Ptc Therapeutics, Inc 10-Q for FY2020 Q3

Ptc Therapeutics, Inc. (PTCT)

10-Q 2020-10-29 For: 2020-09-30

Added on April 07, 2026

About this 10-Q

Ptc Therapeutics, Inc filed this 10-Q on October 29, 2020, covering the quarter ended September 30, 2020 (FY2020 Q3).

Headline figures

Quarter ended September 30, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $118.4M; up 65.8% from $71.42M a year earlier
Net loss: $69.69M; compared with a net loss of $60M a year earlier

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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)


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


Large accelerated filer	þ	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


	Page No.
PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)	4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	45

Item 3. Quantitative and Qualitative Disclosures About Market Risk	63

Item 4. Controls and Procedures	63

PART II—OTHER INFORMATION

Item 1. Legal Proceedings	64

Item 1A. Risk Factors	64

Item 5. Other Information	66

Item 6. Exhibits	66


	September 30,		December 31,
	2020		2019
Assets
Current assets:
Cash and cash equivalents	$	433,970	$	288,028
Marketable securities		707,049		398,535
Trade receivables, net		56,786		55,538
Inventory, net		19,481		19,285
Prepaid expenses and other current assets		26,888		17,898
Total current assets		1,244,174		779,284
Fixed assets, net		28,141		21,549
Intangible assets, net		712,536		710,500
Goodwill		82,341		82,341
Operating lease ROU assets		85,810		13,693
Deposits and other assets		28,057		16,415
Total assets	$	2,181,059	$	1,623,782
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	218,561	$	159,276
Current portion of long-term debt		—		20,000
Deferred revenue		5,992		8,242
Operating lease liabilities- current		5,859		5,153
Finance lease liabilities- current		1,251		—
Liability for sale of future royalties- current		22,159		—
Deferred consideration payable		—		40,000
Other current liabilities		—		3,186
Total current liabilities		253,822		235,857
Deferred revenue- long term		—		3,415
Long-term debt		302,971		293,859
Contingent consideration payable		234,100		356,300
Deferred tax liability		130,863		130,862
Operating lease liabilities- noncurrent		81,674		9,018
Finance lease liabilities- noncurrent		22,608		—
Liability for sale of future royalties- noncurrent		642,099		—
Other long-term liabilities		1,968		141
Total liabilities		1,670,105		1,029,452
Stockholders’ equity:
Common stock, $0.001 par value. Authorized 125,000,000 shares; issued and outstanding 67,809,560 shares at September 30, 2020. Authorized 125,000,000 shares; issued and outstanding 61,935,870 shares at December 31, 2019.		68		62
Additional paid-in capital		2,101,136		1,795,351
Accumulated other comprehensive income		(35,727)		(10,584)
Accumulated deficit		(1,554,523)		(1,190,499)
Total stockholders’ equity		510,954		594,330
Total liabilities and stockholders’ equity	$	2,181,059	$	1,623,782


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues:
Net product revenue	$	82,708	$	71,369	$	226,143	$	209,899
Collaboration and grant revenue		35,000		47		35,063		622
Royalty revenue		696		—		696		—
Total revenues		118,404		71,416		261,902		210,521
Operating expenses:
Cost of product sales, excluding amortization of acquired intangible assets		4,667		3,006		14,056		8,593
Amortization of acquired intangible assets		9,630		7,025		26,309		19,677
Research and development		92,998		63,076		359,630		175,621
Selling, general and administrative		57,840		49,284		169,708		139,044
Change in the fair value of deferred and contingent consideration		8,400		9,500		16,980		35,960
Settlement of deferred and contingent consideration		—		—		10,613		—
Total operating expenses		173,535		131,891		597,296		378,895
Loss from operations		(55,131)		(60,475)		(335,394)		(168,374)
Interest expense, net		(21,039)		(2,666)		(32,060)		(7,028)
Other income, net		28,766		2,800		26,242		2,509
Loss before income tax expense		(47,404)		(60,341)		(341,212)		(172,893)
Income tax (expense) benefit		(22,288)		344		(22,594)		(1,006)
Net loss attributable to common stockholders	$	(69,692)	$	(59,997)	$	(363,806)	$	(173,899)
Weighted-average shares outstanding:
Basic and diluted (in shares)		67,641,171		56,463,528		65,068,281		57,798,968
Net loss per share—basic and diluted (in dollars per share)	$	(1.03)	$	(1.06)	$	(5.59)	$	(3.01)


