PTC THERAPEUTICS, INC. (PTCT)

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 Annual Report on Form 10-K. 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 I, Item 1A. Risk Factors, of this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements.

We are a global biopharmaceutical company that discovers, develops and commercializes clinically differentiated medicines that provide benefits to children and adults living 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 little to 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 diversified therapeutic portfolio 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 relating to neurology and metabolism.

We have two products, TranslarnaTM (ataluren) and Emflaza® (deflazacort), for the treatment of Duchenne muscular dystrophy, or DMD, a rare, life threatening disorder. Translarna currently has conditional marketing authorization in the European Economic Area, or EEA, for the treatment of nonsense mutation Duchenne muscular dystrophy, or nmDMD, in ambulatory patients aged two years and older. Translarna also has marketing authorization in Russia for the treatment of

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nmDMD in patients aged two years and older, and in Brazil for the treatment of nmDMD in ambulatory patients two years and older and for continued treatment of patients that become non-ambulatory, as well as in various other countries. During the year ended December 31, 2024, we recognized $339.9 million in sales of 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 year ended December 31, 2024, Emflaza achieved net sales of $207.2 million.

Our marketing authorization for Translarna in the EEA is subject to annual review and renewal by the European Commission, or EC, 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 September 2022, we submitted a Type II variation to the EMA to support conversion of the conditional marketing authorization for Translarna to a standard marketing authorization, which included a report on the placebo-controlled trial of Study 041 and data from the open-label extension as further described below. Study 041 was an 18-month, placebo-controlled trial, followed by an 18-month open-label extension of Translarna in the treatment of ambulatory patients with nmDMD aged five years or older. In February 2023, we also submitted an annual marketing authorization renewal request to the EMA. In September 2023, the Committee for Medicinal Products for Human Use, or CHMP, gave a negative opinion on the conversion of the conditional marketing authorization to full marketing authorization of Translarna for the treatment of nmDMD and a negative opinion on the renewal of the existing conditional marketing authorization of Translarna for the treatment of nmDMD. In January 2024, the CHMP issued a negative opinion for the renewal of the conditional marketing authorization following a re-examination procedure. In May 2024, the EC decided not to adopt the CHMP’s negative opinion for the renewal of the conditional marketing authorization of Translarna and returned such opinion to the CHMP for re-evaluation. In June 2024, following the EC’s request for re-review, the CHMP issued a negative opinion on the renewal of the conditional marketing authorization of Translarna for the treatment of nmDMD. On October 18, 2024, the CHMP maintained its negative opinion for the renewal of the conditional marketing authorization following the requested reexamination procedure. In accordance with EMA regulations, the EC has 67 days from the date of issuance to adopt the opinion. At this time, the EC has not yet adopted the negative opinion. If the EC adopts the negative opinion, Translarna would no longer have marketing authorization in the member states of the EEA. The marketing authorization for Translarna remains in effect, pending the EC’s potential adoption of the negative opinion.

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, or similar styled 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 the EC adopts the CHMP’s negative opinion, or we are otherwise unable to renew our EEA marketing authorization during any annual renewal cycle, or we are unable to identify other potential mechanisms in which we may provide Translarna to nmDMD patients in the EEA should the EC adopts the CHMP’s negative opinion or our product label is materially restricted, we would lose all, or a significant portion of, our ability to generate revenue from sales of Translarna in the EEA and other territories. For more information regarding the risks associated with a potential EC adoption of the CHMP’s negative opinion on Translarna’s marketing authorization, see Item 1A. Risk Factors, “We may be unable to continue to commercialize Translarna for nmDMD in the EEA if the EC adopts the negative opinion issued by the CHMP for the renewal of the existing conditional authorization for Translarna.”

