PTC Therapeutics Reports Fourth Quarter and Full Year 2016 Financial Results and Provides Corporate Update

SOUTH PLAINFIELD, N.J., March 16, 2017

"For nearly 20 years, PTC has been committed to delivering new treatment options to patients living with Duchenne muscular dystrophy globally," said Stuart W. Peltz, Ph.D., Chief Executive Officer, PTC Therapeutics, Inc. "Our strong commercial performance in 2016 coupled with the advancements in our clinical programs brings us closer to that goal. I am proud of what we accomplished in 2016, and we will continue to work diligently to bring Translarna to patients globally, as well as develop treatments for additional rare, genetic disorders."

Fourth Quarter and Full Year 2016 Financial Highlights:

• Translarna net product sales were $25.1 million for the fourth quarter of 2016, representing 98% growth versus $12.7 million in the fourth quarter of 2015. For the full year 2016, Translarna generated $81.4 million in net product sales representing 142% growth compared to $33.7 million in the prior year.
• Total revenues for the fourth quarter of 2016 were $25.2 million versus $12.7 million in the same period of 2015. Total revenues for 2016 were $82.7 million compared to $36.8 million for the same period of 2015. The change in total revenue was primarily due to growing Translarna net product sales, partially offset by lower grant revenue.
• GAAP R&D expenses were $26.0 million for the fourth quarter of 2016 compared to $35.0 million for the fourth quarter of 2015. For the full year 2016, GAAP R&D expenses were $117.6 million compared to $121.8 million in the prior year period. The decrease in R&D expense for the fourth quarter and year ended December 31, 2016, as compared to the prior year periods was primarily due to lower costs associated with research and clinical development activities, partially offset by increased costs related to the manufacture of drug product.
• Non-GAAP R&D expenses were $21.9 million for the fourth quarter of 2016, excluding $4.1 million in non-cash, stock-based compensation expense, compared to $31.4 million for the fourth quarter of 2015, excluding $3.7 million in non-cash, stock-based compensation expense. For the full year 2016, non-GAAP R&D expenses were $100.0 million, excluding $16.8 million in non-cash, stock-based compensation expense and $0.8 million in one-time restructuring expense, compared to $105.7 million for 2015, excluding $16.1 million in non-cash, stock-based compensation expense.
• GAAP SG&A expenses were $24.2 million for the fourth quarter of 2016 compared to $25.9 million for the fourth quarter of 2015. For the full year 2016, GAAP SG&A expenses were $97.1 million compared to $82.1 million in 2015. The increase in SG&A expense for the fourth quarter and year ended December 31, 2016, as compared to the prior year periods, primarily resulted from additional costs associated with commercial activities in support of Translarna across Europe and other regions.
• Non-GAAP SG&A expenses were $19.9 million for the fourth quarter of 2016, excluding $4.3 million in non-cash, stock-based compensation expense, compared to $21.7 million for the fourth quarter of 2015, excluding $4.2 million in non-cash, stock-based compensation expense. Full-year 2016 non-GAAP SG&A expenses were $77.3 million, excluding $18.2 million in non-cash, stock-based compensation expense and $1.6 million in one-time restructuring expense, compared to $64.2 million for 2015, excluding $17.8 million in non-cash, stock-based compensation expense.
• Net interest expense for the fourth quarter of 2016 was $2.1 million compared to net interest expense of $2.5 million in the same period in 2015. The decrease in interest expense is primarily a result of increased interest income related to investments, which partially offset interest expense related to the $150 million convertible debt offering completed during mid-third quarter 2015. The debt was recorded on PTC's balance sheet at a discount, which will be amortized over the life of the bond. For the full year 2016, net interest expense was $8.3 million, compared to $2.4 million for 2015. The increase is primarily due to interest expense accrued in connection with the semi-annual interest payments due on the notes from the convertible debt offering beginning in 2016 for the full year as compared to partial year expense in 2015 partially offset by interest income related to investments.
• Net loss for the fourth quarter of 2016 was $26.8 million compared to a net loss of $50.9 million for the same period in 2015. Net loss for the full year 2016 was $142.1 million compared to $170.4 million for the same period in 2015.
• Cash, cash equivalents, and marketable securities totaled approximately $231.7 million at December 31, 2016 compared to approximately $338.9 million at December 31, 2015.
• Shares issued and outstanding as of December 31, 2016 were 34.3 million, which includes 0.2 million shares of unvested restricted stock.

