $79.8 million.
- Operating cash used was $156.4 million in the first half, versus $72.9 million a year earlier. Investing activities provided $40.8 million and financing activities used $14.4 million. Cash, cash equivalents, and marketable securities totaled $498.9 million at June 30.
- Current assets were $605.0 million and current liabilities $201.8 million. Balance-sheet long-term debt was $297.0 million, with $18.3 million of current debt. The company also had $287.5 million principal of 2026 convertible notes and $150.0 million principal of 2022 convertible notes; carrying values differ due to discounts and issuance costs.
- Management stated that cash flows from product sales and available cash and marketable securities were expected to fund operations for at least the next 12 months, while noting estimates depend on assumptions and additional funding may be needed.
Material changes versus prior periods
- Q2 revenue fell 12% year over year, largely because a Brazilian Translarna group purchase order was delayed; Emflaza growth from new prescriptions and commercial improvements partly offset the decline. First-half revenue increased 3%.
- R&D expense rose sharply, including $53.6 million related to acquiring and expensing PTC923 and $41.2 million for dedicated MassBiologics manufacturing facilities for the AADC gene-therapy program. R&D also increased with investment in gene therapy, Bio-e, and the broader pipeline.
- Q2 included a $10.6 million loss on settlement of Agilis deferred and contingent consideration. The associated rights exchange involved $36.9 million cash and 2.82 million shares, in exchange for cancellation of specified potential milestone rights totaling $211.6 million.
- Shares outstanding increased to 67.2 million at June 30 from 61.9 million at year-end 2019, reflecting the Agilis rights exchange, Censa acquisition, at-the-market issuance, and other share issuances.
Outlook, risks, and unusual items
- Post-quarter financing: On July 17, 2020, PTC received $650 million from Royalty Pharma in exchange for 42.933% of its future risdiplam royalty stream. PTC retained 57.067% of the royalty and all remaining potential regulatory and sales milestones under the Roche agreement, stated at $397.5 million in aggregate. This transaction occurred after June 30 and is not included in the quarter-end cash balance.
- Debt and facility: PTC terminated its MidCap credit facility on July 1, repaying $18.4 million of principal and accrued interest and paying $0.6 million in termination and exit fees. The Hopewell facility lease began July 1; the initial 15-year term carries approximately $111.5 million aggregate rent. The MassBiologics manufacturing arrangement has a 12.5-year term.
- Pipeline milestones: PTC anticipated initiating the U.S. PTC-AADC BLA submission in the second half of 2020 and expected an EMA committee opinion in Q1 2021. It expected to begin vatiquinone trials in Q3 and Q4 2020, and PTC923 Phase 3 work in 2021. These are forward-looking expectations, not guaranteed outcomes.
- COVID-19: The pandemic delayed final muscle biopsies for Translarna Study 045 and affected regulatory and trial timelines, including PTC-AADC review activities and first-in-human gene-therapy work. Delays in Brazilian government purchase orders also affected Translarna revenue. PTC299 entered a Phase 2/3 COVID-19 trial; management expected Stage 1 completion in the second half of 2020 and topline results in the first half of 2021.
- Regulatory and commercial risks: Translarna’s EEA authorization remains subject to annual renewal and Study 041, with final reporting due by Q3 2022. The FDA had not approved Translarna in the U.S.; a potential resubmission depended on Study 045 data. Pricing, reimbursement, patient access, clinical outcomes, manufacturing, and further COVID-19 disruptions could affect revenue and spending.
- PTC reported no material legal proceedings and no material change in internal control over financial reporting; management concluded disclosure controls were effective as of June 30.
Most important facts for investors to verify
- Whether delayed Brazilian purchase orders normalize and whether Translarna and Emflaza sales sustain or improve revenue trends.
- Progress, data, and regulatory consequences for Study 041, Study 045, and the PTC-AADC application, including COVID-related delays.
- Actual cash burn and the effect of the $650 million royalty sale on liquidity, including the royalties surrendered and the retained royalty economics.
- R&D spending trajectory, particularly exceptional acquisition and manufacturing-related charges, and the timing of pipeline trial starts.
- Convertible-note obligations, dilution from equity issuances, and the potential size and timing of contingent milestone, royalty, and lease payments.