PTC THERAPEUTICS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-Q)

The following discussion and analysis is meant to provide material information
relevant to an assessment of the financial condition and results of operations
of our company, including an evaluation of the amounts and certainty of cash
flows from operations and from outside resources, so as to allow investors to
better view our company from management's perspective. The following discussion
of our financial condition and results of operations should be read in
conjunction with our financial statements and the notes to those financial
statements appearing elsewhere in this Quarterly Report on Form 10-Q and the
audited consolidated financial statements and notes thereto and management's
discussion and analysis of financial condition and results of operations for
the year ended December 31, 2021 included in our Annual Report on Form 10-K
filed with the Securities and Exchange Commission on February 22, 2022, or our
2021 Annual Report. This discussion contains forward-looking statements that
involve significant risks and uncertainties. As a result of many factors, such
as those set forth in Part II, Item 1A. (Risk Factors) of this Quarterly Report
on Form 10-Q and Part I, Item 1A. (Risk Factors) of our 2021 Annual Report, our
actual results may differ materially from those anticipated in these
forward-looking statements.

Our Company

We are 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. Our 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. Our mission is to provide access to best-in-class
treatments for patients who have few or no treatment options. Our strategy is to
leverage our strong scientific and clinical expertise and global commercial
infrastructure to bring therapies to patients.  We believe that this allows us
to maximize value for all of our stakeholders.

We have 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.

Corporate Updates

COVID-19 Impact

The global pandemic caused by a strain of novel coronavirus, COVID-19, has
impacted and is continuing to impact the timing of certain of our clinical
trials and regulatory submissions as well as other aspects of our business
operations. In addition to our previous disclosures regarding the impact of the
COVID-19 pandemic, such as those set forth in our Annual Report on Form 10-K for
the year ended December 31, 2021, the following expectations have been revised
as a result of the impact or expected impact of the COVID-19 pandemic:

We have experienced additional delays in enrolling patients for our

registration-directed Phase 2/3 placebo-controlled trial of vatiquinone in

children with mitochondrial disease associated seizures as some patients have

? been unable or hesitant to travel to clinical sites due to the COVID-19

pandemic. We have also experienced delays in opening certain clinical trial

sites. We now anticipate results from this trial to be available in the first

quarter of 2023.

As of the date of this Report on Form 10-Q, except as otherwise previously

disclosed with respect to Translarna product revenue in Brazil, our ability to

generate revenue has not been significantly affected by the COVID-19 pandemic.

However, due to travel restrictions, social distancing and the continued global

? uncertainty resulting from the COVID-19 pandemic, we may have difficulty

identifying and accessing new patients, supporting existing patients and

meeting with regulatory authorities or other governmental entities, which may

negatively affect our future revenue. We continue to support our existing

   patient base and remotely connect with them, as necessary. We have not
   encountered any material issues in supplying those patients.


                                       40

  Table of Contents

As previously disclosed, in response to the global uncertainty caused by the

? COVID-19 pandemic, we are continuing to prioritize our expenses where we deem

appropriate and strategically positioning our capital allocation.

The COVID-19 pandemic and responsive measures thereto may result in further
negative impacts, including additional delays in our clinical and regulatory
activities and further fluctuations in our revenue. We cannot be certain what
the overall impact of the COVID-19 pandemic will be on our business and it has
the potential to materially adversely affect our business, financial condition,
results of operations, and prospects.  For additional information, see "Item 1A.
Risk Factors - We face risks related to health epidemics and other widespread
outbreaks of contagious disease, which are, and may continue to, delay our
ability to complete our ongoing clinical trials and initiate future clinical
trials, disrupt regulatory activities and have other adverse effects on our
business and operations, including the novel coronavirus (COVID-19) pandemic,
which has disrupted, and may continue to disrupt, our operations and may
significantly impact our operating results. In addition, the COVID-19 pandemic
has caused substantial disruption in the financial markets and economies, which
could result in adverse effects on our business and operations." in our Annual
Report on Form 10-K for the year ended December 31, 2021.

UpstazaTM (eladocagene exuparvovec) Approved in European Economic Area

In July 2022, the European Commission approved Upstaza, formerly known as PTC-AADC, for the treatment of Aromatic L-Amino Decarboxylase, or AADC, deficiency, a rare central nervous system, or CNS, disorder arising from reductions in the enzyme AADC that results from mutations in the dopa decarboxylase gene, for patients 18 months and older within the European Economic Area, or EEA. Upstaza is the first commercially approved disease-modifying treatment for AADC deficiency and the first marketed gene therapy directly infused into the brain.

Global Commercial Footprint

Global DMD Franchise

We have two products, Translarna™ (ataluren) and Emflaza® (deflazacort), for the
treatment of Duchenne muscular dystrophy, or DMD, a rare, life threatening
disorder. Translarna has marketing authorization in the EEA for the treatment of
nonsense mutation Duchenne muscular dystrophy, or nmDMD, in ambulatory patients
aged two 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. During the quarter ended June 30, 2022, we recognized $77.0
million in net sales from Translarna. We hold worldwide commercialization rights
to Translarna for all indications in all territories. Emflaza is approved in the
United States for the treatment of DMD in patients two years and older. During
the quarter ended June 30, 2022, we recognized $56.8 million in net sales from
Emflaza.

Our marketing authorization for Translarna in the EEA is subject to annual
review and renewal by the European Commission following reassessment by the
European Medicines Agency, or EMA, of the benefit-risk balance of the
authorization, which we refer to as the annual EMA reassessment. In June 2022,
the European Commission renewed our marketing authorization, making it
effective, unless extended, through August 5, 2023. This marketing authorization
is further subject to a specific obligation to conduct and submit the results of
an 18-month, placebo-controlled trial, followed by an 18-month open-label
extension, which we refer to together as Study 041. In June 2022, we 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.  We expect to submit a report on the placebo-controlled

                                       41

Table of Contents

trial and the open-label extension data that has been collected to date to the EMA by the end of the third quarter of 2022, as required.

Each country, including each member state of the EEA, has its own pricing and
reimbursement regulations. In order to commence commercial sale of product
pursuant to our Translarna marketing authorization in any particular country in
the EEA, we must finalize pricing and reimbursement negotiations with the
applicable government body in such country. As a result, our commercial launch
will continue to be on a country-by-country basis. We also have made, and expect
to continue to make, product available under early access programs, or EAP
Programs, both in countries in the EEA and other territories. Our ability to
negotiate, secure and maintain reimbursement for product under commercial and
EAP Programs can be subject to challenge in any particular country and can also
be affected by political, economic and regulatory developments in such country.

There is substantial risk that if we are unable to renew our EEA marketing
authorization during any annual renewal cycle, or if our product label is
materially restricted, or if Study 041 does not provide the data necessary to
maintain our marketing authorization, we would lose all, or a significant
portion of, our ability to generate revenue from sales of Translarna in the EEA
and other territories.

Translarna is an investigational new drug in the United States. During the first
quarter of 2017, we filed a New Drug Application, or NDA, for Translarna for the
treatment of nmDMD over protest with the United States Food and Drug
Administration, or FDA. 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, we 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 our 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. We followed the FDA's recommendation and
collected, using newer technologies via procedures and methods that we 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, we announced top-line results from the
placebo-controlled trial of Study 041. We are preparing to have discussion with
the FDA regarding a potential a resubmission of the Translarna NDA.