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, or CRL, 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 CRL. 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

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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. Following this announcement, we submitted a meeting request to the FDA to gain clarity on the regulatory pathway for a potential re-submission of an NDA for Translarna. The FDA provided initial written feedback that Study 041 does not provide substantial evidence of effectiveness to support NDA re-submission. We held a Type C meeting with the FDA in the fourth quarter of 2023 to discuss the totality of Translarna data. Based on feedback from the FDA, we re-submitted the NDA in July 2024, based on the results from Study 041 and from our international drug registry study for nmDMD patients receiving Translarna. In October 2024, the FDA accepted for review the resubmission of the NDA for Translarna for the treatment of nmDMD. As this was an NDA resubmission following a complete response letter to the NDA which was filed over protest in 2016, the FDA is not obligated to follow the review timelines under PDUFA guidelines and an action date has not been provided.

We have previously relied on Emflaza’s seven-year marketing exclusivity period in the United States for its approved indications under the provisions of the Orphan Drug Act of 1983, or the Orphan Drug Act, when commercializing Emflaza. Emflaza’s seven-year period of orphan drug exclusivity related to the treatment of DMD in patients five years and older expired in February 2024. We expect the expiration of this orphan drug exclusivity to have a significant negative impact on Emflaza net product revenue. Emflaza’s orphan drug exclusivity related to the treatment of DMD in patients two years of age to less than five expires in June 2026.

Upstaza is a gene therapy 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. In July 2022, the EC approved Upstaza for the treatment of AADC deficiency for patients 18 months and older within the EEA. In November 2022, the Medicines and Healthcare Products Regulatory Agency approved Upstaza for the treatment of AADC deficiency for patients 18 months and older within the United Kingdom. In November 2024, the FDA granted accelerated approval of our gene therapy for the treatment of children and adults with AADC deficiency, which is marketed with the brand name Kebilidi in the United States.

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. In August 2021, ANVISA, the Brazilian health regulatory authority, approved Waylivra as the first treatment for familial chylomicronemia syndrome, or FCS, in Brazil. In December 2022, ANVISA approved Waylivra for the treatment of familial partial lipodystrophy, or FPL. Waylivra has also received marketing authorization in the EU for the treatment of FCS.

We also have a spinal muscular atrophy, or SMA, collaboration with F. Hoffman La Roche Ltd. and Hoffman La Roche inc., which we refer to collectively as Roche, and the Spinal Muscular Atrophy Foundation, or SMA Foundation. The SMA program has one approved product, Evrysdi® (risdiplam), 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 EC 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 has also received marketing authorization for the treatment of SMA in over 100 countries. In May 2022, the FDA approved a label expansion for Evrysdi to include infants under two months old with SMA. In August 2023, the EC approved an extension of the Evrysdi marketing authorization to include infants under two months old in the EU.

One of our most advanced clinical stage molecules is sepiapterin. Sepiapterin is our product candidate for the treatment of phenylketonuria, or PKU. In May 2023, we announced that the primary endpoint was achieved in our registration-directed Phase 3 trial for sepiapterin for phenylketonuria, or PKU. The primary endpoint of the study was the achievement of statistically-significant reduction in blood Phe level. The primary analysis population included those patients who have a greater than 30% reduction in blood Phe levels during the Part 1 run-in phase of the trial. Sepiapterin demonstrated Phe

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level reduction of approximately 63% in the overall primary analysis population and Phe level reduction of approximately 69% in the subset for classical PKU patients. Additionally, sepiapterin was well tolerated with no serious adverse events. Following the placebo-controlled study, patients were eligible to enroll in a long-term open-label study, which is still ongoing and will evaluate long-term safety, durability and Phe tolerance. In March 2024, we submitted a marketing authorization application, or MAA, to the EMA for sepiapterin for the treatment of PKU in the EEA, which was validated and accepted for review by the EMA in May 2024. We expect an opinion from the CHMP in the second quarter of 2025. In July 2024, we submitted an NDA to the FDA for sepiapterin for the treatment of pediatric and adult patients with PKU, including the full spectrum of ages and disease subtypes, in the United States. In September 2024, the FDA accepted for filing the NDA, with a target regulatory action date of July 29, 2025. We also made regulatory submissions for sepiapterin for the treatment of PKU in Brazil in the third quarter of 2024, and in Japan in the fourth quarter of 2024, with a regulatory decision in Japan expected in the fourth quarter of 2025.

