PTC Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Financial statement amounts below are in millions of U.S. dollars unless noted. PTC is a commercial-stage biotechnology company focused on rare diseases, with marketed products including Translarna and Emflaza and a development pipeline.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Total revenue | $138.7 | $118.4 | $373.4 | $261.9 |
| Operating loss | $(93.1) | $(55.1) | $(289.7) | $(335.4) |
| Net loss | $(133.6) | $(69.7) | $(380.6) | $(363.8) |
| Net loss per share, diluted | $(1.89) | $(1.03) | $(5.41) | $(5.59) |
| Operating cash flow | Not provided by quarter | Not provided by quarter | $(182.5) | $(129.7) |
- Q3 net product revenue was $115.6 million: Translarna contributed $67.2 million and Emflaza $47.1 million. Collaboration revenue was $10.0 million and royalty revenue, primarily Evrysdi-related, was $13.1 million.
- Q3 operating expenses were $231.8 million, including research and development of $130.8 million and selling, general and administrative expense of $69.3 million. Operating loss was 67% of revenue.
- At September 30, 2021, cash and cash equivalents were $189.8 million and marketable securities were $678.1 million, totaling $867.9 million. Current assets were $1,011.1 million against current liabilities of $465.3 million.
- Debt included $149.4 million carrying value of 3.00% convertible notes due August 2022 and $281.6 million of 1.50% convertible notes due September 2026. The separate liability for sold future royalties was $723.2 million, including $52.7 million current. These balances are carrying amounts.
- Nine-month investing cash flow was positive $150.9 million, mainly reflecting net sales and redemptions of marketable securities; financing cash flow was positive $16.5 million. Cash, cash equivalents and restricted cash declined $19.0 million over the period.
Changes versus prior period
- Q3 revenue increased 17% year over year; nine-month revenue increased 43%. Nine-month product revenue grew 37%, while Evrysdi-related royalty revenue increased to $33.3 million from $0.7 million.
- Q3 product revenue rose 40%, supported by Translarna growth of 55% and Emflaza growth of 22%. Nine-month product revenue increased $83.9 million, while collaboration revenue fell $5.0 million as milestone timing differed from 2020.
- Despite higher revenue, Q3 operating loss widened by $38.0 million, reflecting higher R&D and commercial spending. Nine-month operating loss narrowed by $45.7 million, but net loss increased by $16.8 million.
- Nine-month operating cash use increased $52.8 million year over year. Interest expense, net rose $31.5 million, principally due to non-cash interest accretion on the royalty-sale liability.
- PTC early adopted ASU 2020-06 for convertible debt accounting on January 1, 2021. The change materially altered the presentation of debt, equity and interest expense; it was not equivalent to new cash financing.
Outlook, risks and notable items
- Management said existing cash, cash equivalents, marketable securities and expected product cash flows should fund operations for at least the next 12 months, while cautioning that assumptions may prove inaccurate. PTC expects continued operating losses and higher expenses; it has never been profitable and may require additional funding.
- PTC expected an EMA committee opinion on PTC-AADC in Q4 2021 and a U.S. BLA submission in Q1 2022. It expected results from Study 041 for Translarna in Q3 2022; the EEA authorization is subject to annual review and the study obligation. Study 045 did not meet its primary endpoint, and a positive Study 041 outcome is a condition to the company’s expected Translarna NDA resubmission.
- Other stated development timelines included PTC518 Phase 2 initiation by year-end 2021; PTC857 Phase 2 initiation in Q1 2022; vatiquinone trial results in 2022 and 2023; PTC923 Phase 3 results by end-2022; and completion of emvododstat COVID-19 trial enrollment by end-2021. These are management expectations, not guarantees.
- COVID-19 had delayed some clinical and regulatory work and contributed to delays in Brazilian centralized purchase orders for Translarna. The company warned of possible further trial, regulatory, patient-access and revenue disruption.
- The $2022 notes mature in August 2022, creating a near-term refinancing, repayment or conversion consideration. The royalty-sale liability accrues interest at an effective rate of 11%; RPI is entitled to 42.933% of defined SMA-program royalties until the agreement’s termination conditions are met.
- Unusual quarterly items included $18.8 million of other expense, mainly foreign-exchange remeasurement losses and losses on ClearPoint investments, and a $10.8 million increase in the fair value of deferred and contingent consideration. The filing reported no material legal proceedings and no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether Translarna’s Study 041 meets its objectives and supports ongoing EEA authorization and any U.S. resubmission.
- Cash generation, spending trajectory and funding needs, including the approach to the August 2022 convertible-note maturity.
- Product growth, reimbursement and market access, particularly Translarna sales in Brazil and the EEA and Emflaza demand and coverage.
- Evrysdi royalty trends and the effect of the royalty-sale agreement on future cash receipts and financing costs.
- Progress and timing of PTC-AADC regulatory filings and the clinical programs described in management’s outlook.