UpstazaTM (eladocagene exuparvovec)

We have a pipeline of gene therapy product candidates for rare monogenic
diseases that affect the CNS, including Upstaza for the treatment of AADC
deficiency. In July 2022, the European Commission approved Upstaza for the
treatment of AADC deficiency for patients 18 months and older within the EEA. We
are also preparing a biologics license application, or BLA, for Upstaza for the
treatment of AADC deficiency in the United States. In response to discussions
with the FDA, we intend to provide additional information concerning the use of
the commercial cannula for Upstaza in young patients. We expect to submit a BLA
to the FDA in the fourth quarter of 2022.

Tegsedi® (inotersen) and Waylivra™ (volanesorsen)

We hold the rights for the commercialization of Tegsedi and Waylivra for the
treatment of rare diseases in countries in Latin America and the Caribbean
pursuant to a Collaboration and License Agreement, or the Tegsedi-Waylivra
Agreement, dated August 1, 2018, by and between us and Akcea Therapeutics, Inc.,
or Akcea, a subsidiary of Ionis Pharmaceuticals, Inc. Tegsedi has received
marketing authorization in the United States, European Union, or EU, and Brazil
for the treatment of stage 1 or stage 2 polyneuropathy in adult patients with
hereditary transthyretin amyloidosis, or hATTR amyloidosis. We began to make
commercial sales of Tegsedi for the treatment of hATTR amyloidosis in Brazil in
the second quarter of 2022 and we continue to make Tegsedi available in certain
other countries within Latin America and the Caribbean through EAP Programs. In
August 2021, ANVISA, the Brazilian health regulatory authority, approved
Waylivra as the first treatment for familial chylomicronemia syndrome, or FCS,
in Brazil and we 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, we submitted an application to ANVISA in December 2021 for
the approval

                                       42

  Table of Contents

of Waylivra for the treatment of familial partial lipodystrophy, or FPL, and we expect a regulatory decision on approval in the second half of 2022.

Evrysdi® (risdiplam)

We also have an SMA collaboration with Roche and the SMA Foundation. The SMA
program has one approved product, Evrysdi, 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.

Diversified Development Pipeline

Splicing Platform

In addition to our SMA program, our splicing platform also includes PTC518,
which is being developed for the treatment of Huntington's disease, or HD. We
announced the results from our 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 blood brain
barrier at significant levels and that PTC518 was well tolerated.  We 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. We expect data from
the initial 12-week phase of the Phase 2 study by the end of 2022.

Bio-e Platform

Our 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 our Bio-e platform are vatiquinone and PTC857. We 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. We have experienced additional delays in enrolling this trial due to the
COVID-19 pandemic and anticipate results from this trial to be available in the
first quarter of 2023.  We 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 anticipate results from this trial to be available in the
second quarter of 2023. In the third quarter of 2021, we completed a Phase 1
trial in healthy volunteers to evaluate the safety and pharmacology of PTC857.
PTC857 was found to be well-tolerated with no reported serious adverse events
while demonstrating predictable pharmacology. We initiated a Phase 2 trial of
PTC857 for amyotrophic lateral sclerosis in the first quarter of 2022.

Metabolic Platform

The most advanced molecule in our metabolic platform is PTC923, an oral
formulation of synthetic sepiapterin, a precursor to intracellular
tetrahydrobiopterin, which is a critical enzymatic cofactor involved in
metabolism and synthesis of numerous metabolic products, for orphan diseases. We
initiated a registration-directed Phase 3 trial for PTC923 for phenylketonuria,
or PKU, in the third quarter of 2021 and expect results from this trial to

be
available by the end of 2022.

Oncology Platform

We also have two oncology agents that are in clinical development, unesbulin and
emvododstat. We completed our Phase 1 trials evaluating unesbulin in
leiomyosarcoma, or LMS, and diffuse intrinsic pontine glioma, or DIPG, in the
fourth quarter of 2021. We initiated a registration-directed Phase 2/3 trial of
unesbulin for the treatment of LMS in the first quarter of 2022 and we expect to
initiate a registration-directed Phase 2 trial of unesbulin for the treatment of
DIPG in the third quarter of 2022. We completed our Phase 1 trial evaluating
emvododstat in acute myelogenous leukemia, or AML, in the fourth quarter of
2021. We expect to provide further updates regarding our emvododstat program at
a later date.

                                       43

  Table of Contents

Emvododstat for COVID-19

In June 2020, we initiated a Phase 2/3 clinical trial evaluating the efficacy
and safety of emvododstat in patients hospitalized with COVID-19. In February
2021, we announced the completion of the first stage of the Phase 2/3 trial.
Given the changing nature of the COVID-19 pandemic to the outpatient treatment
setting, we concluded enrollment in the Phase 2/3 trial early to review the data
collected to date and make a decision on next steps. Based upon our initial
analyses of all randomized subjects, there was a trend towards emvododstat
benefit across several disease relevant endpoints including reduced
hospitalizations and time to reduction of fever. Additionally, within the cohort
of patients enrolled within five days of infection, emvododstat demonstrated a
benefit with respect to time to respiratory improvement, duration of
hospitalization, dyspnea resolution and cough relief. We plan to complete the
remaining data analyses and will then formulate a strategy for next steps.

Multi-Platform Discovery

In addition, we have 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,
including rare diseases and oncology.

Funding

The success of our products and any other product candidates we may develop,
depends largely on obtaining and maintaining reimbursement from governments and
third-party insurers. Our revenues are primarily generated from sales of
Translarna for the treatment of nmDMD in countries where we were able to obtain
acceptable commercial pricing and reimbursement terms and in select countries
where we are permitted to distribute Translarna under our EAP Programs and from
sales of Emflaza for the treatment of DMD in the United States. We have also
recognized revenue associated with milestone and royalty payments from Roche
pursuant to the SMA License Agreement under our SMA program.

To date, we have financed our operations primarily through our offering of 3.00%
convertible senior notes due August 15, 2022, or the 2022 Convertible Notes, our
offering of 1.50% convertible senior notes due September 15, 2026, or the 2026
Convertible Notes, and, together with the 2022 Convertible Notes, the
Convertible Notes, our public offerings of common stock in February 2014, in
October 2014, in April 2018, in January 2019, and in September 2019, the common
stock issued in our "at the marketing offering", our initial public offering of
common stock in June 2013, proceeds from a Royalty Purchase Agreement dated as
of July 17, 2020, by and among us, RPI 2019 Intermediate Finance Trust, or RPI,
and, solely for the limited purposes set forth therein, Royalty Pharma PLC, or
the Royalty Purchase Agreement, private placements of our preferred stock,
collaborations, bank and institutional lender debt and convertible debt
financings, and grants and clinical trial support from governmental and
philanthropic organizations and patient advocacy groups in the disease areas
addressed by our product candidates. Since 2014, we have 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, we have generated revenue from
net sales of Emflaza for the treatment of DMD in the United States. We have also
relied on revenue associated with milestone and royalty payments from Roche
pursuant to the SMA License Agreement.

The 2022 Convertible Notes consist of $150.0 million in aggregate principal
amount of 3.00% convertible senior notes due 2022. The 2022 Convertible
Notes bear cash interest payable on February 15 and August 15 of each year,
beginning on February 15, 2016. The 2022 Convertible Notes are senior unsecured
obligations of ours and will mature on August 15, 2022, unless earlier
converted, redeemed or repurchased in accordance with their terms prior to such
date. As of February 15, 2022, until the close of business on the business day
immediately preceding the maturity date, holders may convert their 2022
Convertible Notes at any time. Upon conversion, we will pay and deliver a
combination of cash and shares of our common stock. We received net proceeds
from the offering of approximately $145.4 million, after deducting the initial
purchasers' discounts and commissions and the offering expenses payable by us.

