PTC Therapeutics, Inc. — Q2 2022 Form 10-Q
Business context and period. Unaudited results cover the three and six months ended June 30, 2022. PTC is a commercial-stage rare-disease biopharmaceutical company with marketed products and a development pipeline. Unless otherwise noted, amounts below are in millions of dollars.
Financial performance
| Metric | Q2 2022 | Q2 2021 | First half 2022 | First half 2021 |
|---|---|---|---|---|
| Total revenue | $165.5 | $116.7 | $314.3 | $234.6 |
| Net product revenue | $143.7 | $103.1 | $273.5 | $194.4 |
| Royalty revenue | $21.8 | $13.6 | $40.7 | $20.2 |
| Operating loss | $(92.4) | $(98.5) | $(178.9) | $(196.6) |
| Net loss | $(152.1) | $(118.4) | $(278.8) | $(247.0) |
| Net loss per share, diluted | $(2.13) | $(1.68) | $(3.91) | $(3.51) |
PTC remained unprofitable; margins were negative. Q2 research and development expense was $157.3 million and selling, general and administrative expense was $79.9 million. First-half amounts were $297.3 million and $153.2 million, respectively. Net interest expense was $22.0 million in Q2 and $45.5 million in the first half.
For the first half, cash used in operating activities was $152.6 million, compared with $131.3 million in 2021. Investing activities provided $121.3 million, principally reflecting net marketable-security sales and redemptions; financing activities provided $5.0 million. Cash and cash equivalents were $158.2 million and marketable securities were $347.4 million at June 30, for $505.5 million combined.
At June 30, current assets were $694.7 million and current liabilities were $567.4 million. Total liabilities were $1.986 billion, including $432.4 million of convertible-note carrying value and $754.3 million of liabilities for the sale of future royalties. Stockholders’ equity was a deficit of $182.2 million.
Changes versus the prior comparable period
- Revenue increased 42% in Q2 and 34% in the first half. Product revenue rose 39% and 41%, respectively, led by Translarna and Emflaza; PTC also began recording Upstaza sales in Q2.
- Evrysdi royalty revenue increased 61% in Q2 and more than doubled in the first half, reflecting higher sales. First-half collaboration revenue fell by $20.0 million because the comparable 2021 period included a Roche milestone for Evrysdi’s first EU commercial sale.
- Despite higher revenue, first-half net loss widened by $31.8 million. Higher R&D, SG&A, acquired-intangible amortization, interest, foreign-exchange-related expense and taxes more than offset revenue growth and a $26.9 million gain from changes in the fair value of deferred and contingent consideration.
- Cash, cash equivalents and marketable securities declined from $773.4 million at December 31, 2021 to $505.5 million at June 30, 2022.
Outlook, risks and unusual items
- Management stated that cash flows from product sales, cash and marketable securities were expected to fund operations for at least the next 12 months. PTC also cautioned that estimates depend on assumptions and that it may need substantial additional funding; it has never been profitable.
- The $150.0 million principal amount of 3.00% convertible notes was due August 15, 2022. The filing reports the maturity obligation but does not state its subsequent resolution. The other convertible notes have $287.5 million principal due in 2026.
- In July 2022, the European Commission approved Upstaza for AADC deficiency in patients 18 months and older in the EEA. The approval triggered a $50.0 million payment to former Agilis equityholders, reclassified as payable at June 30. PTC expected a further $20.0 million payment upon FDA acceptance for filing of its planned Upstaza BLA, targeted for Q4 2022.
- PTC expected a $30.0 million Censa milestone if enrollment was completed in the Phase 3 PTC923 trial for PKU in 2022; the company could elect to pay in cash or shares. The filing also reports a separate $50.0 million Emflaza sales-based milestone paid to Marathon during the first half.
- Translarna’s EEA authorization remains subject to annual review and renewal. Study 041 showed statistically significant benefit across the intent-to-treat population on several measures, but the primary analysis group did not achieve statistical significance. PTC planned to submit trial and available extension data to the EMA by the end of Q3 2022; it was also preparing FDA discussions on a possible Translarna NDA resubmission.
- PTC expected to submit the Upstaza U.S. BLA in Q4 2022, after providing additional information requested by the FDA on commercial cannula use in young patients. Other stated milestones included PTC518 initial Phase 2 data and PTC923 trial results by year-end 2022, Waylivra’s expected Brazilian regulatory decision in the second half of 2022, and delayed vatiquinone seizure-trial results in Q1 2023. COVID-19-related clinical-site and enrollment delays remained a risk.
- Further risks include pricing and reimbursement access, maintaining Translarna authorization, clinical-trial and regulatory outcomes, manufacturing and commercialization execution, foreign-exchange exposure, and the need for additional financing. The company entered a 17-year Warren, New Jersey lease; base rent is approximately $163.0 million before a potential $18.6 million abatement.
Most important facts for investors to verify
- How the August 15, 2022 convertible-note maturity was settled, including any cash, conversion or refinancing consequences.
- Whether the EMA accepted the Study 041 submission and what it concluded about Translarna’s annual authorization and benefit-risk assessment.
- Whether the FDA accepted the Upstaza BLA and whether the expected $20.0 million milestone was triggered.
- Progress toward the stated clinical and regulatory milestones, particularly PTC923, PTC518 and vatiquinone, and any effects on spending or cash runway.
- Whether product growth and reimbursement access can sustain revenue while operating cash use and long-term lease and royalty obligations remain significant.