PTC Therapeutics, Inc. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020. The interim financial statements are unaudited. PTC is a commercial-stage biopharmaceutical company focused on rare diseases, with Translarna and Emflaza marketed for Duchenne muscular dystrophy and additional products, collaborations, and development programs.
Financial performance
| Metric | Q1 2020 | Q1 2019 | Change |
|---|---|---|---|
| Total revenue | $68.3 million | $53.6 million | +$14.7 million |
| Net product revenue | $68.2 million | $53.1 million | +29% |
| Operating loss | $93.0 million | $69.1 million | Loss widened |
| Net loss | $112.7 million | $72.1 million | Loss widened |
| Basic and diluted loss per share | $1.81 | $1.29 | Loss per share increased |
| Cash used in operating activities | $81.6 million | $42.4 million | Cash use increased |
U.S. product sales, consisting of Emflaza, were $27.5 million, up from $17.8 million. Non-U.S. product sales were $40.7 million, compared with $35.3 million. Management attributed product growth to Translarna sales in existing and new markets and Emflaza patient growth. Collaboration and grant revenue was only $0.1 million, down from $0.5 million.
Research and development expense rose 71% to $90.1 million, reflecting investment in gene therapy, Bio-e, and other research and clinical programs. Selling, general and administrative expense increased 44% to $58.2 million, primarily to support commercialization. Other expense was $13.8 million, largely from foreign-exchange effects and $4.4 million of unrealized losses on ClearPoint equity and convertible-debt investments. Interest expense, net, increased to $5.6 million, mainly reflecting the convertible notes and credit facility.
Balance sheet, debt, and liquidity
- At March 31, 2020, cash and cash equivalents were $123.3 million and marketable securities were $472.6 million, or $595.9 million combined. Cash, cash equivalents, and restricted cash totaled $130.8 million.
- Total assets were $1.546 billion; current assets were $691.9 million and current liabilities were $217.7 million. Stockholders’ equity was $528.7 million and accumulated deficit was $1.303 billion.
- Debt carrying value was approximately $314.6 million, comprising $23.3 million under the senior secured MidCap facility and the convertible notes. The MidCap facility matures May 1, 2021; the notes comprise $150.0 million principal due 2022 and $287.5 million principal due 2026. PTC reported compliance with its credit-facility covenants.
- Investing activities used $101.3 million, primarily reflecting purchases of marketable securities; financing activities provided $18.5 million, primarily from ATM share sales and option exercises. PTC sold 262,205 shares through its ATM program for net proceeds of $13.5 million.
- Management stated that product cash flows and available cash, cash equivalents, and marketable securities were expected to fund operations for at least the next 12 months. PTC also cautioned that assumptions could prove incorrect and additional financing may be needed. The company has not been profitable.
Material changes, outlook, and risks
- COVID-19: PTC reported no significant effect on revenue or product supply to existing patients to date, but pandemic-related restrictions delayed clinical and regulatory work. Study 045 biopsies were delayed by site closures; data were expected in Q3 2020, followed by a potential Translarna U.S. NDA resubmission. PTC anticipated filing the PTC-AADC U.S. BLA in H2 2020, with the EEA review opinion expected by year-end. Bio-e trial starts were delayed; PTC expected a PTC743 Phase 2 trial in Q3 2020 and a Friedreich ataxia Phase 3 trial in Q4 2020. Gene-therapy IND filings for Friedreich ataxia and Angelman syndrome were expected to be delayed at least one quarter. The Hopewell facility’s clinical-material GMP manufacturing was expected to begin in early 2021.
- Regulatory and commercial exposure: Translarna’s EEA authorization requires annual renewal and completion of Study 041, with the final report due by Q3 2022. The FDA had previously declined to approve Translarna; Study 045 is intended to support a possible resubmission. Pricing, reimbursement, market access, and patient identification remain important revenue dependencies. Risdiplam’s FDA decision date was extended to August 24, 2020; Roche expected to submit an EEA application around mid-2020.
- Post-quarter Agilis rights exchange: On April 29, PTC paid $36.9 million and agreed to issue 2,821,176 shares in exchange for cancellation of $211.6 million of certain potential Agilis milestone rights. Other milestone and royalty obligations remained, including up to $361.0 million of regulatory milestones, $150.0 million of sales milestones, and specified royalties. PTC also remained obligated for $2.4 million of development payments due in August 2020 regardless of milestone achievement.
- Other commitments and risks: The amended Hopewell lease covers approximately 220,500 square feet, with an estimated 15-year initial term and approximately $111.5 million aggregate rent. PTC disclosed no material legal proceedings and no off-balance-sheet arrangements. Key risks include clinical and regulatory outcomes, Translarna authorization renewal, reimbursement, COVID-19 disruption, manufacturing execution, contingent acquisition payments, and the need for future financing.
No quantified revenue or earnings guidance is provided in the filing. Management expects expenses to continue rising with commercialization, research and development, manufacturing, and regulatory activity.
Important facts for investors to verify
- Progress and outcomes for Study 041 and Study 045, including Translarna’s EEA renewal and any U.S. NDA resubmission.
- COVID-19’s continuing effect on clinical timelines, regulatory filings, Hopewell facility readiness, and product access or sales.
- Product revenue growth and sustainability by product and geography, including reimbursement and distributor concentration.
- Cash burn, available liquidity, financing needs, and ability to meet debt maturities and lease obligations.
- Final accounting and dilution effects of the Agilis rights exchange, as well as remaining contingent milestone and royalty exposure.