In August 2019, we entered into an At the Market Offering Sales Agreement, or
the Sales Agreement, with Cantor Fitzgerald and RBC Capital Markets, LLC, or
together, the Sales Agents, pursuant to which, we may offer and sell shares of
our common stock, having an aggregate offering price of up to $125.0 million
from time to time through the Sales Agents by any method that is deemed to be an
"at the market offering" as defined in Rule 415(a)(4) promulgated under

                                       44

Table of Contents

the Securities Act of 1933, as amended, or the Securities Act. During the three
and six months ended June 30, 2022, we did not issue or sell any shares of
common stock pursuant to the Sales Agreement. The remaining shares of our common
stock available to be issued and sold, under the Sales Agreement, have an
aggregate offering price of up to $93.0 million as of June 30, 2022.

The 2026 Convertible Notes consist of $287.5 million aggregate principal amount
of 1.50% convertible senior notes due 2026. The 2026 Convertible Notes bear cash
interest at a rate of 1.50% per year, payable semi-annually on March 15 and
September 15 of each year, beginning on March 15, 2020. The 2026 Convertible
Notes will mature on September 15, 2026, unless earlier repurchased or
converted. We received net proceeds of $279.3 million after deducting the
initial purchasers' discounts and commissions and the offering expenses payable
by us.

As of June 30, 2022, we had an accumulated deficit of $2,376.8 million. We had a net loss of $278.8 million and $247.0 million for the six months ended June 30, 2022 and 2021, respectively.

We anticipate that our expenses will continue to increase in connection with our
commercialization efforts in the United States, the EEA, Latin America and other
territories, including the expansion of our infrastructure and corresponding
sales and marketing, legal and regulatory, distribution and manufacturing,
including expanding our direct manufacturing capabilities at our leased
biologics manufacturing facility and administrative and employee-based expenses.
In addition to the foregoing, we expect to continue to incur ongoing research
and development expenses for our products and product candidates, including our
splicing, gene therapy, Bio-e, metabolic and oncology programs, our studies of
emvododstat for COVID-19 as well as studies in our products for maintaining
authorizations, including Study 041, label extensions and additional
indications. In addition, we may incur substantial costs in connection with our
efforts to advance our regulatory submissions. We continue to seek marketing
authorization for Translarna for the treatment of nmDMD in territories that we
do not currently have marketing authorization in and we may also seek marketing
authorization for Translarna for other indications. We are preparing a BLA for
Upstaza for the treatment of AADC deficiency in the United States and we
anticipate submitting a BLA to the FDA in the fourth quarter of 2022. We filed
for marketing authorization for Waylivra with ANVISA for the treatment of FPL
and we expect a regulatory decision on approval from ANVISA in the second half
of 2022. These efforts may significantly impact the timing and extent of our
commercialization expenses.

We may seek to expand and diversify our product pipeline through
opportunistically in-licensing or acquiring the rights to products, product
candidates or technologies and we may incur expenses, including with respect to
transaction costs, subsequent development costs or any upfront, milestone or
other payments or other financial obligations associated with any such
transaction, which would increase our future capital requirements.

With respect to our outstanding 2022 Convertible Notes, cash interest payments
are payable on a semi-annual basis in arrears, which require total funding of
$4.5 million annually. The 2022 Convertible Notes will mature on August 15, 2022
and we will be required to pay any outstanding principal amount of the 2022
Convertible Notes at that time, unless earlier converted, redeemed or
repurchased in accordance with their terms prior to such date. As of February
15, 2022, until the close of business on the business day immediately preceding
the maturity date, holders may convert their 2022 Convertible Notes at any time.
Upon conversion, we will pay and deliver a combination of cash and shares of our
common stock. With respect to our outstanding 2026 Convertible Notes, cash
interest payments are payable on a semi-annual basis in arrears, which will
require total funding of $4.3 million annually.

We are obligated to pay the former equityholders of Agilis $50.0 million as a
result of the European Commission's marketing approval of Upstaza for the
treatment of AADC deficiency in July 2022 and we expect to pay such former
equityholders an additional $20.0 million upon the acceptance for filing by the
FDA of a BLA for Upstaza for the treatment of AADC deficiency, which we expect
to occur in the fourth quarter of 2022. We also expect to pay the former
securityholders of Censa Pharmaceuticals, Inc., or Censa, a $30.0 million
development milestone for the completion of enrollment of a Phase 3 clinical
trial for PTC923 for PKU in 2022. If achieved, we have the option to pay such
milestone payment in cash or shares of our common stock.

We also have certain significant contractual obligations and commercial
commitments that require funding and we have disclosed these items under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations-Funding requirements" in our 2021 Annual Report on Form 10-K. In
addition to those obligations previously

                                       45

Table of Contents

disclosed, we entered into a Lease Agreement, or the Warren Lease, on May 24,
2022 with Warren CC Acquisitions, LLC, relating to the lease of two entire
buildings comprised of approximately 360,000 square feet of shell condition,
modifiable space, or the Premises, at a facility located in Warren, New Jersey.
The rental term of the Warren Lease commenced on June 1, 2022, with an initial
term of seventeen years, or the Initial Term, followed by three consecutive
five-year renewal periods at our option. The aggregate base rent for the Initial
Term will be approximately $163.0 million; provided, however, that if we are not
subject to an Event of Default (as defined in the Warren Lease), we will be
entitled to a base rent abatement over the first three years of the Initial Term
of approximately $18.6 million, reducing our total base rent obligation to
$144.4 million. The rental rate for the renewal periods will be at the Fair
Market Rental Value (as defined in the Warren Lease) and determined at the time
of the exercise of the renewal. Beginning in the second lease year, we are also
responsible for the payment of all taxes and operating expenses for the
Premises. There were no other material changes to the contractual obligations
and commercial commitments set forth in our 2021 Annual Report on Form 10-K
during the period ended June 30, 2022. Furthermore, since we are a public
company, we have incurred and expect to continue to incur additional costs
associated with operating as such including significant legal, accounting,
investor relations and other expenses.

We have never been profitable and we will need to generate significant revenues
to achieve and sustain profitability, and we may never do so. Accordingly, we
may need to obtain substantial additional funding in connection with our
continuing operations. Adequate additional financing may not be available to us
on acceptable terms, or at all. If we are unable to raise capital when needed or
on attractive terms, we could be forced to delay, reduce or eliminate our
research and development programs or our commercialization efforts.

Financial operations overview

Revenues

Net product revenues. To date, our net product revenues have consisted primarily
of sales of Translarna for the treatment of nmDMD in territories outside of the
United States and sales of Emflaza for the treatment of DMD in the United
States. We recognize revenue when performance obligations with customers have
been satisfied. Our performance obligations are to provide products based on
customer orders from distributors, hospitals, specialty pharmacies or retail
pharmacies. The performance obligations are satisfied at a point in time when
our customer obtains control of the product, which is typically upon delivery.
We invoice customers after the products have been delivered and invoice payments
are generally due within 30 to 90 days of invoice date. We determine the
transaction price based on fixed consideration in its contractual agreements.
Contract liabilities arise in certain circumstances when consideration is due
for goods not yet provided. As we have identified only one distinct performance
obligation, the transaction price is allocated entirely to the product sale. In
determining the transaction price, a significant financing component does not
exist since the timing from when we deliver product to when the customers pay
for the product is typically less than one year. Customers in certain countries
pay in advance of product delivery. In those instances, payment and delivery
typically occur in the same month.