2017 Guidance:

• For 2017, PTC expects to achieve ex-U.S. Translarna net sales between $105 and $125 million, assuming current exchange rates, representing continued strong growth year-over-year of its sustainable DMD business. This is driven by both increased penetration into the over 25 countries where Translarna is currently available as well as continued geographic expansion into new territories.  
• PTC is reviewing its guidance for 2017 operating expenses and ending cash in light of PTC's planned acquisition of Emflaza™ (deflazacort)

Key 2016 Fourth Quarter and other Corporate Highlights:

• Entry into Asset Purchase Agreement to acquire Emflaza™ (deflazacort). PTC announced today that it entered into an asset purchase agreement with Marathon Pharmaceuticals, LLC, under which PTC plans to acquire all rights to Emflaza, subject to satisfaction of customary closing conditions. Under the terms of the agreement, PTC will make an upfront payment of $140 million to Marathon, comprising of a combination of cash and stock. Following completion of a transition period, Marathon is entitled to receive payments from PTC based on annual net sales of Emflaza beginning in 2018, which PTC expects will range as a percentage of net sales between the low to mid-20s on a blended average basis. In addition, Marathon has the opportunity to receive a single $50 million sales-based milestone.
• Successful second year of Translarna sales with 2016 revenues of $81.4M, an increase of 142% over the prior year and achieving the upper-end of guidance. PTC has expanded on its strong global footprint in Duchenne muscular dystrophy (DMD), with sales now generated in over 25 countries. Market access discussions regarding funding on a country-by-country basis are ongoing. This strong performance reflects rapid uptake, sustainable pricing, and an estimated high (>90%) compliance to treatment.
• Filing of New Drug Application for Translarna for the Treatment of Nonsense Mutation Duchenne Muscular Dystrophy Acknowledged.  The FDA has granted standard review and assigned a Prescription Drug User Fee Act (PDUFA) date of October 24, 2017. The PDUFA date is the target date for the FDA to complete its review of the NDA. PTC used the FDA's file over protest regulations to file the NDA, which allowed PTC to have its NDA filed and reviewed following receipt of the FDA's refuse to file determination in February 2016.
• Two SMA clinical trials on track to advance into pivotal studies in 2017. The spinal muscular atrophy (SMA) program, a joint collaboration with Roche and the SMA Foundation, is expected to advance into two pivotal studies in 2017. SUNFISH and FIREFISH are both two part studies in childhood onset (Type 2/3) and infant onset (Type 1) SMA patients, respectively. Both studies are enrolling the initial dose escalation part of the study which will then transition to the pivotal part of the study evaluating efficacy. Commencement of the pivotal portion of either study will trigger a single $20 million milestone payment to PTC from Roche. RG7916 was recently granted orphan-drug designation by the FDA.
• Announced results from Phase 3 clinical trial of Translarna (ataluren) in nonsense mutation cystic fibrosis patients. ACT CF did not achieve its primary or secondary endpoints. Ataluren was generally well tolerated and ACT CF confirmed a favorable safety profile for ataluren, which has now been used by more than 1,000 patients across multiple indications. PTC plans to discontinue current clinical development of ataluren in cystic fibrosis and close ongoing extension studies. The company has withdrawn its application for marketing authorization in cystic fibrosis in Europe.
• Advanced clinical pipeline in rare disorders and oncology. We continue to pursue our Phase 2 proof-of-concept studies of Translarna in additional rare disease indications, including aniridia, MPS I, and Dravet/CDKL5. Clinical development of PTC596, PTC's cancer stem cell investigational new drug, is expected to progress in 2017. Additionally, PTC's genetic disorders research organization is actively advancing lead optimization programs from its splicing platform focused on Huntington's disease and Familial Dysautonomia.

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 and one-time restructuring expenses relating to the reorganization of operations intended to improve efficiency and better align costs and employment structure with the Company's strategic plans. These results are provided as a complement to results reported in GAAP, because management uses these non-GAAP financial measures when assessing and identifying operational trends. In management's opinion, these non-GAAP measures are useful to investors and other users of our financial statements by providing greater transparency into the operating performance at PTC and the company's future outlook.