Emflaza asset acquisition

On April 20, 2017, the Company completed its previously announced acquisition of all rights to EMFLAZA pursuant to an Asset Purchase Agreement, dated March 15, 2017, and amended on April 20, 2017, by and between the Company and Marathon. The assets acquired by the Company in the Transaction include intellectual property rights related to EMFLAZA, inventories of EMFLAZA, and certain contractual rights related to EMFLAZA. The Company assumed certain liabilities and obligations in the Transaction arising out of, or relating to, the assets acquired in the Transaction.

The Company concluded that the EMFLAZA Agreement included inputs and processes that did not constitute a business under the revised guidance of ASU No. 2017-01, which allows for a screen to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. The Company determined that substantially all of the fair value is concentrated in the EMFLAZA rights intangible asset and accounted for the transaction as an asset acquisition under ASC 805-50.

The purchase price consisted of total upfront consideration comprised of $75.0 million in cash and 6,683,598 shares of the Company's common stock with a fair value of $75.2 million. In addition, the Company incurred approximately $2.2 million of acquisition costs, which are capitalized in an asset acquisition and included in the total consideration transferred.

Marathon is entitled to receive contingent payments from the Company based on annual net sales of EMFLAZA beginning in 2018, up to a specified aggregate maximum amount over the expected commercial life of the asset. In addition, Marathon has the opportunity to receive a single $50.0 million sales-based milestone. In accordance with the guidance for an asset acquisition, the Company will record the milestone payment when it becomes payable to Marathon and increase the cost basis for the EMFLAZA rights intangible asset.

The following tables present the total purchase consideration and the preliminary allocation of the purchase consideration for the Transaction as of April 20, 2017 (the “Acquisition Date”):



Cash consideration	$	75,000
Fair value of PTC common stock issued to Marathon (6,683,598 shares)	75,190
Acquisition costs	2,163
Total preliminary consideration transferred	$	152,353



Purchase price	$	152,353

Total fair value of tangible assets acquired and liabilities assumed:
Inventory	3,980
EMFLAZA rights	$	148,373

The EMFLAZA rights intangible asset is being amortized to cost of product sales over its expected useful life of approximately seven years. The Company utilized an economic use method approach for recording the amortization in the second quarter. Given the inherent uncertainty of the Company's sales projections, the Company concluded that amortizing the asset on a straight line basis is a more appropriate method. Had amortization been recorded on a straight line basis since the acquisition, there would have been an additional $4.3 million of amortization recorded in the three months ended June 30, 2017. This amount is immaterial to the financial statements and is recorded in the three months ended September 30, 2017.

As of September 30, 2017, the Company recognized accumulated amortization of $10.0 million with respect to the EMFLAZA rights intangible asset. The estimated future amortization of the EMFLAZA rights intangible asset is expected to be as follows:



	As of September 30, 2017
2017 (1)	$	5,428
2018	21,713
2019	21,713
2020	21,713
2021 and thereafter	67,854
Total	$	138,421

(1) For the three months ended December 31, 2017.