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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to

Commission file number: 001-35969

PTC Therapeutics, Inc.

(Exact name of registrant as specified in its charter)

Delaware

    

04-3416587

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

100 Corporate Court

    

South Plainfield, NJ

07080

(Address of principal executive offices)

(Zip Code)

(908) 222-7000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Common Stock, $0.001 par value per share

PTCT

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

þ

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No þ

As of August 2, 2022, there were 71,540,965 shares of Common Stock, $0.001 par value per share, outstanding.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things, statements about:

our expectations with respect to the COVID-19 pandemic and related response measures and their effects on our business, operations, clinical trials, potential regulatory submissions and approvals, our collaborators, contract research organizations, suppliers and manufacturers;
our ability to negotiate, secure and maintain adequate pricing, coverage and reimbursement terms and processes on a timely basis, or at all, with third-party payors for our products or product candidates that we commercialize or may commercialize in the future;
expectations with respect to our gene therapy platform, including our ability to commercialize UpstazaTM (eladocagene exuparvovec), formerly known as PTC-AADC, for the treatment of Aromatic L-Amino Acid Decarboxylase, or AADC deficiency, in the European Economic Area, or EEA, any potential regulatory submissions and potential approvals, our manufacturing capabilities and the potential financial impact and benefits of our leased biologics manufacturing facility and the potential achievement of development, regulatory and sales milestones and contingent payments that we may be obligated to make;
our ability to maintain our marketing authorization of TranslarnaTM (ataluren) for the treatment of nonsense mutation Duchenne muscular dystrophy, or nmDMD, in the EEA, which is subject to the specific obligation to conduct and submit the results of Study 041 to the European Medicines Agency, or EMA, and annual review and renewal by the European Commission following reassessment of the benefit-risk balance of the authorization by the EMA;
our ability to utilize results from Study 041 to support a marketing approval for Translarna for the treatment of nmDMD in the United States;
the anticipated period of market exclusivity for Emflaza® (deflazacort) for the treatment of Duchenne muscular dystrophy in the United States under the Orphan Drug Act of 1983;
our expectations with respect to the commercial status of Evrysdi® (risdiplam) and our program directed against spinal muscular atrophy in collaboration with F. Hoffmann La Roche Ltd and Hoffmann La Roche Inc. and the Spinal Muscular Atrophy Foundation and our estimates regarding future revenues from sales-based royalty payments or the achievement of milestones in that program;
our expectations and the potential financial impact and benefits related to our Collaboration and License Agreement with a subsidiary of Ionis Pharmaceuticals, Inc. including with respect to the timing of regulatory approval of Tegsedi® (inotersen) and WaylivraTM (volanesorsen) in countries in which we are licensed to commercialize them, the commercialization of Tegsedi and Waylivra, and our expectations with respect to royalty payments by us based on our potential achievement of certain net sales thresholds;
the timing and scope of our commercialization of our products and product candidates;
our ability to obtain additional and maintain existing reimbursed named patient and cohort early access programs for our products on adequate terms, or at all;

1

our estimates regarding the potential market opportunity for our products or product candidates, including the size of eligible patient populations and our ability to identify such patients;
our estimates regarding expenses, future revenues, third-party discounts and rebates, capital requirements and needs for additional financing, including our ability to maintain the level of our expenses consistent with our internal budgets and forecasts and to secure additional funds on favorable terms or at all;
the timing and conduct of our ongoing, planned and potential future clinical trials and studies in our splicing, gene therapy, Bio-e, metabolic and oncology programs and studies of emvododstat for COVID-19 as well as studies in our products for maintaining authorizations, label extensions and additional indications, including the timing of initiation, enrollment and completion of the trials and the period during which the results of the trials will become available;
our ability to realize the anticipated benefits of our acquisitions or other strategic transactions, including the possibility that the expected impact of benefits from the acquisitions or strategic transactions will not be realized or will not be realized within the expected time period, significant transaction costs, the integration of operations and employees into our business, our ability to obtain marketing approval of our product candidates we acquired from the acquisitions or other strategic transactions and unknown liabilities;
the rate and degree of market acceptance and clinical utility of any of our products or product candidates;
the ability and willingness of patients and healthcare professionals to access our products and product candidates through alternative means if pricing and reimbursement negotiations in the applicable territory do not have a positive outcome;
the timing of, and our ability to obtain additional marketing authorizations for our products and product candidates;
the ability of our products and our product candidates to meet existing or future regulatory standards;
our ability to maintain the current labeling under the marketing authorization in the EEA or expand the approved product label of Translarna for the treatment of nmDMD;
our ability to complete Study 041, a multicenter, randomized, double-blind, 18-month, placebo-controlled clinical trial of Translarna for the treatment of nmDMD followed by an 18-month open-label extension, according to the protocol agreed with the EMA, and by the EMA’s deadline;
the potential receipt of revenues from future sales of our products or product candidates;
the potential impact that completion of Study 041 may have on our revenue growth;
our sales, marketing and distribution capabilities and strategy, including the ability of our third-party manufacturers to manufacture and deliver our products and product candidates in clinically and commercially sufficient quantities and the ability of distributors to process orders in a timely manner and satisfy their other obligations to us;
our ability to establish and maintain arrangements for the manufacture of our products and product candidates that are sufficient to meet clinical trial and commercial launch requirements;
our ability to complete any post-marketing requirements imposed by regulatory agencies with respect to our products;
our ability to operate and grow our manufacturing capabilities for our gene therapy platform;

