On February 29, 2016 PTC Therapeutics, Inc. (NASDAQ: PTCT) reported a corporate update and reported financial results for the fourth quarter and full year ending December 31, 2015 (Filing, Q4/Annual, PTC Therapeutics, 2015, FEB 29, 2016, View Source [SID:1234509287]).

"We are shocked and disappointed to have received a Refuse to File (RTF) letter from the FDA regarding our NDA for Translarna, and we are engaging in dialogue with the FDA to determine a path forward," said Stuart W. Peltz, Ph.D., Chief Executive Officer, PTC Therapeutics, Inc. "Despite this recent setback, we achieved a number of key milestones in 2015 as we continue to build PTC into a global, commercial biotechnology company. Translarna had a landmark first year launch in nonsense mutation Duchenne muscular dystrophy and we are currently under regulatory review in the EU to remove the condition to the existing marketing authorization as well as expand our label to include nonsense mutation cystic fibrosis. Our Phase 3 ACT CF clinical trial is fully enrolled and our clinical stage SMA and cancer stem cell assets continue to progress. I am proud of what we accomplished in 2015. Resilience has been one of our key values since I founded PTC in 1998 and our team continues to work diligently to bring Translarna to patients globally."

Key Fourth Quarter, Full Year 2015 and other Corporate Highlights:

· Refuse to File letter received from the FDA regarding Translarna for nonsense mutation Duchenne muscular dystrophy (nmDMD). The letter from the U.S. Food and Drug Administration (FDA) received on February 22, 2016 stated that the new drug application (NDA) for Translarna was not sufficiently complete to permit a substantive review. Specifically, PTC was notified in the letter that, in the view of the FDA, both the Phase 2b and ACT DMD trials were negative and do not provide substantial evidence of effectiveness. The FDA also characterized certain of the company’s adjustments to the ACT DMD study as post hoc and therefore not supportive of effectiveness. In addition, the FDA noted that the NDA did not contain adequate information regarding the abuse potential of Translarna, a requirement for new molecules that cross the blood-brain barrier. PTC is engaging in dialogue with the FDA to discuss and clarify the matters set forth in the letter and to determine the best path forward.

· Successful first year Translarna launch with 2015 revenues of $33.7M. PTC has established a strong global commercial footprint launching the first approved therapy in Duchenne muscular dystrophy (DMD), with sales generated in 23 countries including most recently Argentina, the Czech Republic, Hungary, Portugal and Singapore. PTC is targeting to expand access to Translarna to over 35 countries by the end of 2016. Market access discussions regarding funding on a country-by-country basis are ongoing. In the UK, PTC has had constructive discussions with the National Health Services (NHS) England regarding a managed access agreement for Translarna with a decision from the National Institute for Health and Care Excellence (NICE) expected in the coming months. In Germany, PTC has had multiple discussions with the German Federal Association of the Statutory Health Insurances (GKV-SV) over the last several months to come to agreement on pricing and reimbursement. Recently, these discussions transitioned into an arbitration process, which did not lead to an acceptable agreement. As a result, PTC expects to delist Translarna from the German pharmacy ordering system. Under these circumstances, patients and healthcare professionals may be able to

access Translarna through a reimbursed importation pathway possible under German law, thus minimizing any access issues for existing and new German patients.

· Actively pursuing regulatory approvals for Translarna in DMD globally. In early January 2016, PTC submitted the ACT DMD Phase 3 results to the European Medicines Agency (EMA) in fulfillment of the principal condition of the EMA marketing authorization for the treatment of nmDMD in ambulatory patients aged five and over. The submission to the EMA, called a type II variation, seeks to remove the condition to the existing marketing authorization. PTC anticipates the Committee for Medicinal Products for Human Use (CHMP) will issue its recommendation regarding this request in mid-2016. Translarna also received regulatory approvals in both Israel and South Korea in 2015. In September 2015, Health Canada initiated an expedited review of Translarna for potential approval for nmDMD in the first half of 2016.

· ACT CF Phase 3 clinical trial on track for completion by year-end 2016 with top-line results expected early 2017. In November 2015, PTC announced that it had completed enrollment for ACT CF, the company’s second Phase 3 clinical trial of Translarna for patients with nonsense mutation cystic fibrosis (nmCF). ACT CF is a 48-week placebo-controlled Phase 3 clinical trial designed to evaluate the effect of Translarna in patients six years of age or older with nmCF not receiving chronic inhaled aminoglycosides. During the third quarter, PTC submitted a variation to its marketing authorization requesting EMA approval of Translarna for the treatment of nmCF based on the company’s previous Phase 3 study. PTC anticipates the CHMP will issue its recommendation regarding this submission in mid-2016.

· As part of 10 by ‘20 strategy, four additional indications in development for Translarna. Given its mechanism of action, Translarna has the potential to address numerous genetic disorders caused by a nonsense mutation to address significant unmet need across a spectrum of many rare diseases. In addition to its advanced DMD and CF programs, PTC is pursuing indications in mucopolysaccharidosis type I (MPS I), aniridia, and two genetically defined epilepsy disorders, Dravet syndrome and CDKL5. PTC’s goal is to investigate Translarna’s activity in a minimum of ten indications beyond DMD

and CF by 2020 in order to deliver on its commitment to patients and maximize the potential of Translarna as both a product and a pipeline.