						Accumulated
				Additional		other				Total
Three months ended September 30, 2020	Common stock			paid-in		comprehensive		Accumulated		stockholders’
	Shares	Amount		capital		loss		deficit		equity
Balance, June 30, 2020	67,240,679	$	67	$	2,067,274	$	(10,016)	$	(1,484,831)	$	572,494
Issuance of common stock related to equity offering	173,956		—		9,141		—		—		9,141
Exercise of options	391,738		1		7,942		—		—		7,943
Restricted stock vesting and issuance, net	3,187		—		—		—		—		—
Share-based compensation expense	—		—		16,779		—		—		16,779
Net loss	—		—		—		—		(69,692)		(69,692)
Comprehensive loss	—		—		—		(25,711)		—		(25,711)
Balance, September 30, 2020	67,809,560	$	68	$	2,101,136	$	(35,727)	$	(1,554,523)	$	510,954

Supplemental disclosure of cash information
Cash paid for interest	$	9,802	$	7,042
Cash paid for income taxes		1,562		1,931
Supplemental disclosure of non-cash investing and financing activity
Unrealized gain on marketable securities, net of tax	$	1,639	$	435
Right-of-use assets obtained in exchange for operating lease obligations		76,657		16,120
Right-of-use assets obtained in exchange for finance lease obligations		41,382		—
Acquisition of product rights and licenses		13,786		7,432
Issuance of common stock related to rights exchange		150,528		—
Accrued transaction costs related to public offerings		—		506
Accrued transaction costs related to issuance of convertible notes		—		298


	Beginning of
	period-		End of period-
	December 31,		September 30,
	2019		2020
Cash and cash equivalents	$	288,028	$	433,970
Restricted cash included in deposits and other assets		7,500		7,500
Total Cash, cash equivalents and restricted cash per statement of cash flows	$	295,528	$	441,470


	September 30, 2020		December 31, 2019
Raw materials	$	946	$	874
Work in progress		8,600		9,652
Finished goods		9,935		8,759
Total inventory	$	19,481	$	19,285


	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Operating Lease Cost
Fixed lease cost	$	4,097	$	1,431	$	7,896	$	3,078
Variable lease cost		890		184		1,914		488
Short-term lease cost		175		94		340		235
Total operating lease cost	$	5,162	$	1,709	$	10,150	$	3,801


	September 30, 2020		December 31, 2019

Operating lease ROU asset	$	85,810	$	13,693

Operating lease liabilities- current	$	5,859	$	5,153
Operating lease liabilities- noncurrent		81,674		9,018
Total operating lease liability	$	87,533	$	14,171


	September 30, 2020		December 31, 2019

Weighted-average remaining lease terms - operating leases (years)	11.66		3.38
Weighted-average discount rate - operating leases	8.64	%	7.33	%
Weighted-average remaining lease terms - finance lease (years)	12.25		—
Weighted-average discount rate - finance lease	7.80	%	—


	Operating Leases		Finance Lease
2020 (excludes the nine months ended September 30, 2020)	$	2,842	$	—
2021		13,472		3,000
2022		13,229		3,000
2023		12,831		3,000
2024 and thereafter		104,142		27,000
Total lease payments		146,516		36,000
Less: Imputed Interest expense		58,983		12,141
Total	$	87,533	$	23,859