2

our expectations with respect to the potential financial impact and benefits of our leased biologics manufacturing facility and our ability to satisfy our obligations under the terms of the lease agreement for such facility;
our ability to satisfy our obligations under the indenture governing our 3.00% convertible senior notes due August 15, 2022 and under the indenture governing our 1.50% convertible senior notes due September 15, 2026;
our regulatory submissions, including with respect to timing and outcome of regulatory review;
our plans to advance our earlier stage programs and pursue research and development of other product candidates, including our splicing, gene therapy, Bio-e, metabolic and oncology programs;
whether we may pursue business development opportunities, including potential collaborations, alliances, and acquisition or licensing of assets and our ability to successfully develop or commercialize any assets to which we may gain rights pursuant to such business development opportunities;
the potential advantages of our products and any product candidate;
our intellectual property position;
the impact of government laws and regulations;
the impact of litigation that has been or may be brought against us or of litigation that we are pursuing against others; and
our competitive position.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in Part II, Item 1A. Risk Factors as well as in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2021 completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

In this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise requires, references to “PTC,” “PTC Therapeutics,” “the Company,” “we,” “us,” “our,” and similar references refer to PTC Therapeutics, Inc. and, where appropriate, its subsidiaries. The trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

All website addresses given in this Quarterly Report on Form 10-Q are for information only and are not intended to be an active link or to incorporate any website information into this document.

3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PTC Therapeutics, Inc.

Consolidated Balance Sheets (unaudited)

In thousands (except shares)

June 30, 

December 31, 

    

2022

    

2021

Assets

Current assets:

 

  

 

  

Cash and cash equivalents

$

158,158

$

189,718

Marketable securities

 

347,387

 

583,658

Trade and royalty receivables, net

 

135,943

 

110,455

Inventory, net

 

15,004

 

15,856

Prepaid expenses and other current assets

 

38,184

 

54,681

Total current assets

 

694,676

 

954,368

Fixed assets, net

 

64,913

 

52,585

Intangible assets, net

 

760,154

 

724,841

Goodwill

 

82,341

 

82,341

Operating lease ROU assets

141,635

77,421

Deposits and other assets

 

60,338

 

46,500

Total assets

$

1,804,057

$

1,938,056

Liabilities and stockholders’ (deficit) equity

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable and accrued expenses

$

330,918

$

288,784

Current portion of long-term debt

 

149,908

 

149,540

Operating lease liabilities- current

8,898

7,273

Finance lease liabilities- current

2,174

3,000

Liability for sale of future royalties- current

74,022

59,291

Other current liabilities

 

1,451

 

1,460

Total current liabilities

 

567,371

 

509,348

Long-term debt

 

282,460

 

281,894

Contingent consideration payable

 

163,000

 

239,900

Deferred tax liability

 

137,110

 

137,110

Operating lease liabilities- noncurrent

137,353

73,619

Finance lease liabilities- noncurrent

18,675

20,053

Liability for sale of future royalties- noncurrent

680,306

674,694

Total liabilities

 

1,986,275

 

1,936,618

Stockholders’ (deficit) equity:

 

  

 

  

Common stock, $0.001 par value. Authorized 250,000,000 shares; issued and outstanding 71,505,889 shares at June 30, 2022. Authorized 250,000,000 shares; issued and outstanding 70,828,226 shares at December 31, 2021.

 

71

 

71

Additional paid-in capital

 

2,184,230

 

2,123,606

Accumulated other comprehensive loss

 

10,251

 

(24,282)

Accumulated deficit

 

(2,376,770)

 

(2,097,957)

Total stockholders’ (deficit) equity

 

(182,218)

 

1,438

Total liabilities and stockholders’ equity

$

1,804,057

$

1,938,056

See accompanying unaudited notes.