We record product sales net of any variable consideration, which includes
discounts, allowances, rebates related to Medicaid and other government pricing
programs, and distribution fees. We use the expected value or most likely amount
method when estimating variable consideration, unless discount or rebate terms
are specified within contracts. The identified variable consideration is
recorded as a reduction of revenue at the time revenues from product sales are
recognized. These estimates for variable consideration are adjusted to reflect
known changes in factors and may impact such estimates in the quarter those
changes are known. Revenue recognized does not include amounts of variable
consideration that are constrained. For the three months ended June 30, 2022 and
2021, net product sales outside of the United States were $86.9 million and
$54.0 million, respectively consisting of Translarna, Tegsedi, Waylivra, and
Upstaza. Upstaza sales commenced during the three months period ended June 30,
2022. Translarna net revenues made up $77.0 million and $52.6 million of the net
product sales outside of the United States for the three months ended
June 30, 2022 and 2021, respectively.  For the three months ended June 30, 2022
and 2021, net product sales in the United States were $56.8 million and $49.1
million, respectively, consisting solely of Emflaza. For the six months ended
June 30, 2022 and 2021, net product sales outside of the United States were
$168.1 million and $101.7 million, respectively, consisting of Translarna,
Tegsedi, Waylivra, and Upstaza. Upstaza sales commenced during the six months
period ended June 30, 2022. Translarna net revenues made up $156.2 million and
$99.1 million of the net product sales outside of the United States for

                                       46

Table of Contents

the six months ended June 30, 2022 and 2021, respectively. For the six months
ended June 30, 2022 and 2021, net product sales in the United States were $105.4
million and $92.7 million, respectively, consisting solely of Emflaza.

In relation to customer contracts, we incur costs to fulfill a contract but do
not incur costs to obtain a contract. These costs to fulfill a contract do not
meet the criteria for capitalization and are expensed as incurred. We consider
any shipping and handling costs that are incurred after the customer has
obtained control of the product as a cost to fulfill a promise. Shipping and
handling costs associated with finished goods delivered to customers are
recorded as a selling expense.

Roche and the SMA Foundation Collaboration. In November 2011, we entered into
the SMA License Agreement pursuant to which we are collaborating with Roche and
the SMA Foundation to further develop and commercialize compounds identified
under our SMA program with the SMA Foundation. The research component of this
agreement terminated effective December 31, 2014. We are eligible to receive
additional payments from Roche if specified events are achieved with respect to
each licensed product, including up to $135.0 million in research and
development event milestones, up to $325.0 million in sales milestones upon
achievement of specified sales events, and up to double digit royalties on
worldwide annual net sales of a commercial product. As of June 30, 2022, we had
recognized a total of $160.0 million in milestone payments and $100.1 million
royalties on net sales pursuant to the SMA License Agreement. As of
June 30, 2022, there are no remaining research and development event milestones
that we can receive. The remaining potential sales milestones as of
June 30, 2022 are $300.0 million upon achievement of certain sales events.

For the three months ended June 30, 2022 and 2021, we did not recognize
collaboration revenue related to the SMA License Agreement with Roche. For the
six months ended June 30, 2022 and 2021, we recognized $0.0 million and $20.0
million of collaboration revenue related to the SMA License Agreement with
Roche, respectively.  The first commercial sale of Evrysdi in the EU was made in
March 2021. This event triggered a $20.0 million milestone payment to us from
Roche for the six months ended June 30, 2021.

For the three months ended June 30, 2022 and 2021, we have recognized $21.8 million and $13.6 million of royalty revenue, respectively, related to Evrysdi.

For the six months ended June 30, 2022 and 2021, we have recognized $40.7 million and $20.2 million of royalty revenue, respectively, related to Evrysdi.

Pursuant to the Royalty Purchase Agreement, we sold to RPI 42.933%, or the
Assigned Royalty Payment, of our right to receive sales-based royalty payments,
or the Royalty, on worldwide net sales of Evrysdi and any other product
developed pursuant to the SMA License Agreement in consideration for $650.0
million. We have retained a 57.067% interest in the Royalty and all economic
rights to receive the remaining potential regulatory and sales milestone
payments under the SMA License Agreement. The Royalty Purchase Agreement will
terminate 60 days following the earlier of the date on which Roche is no longer
obligated to make any payments of the Royalty pursuant to the SMA License
Agreement and the date on which RPI has received $1.3 billion in respect of the
Assigned Royalty Payment.

Research and development expense

Research and development expenses consist of the costs associated with our
research activities, as well as the costs associated with our drug discovery
efforts, conducting preclinical studies and clinical trials, manufacturing
development efforts and activities related to regulatory filings. Our research
and development expenses consist of:

?external research and development expenses incurred under agreements with third-party contract research organizations and investigative sites, third-party manufacturing organizations and consultants;

?employee-related expenses, which include salaries and benefits, including share-based compensation, for the personnel involved in our drug discovery and development activities; and

?facilities, depreciation and other allocated expenses, which include direct and
allocated expenses for rent and maintenance of facilities, IT, human resources
and other support functions, depreciation of leasehold improvements and
equipment, and laboratory and other supplies.

                                       47

Table of Contents

We use our employee and infrastructure resources across multiple research projects, including our drug development programs. We track expenses related to our clinical programs and certain preclinical programs on a per project basis.

We expect our research and development expenses to fluctuate in connection with
our ongoing activities, particularly in connection with Study 041 and other
studies for Translarna for the treatment of nmDMD, our activities under our
splicing, gene therapy, Bio-e, metabolic and oncology programs and our studies
of emvododstat for COVID-19 and performance of our post-marketing requirements
imposed by regulatory agencies with respect to our products. The timing and
amount of these expenses will depend upon the outcome of our ongoing clinical
trials and the costs associated with our planned clinical trials. The timing and
amount of these expenses will also depend on the costs associated with potential
future clinical trials of our products or product candidates and the related
expansion of our research and development organization, regulatory requirements,
advancement of our preclinical programs, and product and product candidate
manufacturing costs.

The following tables provide research and development expense for our most advanced principal product development programs, for the three and six months ended June 30, 2022 and 2021.

                                     Three Months Ended June 30,
                                       2022                2021

                                            (in thousands)
Global DMD Franchise              $       17,111      $       17,887
Metabolic                                 15,184              10,476
Gene Therapy                              49,556              35,619
Bio-e                                     12,880              14,863
Oncology                                   8,979               3,625
Splicing                                  18,355              12,008
Emvododstat for COVID-19                   7,459               9,273
Discovery                                 27,739              21,731

Total research and development $ 157,263 $ 125,482

                                     Six Months Ended June 30,
                                       2022               2021

                                           (in thousands)
Global DMD Franchise              $       34,692     $       36,258
Metabolic                                 30,974             23,665
Gene Therapy                              91,547             76,585
Bio-e                                     27,612             30,198
Oncology                                  15,199              7,453
Splicing                                  33,076             24,115
Emvododstat for COVID-19                   9,831             21,489
Discovery                                 54,410             40,232

Total research and development $ 297,341 $ 259,995

The successful development of our products and product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with developing drugs, including the uncertainty of:

? the scope, rate of progress and expense of our clinical trials and other

research and development activities;

? the potential benefits of our products and product candidates over other

therapies;

our ability to market, commercialize and achieve market acceptance for any of

? our products or product candidates that we are developing or may develop in the

   future, including our ability to negotiate pricing and reimbursement terms
   acceptable to us;


                                       48

  Table of Contents

 ? clinical trial results;

? the terms and timing of regulatory approvals; and

? the expense of filing, prosecuting, defending and enforcing patent claims and

other intellectual property rights.

