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 September 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 October 25, 2022, there were 71,882,044 shares of Common Stock, $0.001 par value per share, outstanding.

TABLE OF CONTENTS

PTC Therapeutics, Inc.

	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	41
Item 3. Quantitative and Qualitative Disclosures About Market Risk	61
Item 4. Controls and Procedures	61
PART II—OTHER INFORMATION
Item 1. Legal Proceedings	61
Item 1A. Risk Factors	61
Item 6. Exhibits	62

i

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 Upstaza^TM (eladocagene exuparvovec) 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 Translarna^TM (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 and to support a conversion of the conditional marketing authorization for Translarna for the treatment of nmDMD in the EEA to a standard marketing authorization;

● 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 Waylivra^TM (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 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)

	September 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	104,424	$	189,718
Marketable securities		184,008		583,658
Trade and royalty receivables, net		124,456		110,455
Inventory, net		14,812		15,856
Prepaid expenses and other current assets		89,562		54,681
Total current assets		517,262		954,368
Fixed assets, net		66,889		52,585
Intangible assets, net		749,890		724,841
Goodwill		82,341		82,341
Operating lease ROU assets		104,901		77,421
Deposits and other assets		55,115		46,500
Total assets	$	1,576,398	$	1,938,056
Liabilities and stockholders’ (deficit) equity
Current liabilities:
Accounts payable and accrued expenses	$	329,322	$	288,784
Current portion of long-term debt		—		149,540
Operating lease liabilities- current		8,895		7,273
Finance lease liabilities- current		2,583		3,000
Liability for sale of future royalties- current		77,964		59,291
Other current liabilities		1,312		1,460
Total current liabilities		420,076		509,348
Long-term debt		282,749		281,894
Contingent consideration payable		157,700		239,900
Deferred tax liability		137,110		137,110
Operating lease liabilities- noncurrent		102,124		73,619
Finance lease liabilities- noncurrent		18,675		20,053
Liability for sale of future royalties- noncurrent		680,182		674,694
Other long-term liabilities		4,686		—
Total liabilities		1,803,302		1,936,618
Stockholders’ (deficit) equity:
Common stock, $0.001 par value. Authorized 250,000,000 shares; issued and outstanding 71,854,892 shares at September 30, 2022. Authorized 250,000,000 shares; issued and outstanding 70,828,226 shares at December 31, 2021.		71		71
Additional paid-in capital		2,222,905		2,123,606
Accumulated other comprehensive income (loss)		36,205		(24,282)
Accumulated deficit		(2,486,085)		(2,097,957)
Total stockholders’ (deficit) equity		(226,904)		1,438
Total liabilities and stockholders’ (deficit) equity	$	1,576,398	$	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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues:
Net product revenue	$	134,186	$	115,605	$	407,720	$	309,998
Collaboration revenue		50,017		10,011		50,024		30,018
Royalty revenue		32,924		13,127		73,645		33,348
Total revenues		217,127		138,743		531,389		373,364
Operating expenses:
Cost of product sales, excluding amortization of acquired intangible assets		14,011		6,539		33,785		23,001
Amortization of acquired intangible assets		31,023		14,383		80,790		38,411
Research and development		165,462		130,845		462,802		390,840
Selling, general and administrative		80,118		69,252		233,280		199,225
Change in the fair value of deferred and contingent consideration		(5,300)		10,800		(32,200)		11,600
Total operating expenses		285,314		231,819		778,457		663,077
Loss from operations		(68,187)		(93,076)		(247,068)		(289,713)
Interest expense, net		(20,880)		(21,802)		(66,371)		(63,520)
Other expense, net		(38,141)		(18,782)		(84,355)		(26,499)
Loss before income tax expense		(127,208)		(133,660)		(397,794)		(379,732)
Income tax benefit (expense)		17,893		36		9,666		(904)
Net loss attributable to common stockholders	$	(109,315)	$	(133,624)	$	(388,128)	$	(380,636)
Weighted-average shares outstanding:
Basic and diluted (in shares)		71,654,671		70,585,938		71,415,849		70,397,846
Net loss per share—basic and diluted (in dollars per share)	$	(1.53)	$	(1.89)	$	(5.43)	$	(5.41)

See accompanying unaudited notes.

5

PTC Therapeutics, Inc.