4

PTC Therapeutics, Inc.

Consolidated Statements of Operations (unaudited)

In thousands (except shares and per share amounts)

Three Months Ended June 30, 

Six Months Ended June 30, 

    

2022

    

2021

    

2022

    

2021

Revenues:

 

  

 

  

  

 

  

Net product revenue

$

143,701

$

103,113

$

273,534

$

194,393

Collaboration revenue

 

 

7

 

20,007

Royalty revenue

21,825

13,563

40,721

20,220

Total revenues

 

165,526

 

116,676

 

314,262

 

234,620

Operating expenses:

Cost of product sales, excluding amortization of acquired intangible assets

 

9,639

7,358

 

19,774

 

16,462

Amortization of acquired intangible assets

 

26,294

12,751

 

49,767

 

24,028

Research and development

 

157,263

125,482

 

297,341

 

259,995

Selling, general and administrative

 

79,892

68,878

 

153,162

 

129,973

Change in the fair value of deferred and contingent consideration

 

(15,200)

700

 

(26,900)

 

800

Total operating expenses

 

257,888

 

215,169

 

493,144

 

431,258

Loss from operations

 

(92,362)

 

(98,493)

 

(178,882)

 

(196,638)

Interest expense, net

 

(21,976)

(22,559)

 

(45,490)

 

(41,718)

Other (expense) income, net

 

(34,357)

3,170

 

(46,214)

 

(7,716)

Loss before income tax expense

 

(148,695)

 

(117,882)

 

(270,586)

 

(246,072)

Income tax expense

 

(3,392)

(488)

 

(8,227)

 

(940)

Net loss attributable to common stockholders

$

(152,087)

$

(118,370)

$

(278,813)

$

(247,012)

Weighted-average shares outstanding:

Basic and diluted (in shares)

 

71,372,940

70,414,632

 

71,294,458

 

70,302,241

Net loss per share—basic and diluted (in dollars per share)

$

(2.13)

$

(1.68)

$

(3.91)

$

(3.51)

See accompanying unaudited notes.

5

PTC Therapeutics, Inc.

Consolidated Statements of Comprehensive Loss (unaudited)

In thousands

Three Months Ended June 30, 

Six Months Ended June 30, 

     

2022

     

2021

     

2022

     

2021

Net loss

$

(152,087)

$

(118,370)

$

(278,813)

$

(247,012)

Other comprehensive loss:

 

  

 

  

 

 

Unrealized loss on marketable securities, net of tax of $0

 

(156)

(75)

 

(3,069)

 

(1,369)

Foreign currency translation gain (loss), net of tax of $0

 

29,015

(7,269)

 

37,602

 

16,239

Comprehensive loss

$

(123,228)

$

(125,714)

$

(244,280)

$

(232,142)

See accompanying unaudited notes.

6

PTC Therapeutics, Inc.

Consolidated Statements of Stockholders’ (Deficit) Equity (unaudited)

In thousands (except shares)

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Three months ended June 30, 2022

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

(loss) income

    

deficit

    

deficit

Balance, March 31, 2022

71,337,041

    

$

71

    

$

2,152,639

    

$

(18,608)

    

$

(2,224,683)

    

$

(90,581)

Exercise of options

 

27,832

754

754

Restricted stock vesting and issuance, net

 

49,753

Issuance of common stock in connection with an employee stock purchase plan

 

91,263

3,107

3,107

Share-based compensation expense

 

27,730

27,730

Net loss

 

(152,087)

(152,087)

Comprehensive income

 

28,859

28,859

Balance, June 30, 2022

 

71,505,889

$

71

$

2,184,230

$

10,251

$

(2,376,770)

$

(182,218)

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Three months ended June 30, 2021

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

loss

    

deficit

    

equity

Balance, March 31, 2021

 

70,405,905

    

$

70

    

$

2,033,972

    

$

(38,743)

    

$

(1,702,723)

    

$

292,576

Exercise of options

 

60,159

1,389

1,389

Restricted stock vesting and issuance, net

 

20,145

Issuance of common stock in connection with an employee stock purchase plan

73,121

2,627

2,627

Share-based compensation expense

 

25,699

25,699

Net loss

 

 

 

 

 

(118,370)

 

(118,370)

Comprehensive loss

 

 

 

 

(7,344)

 

 

(7,344)

Balance, June 30, 2021

 

70,559,330

$

70

$

2,063,687

$

(46,087)

$

(1,821,093)

$

196,577

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Six months ended June 30, 2022

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

(loss) income

    

deficit

    

equity (deficit)

Balance, December 31, 2021

 