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. In June 2023, we announced interim data from the 12-week placebo-controlled phase of the Phase 2 study of PTC518. The study demonstrated dose-dependent lowering of huntingtin, or HTT, protein levels in peripheral blood cells, reaching an approximate mean 30% reduction in mutant HTT levels at the 10mg dose level. In addition, PTC518 exposure in the cerebrospinal fluid was consistent with or higher than plasma unbound drug levels. Furthermore, PTC518 was well tolerated with no treatment-related serious adverse events. In June 2024, we announced interim results from the full Phase 2 study of PTC518. In September 2024, the FDA granted Fast Track designation to the PTC518 program for the treatment of HD. In December 2024, we held a Type C meeting with the FDA to discuss whether huntingtin protein lowering could be considered a surrogate endpoint for accelerated approval of PTC518. The FDA was aligned on the scientific rationale and asked to see additional data supportive of an association between huntingtin protein lowering and changes in clinical outcome scores. We expect to provide results from the Phase 2 study of PTC518 for the treatment of HD in the second quarter of 2025. In November 2024, we entered into the Novartis Agreement with Novartis Pharmaceuticals Corporation, or Novartis, relating to our PTC518 program. This transaction closed in January 2025. Pursuant to the Novartis Agreement, we will continue to conduct the ongoing Phase 2A Clinical Trial and the ongoing OLE Clinical Trial pursuant to its existing development plan, with the goal of transitioning the ongoing OLE Clinical Trial to Novartis within 12 months after the effective date of the Novartis Agreement. Novartis will be responsible for all other development of licensed compounds and licensed products and the manufacture and commercialization of licensed compounds and licensed products worldwide.

Our inflammation and ferroptosis 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 most advanced molecule in our inflammation and ferroptosis platform is vatiquinone. We announced topline results from a registration-directed Phase 3 trial of vatiquinone in children and young adults with FA, called MOVE-FA, in May 2023. While the study did not meet its primary endpoint of statistically significant change in modified Friedreich Ataxia Rating Scale, or mFARS, score at 72 weeks in the primary analysis population, vatiquinone treatment did demonstrate significant benefit on key disease subscales and secondary endpoints. In addition, in the population of subjects that completed the study protocol, significance was reached in the mFARS endpoint and several secondary endpoints, including the upright stability subscale. Furthermore, vatiquinone was well tolerated. In October 2024, we announced that the pre-specified endpoint for two different FA long-term extension studies was met, with statistically significant evidence of durable treatment benefit on disease progression. In December 2024, we submitted an NDA to the FDA for vatiquinone for the treatment of children and adults living with FA. In February 2025, the FDA accepted for filing the NDA and granted priority review with a target regulatory action date of August 19, 2025.

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 for rare diseases.

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Overview—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. During 2024, our revenues were 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 or through similar styled programs, and from sales of Emflaza for the treatment of DMD in the United States. We also generated revenue from sales of Upstaza for the treatment of AADC deficiency in the EEA and have recognized revenue associated with milestone and royalty payments from Roche pursuant to a License and Collaboration Agreement, or the SMA License Agreement, by and among us, Roche and, for the limited purposes set forth therein, the SMA Foundation, under our SMA program.

See “Item 1. Business—Commercial Matters—Market Access Considerations” for additional information and “Item 1A. Risk Factors—Commercialization of Translarna and Upstaza has been in, and is expected to continue to take place in, countries that tend to impose strict price controls, which may adversely affect our revenues. Failure to obtain and maintain acceptable pricing and reimbursement terms for Translarna for the treatment of nmDMD or Upstaza for the treatment of AADC deficiency in the EEA and other countries where Translarna is available would delay or prevent us from marketing our product in such regions, which would adversely affect our business, results of operations, and financial condition.”

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 the Securities Act of 1933, as amended, or the Securities Act. We did not issue or sell any shares of common stock pursuant to the Sales Agreement during the years ended December 31, 2024, 2023 and 2022. 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 December 31, 2024.