Consolidated Statements of Comprehensive Loss (unaudited)

In thousands

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net loss	$	(109,315)	$	(133,624)	$	(388,128)	$	(380,636)
Other comprehensive loss:
Unrealized gain (loss) on marketable securities, net of tax		736		(136)		(2,333)		(1,505)
Foreign currency translation gain, net of tax		25,218		13,262		62,820		29,501
Comprehensive loss	$	(83,361)	$	(120,498)	$	(327,641)	$	(352,640)

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 September 30, 2022	Common stock			paid-in		comprehensive		Accumulated		stockholders’
	Shares	Amount		capital		income		deficit		deficit
Balance, June 30, 2022	71,505,889	$	71	$	2,184,230	$	10,251	$	(2,376,770)	$	(182,218)
Exercise of options	331,379		—		10,005		—		—		10,005
Restricted stock vesting and issuance, net	17,624		—		—		—		—		—
Issuance of common stock in connection with an employee stock purchase plan	—		—		—		—		—		—
Share-based compensation expense	—		—		28,670		—		—		28,670
Net loss	—		—		—		—		(109,315)		(109,315)
Comprehensive income	—		—		—		25,954		—		25,954
Balance, September 30, 2022	71,854,892	$	71	$	2,222,905	$	36,205	$	(2,486,085)	$	(226,904)

						Accumulated
				Additional		other				Total
Three months ended September 30, 2021	Common stock			paid-in		comprehensive		Accumulated		stockholders’
	Shares	Amount		capital		(loss) income		deficit		equity
Balance, June 30, 2021	70,559,330	$	70	$	2,063,687	$	(46,087)	$	(1,821,093)	$	196,577
Exercise of options	98,288		—		2,976		—		—		2,976
Restricted stock vesting and issuance, net	7,392		—		—		—		—		—
Share-based compensation expense	—		—		25,871		—		—		25,871
Net loss	—		—		—		—		(133,624)		(133,624)
Comprehensive income	—		—		—		13,126		—		13,126
Balance, September 30, 2021	70,665,010	$	70	$	2,092,534	$	(32,961)	$	(1,954,717)	$	104,926

						Accumulated
				Additional		other				Total
Nine months ended September 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	456,399		—		13,203		—		—		13,203
Restricted stock vesting and issuance, net	479,004		—		—		—		—		—
Issuance of common stock in connection with an employee stock purchase plan	91,263		—		3,107		—		—		3,107
Share-based compensation expense	—		—		82,989		—		—		82,989
Net loss	—		—		—		—		(388,128)		(388,128)
Comprehensive income	—		—		—		60,487		—		60,487
Balance, September 30, 2022	71,854,892	$	71	$	2,222,905	$	36,205	$	(2,486,085)	$	(226,904)

						Accumulated
				Additional		other				Total
Nine months ended September 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	574,230		—		16,120		—		—		16,120
Restricted stock vesting and issuance, net	299,563		—		—		—		—		—
Issuance of common stock in connection with an employee stock purchase plan	73,121		—		2,627		—		—		2,627
Share-based compensation expense	—		—		77,277		—		—		77,277
Adjustment for the adoption of ASU 2020-06	—		—		(175,236)		—		54,796		(120,440)
Net loss	—		—		—		—		(380,636)		(380,636)
Comprehensive income	—		—		—		27,996		—		27,996
Balance, September 30, 2021	70,665,010	$	70	$	2,092,534	$	(32,961)	$	(1,954,717)	$	104,926

See accompanying unaudited notes.

7

PTC Therapeutics, Inc.

Consolidated Statements of Cash Flows (unaudited)

In thousands

	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities
Net loss	$	(388,128)	$	(380,636)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		89,971		45,323
Non-cash operating lease expense		7,505		5,516
Non-cash royalty revenue related to sale of future royalties		(31,617)		(14,317)
Non-cash interest expense on liability related to sale of future royalties		55,778		57,755
Change in valuation of deferred and contingent consideration		(32,200)		11,600
Unrealized loss (gain) on ClearPoint Equity Investments		1,113		(2,376)
Unrealized loss (gain) on ClearPoint convertible debt security		2,392		(2,054)
Unrealized loss (gain) on marketable securities- equity investments		11,319		(1,350)
Loss on disposal of asset		81		—
Amortization of premiums on investments, net		1,792		4,052
Amortization of debt issuance costs		1,316		1,377
Share-based compensation expense		82,989		77,277
Unrealized foreign currency transaction losses, net		71,246		33,280
Changes in operating assets and liabilities:
Inventory, net		(768)		2,476
Prepaid expenses and other current assets		(35,615)		8,161
Trade and royalty receivables, net		(24,773)		(28,625)
Deposits and other assets		(3,752)		(444)
Accounts payable and accrued expenses		1,568		8,888
Other liabilities		(908)		(4,340)
Deferred revenue		—		(4,055)
Net cash used in operating activities	$	(190,691)	$	(182,492)
Cash flows from investing activities
Purchases of fixed assets	$	(23,394)	$	(19,487)
Purchases of marketable securities- available for sale		(40,429)		(276,376)
Purchases of marketable securities- equity investments		(22,787)		(205,382)
Sale and redemption of marketable securities- available for sale		341,990		693,319
Sale and redemption of marketable securities- equity investments		104,431		740
Acquisition of product rights and licenses		(102,069)		(41,806)
Purchase of equity investment in ClearPoint		—		(100)
Net cash provided by investing activities	$	257,742	$	150,908
Cash flows from financing activities
Proceeds from exercise of options		13,203		16,120
Repayment of Convertible Notes		(150,000)		—
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	$	(134,966)	$	16,523
Effect of exchange rate changes on cash		(8,792)		(3,933)
Net decrease in cash and cash equivalents		(76,707)		(18,994)
Cash and cash equivalents, and restricted cash beginning of period		197,218		216,312
Cash and cash equivalents, and restricted cash end of period	$	120,511	$	197,318
Supplemental disclosure of cash information
Cash paid for interest	$	12,679	$	9,589
Cash paid for income taxes		4,029		5,527
Supplemental disclosure of non-cash investing and financing activity
Unrealized loss on marketable securities, net of tax	$	(2,333)	$	(1,505)
Right-of-use assets obtained in exchange for operating lease obligations		35,294		—
Acquisition of product rights and licenses		27,828		19,154
Milestone payable		50,000		—