70,828,226

$

71

$

2,123,606

$

(24,282)

$

(2,097,957)

$

1,438

Exercise of options

 

125,020

 

 

3,198

 

 

 

3,198

Restricted stock vesting and issuance, net

 

461,380

 

 

 

 

 

Issuance of common stock in connection with an employee stock purchase plan

 

91,263

 

 

3,107

 

 

 

3,107

Share-based compensation expense

 

 

 

54,319

 

 

 

54,319

Net loss

 

 

 

 

 

(278,813)

 

(278,813)

Comprehensive income

 

 

 

 

34,533

 

 

34,533

Balance, June 30, 2022

 

71,505,889

$

71

$

2,184,230

$

10,251

$

(2,376,770)

$

(182,218)

 

 

Accumulated

 

 

 

Additional

 

other

 

Total

Six months ended June 30, 2021

Common stock

paid-in

 

comprehensive

Accumulated

stockholders’

    

Shares

    

Amount

    

capital

    

(loss) income

    

deficit

    

equity

Balance, December 31, 2020

 

69,718,096

$

70

$

2,171,746

$

(60,957)

$

(1,628,877)

$

481,982

Exercise of options

475,942

 

 

13,144

 

 

13,144

Restricted stock vesting and issuance, net

292,171

 

 

 

 

Issuance of common stock in connection with an employee stock purchase plan

 

73,121

 

 

2,627

 

 

 

2,627

Share-based compensation expense

 

 

 

51,406

 

 

 

51,406

Adjustment for the adoption of ASU 2020-06

(175,236)

54,796

(120,440)

Net loss

 

 

 

 

 

(247,012)

 

(247,012)

Comprehensive income

 

 

 

 

14,870

 

 

14,870

Balance, June 30, 2021

 

70,559,330

$

70

$

2,063,687

$

(46,087)

$

(1,821,093)

$

196,577

See accompanying unaudited notes.

7

PTC Therapeutics, Inc.

Consolidated Statements of Cash Flows (unaudited)

Six Months Ended June 30, 

    

2022

    

2021

Cash flows from operating activities

Net loss

$

(278,813)

$

(247,012)

Adjustments to reconcile net loss to net cash used in operating activities:

 

Depreciation and amortization

 

55,494

28,573

Non-cash operating lease expense

 

4,295

3,666

Non-cash royalty revenue related to sale of future royalties

(17,482)

(8,681)

Non-cash interest expense on liability related to sale of future royalties

37,825

38,083

Change in valuation of deferred and contingent consideration

 

(26,900)

800

Unrealized gain on ClearPoint Equity Investments

 

(2,369)

(4,110)

Unrealized gain on ClearPoint convertible debt security

(1,995)

(4,326)

Unrealized loss (gain) on marketable securities- equity investments

11,356

(694)

Loss on disposal of asset

82

Amortization of premiums on investments, net

 

1,540

2,644

Amortization of debt issuance costs

 

935

911

Share-based compensation expense

 

54,319

51,406

Unrealized foreign currency transaction losses, net

 

36,359

15,983

Changes in operating assets and liabilities:

 

Inventory, net

 

27

1,906

Prepaid expenses and other current assets

 

16,431

15,649

Trade and royalty receivables, net

 

(29,549)

(9,420)

Deposits and other assets

 

(974)

(289)

Accounts payable and accrued expenses

 

(9,060)

(9,223)

Other liabilities

 

(4,167)

(3,083)

Deferred revenue

 

(4,085)

Net cash used in operating activities

$

(152,646)

$

(131,302)

Cash flows from investing activities

 

 

Purchases of fixed assets

$

(18,012)

$

(13,643)

Purchases of marketable securities- available for sale

(40,429)

(192,931)

Purchases of marketable securities- equity investments

(200,000)

Sale and redemption of marketable securities- available for sale

257,534

514,716

Sale and redemption of marketable securities- equity investments

3,630

Acquisition of product rights and licenses

(81,426)

(21,838)

Purchase of equity investment in ClearPoint

 

(100)

Net cash provided by investing activities

$

121,297

$

86,204

Cash flows from financing activities

 

  

 

Proceeds from exercise of options

3,198

13,144

Proceeds from employee stock purchase plan

3,107

2,627

Payment of finance lease principal

(1,276)

(2,224)

Net cash provided by financing activities

$

5,029

$

13,547

Effect of exchange rate changes on cash

 

3,347

86

Net decrease in cash and cash equivalents

 

(22,973)

 

(31,465)

Cash and cash equivalents, and restricted cash beginning of period

 

197,218

216,312

Cash and cash equivalents, and restricted cash end of period

$

174,245

$

184,847

Supplemental disclosure of cash information

 

  

 

Cash paid for interest

$

8,273

$

5,182

Cash paid for income taxes

2,949

4,127

Supplemental disclosure of non-cash investing and financing activity

 

  

 

Unrealized loss on marketable securities, net of tax

$

(3,069)

$

(1,369)

Right-of-use assets obtained in exchange for operating lease obligations

68,642

13

Acquisition of product rights and licenses

26,687

18,369

Milestone payable

50,000

See accompanying unaudited notes.

