PTC Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Financial statements are unaudited. Dollar figures below are in millions unless stated otherwise.
Business context
PTC is a commercial-stage biopharmaceutical company focused on rare diseases. Key marketed products include Translarna and Emflaza for Duchenne muscular dystrophy, Upstaza for AADC deficiency, and Tegsedi and Waylivra in certain Latin American markets. PTC also earns royalties from Roche’s Evrysdi for spinal muscular atrophy and is advancing programs in splicing, metabolism, Bio-e and oncology.
Financial performance
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Total revenue | $196.6 | $217.1 | $630.8 | $531.4 |
| Net product revenue | $144.0 | $134.2 | $506.2 | $407.7 |
| Royalty revenue | $50.2 | $32.9 | $117.9 | $73.6 |
| Collaboration revenue | $0 | $50.0 | $0.006 | $50.0 |
| Operating loss | $(118.2) | $(68.2) | $(445.3) | $(247.1) |
| Net loss | $(133.0) | $(109.3) | $(470.8) | $(388.1) |
| Net loss per share | $(1.76) | $(1.53) | $(6.31) | $(5.43) |
Q3 product revenue increased 7%, with Emflaza up 23% to $67.4 million, partly offset by Translarna down 10% to $69.0 million. Evrysdi royalties rose 52%. Total Q3 revenue fell 9% because the prior-year quarter included a $50 million Roche sales milestone. For the first nine months, product revenue rose 24% and royalties rose 60%; total revenue increased 19% despite the absence of that prior-year milestone.
Operating expenses included $58.6 million of acquired-intangible amortization in Q3 and $145.5 million for the nine-month period. Nine-month results also included a $217.8 million impairment of gene-therapy assets and a $125.0 million gain from reducing contingent consideration, primarily after PTC discontinued early gene-therapy research programs. The company reported no conventional gross-margin figure.
Cash, debt and liquidity
- At September 30, cash and cash equivalents were $165.2 million and marketable securities were $129.7 million, totaling $294.8 million. The cash-flow statement includes restricted cash; cash, cash equivalents and restricted cash totaled $181.4 million at period-end.
- Nine-month operating cash use was $58.1 million, versus $190.7 million in 2022; investing cash use was $82.3 million, while financing provided $25.9 million. The filing attributes operating cash use mainly to clinical development and commercial activities.
- Long-term debt was $573.2 million. Separately, the liability for sold future royalties was $763.3 million, including current and noncurrent portions. The company had a $3.1 billion accumulated deficit and $670.8 million stockholders’ deficit.
- After quarter-end, PTC received $1.0 billion from Royalty Pharma for additional rights to Evrysdi royalties. PTC also terminated its Blackstone loan on October 19, repaying $302.1 million of principal and accrued interest and paying $82.1 million in premiums, expenses and exit fees. The filing does not provide a clear pro forma cash balance after these transactions.
- Management stated that available resources and expected cash flows were expected to fund operations for at least 12 months. PTC also cautioned that it has never been profitable and may need additional financing.
Outlook, material developments and risks
- Translarna: In September 2023, the EMA’s CHMP issued negative opinions on both conversion to standard authorization and renewal of the existing conditional authorization for nmDMD. PTC requested re-examination of the renewal opinion and expected a CHMP opinion in late January 2024, followed by EC action. Loss or restriction of authorization could materially reduce Translarna revenue in Europe and potentially affect other markets. The FDA had also indicated that Study 041 alone did not provide substantial evidence to support an NDA resubmission.
- Pipeline timing: PTC expected a U.S. Upstaza BLA submission shortly after a December 2023 pre-BLA meeting. It expected a sepiapterin PKU MAA in the first half of 2024 and an FDA NDA by the end of Q3 2024; the FDA required a 26-week mouse carcinogenicity study before NDA submission. PTC expected further PTC518 data in the first half of 2024. The vatiquinone Phase 3 trial missed its primary endpoint, and the FDA indicated a confirmatory study would likely be needed to support an NDA.
- Restructuring and portfolio focus: PTC announced a workforce reduction of approximately 25%, expected to be substantially completed by January 15, 2024. Nine-month restructuring costs were $30.6 million, with $23.4 million accrued at September 30. The company discontinued early research programs in gene therapy, impairing related assets and reducing associated contingent consideration.
- Commercial and funding risks: Revenue depends on product access, pricing and reimbursement, regulatory approvals, and continued market acceptance. PTC cited ongoing development and commercialization spending, potential milestone obligations, and uncertainty about obtaining future financing on acceptable terms. Management expected expenses to continue increasing.
- PTC reported effective disclosure controls and procedures and no material legal proceedings known to the company.
Key facts for investors to verify
- Outcome and timing of the Translarna EMA re-examination and the resulting impact on European sales and other authorizations.
- Cash and liquidity after the $1.0 billion royalty transaction and the Blackstone loan payoff, including the accounting treatment and remaining debt obligations.
- How much Evrysdi royalty income remains with PTC under the amended Royalty Purchase Agreement, and whether PTC exercises its additional royalty-sale options.
- Progress and regulatory requirements for the Upstaza BLA and sepiapterin filings, including the required carcinogenicity study.
- Whether revenue growth can offset continuing operating losses, amortization, research and development spending, and future milestone or restructuring costs.