· Internally developed pipeline continues to progress. In January 2016, clinical development of the spinal muscular atrophy (SMA) program, a collaboration with Roche and the SMA Foundation, resumed with a second compound, RG7916, beginning a Phase 1 study in healthy volunteers. In addition, PTC’s cancer stem cell program in oncology continues to advance with Phase 1 data expected in 2016. PTC’s discovery group is focused on the advancement of novel programs for rare and neglected disorders including next generation nonsense read-through, Huntington’s disease and familial dysautonomia.

· Maintained strong balance sheet with approximately $339 million in cash and cash equivalents. PTC completed a successful $150 million offering of 3.00% convertible senior notes due 2022 in August 2015, raising net proceeds of approximately $145 million. PTC finished 2015 with approximately $339 million in cash and cash equivalents.

Upcoming Events:

PTC will participate in the following upcoming conferences:

· Cowen and Company’s 36th Annual Health Care Conference on March 8 at 11:20 a.m. (ET) in Boston, MA
· Barclay’s Global Healthcare Conference on March 15 at 1:35 p.m. (ET) in Miami, FL
· Deutsche Bank’s 41st Annual Healthcare Conference on May 4-5 in Boston, MA

The presentations will be webcast live on the Events and Presentations page under the investor relations section of PTC’s website at www.ptcbio.com and will be archived for two weeks following the presentation. PTC’s current investor presentation is available at the same website location.

Fourth Quarter and Full Year 2015 Financial Highlights:

· Translarna net product sales were $12.7 million for the fourth quarter of 2015, representing 30% sequential growth versus $9.8 million in the third quarter of 2015. For the full year 2015, Translarna generated $33.7 million in net product sales compared to $0.7 million in the prior year.

· Total revenues for the fourth quarter of 2015 were $12.7 million compared to $12.7 million in the same period of 2014. Total revenues for 2015 were $36.8 million compared to $25.2 million for the same period of 2014. The change in total revenue was a result of the expanded commercial launch of Translarna during 2015, which received marketing authorization from the EMA in August 2014, offset by lower grant revenue.

· Non-GAAP R&D expenses were $31.4 million for the fourth quarter of 2015, excluding $3.7 million in non-cash, stock-based compensation expense, compared to $23.7 million for the fourth quarter of 2014, excluding $3.2 million in non-cash, stock-based compensation expense. GAAP R&D expenses were $35.0 million for the fourth quarter of 2015 compared to $26.9 million for the fourth quarter of 2014. For the full year 2015, non-GAAP R&D expenses were $105.7 million, excluding $16.1 million in non-cash, stock-based compensation expense, compared to $70.1 million for 2014, excluding $9.7 million in non-cash, stock-based compensation expense. For the full year 2015, GAAP R&D expenses were $121.8 million compared to $79.8 million in the prior year period. The increase in R&D expense for the fourth quarter and year ended December 31, 2015, as compared to the prior year periods was primarily due to expansion of our clinical development activities including late-stage studies and extension programs in both Duchenne muscular dystrophy and cystic fibrosis.

· Non-GAAP SG&A expenses were $21.7 million for the fourth quarter of 2015, excluding $4.2 million in non-cash, stock-based compensation expense, compared to $14.5 million for the fourth quarter of 2014, excluding $3.5 million in non-cash, stock-based compensation expense. GAAP SG&A expenses were $25.9 million for the fourth quarter of 2015 compared to $18.0 million for the fourth quarter of 2014. For the full year 2015,

non-GAAP SG&A expenses were $64.2 million, excluding $17.8 million in non-cash, stock-based compensation expense, compared to $35.2 million for 2014, excluding $9.6 million in non-cash, stock-based compensation expense. GAAP full-year 2015 SG&A expenses were $82.1 million compared to $44.8 million in 2014. The increase in SG&A expense for the fourth quarter and year ended December 31, 2015, as compared to the prior year periods primarily resulted from additional costs associated with commercial activities in support of the launch of Translarna for DMD.

· Net loss for the fourth quarter of 2015 was $50.9 million compared to a net loss of $27.3 million for the same period in 2014. Net loss for the full year 2015 was $170.4 million compared to $93.8 million for the same period in 2014.

· Cash, cash equivalents, and marketable securities totaled approximately $339 million at December 31, 2015 compared to approximately $315 million at December 31, 2014. This increase includes net proceeds of approximately $145 million from a $150 million convertible debt offering completed in the third quarter of 2015.

· Shares issued and outstanding as of December 31, 2015 were 34.3 million, which includes 0.3 million shares of unvested restricted stock.

2016 Guidance:

· Total ex-U.S. Translarna nmDMD revenues for 2016 are anticipated to be between $65 and $85 million. This guidance assumes current exchange rates and the continued commercial expansion for Translarna in nmDMD outside of the U.S.

· Operating expenses for 2016 are currently under review as a result of the Refuse to File letter recently received from the FDA.

Non-GAAP Financial Measures

In this press release, PTC’s financial results and financial guidance are provided in accordance with accounting principles generally accepted in the United States (GAAP) and using certain non-GAAP financial measures. In particular, non-GAAP financial results exclude stock-based compensation expense. These results are provided as a complement to results reported in GAAP because management believes these non-GAAP financial measures are the best indication of the company’s business.

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