8

PTC Therapeutics, Inc.

Notes to Consolidated Financial Statements (unaudited)

June 30, 2022

In thousands (except share and per share amounts unless otherwise noted)

1.        The Company

PTC Therapeutics, Inc. (the “Company” or “PTC”) is a science-driven global biopharmaceutical company focused on the discovery, development and commercialization of clinically differentiated medicines that provide benefits to patients with rare disorders. PTC’s ability to innovate to identify new therapies and to globally commercialize products is the foundation that drives investment in a robust and diversified pipeline of transformative medicines. PTC’s mission is to provide access to best-in-class treatments for patients who have few or no treatment options. PTC’s strategy is to leverage its strong scientific and clinical expertise and global commercial infrastructure to bring therapies to patients.  PTC believes that this allows it to maximize value for all of its stakeholders.

PTC has a portfolio pipeline that includes several commercial products and product candidates in various stages of development, including clinical, pre-clinical and research and discovery stages, focused on the development of new treatments for multiple therapeutic areas for rare diseases.

The Company has two products, Translarna™ (ataluren) and Emflaza® (deflazacort), for the treatment of Duchenne muscular dystrophy (“DMD”), a rare, life threatening disorder. Translarna has marketing authorization in the European Economic Area (the “EEA”) for the treatment of nonsense mutation Duchenne muscular dystrophy (“nmDMD”) in ambulatory patients aged 2 years and older and in Russia for the treatment of nmDMD in patients aged two years and older. In July 2020, the European Commission approved the removal of the statement “efficacy has not been demonstrated in non-ambulatory patients” from the indication statement for Translarna. Translarna also has marketing authorization in Brazil for the treatment of nmDMD in ambulatory patients two years and older and for continued treatment of patients that become non-ambulatory. Emflaza is approved in the United States for the treatment of DMD in patients two years and older.

The Company has a pipeline of gene therapy product candidates for rare monogenic diseases that affect the central nervous system (“CNS”) including Upstaza (eladocagene exuparvovec), formerly known as PTC-AADC, for the treatment of Aromatic L-Amino Acid Decarboxylase (“AADC”) deficiency (“AADC deficiency”), a rare CNS disorder arising from reductions in the enzyme AADC that results from mutations in the dopa decarboxylase gene. In July 2022, the European Commission approved Upstaza for the treatment of AADC deficiency for patients 18 months and older within the EEA.  The Company is also preparing a biologics license application (“BLA”) for Upstaza for the treatment of AADC deficiency in the United States. In response to discussions with the United States Food and Drug Administration (“FDA”), the Company intends to provide additional information concerning the use of the commercial cannula for Upstaza in young patients. The Company expects to submit a BLA to the FDA in the fourth quarter of 2022.

The Company holds the rights for the commercialization of Tegsedi® (inotersen) and Waylivra® (volanesorsen) for the treatment of rare diseases in countries in Latin America and the Caribbean pursuant to the Collaboration and License Agreement (the “Tegsedi-Waylivra Agreement”), dated August 1, 2018, by and between the Company and Akcea Therapeutics, Inc. (“Akcea”), a subsidiary of Ionis Pharmaceuticals, Inc. Tegsedi has received marketing authorization in the United States, the European Union (the “EU”) and Brazil for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with hereditary transthyretin amyloidosis (“hATTR amyloidosis”). The Company began to make commercial sales of Tegsedi for the treatment of hATTR amyloidosis in Brazil in the second quarter of 2022 and it continues to make Tegsedi available in certain other countries within Latin America and the Caribbean through early access programs (“EAP Programs”). In August 2021, ANVISA, the Brazilian health regulatory authority, approved Waylivra as the first treatment for familial chylomicronemia syndrome (“FCS”) in Brazil and the Company began to make commercial sales of Waylivra in Brazil in the third quarter of 2022 while continuing to make Waylivra available in certain other countries within Latin America and the Caribbean through EAP Programs. Waylivra has also received marketing authorization in the EU for the treatment of FCS. Additionally, the Company submitted an application to ANVISA in December 2021 for the approval of

9

Waylivra for the treatment of familial partial lipodystrophy, and it expects a regulatory decision on approval in the second half of 2022.