A change in the outcome of any of these variables with respect to the
development of our products or product candidates could mean a significant
change in the costs and timing associated with the development of that product
or product candidate. For example, if the EMA or FDA or other regulatory
authority were to require us to conduct clinical trials beyond those which we
currently anticipate will be required for the completion of clinical development
of any of our products or product candidates or if we experience significant
delays in enrollment in any of our clinical trials, we could be required to
expend significant additional financial resources and time on the completion of
clinical development. In addition, the uncertainty with respect to the duration,
nature and extent of negative impacts of the COVID-19 pandemic and responsive
measures relating thereto on our ability to successfully enroll our current and
future clinical trials, has caused us to experience delays, and may cause us to
experience further delays, in our clinical trials and regulatory submissions.

Selling, general and administrative expense

Selling, general and administrative expenses consist primarily of salaries and
other related costs for personnel, including share-based compensation expenses,
in our executive, legal, business development, commercial, finance, accounting,
information technology and human resource functions. Other selling, general and
administrative expenses include facility-related costs not otherwise included in
research and development expense; advertising and promotional expenses; costs
associated with industry and trade shows; and professional fees for legal
services, including patent-related expenses, accounting services and
miscellaneous selling costs.

We expect that selling, general and administrative expenses will increase in
future periods in connection with our continued efforts to commercialize our
products, including increased payroll, expanded infrastructure, commercial
operations, increased consulting, legal, accounting and investor relations
expenses.

Interest expense, net

Interest expense, net consists of interest expense from the liability for the
sale of future royalties related to the Royalty Purchase Agreement, and from the
Convertible Notes outstanding.

Critical accounting policies and significant judgments and estimates

Our management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which we have prepared in
accordance with generally accepted accounting principles in the United States.
The preparation of these financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported revenues and expenses during the reporting
periods. Actual results may differ from these estimates under different
assumptions or conditions.

During the three and six months ended June 30, 2022, there were no material changes to our critical accounting policies as reported in our 2021 Annual Report on Form 10-K.

                                       49

  Table of Contents

Results of operations

Three months ended June 30, 2022 compared to three months ended June 30, 2021

The following table summarizes revenues and selected expense and other income data for the three months ended June 30, 2022 and 2021.

                                                      Three Months Ended
                                                          June 30,                 Change
(in thousands)                                        2022          2021        2022 vs. 2021
Net product revenue                                $  143,701    $  103,113    $        40,588
Royalty revenue                                        21,825        13,563              8,262
Cost of product sales, excluding amortization
of acquired intangible asset                            9,639         7,358              2,281
Amortization of acquired intangible asset              26,294        12,751             13,543
Research and development expense                      157,263       125,482             31,781
Selling, general and administrative expense            79,892        68,878             11,014
Change in the fair value of deferred and
contingent consideration                             (15,200)           700           (15,900)
Interest expense, net                                (21,976)      (22,559)                583
Other (expense) income, net                          (34,357)         3,170           (37,527)
Income tax expense                                    (3,392)         (488)            (2,904)


Net product revenues. Net product revenues were $143.7 million for the
three months ended June 30, 2022, an increase of $40.6 million, or 39%, from
$103.1 million for the three months ended June 30, 2021. The increase in net
product revenue was primarily due to an increase in net product sales of
Translarna and Emflaza. Translarna net product revenues were $77.0 million for
the three months ended June 30, 2022, an increase of $24.4 million, or 46%,
compared to $52.6 million for the three months ended June 30, 2021. These
results reflect an increase in net product sales in existing markets as well as
continued geographic expansion. Emflaza net product revenues were $56.8 million
for the three months ended June 30, 2022, an increase of $7.7 million, or 16%,
compared to $49.1 million for the three months ended June 30, 2021. These
results reflect continued addition of new patients, broader access, continued
high compliance, and appropriate weight-based dosing.

Royalty revenue. Royalty revenue was $21.8 million for the three months ended
June 30, 2022, an increase of $8.3 million, or 61%, from $13.6 million for the
three months ended June 30, 2021. The increase in royalty revenue was due to
higher Evrysdi sales in the three months ended June 30, 2022 as compared to the
three months ended June 30, 2021. In accordance with the SMA License Agreement,
we are entitled to royalties on worldwide annual net sales of the product.

Cost of product sales, excluding amortization of acquired intangible asset. Cost
of product sales, excluding amortization of acquired intangible asset, were $9.6
million for the three months ended June 30, 2022, an increase of $2.3 million,
or 31%, from $7.4 million for the three months ended June 30, 2021. Cost of
product sales consist primarily of royalty payments associated with Emflaza and
Translarna net product sales, excluding contingent payments to Marathon
Pharmaceuticals, LLC (now known as Complete Pharma Holdings, LLC), or Marathon,
costs associated with Emflaza and Translarna product sold during the period, and
royalty expense related to royalty revenues and collaboration milestone
revenues. The increase in cost of product sales, excluding amortization of
acquired intangible asset, is primarily due to the increase in net product
revenue and royalty revenue.

Amortization of acquired intangible asset. Amortization of our intangible assets
was $26.3 million for the three months ended June 30, 2022, an increase of $13.5
million, or over 100%, from $12.8 million for the three months ended
June 30, 2021. These amounts are related to the acquisition of all rights to
Emflaza acquired in May 2017, Marathon contingent payments, and our Waylivra and
Tegsedi intangible assets. The increase is primarily related to additional
Marathon contingent payments. The amount allocated to the Emflaza intangible
asset is amortized on a straight-line basis over its estimated useful life of
approximately seven years from the date of the completion of the acquisition of
all rights to Emflaza, the period of estimated future cash flows. The Marathon
contingent payments, including a $50.0 million contingent payment made in March
2022, are amortized prospectively as incurred, straight-line, over the remaining
useful

                                       50

  Table of Contents

life of the Emflaza intangible asset. The Waylivra and Tegsedi assets are
amortized on a straight-line basis over their estimated useful life of
approximately ten years, respectively. Additionally, in August 2021, we made a
$4.0 million milestone payment to Akcea upon regulatory approval of Waylivra
from ANVISA. In accordance with the guidance for an asset acquisition, we
recorded the milestone payment when it became payable to Akcea, and it increased
the cost basis for the Waylivra intangible asset.  This payment is being
amortized to cost of product sales over the expected remaining useful life of
the Waylivra asset on a straight line basis.

Research and development expense. Research and development expense was $157.3
million for the three months ended June 30, 2022, an increase of $31.8 million,
or 25%, from $125.5 million for the three months ended June 30, 2021. The
increase in research and development expenses is primarily related to increased
investment in research programs and advancement of the clinical pipeline.

Selling, general and administrative expense. Selling, general and administrative
expense was $79.9 million for the three months ended June 30, 2022, an increase
of $11.0 million, or 16%, from $68.9 million for the three months ended
June 30, 2021.  The increase reflects our continued investment to support our
commercial activities including our expanding commercial portfolio.

Change in the fair value of deferred and contingent consideration. The change in
the fair value of deferred and contingent consideration was a gain of $15.2
million for the three months ended June 30, 2022, a change of $15.9 million, or
over 100%, from a loss of $0.7 million for the three months ended June 30, 2021.
The change is related to the fair valuation of the potential future
consideration to be paid to former equityholders of Agilis as a result of our
merger with Agilis which closed in August 2018. Changes in the fair value were
due to the re-calculation of discounted cash flows for the passage of time and
changes to certain other estimated assumptions.

Interest expense, net. Interest expense, net was $22.0 million for the
three months ended June 30, 2022, a decrease of $0.6 million, or 3%, from $22.6
million for the three months ended June 30, 2021. The decrease in interest
expense, net was primarily due to interest expense recorded from the liability
for the sale of future royalties related to the Royalty Purchase Agreement.