See accompanying unaudited notes.

8

PTC Therapeutics, Inc.

Notes to Consolidated Financial Statements (unaudited)

September 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) 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 October 2022, the Company held a type C meeting with the FDA to discuss the details of a potential submission package for Upstaza. At such meeting, the FDA asked for additional bioanalytical data in support of comparability between the drug product used in the clinical studies and the commercial drug product. The Company is working with the FDA to address this request and it expects to submit a BLA to the FDA in the first half of 2023.

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

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Waylivra for the treatment of familial partial lipodystrophy, and it expects a regulatory decision on approval in the fourth quarter 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 and the Company expects the European Medicines Agency (“EMA”) to make a regulatory decision on approval for a label expansion for Evrysdi to include infants under two months old with SMA by the end of 2022. 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. Enrollment in the Phase 2 study remains active and ongoing outside of the United States. Enrollment within the United States is paused as the FDA has requested additional data to allow the Phase 2 study to proceed; discussions are ongoing with the FDA to allow the resumption of U.S. enrollment. The Company expects data from the initial 12-week phase of the Phase 2 study in the first half of 2023.

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 utreloxastat, formerly known as 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 completed enrollment in this trial after previously experiencing delays in enrollment due to the COVID-19 pandemic.  The Company anticipates results from the Phase 2/3 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 utreloxastat. Utreloxastat was found to be well-tolerated with no reported serious adverse events while demonstrating predictable pharmacology. The Company initiated a Phase 2 trial of utreloxastat for amyotrophic lateral sclerosis in the first quarter of 2022.

The most advanced molecule in the Company’s metabolic platform is sepiapterin, formerly known as PTC923, 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 sepiapterin 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. The Company expects that initiation of a registration-directed Phase 2/3 trial of unesbulin for the treatment of DIPG will be delayed by at least one quarter. The Company completed its Phase 1 trial evaluating emvododstat in acute myeloid 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

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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 and has ended the trial.

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.  In September 2022, as part of a specific obligation, the Company submitted a Type II variation to the EMA to support conversion of the conditional marketing authorization for Translarna to a standard marketing authorization, which included a report on the placebo-controlled trial of Study 041 and data from the open-label extension. The Company expects an opinion from the Committee for Medicinal Products for Human Use in the first half of 2023.

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 submitted a meeting request to the FDA to gain clarity on the regulatory pathway for a potential re-submission of an NDA for Translarna. While the FDA provided initial written feedback that Study 041 does not provide substantial evidence of effectiveness, the Company plans to pursue follow up discussions with the FDA to understand whether the evidence shown by entire intent to treat population in Study 041 along with confirmatory evidence from other studies could support approval.

As of September 30, 2022, the Company had an accumulated deficit of approximately $2,486.1 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. On August 15, 2022, the Company repaid the outstanding principal amount and

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accrued interest, totaling $152.3 million, of the 3.00% convertible senior notes due August 15, 2022 (the “2022 Convertible Notes”) that was due upon maturity in accordance with the terms of the notes. 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.  

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 September 30, 2022 and for the three and nine months ended September 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 September 30, 2022 and for the three and nine months ended September 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 nine months ended September 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

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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.

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-
	September 30,		December 31,
	2022		2021
Cash and cash equivalents	$	104,424	$	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	$	120,511	$	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 nine months ended September 30, 2022 and 2021,