The Company also has a spinal muscular atrophy (“SMA”) collaboration with F. Hoffman-La Roche Ltd and Hoffman-La Roche Inc. (referred to collectively as “Roche”) and the Spinal Muscular Atrophy Foundation (“SMA Foundation”). The SMA program has one approved product, Evrysdi® (risdiplam), which was approved by the FDA in August 2020 for the treatment of SMA in adults and children two months and older and by the European Commission in March 2021 for the treatment of 5q SMA in patients two months and older with a clinical diagnosis of SMA Type 1, Type 2 or Type 3 or with one to four SMN2 copies. Evrysdi also received marketing authorization for the treatment of SMA in Brazil in October 2020 and Japan in June 2021. In May 2022, the FDA approved a label expansion for Evrysdi to include infants under two months old with SMA. In addition to the Company’s SMA program, the Company’s splicing platform also includes PTC518, which is being developed for the treatment of Huntington’s disease (“HD”). The Company announced the results from its Phase 1 study of PTC518 in healthy volunteers in September 2021 demonstrating dose-dependent lowering of huntingtin messenger ribonucleic acid and protein levels, that PTC518 efficiently crosses the blood brain barrier at significant levels and that PTC518 was well tolerated. The Company initiated a Phase 2 study of PTC518 for the treatment of HD in the first quarter of 2022, which consists of an initial 12-week placebo-controlled phase focused on safety, pharmacology and pharmacodynamic effects followed by a nine-month placebo-controlled phase focused on PTC518 biomarker effect. The Company expects data from the initial 12-week phase of the Phase 2 study by the end of 2022.

The Company’s Bio-e platform consists of small molecule compounds that target oxidoreductase enzymes that regulate oxidative stress and inflammatory pathways central to the pathology of a number of CNS diseases. The two most advanced molecules in the Company’s Bio-e platform are vatiquinone and PTC857. The Company initiated a registration-directed Phase 2/3 placebo-controlled trial of vatiquinone in children with mitochondrial disease associated seizures in the third quarter of 2020. The Company has experienced additional delays in enrolling this trial due to the COVID-19 pandemic and anticipates results from this trial to be available in the first quarter of 2023. The Company also initiated a registration-directed Phase 3 trial of vatiquinone in children and young adults with Friedreich ataxia in the fourth quarter of 2020 and anticipates results from this trial to be available in the second quarter of 2023. In the third quarter of 2021, the Company completed a Phase 1 trial in healthy volunteers to evaluate the safety and pharmacology of PTC857. PTC857 was found to be well-tolerated with no reported serious adverse events while demonstrating predictable pharmacology. The Company initiated a Phase 2 trial of PTC857 for amyotrophic lateral sclerosis in the first quarter of 2022.

The most advanced molecule in the Company’s metabolic platform is PTC923, an oral formulation of synthetic sepiapterin, a precursor to intracellular tetrahydrobiopterin, which is a critical enzymatic cofactor involved in metabolism and synthesis of numerous metabolic products, for orphan diseases. The Company initiated a registration-directed Phase 3 trial for PTC923 for phenylketonuria (“PKU”) in the third quarter of 2021 and expects results from this trial to be available by the end of 2022.

The Company also has two oncology agents that are in clinical development, unesbulin and emvododstat. The Company completed its Phase 1 trials evaluating unesbulin in leiomyosarcoma (“LMS”) and diffuse intrinsic pontine glioma (“DIPG”) in the fourth quarter of 2021. The Company initiated a registration-directed Phase 2/3 trial of unesbulin for the treatment of LMS in the first quarter of 2022, and it expects to initiate a registration-directed Phase 2 trial of unesbulin for the treatment of DIPG in the third quarter of 2022. The Company completed its Phase 1 trial evaluating emvododstat in acute myelogenous leukemia (“AML”), in the fourth quarter of 2021. The Company expects to provide further updates regarding its emvododstat program at a later date.

In June 2020, the Company initiated a Phase 2/3 clinical trial evaluating the efficacy and safety of emvododstat in patients hospitalized with COVID-19. In February 2021, the Company announced the completion of the first stage of the Phase 2/3 trial. Given the changing nature of the COVID-19 pandemic to the outpatient treatment setting, the Company concluded enrollment in the Phase 2/3 trial early to review the data collected to date and make a decision on next steps. Based upon the Company’s initial analyses of all randomized subjects, there was a trend towards emvododstat benefit across several disease relevant endpoints including reduced hospitalizations and time to reduction of fever. Additionally, within the cohort of patients enrolled within five days of infection, emvododstat demonstrated a benefit with respect to time to respiratory improvement, duration of hospitalization, dyspnea resolution and cough relief. The Company plans to complete the remaining data analyses and will then formulate a strategy for next steps.