	September 30, 2020
			Quoted prices		Significant
			in active		other		Significant
			markets for		observable		unobservable
			identical assets		inputs		inputs
	Total		(level 1)		(level 2)		(level 3)
Marketable securities	$	707,049	$	—	$	707,049	$	—
Equity investment in ClearPoint	$	7,045	$	7,045	$	—	$	—
ClearPoint convertible debt security	$	10,633	$	—	$	10,633	$	—
Contingent consideration payable- development and regulatory milestones	$	138,200	$	—	$	—	$	138,200
Contingent consideration payable- net sales milestones and royalties	$	95,900	$	—	$	—	$	95,900


	September 30, 2020
	Amortized		Gross Unrealized
	Cost		Gains		Losses		Fair Value
Commercial paper	$	260,392	$	74	$	(16)	$	260,450
Corporate debt securities		316,198		2,082		(19)		318,261
Asset-backed securities		35,461		232		(2)		35,691
Government obligations		92,602		61		(16)		92,647
Total	$	704,653	$	2,449	$	(53)	$	707,049


	September 30, 2020
	Securities in an unrealized loss				Securities in an unrealized loss
	position less than 12 months				position greater than 12 months				Total
	Unrealized losses		Fair Value		Unrealized losses		Fair Value		Unrealized losses		Fair Value
Commercial paper	$	(16)		53,580		—		—		(16)		53,580
Corporate debt securities		(19)		62,811		—		—		(19)		62,811
Asset-backed securities		(2)		2,899		—		—		(2)		2,899
Government obligations		(16)		31,955		—		—		(16)		31,955
Total	$	(53)	$	151,245	$	—	$	—	$	(53)	$	151,245


	September 30, 2020
	Less Than		More Than
	12 Months		12 Months
Commercial paper	$	260,451	$	—
Corporate debt securities		260,199		58,062
Asset-backed securities		14,375		21,316
Government obligations		39,530		53,116
Total Marketable securities	$	574,555	$	132,494


	Level 3 liabilities
			Contingent consideration payable-		Contingent consideration payable-
			development and regulatory		net sales milestones and royalties
	SARs		milestones
Beginning balance as of December 31, 2019	$	3,186	$	290,500	$	65,800
Additions		—		—		—
Change in fair value		—		(13,120)		30,100
Payments		(3,186)		—		—
Rights Exchange settlement		—		(139,180)		—
Ending balance as of September 30, 2020	$	—	$	138,200	$	95,900


	September 30, 2020
	Fair Value	Valuation Technique	Unobservable Input	Range
Contingent consideration payable- development and regulatory milestones	$138,200	Probability-adjusted discounted cash flow	Potential development and regulatory milestones Probabilities of success Discount rates Projected years of payments	$0 - $381 million 25% - 94% 3.1% - 5.3% 2021 - 2027
Contingent considerable payable- net sales milestones and royalties	$95,900	Option-pricing model with Monte Carlo simulation	Potential net sales milestones Probabilities of success Potential percentage of net sales for royalties Discount rate Projected years of payments	$0 - $150 million 25% - 94% 2% - 6% 12.0% 2022 - 2039


	Unrealized				Total
	Gains/(Losses)				Accumulated
	On		Foreign		Other
	Marketable		Currency		Comprehensive
	Securities, net of tax		Translation		Items
Balance, June 30, 2020	$	3,410	$	(13,426)	$	(10,016)
Other comprehensive loss before reclassifications		(1,016)		(24,695)		(25,711)
Amounts reclassified from other comprehensive items		—		—		—
Other comprehensive loss before reclassifications		(1,016)		(24,695)		(25,711)
Balance, September 30, 2020	$	2,394	$	(38,121)	$	(35,727)


	As of September 30,
	2020	2019
Stock Options	11,528,241	10,743,181
Unvested restricted stock awards and units	961,795	650,103
Total	12,490,036	11,393,284


				Weighted-
		Weighted-		average		Aggregate
		average		remaining		intrinsic
	Number of	exercise		contractual		value(in
	options	price		term		thousands)