In September 2019, we issued $287.5 million aggregate principal amount of 1.50% convertible senior notes due September 15, 2026, or the 2026 Convertible Notes, which included an option to purchase up to an additional $37.5 million in aggregate principal amount of the 2026 Convertible Notes, which was exercised in full by the initial purchasers. We received net proceeds of $279.3 million after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by us. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

In July 2020, we entered into a Royalty Purchase Agreement, or the Original Royalty Purchase Agreement, with RPI Intermediate Finance Trust, or RPI, and, for the limited purposes set forth in the agreement, Royalty Pharma plc. Pursuant to the Original Royalty Purchase Agreement, we sold to RPI 42.933%, or the Original Assigned Royalty Rights, of the Royalty (as defined below) for $650.0 million. At that time, we 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.

In June 2021, we filed a Certificate of Amendment to our Restated Certificate of Incorporation, which increased the number of authorized shares of our common stock from 125,000,000 to 250,000,000 shares.

In October 2022, we entered into the Credit Agreement, dated October 27, 2022, by and among us and certain of our subsidiaries from time to time party thereto, as guarantors, or, collectively with us, the Loan Parties, funds and other affiliated entities advised or managed by Blackstone Life Sciences and Blackstone Credit, or collectively, Blackstone, as lenders, together with their permitted assignees, the Lenders, and Wilmington Trust, National Association, as the administrative agent for the Lenders, or the Blackstone Credit Agreement. The Blackstone Credit Agreement provided for fundings of up to $950.0 million consisting of a committed loan facility consisting of a senior secured term loan facility funded on October 27, 2022, or the Closing Date, in the aggregate principal amount of $300.0 million, and a delayed draw term loan facility of up to $150.0 million to be funded at our request within 18 months of the Closing Date subject to specified conditions, and further contemplating the potential for up to $500.0 million of additional financing, to the extent

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that we requested such additional financing and subject to the Lenders’ agreement to provide such additional financing and to mutual agreement on terms. In October 2023, we terminated the Blackstone Credit Agreement. In connection with the termination of the Blackstone Credit Agreement, we repaid outstanding principal of $300.0 million, accrued interest of $2.1 million, an additional $82.0 million in prepayment premiums, exit fees, and creditor expenses, and $0.2 million in legal fees. We recorded a loss on the extinguishment of debt of $92.7 million which is included on the statement of operations for the period ended December 31, 2023. The loss on extinguishment of debt consisted of $82.0 million in prepayment premiums, exit fees, and creditor expenses and debt issuance costs of $10.7 million. All liens and security interests securing the loans made pursuant to the Blackstone Credit Agreement were released upon termination.

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In June 2024, we entered into an amendment with Royalty Pharma Investments 2019 ICAV, or Royalty Pharma, and Royalty Pharma plc, to the Amended and Restated Royalty Purchase Agreement, dated October 18, 2023, or the A&R Royalty Purchase Agreement, which amends and restated in its entirety the Original Royalty Purchase Agreement, and we exercised our first put option in exchange for $241.8 million in cash consideration. To date, Royalty Pharma has paid to us cash consideration of $1.9 billion (less Royalty payments received by us with respect to assigned Royalties, or the Assigned Royalty Rights) in exchange for 90.49% of the Royalty, which will be reduced to 83.33% after Royalty Pharma receives $1.3 billion in aggregate payments, or the Assigned Royalty Cap, from the Royalty assigned under the Original Royalty Purchase Agreement.  We currently retain 9.51% of the Royalty, which increases to 16.67% after the Assigned Royalty Cap has been met. We have the option to sell our retained portions of the Royalty to Royalty Pharma in up to three tranches for the following payments: (1) $100.0 million in exchange for 3.81% of the Royalty, which increases to 6.67% after the Assigned Royalty Cap has been met, (2) $100.0 million in exchange for 3.81% of the Royalty, which increases to 6.67% after the Assigned Royalty Cap has been met, and (3) $50.0 million in exchange for 1.90% of the Royalty, which increases to 3.33% after the Assigned Royalty Cap has been met, in each case less Royalty payments received by us with respect to the Assigned Royalty Rights. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