Other (expense) income, net. Other expense, net was $34.4 million for the
three months ended June 30, 2022, a change of $37.5 million, or over 100%, from
other income, net of $3.2 million for the three months ended June 30, 2021. The
change in other (expense) income, net resulted primarily from an unrealized
foreign exchange loss from the remeasurement of our intercompany loan, offset by
unrealized gains on our equity investments and convertible debt security in
ClearPoint Neuro, Inc. of $3.4 million and $3.5 million, respectively.

Income tax expense. Income tax expense was $3.4 million for the three months
ended June 30, 2022, an increase of $2.9 million, or over 100%, compared to
income tax expense of $0.5 million for the three months ended June 30, 2021. The
increase in income tax expense is primarily attributable to the capitalization
and amortization of Section 174 expenditures which took effect in 2022 pursuant
to TCJA amendments to IRC Section 174. We incur income tax expense in various
foreign jurisdictions, and our foreign tax liabilities are largely dependent
upon the distribution of pre-tax earnings among these different jurisdictions.

                                       51

  Table of Contents

Six months ended June 30, 2022 compared to six months ended June 30, 2021

The following table summarizes revenues and selected expense and other income data for the six months ended June 30, 2022 and 2021.

                                                                                   Six Months Ended
                                                                                      June 30,                 Change
(in thousands)                                                                    2022          2021        2022 vs. 2021
Net product revenue                                                            $  273,534    $  194,393    $        79,141
Collaboration revenue                                                                   7        20,007           (20,000)
Royalty revenue                                                                    40,721        20,220             20,501

Cost of product sales, excluding amortization of acquired intangible assets        19,774        16,462              3,312
Amortization of acquired intangible assets                                         49,767        24,028             25,739
Research and development expense                                                  297,341       259,995             37,346
Selling, general and administrative expense                                       153,162       129,973             23,189
Change in the fair value of deferred and contingent consideration          

     (26,900)           800           (27,700)
Interest expense, net                                                            (45,490)      (41,718)            (3,772)
Other expense, net                                                               (46,214)       (7,716)           (38,498)
Income tax expense                                                                (8,227)         (940)            (7,287)

Net product revenues. Net product revenues were $273.5 million for the six
months ended June 30, 2022, an increase of $79.1 million, or 41%, from $194.4
million for the six months ended June 30, 2021. The increase in net product
revenue was primarily due to an increase in net product sales of Translarna and
Emflaza. Translarna net product revenues were $156.2 million for the six months
ended June 30, 2022, an increase of $57.1 million, or 58%, compared to $99.1
million for the six months ended June 30, 2021. These results reflect an
increase in net product sales in existing markets as well as continued
geographic expansion. Emflaza net product revenues were $105.4 million for the
six months ended June 30, 2022, an increase of $12.7 million, or 14%, compared
to $92.7 million for the six months ended June 30, 2021. These results reflect
continued addition of new patients, broader access, continued high compliance,
and appropriate weight-based dosing.

Collaboration revenues. Collaboration revenues was $0.0 million for the six
months ended June 30, 2022, a decrease of $20.0 million, or 100%, from $20.0
million for the six months ended June 30, 2021. The decrease is due to a $20.0
million milestone that was triggered from Roche in the six months ended June 30,
2021 relating to the first commercial sale of Evrysdi in the EU, which was made
in March 2021. No milestones were triggered in the six months ended June 30,
2022.

Royalty revenue. Royalty revenue was $40.7 million for the six months ended
June 30, 2022, an increase of $20.5 million, or over 100%, from $20.2 million
for the six months ended June 30, 2021. The increase in royalty revenue was due
to higher Evrysdi sales in the six months ended June 30, 2022 as compared to the
six months ended June 30, 2021. In accordance with the SMA License Agreement, we
are entitled to royalties on worldwide annual net sales of the product.

Cost of product sales, excluding amortization of acquired intangible asset. Cost
of product sales, excluding amortization of acquired intangible asset, were
$19.8 million for the six months ended June 30, 2022, an increase of $3.3
million, or 20%, from $16.5 million for the six months ended June 30, 2021. Cost
of product sales consist primarily of royalty payments associated with Emflaza
and Translarna net product sales, excluding contingent payments to Marathon,
costs associated with Emflaza and Translarna product sold during the period, and
royalty expense related to royalty revenues and collaboration milestone
revenues. The increase in cost of product sales, excluding amortization of
acquired intangible asset, is primarily due to the increase in net product
revenue, royalty revenue, and collaboration milestone revenue.

Amortization of acquired intangible asset. Amortization of our intangible assets
was $49.8 million for the six months ended June 30, 2022, an increase of $25.7
million, or over 100%, from $24.0 million for the six months ended
June 30, 2021. These amounts are related to the acquisition of all rights to
Emflaza acquired in May 2017, Marathon contingent payments, and our Waylivra and
Tegsedi intangible assets. The increase is primarily related to additional
Marathon contingent payments. The amount allocated to the Emflaza intangible
asset is amortized on a straight-line basis

                                       52

Table of Contents

over its estimated useful life of approximately seven years from the date of the
completion of the acquisition of all rights to Emflaza, the period of estimated
future cash flows. The Marathon contingent payments, including a $50.0 million
contingent milestone payment made in the six months ended June 30, 2022, are
amortized prospectively as incurred, straight-line, over the remaining useful
life of the Emflaza intangible asset. The Waylivra and Tegsedi assets are
amortized on a straight-line basis over their estimated useful life of
approximately ten years, respectively.

Research and development expense. Research and development expense was $297.3
million for the six months ended June 30, 2022, an increase of $37.3 million, or
14%, from $260.0 million for the six months ended June 30, 2021. The increase in
research and development expenses is primarily related to increased investment
in research programs and advancement of the clinical pipeline.

Selling, general and administrative expense. Selling, general and administrative
expense was $153.2 million for the six months ended June 30, 2022, an increase
of $23.2 million, or 18%, from $130.0 million for the six months ended
June 30, 2021. The increase reflects our continued investment to support our
commercial activities including our expanding commercial portfolio

Change in the fair value of deferred and contingent consideration. The change in
the fair value of deferred and contingent consideration was a gain of $26.9
million for the six months ended June 30, 2022, a change of $27.7 million, or
over 100%, from a loss of $0.8 million for the six months ended June 30, 2021.
The change is related to the fair valuation of the potential future
consideration to be paid to former equityholders of Agilis as a result of our
merger with Agilis which closed in August 2018. Changes in the fair value were
due to the re-calculation of discounted cash flows for the passage of time and
changes to certain other estimated assumptions.

Interest expense, net. Interest expense, net was $45.5 million for the six months ended June 30, 2022, an increase of $3.8 million, or 9%, from $41.7 million for the six months ended June 30, 2021. The increase in interest expense, net was primarily due to additional interest expense recorded from the 2026 Convertible Notes and interest income from our investments.

Other expense, net. Other expense, net was $46.2 million for the six months ended June 30, 2022, an increase of $38.5 million, or over 100%, from other expense, net of $7.7 million for the six months ended June 30, 2021. The increase in other expense, net resulted primarily from an unrealized foreign exchange loss from the remeasurement of our intercompany loan, offset by unrealized gains on our equity investments and convertible debt security in ClearPoint Neuro, Inc. of $2.4 million and $2.0 million, respectively.

Income tax expense. Income tax expense was $8.2 million for the six months ended
June 30, 2022, an increase of $7.3 million, or over 100%, compared to income tax
expense of $0.9 million for the six months ended June 30, 2021. We incurred
income tax expense in various foreign jurisdictions, and our foreign tax
liabilities are largely dependent upon the distribution of pre-tax earnings
among these different jurisdictions.

Liquidity and capital resources

Sources of liquidity

Since inception, we have incurred significant operating losses.

