Blog Coverage PTC Therapeutics Acquires Rights for Duchenne Muscular Dystrophy Drug from Marathon for $140 Million Upfront
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LONDON, UK / ACCESSWIRE / March 17, 2017 / Active Wall St. blog coverage looks at the headline from PTC Therapeutics, Inc. (NASDAQ: PTCT) as the Company announced on March 16, 2017, that it has entered into an asset purchase agreement with Marathon Pharmaceuticals, LLC to acquire all rights to Emflaza™ (deflazacort) for $140 million upfront. Emflaza is the first treatment approved in the United States for all Duchenne muscular dystrophy (DMD) patients five years and older, regardless of their genetic mutation. Register with us now for your free membership and blog access at:
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"With our nearly 20-year commitment to the Duchenne community, it is deeply meaningful for us to bring this critical therapy to US patients," said Stuart W. Peltz, Ph.D., Chief Executive Officer of PTC Therapeutics, Inc., "We believe Emflaza is a disease-modifying therapy that has been shown to slow disease progression. In keeping with PTC's mission, we are excited to work with the community to raise the standard of care for DMD patients."
About Duchenne Muscular Dystrophy
Primarily affecting males, Duchenne muscular dystrophy (DMD) is a rare and fatal genetic disorder that results in progressive muscle weakness from early childhood and leads to premature death in the mid-twenties due to heart and respiratory failure. It is a progressive muscle disorder caused by the lack of functional dystrophin protein. Dystrophin is critical to the structural stability of skeletal, diaphragm, and heart muscles. Patients with DMD, the more severe form of the disorder, can lose the ability to walk as early as age ten, followed by loss of the use of their arms. DMD patients subsequently experience life-threatening lung complications, requiring the need for ventilation support, and heart complications in their late teens and twenties. DMD treatment guidelines recommend steroids as a foundational component of the standard of care. Emflaza reduces inflammation, which is critical to preserving muscle function and delaying disease progression. It received FDA approval on February 09, 2017 and has the potential to benefit many DMD patients in the US. However, the drug has been available outside the United States for decades.
Transaction Overview
Under terms of the asset purchase agreement, PTC will pay Marathon Pharma a total upfront consideration of $140 million upon completion of the transaction, which is comprised of approximately $75 million in cash and approximately $65 million in PTC's common stock, subject to a maximum 6.9 million share limit (with any shortfall to be made whole with additional cash consideration). Marathon is also entitled to receive payments from PTC based on annual net sales of Emflaza beginning in 2018, which PTC expects will range between the low to mid-20s as a percentage of net sales on a blended average basis. In addition, Marathon has the opportunity to receive a single $50 million sales-based milestone.
The transaction is expected to be accretive to both earnings and cash flow beginning in 2018. It is also anticipated to close in Q2 2017, subject to customary closing conditions, including receipt of clearance under the Hart-Scott-Rodino Act.
Pricing Problem
Privately held Marathon Pharma had suspended the launching of Emflaza post receiving the FDA's approval in February. That decision came after the Company was sharply criticized for setting a hefty price tag of $89,000 per patient per year. The drug is available globally for as little as $0.60 per pill, and importing it from Canada or the UK would have cost approximately $1,000 to $2,000 a year.
Stock Performance
At the close of trading session on Thursday, March 16, 2017, following the announcement, PTC Therapeutics' share price finished yesterday's trading session at $8.84, tumbling 18.90%. A total volume of 5.18 million shares exchanged hands, which was higher than the 3 months average volume of 1.03 million shares. The stock has advanced 61.31% in the past twelve months. At Thursday's closing price, the stock's net capitalization stands at $294.55 million.
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