In November 2024, we entered into the Novartis Agreement relating to our PTC518 HD program which includes related molecules. Pursuant to the Novartis Agreement, we will continue to conduct the ongoing Phase 2A Clinical Trial and the ongoing OLE Clinical Trial pursuant to its existing development plan, with the goal of transitioning the ongoing OLE Clinical Trial to Novartis within 12 months after the effective date. Novartis will be responsible for all other development of licensed compounds and licensed products and the manufacture and commercialization of licensed compounds and licensed products worldwide. Under the Novartis Agreement, and upon the closing of the transaction contemplated by the Novartis Agreement in January 2025, we received an upfront payment of $1.0 billion on the effective date and can receive up to $1.9 billion in development, regulatory and sales milestones, a 40% share of U.S. profits and losses, and tiered double-digit royalties on ex-U.S. sales See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

We have financed our operations to date primarily through the private offerings of convertible senior notes, public and “at the market offerings” of common stock, proceeds from royalty purchase agreements, net proceeds from our borrowings under our credit agreement with Blackstone, private placements of our convertible preferred stock and common stock, collaborations, bank and institutional lender debt, other convertible debt, grant funding and clinical trial support from governmental and philanthropic organizations and patient advocacy groups in the disease area addressed by our product candidates. We have relied on revenue generated from net sales of Translarna for the treatment of nmDMD in territories outside of the United States since 2014, Emflaza for the treatment of DMD in the United States since 2017 and Upstaza for the treatment of AADC deficiency in the EEA since 2022. We have also relied on revenue associated with milestone and royalty payments from Roche pursuant to the SMA License Agreement under our SMA program and revenue generated from net sales of Tegsedi and Waylivra in Latin America and the Caribbean.

As of December 31, 2024, we had an accumulated deficit of $3,646.9 million. We had a net loss of $363.3 million, $626.6 million, and $559.0 million for the fiscal years ended December 31, 2024, 2023 and 2022, respectively.

We anticipate that we will continue to incur significant expenses in connection with our commercialization efforts in the United States, the EEA, Latin America and other territories, including expenses related to our commercial infrastructure and corresponding sales and marketing, legal and regulatory, and distribution and manufacturing undertakings as well as

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administrative and employee-based expenses. In addition to the foregoing, we expect to continue to incur significant costs in connection with ongoing, planned and potential future clinical trials and studies for sepiapterin and our splicing and inflammation and ferroptosis programs as well as studies in our products for maintaining authorizations, label extensions and additional indications. 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 are exploring other potential mechanisms by which we may provide Translarna to nmDMD patients in the EEA if the EC adopts the CHMP’s negative opinion for Translarna following a re-examination procedure. We also submitted an MAA to the EMA for sepiapterin for the treatment of PKU in March 2024, an NDA to the FDA for sepiapterin for the treatment of PKU in the third quarter of 2024, and an NDA to the FDA for vatiquinione for the treatment of FA in the fourth quarter of 2024. These efforts may significantly impact the timing and extent of our commercialization and manufacturing 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 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. Borrowings under the Blackstone Credit Agreement, which was terminated in October 2023, bore interest at a variable rate equal to, at our option, either an adjusted Term SOFR rate plus seven and a quarter percent (7.25%) or the Base Rate plus six and a quarter percent (6.25%), subject to a floor of one percent (1%) and two percent (2%) with respect to Term SOFR rate and Base Rate (each as defined in the Blackstone Credit Agreement), respectively.

In May 2024, we announced the validation and acceptance for review of an MMA for sepiapterin by the EMA for the treatment of PKU. In connection with this event and pursuant to the Censa Merger Agreement, we paid a $15.0 million regulatory milestone to the former Censa securityholders. In July 2024, we announced the submission of an NDA to the FDA for sepiapterin for the treatment of pediatric and adult patients with PKU, including the full spectrum of ages and disease subtypes. Pursuant to the Censa Merger Agreement, the decision to submit the NDA triggered a $25.0 million regulatory milestone payment to the former Censa securityholders. In September 2024, we announced the FDA acceptance for filing of the NDA. In connection with this event and pursuant to the Censa Merger Agreement, we paid a $25.0 million regulatory milestone to the former Censa securityholders.

We expect to make additional payments to the former Censa securityholders of $57.5 million in the aggregate in cash upon the potential achievement in 2025 of certain regulatory milestones relating to sepiapterin.