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In addition, the Company has a pipeline of product candidates and discovery programs that are in early clinical, pre-clinical and research and development stages focused on the development of new treatments for multiple therapeutic areas for rare diseases.

The Company’s marketing authorization for Translarna in the EEA is subject to annual review and renewal by the European Commission following reassessment by the EMA of the benefit-risk balance of the authorization, which the Company refers to as the annual EMA reassessment. The marketing authorization in the EEA was last renewed in June 2022 and is effective, unless extended, through August 5, 2023. This marketing authorization is further subject to the specific obligation to conduct and submit the results of a multi-center, randomized, double-blind, 18-month, placebo-controlled trial, followed by an 18-month open-label extension, according to an agreed protocol, in order to confirm the efficacy and safety of Translarna. The Company refers to the trial and open-label extension together as Study 041. In June 2022, the Company announced top-line results from the placebo-controlled trial of Study 041. Within the placebo-controlled trial, Translarna showed a statistically significant treatment benefit across the entire intent to treat population as assessed by the 6-minute walk test, assessing ambulation and endurance, and in lower-limb muscle function as assessed by the North Star Ambulatory Assessment, a functional scale designed for boys affected by DMD. Additionally, Translarna showed a statistically significant treatment benefit across the intent to treat population within the 10-meter run/walk and 4-stair stair climb, each assessing ambulation and burst activity, while also showing a positive trend in the 4-stair stair descend although not statistically significant. Within the primary analysis group, Translarna demonstrated a positive trend across all endpoints, however, statistical significance was not achieved. Translarna was also well tolerated.  The Company expects to submit a report on the placebo-controlled trial and the open-label extension data that has been collected to date to the EMA by the end of the third quarter of 2022, as required.

Translarna is an investigational new drug in the United States. During the first quarter of 2017, the Company filed a New Drug Application (“NDA”) over protest with the FDA, for which the FDA granted a standard review. In October 2017, the Office of Drug Evaluation I of the FDA issued a complete response letter for the NDA, stating that it was unable to approve the application in its current form. In response, the Company filed a formal dispute resolution request with the Office of New Drugs of the FDA. In February 2018, the Office of New Drugs of the FDA denied PTC’s appeal of the Complete Response Letter. In its response, the Office of New Drugs recommended a possible path forward for the ataluren NDA submission based on the accelerated approval pathway. This would involve a re-submission of an NDA containing the current data on effectiveness of ataluren with new data to be generated on dystrophin production in nmDMD patients’ muscles. The Company followed the FDA’s recommendation and collected, using newer technologies via procedures and methods that the Company designed, such dystrophin data in a new study, Study 045, and announced the results of Study 045 in February 2021. Study 045 did not meet its pre-specified primary endpoint. In June 2022, the Company announced top-line results from the placebo-controlled trial of Study 041. The Company is preparing to have discussions with the FDA regarding a potential resubmission of the Translarna NDA.

As of June 30, 2022, the Company had an accumulated deficit of approximately $2,376.8 million. The Company has financed its operations to date primarily through the private offerings in September 2019 of 1.50% convertible senior notes due 2026 and in August 2015 of 3.00% convertible senior notes due 2022 (see Note 9), public offerings of common stock in February 2014, October 2014, April 2018, January 2019, and September 2019, "at the market offering" of its common stock, its initial public offering of common stock in June 2013, proceeds from the Royalty Purchase Agreement dated as of July 17, 2020, by and among the Company, RPI 2019 Intermediate Finance Trust (“RPI”), and, solely for the limited purposes set forth therein, Royalty Pharma PLC (the “Royalty Purchase Agreement”) (see Note 2), private placements of its convertible preferred stock, collaborations, bank and institutional lender debt, grant funding and clinical trial support from governmental and philanthropic organizations and patient advocacy groups in the disease area addressed by the Company’s product candidates. Since 2014, the Company has also relied on revenue generated from net sales of Translarna for the treatment of nmDMD in territories outside of the United States, and since May 2017, the Company has generated revenue from net sales of Emflaza for the treatment of DMD in the United States. The Company has also relied on revenue associated with milestone and royalty payments from Roche pursuant to the License and Collaboration Agreement (the “SMA License Agreement”) dated as of November 23, 2011, by and among the Company, Roche and, for the limited purposes set forth therein, the SMA Foundation, under its SMA program. The Company expects that cash flows from the sales of its products, together with the Company’s cash, cash equivalents and marketable securities, will be sufficient to fund its operations for at least the next twelve months.  

