PTC Therapeutics (NASDAQ:PTCT)

CAPS Rating: 1 out of 5

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Member Avatar zzlangerhans (99.82) Submitted: 6/26/2015 12:11:59 AM : Underperform Start Price: $51.68 PTCT Score: +7.44

My bear thesis on PTC hasn't changed over the last year, but I'm updating my pitch because I was able to close the last red thumb with a positive score. In addition, zzporte now has a real short position of 500 shares cost basis 47 courtesy of an exercise of put options that were out of the money this month.

Pivotal trials of ataluren, PTC's inducer of read-through in nonsense mutations, for Duchenne muscular dystrophy and ccystic fibrosis failed to meet their primary endpoints several years ago but the company claims the drug is effective based on post hoc analyses. The FDA refused to accept this Procrustean approach and demanded repeat phase III trials which are now in progress. Surprisingly, the EU was more lenient and allowed conditional approval of ataluren for DMD in mid 2014 after initially denying it. As of the last earnings report, 82 patients are being treated with ataluren in the EU and quarterly revenues were 5.1M. Topline data from the ACT DMD redo phase III trial is expected in Q4 2015, and the ACT CR redo phase III trial is expected to complete enrollment by the end of 2015. Failure in these trials will of course eliminate any hope of approval in the US and have a good chance of leading to revocation of approval in Europe. PTC does't have much else going for them except the 280M they've raised in dilutive financing, and the market cap is currently about 1.7 billion.

Feuerstein has kept up a drumbeat of pessimism on PTC and ataluren, reporting that the company was trying to sell itself last year despite the fact that positive results of the trials in progress would double or triple the company's value. Those sale rumors churned the share price upward to 78, but there turned out to be no buyers and the buyout speculators have left for now. In addition, the CEO's last automatic sale essentially liquidated his remaining stock holdings completely which can hardly be interpreted as a vote of confidence. The basic research validating ataluren's mechanism of action has been questioned, with published studies suggesting the entire phenomenon is an experimental artifact.

Being short and wrong on PTC could be very painful for our little portfolio, so we don't intend to be short when ACT DMD data is released. However, we do see the stock as vulnerable to corrections and having short positions provides a nice hedge for the ever-present threat of corrections.

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Member Avatar OklaBoston (61.12) Submitted: 6/6/2015 5:42:06 AM : Underperform Start Price: $56.00 PTCT Score: +15.49

Deteriorating techs, insider open market selling and a rising deficit, in addition to a P/Sales over 80.

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Member Avatar noataluren (< 20) Submitted: 5/28/2014 12:49:44 PM : Underperform Start Price: $23.38 PTCT Score: -91.95

As a former PTC employee, this recommendation for conditional approval is a joke. None of the data are strong. The improvement for the 40 mg/kg/day dose over placebo was significant (after eliminating 2 patients whose baseline data was faulty) in the DMD trial, however the results from the higher 80 mg/kg/day dose almost perfectly matched the placebo. Moreover, the CF Phase 3 trial was not only negative on the primary endpoint, but also on pretty much all the secondaries. Most importantly, the endpoint that was the primary in the Phase 2 studies in CF, used to show proof of concept, was highly nonsignificant in the Phase 3 study. Don't be surprised to see this one land flat on its face.

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