Outstanding at December 31, 2019	11,043,939	$	31.67
Granted	2,671,660	$	50.76
Exercised	(1,426,026)	$	23.14
Forfeited/Cancelled	(761,332)	$	42.96
Outstanding at September 30, 2020	11,528,241	$	36.37	7.32	years	$	138,286
Vested or Expected to vest at September 30, 2020	5,297,899	$	40.09	8.70	years	$	44,050
Exercisable at September 30, 2020	5,576,283	$	32.19	5.84	years	$	90,361


		Nine months ended
		September 30, 2020
Risk-free interest rate		0.34% - 1.45%
Expected volatility		87.50% - 89.31%
Expected term		5.75 years


	Restricted Stock Awards and Units
		Weighted
		Average
		Grant
	Number of	Date
	Shares	Fair Value
January 1, 2020	642,419	$	24.50
Granted	625,390	$	50.76
Vested	(232,263)	$	23.86
Forfeited	(73,751)	$	36.28
Unvested at September 30, 2020	961,795	$	41.05


	Three Months Ended September 30,			Nine Months Ended September 30,
Liability for sale of future royalties- (current and noncurrent)	2020			2020
Beginning balance	$	—		$	—
Proceeds from sale of future royalties		650,000			650,000
Less: Non-cash royalty revenue payable to RPI		(299)			(299)
Plus: Non-cash interest expense recognized		14,557			14,557
Ending balance	$	664,258		$	664,258
Effective interest rate for the period		11.0	%		11.0	%


Liability component	September 30, 2020		December 31, 2019
Principal	$	287,500	$	287,500
Less: Debt issuance costs		(4,192)		(4,567)
Less: Debt discount, net(1)		(109,563)		(119,350)
Net carrying amount	$	173,745	$	163,583


	As of September 30, 2020
2020	$	9,627
2021		38,506
2022		38,506
2023		38,506
2024 and thereafter		10,891
Total	$	136,036


	Three Months Ended
	September 30,				Change
(in thousands)	2020		2019		2020 vs. 2019
Net product revenue	$	82,708	$	71,369	$	11,339
Collaboration and grant revenue		35,000		47		34,953
Royalty revenue		696		—		696
Cost of product sales, excluding amortization of acquired intangible asset		4,667		3,006		1,661
Amortization of acquired intangible asset		9,630		7,025		2,605
Research and development expense		92,998		63,076		29,922
Selling, general and administrative expense		57,840		49,284		8,556
Change in the fair value of deferred and contingent consideration		8,400		9,500		(1,100)
Interest expense, net		(21,039)		(2,666)		(18,373)
Other income, net		28,766		2,800		25,966
Income tax (expense) benefit		(22,288)		344		(22,632)


Exhibit Number		Description of Exhibit

10.1†		Collaborative Research Agreement Amendment 5, dated as of January 17, 2020 by and between National Taiwan University and PTC Therapeutics GT, Inc.
10.2†		Collaborative Research Agreement Amendment 6, dated as of May 30, 2020 by and between National Taiwan University and PTC Therapeutics GT, Inc.
10.3†		Royalty Purchase Agreement, dated as of July 17, 2020, by and among PTC Therapeutics, Inc., RPI 2019 Intermediate Finance Trust, and, solely for the limited purposes set forth therein, Royalty Pharma PLC (incorporated by reference to Exhibit 10.2 to the Quarterly Report on Form 10-Q filed by the Registrant on August 5, 2020)
31.1		Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document*
101.SCH		Inline XBRL Taxonomy Extension Schema Document*
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document*
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Database*
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document*
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document*
104		The cover page from this Quarterly Report on Form 10-Q, formatted in Inline XBRL


	PTC THERAPEUTICS, INC.


Date: October 29, 2020	By:	/s/ Emily Hill
		Emily Hill
		Chief Financial Officer
		(Principal Financial Officer and Duly Authorized Signatory)