As a growing commercial-stage biopharmaceutical company, we are engaging in
significant commercialization efforts for our products while also devoting a
substantial portion of our efforts on research and development related to our
products, product candidates and other programs. To date, our product revenue
has been primarily attributable to sales of Translarna for the treatment of
nmDMD in territories outside of the United States and from Emflaza for the
treatment of DMD in the United States. Our ongoing ability to generate revenue
from sales of Translarna for the treatment of nmDMD is dependent upon our
ability to maintain our marketing authorizations in Brazil, Russia and in the
EEA and secure market access through commercial programs following the
conclusion of pricing and reimbursement terms at sustainable levels in the
member states of the EEA or through EAP Programs in the EEA and other
territories. The marketing authorization requires annual review and renewal by
the European Commission following reassessment by the EMA of the benefit-risk
balance

                                       53

  Table of Contents

of the authorization and is subject to the specific obligation to conduct Study
041. Our ability to generate product revenue from Emflaza will largely depend on
the coverage and reimbursement levels set by governmental authorities, private
health insurers and other third-party payors.

We have historically financed our operations primarily through the issuance and
sale of our common stock in public offerings, our "at the market offering" of
our common stock, proceeds from the Royalty Purchase Agreement, the private
placements of our preferred stock, collaborations, bank and institutional lender
debt, convertible debt financings and grants and clinical trial support from
governmental and philanthropic organizations and patient advocacy groups in the
disease areas addressed by our product candidates. We expect to continue to
incur significant expenses and operating losses for at least the next fiscal
year. The net losses we incur may fluctuate significantly from quarter to
quarter.

In August 2015, we closed a private offering of $150.0 million in aggregate
principal amount of 3.00% convertible senior notes due 2022 including the
exercise by the initial purchasers of an option to purchase an additional $25.0
million in aggregate principal amount of the 2022 Convertible Notes. The 2022
Convertible Notes bear cash interest payable on February 15 and August 15 of
each year, beginning on February 15, 2016. The 2022 Convertible Notes are senior
unsecured obligations of ours and will mature on August 15, 2022, unless earlier
converted, redeemed or repurchased in accordance with their terms prior to such
date. We received net proceeds from the offering of approximately $145.4
million, after deducting the initial purchasers' discounts and commissions and
the estimated offering expenses payable by us.

In August 2019, we entered into the Sales Agreement, pursuant to which, we may
offer and sell shares of our common stock, having an aggregate offering price of
up to $125.0 million from time to time through the Sales Agents by any method
that is deemed to be an "at the market offering" as defined in
Rule 415(a)(4) promulgated under the Securities Act. See "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Corporate Updates-Funding" for additional information.

In September 2019, we closed a private offering of $287.5 million aggregate
principal amount of 1.50% convertible senior notes due 2026 including the full
exercise by the initial purchasers of an option to purchase an additional $37.5
million in aggregate principal amount of the 2026 Convertible Notes. The 2026
Convertible Notes bear cash interest at a rate of 1.50% per year, payable
semi-annually on March 15 and September 15 of each year, beginning on March 15,
2020. The 2026 Convertible Notes will mature on September 15, 2026, unless
earlier repurchased or converted. We received net proceeds of $279.3 million
after deducting the initial purchasers' discounts and commissions and the
offering expenses payable by us.

In July 2020, we entered into the Royalty Purchase Agreement. Pursuant to the Royalty Purchase Agreement, we sold to RPI the Assigned Royalty Payment in consideration for $650.0 million.

Cash flows

As of June 30, 2022, we had cash, cash equivalents and marketable securities of $505.5 million.

The following table provides information regarding our cash flows and our capital expenditures for the periods indicated.

                                  Six Months Ended
                                     June 30,
(in thousands)                   2022         2021
Cash (used in) provided by:
Operating activities           (152,646)    (131,302)
Investing activities             121,297       86,204
Financing activities               5,029       13,547

Net cash used in operating activities was $152.6 million for the six months ended June 30, 2022 and $131.3 million for the six months ended June 30, 2021. The net cash used in operating activities primarily relates to supporting clinical development and commercial activities.

                                       54

Table of Contents

Net cash provided by investing activities was $121.3 million for the six months
ended June 30, 2022 and $86.2 million for the six months ended June 30, 2021.
Cash provided by investing activities for the six months ended June 30, 2022 and
2021 were primarily related net sales and redemption of marketable securities,
partially offset by purchases of marketable securities, purchases of fixed
assets and the acquisition of product rights.

Net cash provided by financing activities was $5.0 million for the six months
ended June 30, 2022 and $13.5 million for the six months ended June 30, 2021.
Cash provided by financing activities for the six months ended June 30, 2022 and
2021 were primarily attributable to cash received from the exercise of options
and proceeds from our Employee Stock Purchase Plan partially offset by payments
on our finance lease principal.

Funding requirements

We anticipate that our expenses will continue to increase in connection with our
commercialization efforts in the United States, the EEA, Latin America and other
territories, including the expansion of our infrastructure and corresponding
sales and marketing, legal and regulatory, distribution and manufacturing and
administrative and employee-based expenses. In addition to the foregoing, we
expect to continue to incur significant costs in connection with the research
and development of our splicing, gene therapy, Bio-e, metabolic and oncology
programs and our studies of emvododstat for COVID-19 as well as studies in our
products for maintaining authorizations, including Study 041, label extensions
and additional indications. In addition, we may incur substantial costs in
connection with our efforts to advance our regulatory submissions. We continue
to seek marketing authorization for Translarna for the treatment of nmDMD in
territories that we do not currently have marketing authorization in. We are
preparing a BLA for Upstaza for the treatment of AADC deficiency in the United
States and we expect to submit a BLA to the FDA in the fourth quarter of 2022.
We filed for marketing authorization for Waylivra with ANVISA for the treatment
of FPL and we expect a regulatory decision on approval from ANVISA in the second
half of 2022. These efforts may significantly impact the timing and extent of
our commercialization expenses.

In addition, our expenses will increase if and as we:

? seek to satisfy contractual and regulatory obligations we assumed in connection

with the Agilis Merger;

? seek to satisfy contractual and regulatory obligations in conjunction with the

Tegsedi-Waylivra Agreement;

? satisfy contractual and regulatory obligations that we assumed through our

other acquisitions and collaborations;

? execute our commercialization strategy for our products and product candidates

that may receive marketing authorization;

are required to complete any additional clinical trials, non-clinical studies

? or Chemistry, Manufacturing and Controls, or CMC, assessments or analyses in

order to advance Translarna for the treatment of nmDMD in the United States or

elsewhere;

? utilize the Hopewell Facility to manufacture program materials for certain of

our gene therapy product candidates;

initiate or continue the research and development of our splicing, gene

? therapy, Bio-e, metabolic and oncology programs and our studies of emvododstat

for COVID-19 as well as studies in our products for maintaining authorizations,

including Study 041, label extensions and additional indications;

? seek to discover and develop additional product candidates;

? seek to expand and diversify our product pipeline through strategic

transactions;

? maintain, expand and protect our intellectual property portfolio; and

                                       55

  Table of Contents

add operational, financial and management information systems and personnel,

? including personnel to support our product development and commercialization

efforts.

We believe that our cash flows from product sales, together with existing cash
and cash equivalents, including our offerings of the Convertible Notes, public
offerings of common stock, our "at the market offering" of our common stock,
proceeds from the Royalty Purchase Agreement and marketable securities, will be
sufficient to fund our operating expenses and capital expenditure requirements
for at least the next twelve months. We have based this estimate on assumptions
that may prove to be wrong, and we could use our capital resources sooner than
we currently expect.

