PTC Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Unaudited consolidated financial statements; comparisons are with Q1 2022 unless otherwise noted. PTC is a global rare-disease biopharmaceutical company with commercial products and a clinical-stage pipeline.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Total revenue | $220.4 million | $148.7 million; up 48% |
| Net product revenue | $187.6 million | $129.8 million; up 44% |
| Royalty revenue | $30.8 million | $18.9 million; up 63%, primarily from Evrysdi |
| Manufacturing revenue | $2.0 million | None reported |
| Operating loss | $117.6 million | $86.5 million |
| Net loss | $139.0 million; $1.88 per share | $126.7 million; $1.78 per share |
| Research and development | $195.1 million | $140.1 million; up 39% |
| Selling, general and administrative | $86.9 million | $73.3 million; up 19% |
| Net cash used in operating activities | $29.5 million | $97.4 million |
Product growth reflected Translarna revenue of $115.1 million, up 45%, and Emflaza revenue of $54.6 million, up 12%. Translarna growth was attributed to new patients and geographic expansion; Emflaza growth to new patients, compliance and broader access. The filing does not present a headline gross-margin measure.
At March 31, 2023, cash and cash equivalents were $167.5 million and marketable securities were $118.8 million, totaling $286.3 million. A further $50.0 million was funded into a lender reserve account and is reported as restricted cash; another $16.1 million of restricted cash was included in other assets. Current assets were $613.4 million and current liabilities $441.6 million. Total liabilities were $2.07 billion, versus total assets of $1.61 billion; stockholders’ deficit was $457.6 million.
Long-term debt was $572.1 million. It includes the $300 million Blackstone senior secured term loan and the 2026 convertible notes, which had $287.5 million principal and a $283.3 million net carrying amount. The Blackstone facility bears floating-rate interest and requires at least $100 million of consolidated liquidity at quarter-end, subject to a higher threshold in specified acquisition circumstances. The separate liability for sold future royalties was $763.6 million; related non-cash interest expense was $18.9 million in Q1.
Material changes and notable items
- Revenue increased substantially, while net loss widened by $12.2 million. Operating expenses rose to $338.0 million from $235.3 million, including higher R&D and amortization expense.
- R&D included a $30.0 million success-based milestone following completion of enrollment in the sepiapterin Phase 3 PKU trial. PTC elected to settle this milestone primarily in common shares; it was recorded in accounts payable and accrued expenses.
- Other income was $10.0 million, compared with other expense of $11.9 million in Q1 2022, mainly reflecting foreign-exchange and investment fair-value movements. The fair-value change in deferred and contingent consideration was a $2.4 million loss, versus an $11.7 million gain a year earlier.
- Operating cash outflow improved year over year, but cash and cash equivalents declined $112.3 million from year-end to $167.5 million. The cash-flow statement reports a $62.3 million decrease in cash, cash equivalents and restricted cash, including the quarter’s $50.0 million reserve funding.
Outlook, risks and contingencies
- Management expects cash flows from product sales, Roche royalties and milestones, and cash, cash equivalents and marketable securities to fund operations for at least the next 12 months. PTC also states it has never been profitable, expects significant expenses and operating losses to continue, and may need additional financing; its funding estimate depends on assumptions that may prove incorrect.
- Translarna’s EEA authorization is subject to annual review; renewal was requested in February 2023, and the existing authorization was effective, unless extended, through August 5, 2023. PTC expected a European regulatory committee opinion on conversion to standard authorization in Q2 2023. The FDA had advised that Study 041 did not provide substantial evidence of effectiveness to support an NDA resubmission; PTC planned further FDA discussions.
- Upstaza’s U.S. BLA submission timing could move from Q2 to Q3 2023 as PTC responds to FDA queries. Filing acceptance would trigger a $20 million Agilis milestone. PTC also expected up to $50 million of cash payments to former Censa holders upon specified 2023 sepiapterin milestones.
- Expected 2023 clinical updates included interim PTC518 data, results from two vatiquinone trials, and Part 2 sepiapterin results. These programs, regulatory review, trial outcomes and commercial execution remain uncertain.
- Revenue and liquidity are exposed to pricing, reimbursement, market access and product-authorization risks. Product sales were geographically concentrated: the United States, Russia and Brazil each accounted for at least 10% of Q1 product sales. The company also faces clinical-development, manufacturing, foreign-exchange, variable-rate debt, contingent-payment and financing risks.
- PTC reported no material legal proceedings known to it and no material subsequent events through the filing date. Management concluded disclosure controls were effective at the reasonable-assurance level and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Outcome and timing of the Translarna EEA renewal and standard-authorization review, and any further FDA direction on a U.S. NDA pathway.
- Upstaza U.S. BLA timing, FDA feedback and any resulting $20 million milestone obligation.
- Whether expected clinical results and regulatory milestones are achieved, including sepiapterin’s share-settled $30 million milestone and potential additional Censa payments.
- Quarterly product sales, geographic concentration, reimbursement access and Evrysdi royalty growth, including the portion of royalties assigned to RPI.
- Available liquidity after restricted reserve funding, operating cash use, floating-rate Blackstone interest and other debt and milestone commitments.
- Management’s at-least-12-month funding assessment and the assumptions underlying it, given ongoing losses and potential future financing needs.