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2.        Summary of significant accounting policies

The Company’s complete listing of significant accounting policies is set forth in Note 2 of the notes to the Company’s audited financial statements as of December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 22, 2022 (the "2021 Form 10-K"). Selected significant accounting policies are discussed in further detail below.

Basis of presentation

The accompanying financial information as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 has been prepared by the Company, without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. These interim financial statements should be read in conjunction with the Company’s audited financial statements as of December 31, 2021 and notes thereto included in the 2021 Form 10-K.

In the opinion of management, the unaudited financial information as of June 30, 2022 and for the three and six months ended June 30, 2022 and 2021 reflects all adjustments, which are normal recurring adjustments, necessary to present a fair statement of financial position, results of operations, stockholders’ equity, and cash flows. The results of operations for the three and six months ended June 30, 2022 and 2021 are not necessarily indicative of the results to be expected for the year ended December 31, 2022 or for any other interim period or for any other future year.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant estimates in these consolidated financial statements have been made in connection with the calculation of net product sales, royalty revenue, certain accruals related to the Company’s research and development expenses, valuation procedures for liability for sale of future royalties, valuation procedures for convertible notes, fair value of the contingent consideration, and the provision for or benefit from income taxes. Actual results could differ from those estimates. Changes in estimates are reflected in reported results in the period in which they become known.

Restricted cash

Restricted cash included in deposits and other assets on the consolidated balance sheet contains an unconditional, irrevocable and transferable letter of credit that was entered into during the twelve-month period ended December 31, 2019 in connection with obligations under a facility lease for the Company’s leased biologics manufacturing facility in Hopewell Township, New Jersey. The amount of the letter of credit is $7.5 million, is to be maintained for a term of not less than five years and has the potential to be reduced to $3.8 million if after five years the Company is not in default of its lease. Restricted cash also contains an unconditional, irrevocable and transferable letter of credit that was entered into during June 2022 in connection with obligations for the Company’s new facility lease in Warren, New Jersey. The amount of the letter of credit is $8.1 million and has the potential to be reduced to $4.1 million if after five years the Company is not in default of its lease. Both amounts are classified within deposits and other assets on the consolidated balance sheet due to the long-term nature of the letter of credit. Restricted cash also includes a bank guarantee of $0.5 million denominated in a foreign currency.

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The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheet that sum to the total of the same amounts shown in the statement of cash flows:

    

End of

    

Beginning of

 

period-

 

period-

 

June 30, 

 

December 31, 

 

2022

2021

Cash and cash equivalents

$

158,158

$

189,718

Restricted cash included in deposits and other assets

 

16,087

 

7,500

Total Cash, cash equivalents and restricted cash per statement of cash flows

$

174,245

$

197,218

Marketable securities

The Company’s marketable securities consists of both debt securities and equity investments. The Company considers its investments in debt securities with original maturities of greater than 90 days to be available for sale securities. Securities under this classification are recorded at fair value and unrealized gains and losses within accumulated other comprehensive income. The estimated fair value of the available for sale securities is determined based on quoted market prices or rates for similar instruments. In addition, the cost of debt securities in this category is adjusted for amortization of premium and accretion of discount to maturity. For available for sale debt securities in an unrealized loss position, the Company assesses whether it intends to sell or if it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value. If the criteria are not met, the Company evaluates whether the decline in fair value has resulted from a credit loss or other factors. In making this assessment, management considers, among other factors, the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized costs basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. For the three and six months ended June 30, 2022 and 2021, no allowance was recorded for credit losses.

Marketable securities that are equity investments are measured at fair value, as it is readily available, and as such are classified as Level 1 assets. Unrealized holding gains and losses for these equity investments are components of other (expense) income, net within the consolidated statement of operations.

Inventory and cost of product sales

Inventory

Inventories are stated at the lower of cost and net realizable value with cost determined on a first-in, first-out basis by product. The Company capitalizes inventory costs associated with products following regulatory approval when future commercialization is considered probable and the future economic benefit is expected to be realized. Products which may be used in clinical development programs are included in inventory and charged to research and development expense when the product enters the research and development process and no longer can be used for commercial purposes. Inventory used for marketing efforts are charged to selling, general and administrative expense. Amounts related to clinical development programs and marketing efforts are immaterial.

The following table summarizes the components of the Company’s inventory for the periods indicated:

    

June 30, 2022

    

December 31, 2021

Raw materials

$

1,382

$

1,418

Work in progress

 

7,034

 

7,721

Finished goods

 

6,588

 

6,717

Total inventory

$

15,004

$

15,856