Our future capital requirements will depend on many factors, including:

? our ability to commercialize and market our products and product candidates

that may receive marketing authorization;

our ability to negotiate, secure and maintain adequate pricing, coverage and

? reimbursement terms, on a timely basis, with third-party payors for our

products and products candidates;

our ability to maintain the marketing authorization for our products, including

in the EEA for Translarna for the treatment of nmDMD and whether the EMA

? determines on an annual basis that the benefit-risk balance of Translarna

supports renewal of our marketing authorization in the EEA, on the current

approved label;

? the costs, timing and outcome of Study 041;

the costs, timing and outcome of our efforts to advance Translarna for the

treatment of nmDMD in the United States, including, whether we will be required

? to perform additional clinical trials, non-clinical studies or CMC assessments

or analyses at significant cost which, if successful, may enable FDA review of

an NDA re-submission by us and, ultimately, may support approval of Translarna

for nmDMD in the United States;

? unexpected decreases in revenue or increases in expenses resulting from the

COVID-19 pandemic;

? our ability to maintain orphan exclusivity in the United States for Emflaza;

? our ability to successfully complete all post-marketing requirements imposed by

regulatory agencies with respect to our products;

the progress and results of activities under our splicing, gene therapy, Bio-e,

? metabolic and oncology programs and our studies of emvododstat for COVID-19 as

   well as studies in our products for maintaining authorizations, label
   extensions and additional indications;

the scope, costs and timing of our commercialization activities, including

product sales, marketing, legal, regulatory, distribution and manufacturing,

? for any of our products and for any of our other product candidates that may

receive marketing authorization or any additional territories in which we

receive authorization to market Translarna;

the costs, timing and outcome of regulatory review of our splicing, gene

? therapy, Bio-e, metabolic and oncology programs and our studies of emvododstat

for COVID-19 and Translarna in other territories;

? our ability to utilize the Hopewell Facility to manufacture program materials

for certain of our gene therapy product candidates;

? our ability to satisfy our obligations under the indentures governing the

Convertible Notes;

? the timing and scope of growth in our employee base;

                                       56

  Table of Contents

the scope, progress, results and costs of preclinical development, laboratory

? testing and clinical trials for our other product candidates, including those

   in our splicing, gene therapy, Bio-e, metabolic and oncology programs;

? revenue received from commercial sales of our products or any of our product

candidates;

our ability to obtain additional and maintain existing reimbursed named patient

? and cohort EAP Programs for Translarna for the treatment of nmDMD on adequate

terms, or at all;

the ability and willingness of patients and healthcare professionals to access

? Translarna through alternative means if pricing and reimbursement negotiations

in the applicable territory do not have a positive outcome;

the costs of preparing, filing and prosecuting patent applications,

? maintaining, and protecting our intellectual property rights and defending

against intellectual property-related claims;

the extent to which we acquire or invest in other businesses, products, product

candidates, and technologies, including the success of any acquisition,

? in-licensing or other strategic transaction we may pursue, and the costs of

subsequent development requirements and commercialization efforts, including

with respect to our acquisitions of Emflaza, Agilis, our Bio-E platform and

Censa and our licensing of Tegsedi and Waylivra; and

our ability to establish and maintain collaborations, including our

? collaborations with Roche and the SMA Foundation, and our ability to obtain

research funding and achieve milestones under these agreements.

With respect to our outstanding 2022 Convertible Notes, cash interest payments
are payable on a semi-annual basis in arrears, which require total funding of
$4.5 million annually. The 2022 Convertible Notes will mature on August 15, 2022
and we will be required to pay any outstanding principal amount of the 2022
Convertible Notes at that time, unless  earlier converted, redeemed or
repurchased in accordance with their terms prior to such date. As of February
15, 2022, until the close of business on the business day immediately preceding
the maturity date, holders may convert their 2022 Convertible Notes at any time.
Upon conversion, we will pay and deliver a combination of cash and shares of
common stock. With respect to our outstanding 2026 Convertible Notes, cash
interest payments are payable on a semi-annual basis in arrears, which will
require total funding of $4.3 million annually.

We are obligated to pay the former equityholders of Agilis $50.0 million as a
result of the European Commission's marketing approval of Upstaza for the
treatment of AADC deficiency in July 2022 and we expect to pay such former
equityholders an additional $20.0 million upon the acceptance for filing by the
FDA of a BLA for Upstaza for the treatment of AADC deficiency, which we expect
to occur in the fourth quarter of 2022. We also expect to pay the former
securityholders of Censa a $30.0 million development milestone for the
completion of enrollment of a Phase 3 clinical trial for PTC923 for PKU in 2022.
If achieved, we have the option to pay such milestone payment in cash or shares
of our common stock.

We also have certain significant contractual obligations and commercial
commitments that require funding and we have disclosed these items under the
heading "Management's Discussion and Analysis of Financial Condition and Results
of Operations-Funding requirements" in our 2021 Annual Report on Form 10-K. In
addition to those obligations previously disclosed, we entered into the Warren
Lease relating to the lease of two entire buildings comprised of approximately
360,000 square feet of shell condition, modifiable space at a facility located
in Warren, New Jersey. The rental term of the Warren Lease commenced on June 1,
2022, with an initial term of seventeen years followed by three consecutive
five-year renewal periods at our option. The aggregate base rent for the Initial
Term will be approximately $163.0 million; provided, however, that if we are not
subject to an Event of Default (as defined in the Warren Lease), we will be
entitled to a base rent abatement over the first three years of the Initial Term
of approximately $18.6 million, reducing our total base rent obligation to
$144.4 million. The rental rate for the renewal periods will be at the Fair
Market Rental Value (as defined in the Warren Lease) and determined at the time
of the exercise of the renewal. Beginning in the second lease year, we are also
responsible for the payment of all taxes and operating expenses for the
Premises. There were no other material changes to the contractual obligations
and commercial commitments set forth in our 2021 Annual Report on Form 10-K
during the period ended June 30, 2022. Furthermore, since we are a public
company, we have incurred and expect to

                                       57

Table of Contents

continue to incur additional costs associated with operating as such including significant legal, accounting, investor relations and other expenses.

We will need to generate significant revenues to achieve and sustain
profitability, and we may never do so. We may need to obtain substantial
additional funding in connection with our continuing operations. Until such
time, if ever, as we can generate substantial product revenues, we expect to
finance our cash needs primarily through a combination of equity offerings, debt
financings, collaborations, strategic alliances, grants and clinical trial
support from governmental and philanthropic organizations and patient advocacy
groups in the disease areas addressed by our product and product candidates and
marketing, distribution or licensing arrangements. Adequate additional financing
may not be available to us on acceptable terms, or at all. To the extent that we
raise additional capital through the sale of equity or convertible debt
securities, our shareholders ownership interest will be diluted, and the terms
of these securities may include liquidation or other preferences that adversely
affect the rights of our common stockholders. Debt financing, if available, may
involve agreements that include covenants limiting or restricting our ability to
take specific actions, such as incurring additional debt, making capital
expenditures or declaring dividends. If we raise additional funds through
collaborations, strategic alliances or marketing, distribution or licensing
arrangements with third parties, we may have to relinquish valuable rights to
our technologies, future revenue streams, research programs or product
candidates or to grant licenses on terms that may not be favorable to us.

If we are unable to raise additional funds through equity, debt or other
financings when needed or on attractive terms, we may be required to delay,
limit, reduce or terminate our product development or commercialization efforts
or grant rights to develop and market product candidates that we would otherwise
prefer to develop and market ourselves.

© Edgar Online, source Glimpses