Upon the potential achievement in 2025 of certain regulatory milestones relating to vatiquinone, which milestones would be payable in 2026, we expect to make payments to BioElectron of $75.0 million in the aggregate, in cash or shares of our common stock, as determined by us.

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

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. Our process for recognizing revenue is described below under “Critical accounting policies and significant judgments and estimates—Revenue recognition”.

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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 December 31, 2024, we had recognized a total of $310.0 million in milestone payments and $545.6 million royalties on net sales pursuant to the SMA License Agreement. As of December 31, 2024, there are no remaining research and development event milestones that we can receive. The remaining potential sales milestones as of December 31, 2024 are $150.0 million upon achievement of certain sales events.

In June 2024, we entered into an amendment to the A&R Royalty Purchase Agreement, and we exercised our first put option in exchange for $241.8 million in cash consideration. Pursuant to the A&R Royalty Purchase Agreement, Royalty Pharma has paid to us aggregate cash consideration of $1.9 billion (less Royalty payments received by us with respect to the Assigned Royalty Rights) in exchange for 90.49% of the Royalty, which will be reduced to 83.33% of the Royalty after Royalty Pharma receives $1.3 billion in aggregate payments from the Royalty assigned at the closing of the Original Purchase Agreement.  We currently retain 9.51% of the Royalty, which increases to 16.67% after the Assigned Royalty Cap has been met, and all economic rights to receive the remaining potential regulatory and sales milestone payments under the SMA License Agreement.

We have the option to sell our retained portions of the Royalty to Royalty Pharma in up to three tranches for the following payments:  (1) $100.0 million in exchange for 3.81% of the Royalty, which increases to 6.67% after the Assigned Royalty Cap has been met, (2) $100.0 million in exchange for 3.81% of the Royalty, which increases to 6.67% after the Assigned Royalty Cap has been met, and (3) $50.0 million in exchange for 1.90% of the Royalty, which increases to 3.33% after the Assigned Royalty Cap has been met, in each case less Royalty payments received by us with respect to the Assigned Royalty Rights. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

On November 27, 2024, we and Novartis entered into the Novartis Agreement relating to our PTC518 HD program which includes related molecules. Under the Novartis Agreement, and upon the closing of the transaction contemplated by the Novartis Agreement in January 2025, we received an upfront payment of $1.0 billion on the effective date and can receive up to $1.9 billion in development, regulatory and sales milestones, a 40% share of U.S. profits and losses, and tiered double-digit royalties on ex-U.S. sales. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

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:

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 our activities for sepiapterin and our splicing and inflammation and ferroptosis programs and

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performance of any 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. In 2023, as part of our strategic pipeline prioritizations, we decided to discontinue our preclinical and early research programs for our gene therapy and oncology platforms, reducing research and development expenses in these areas.

The following table provides research and development expense for our most advanced principal product development programs, for the years ended December 31, 2024, 2023, and 2022.

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Development. Consists of costs incurred for product candidates following initiation of a clinical trial.

For the year ended December 31, 2024, compared to the years ended December 31, 2023 and 2022, the decrease in development expenses primarily reflected the decrease in program spend related to our strategic pipeline prioritization in 2023 as we continued to focus our resources on our differentiated, high potential research and development programs.

Research. Consists of costs incurred for product candidates before initiation of a clinical trial.

For the year ended December 31, 2024, compared to the years ended December 31, 2023 and 2022, the decrease in research expenses was primarily related to our strategic pipeline prioritization in 2023 where we discontinued several preclinical and early research programs.

Milestones. Consists of development and regulatory milestone expenses incurred in connection with our collaborative arrangements.

For the year ended December 31, 2024, compared to the years ended December 31, 2023 and 2022, the increase in milestone expenses primarily related to the achievement of a $15.0 million success-based regulatory milestone for the validation and acceptance of an MMA for sepiapterin for PKU in May 2024, the achievement of a $25.0 million regulatory milestone for the decision to submit an NDA to the FDA for sepiapterin for PKU in July 2024, and the achievement of a $25.0 million regulatory milestone for the acceptance of an NDA to the FDA for sepiapterin for PKU in September 2024, as compared to the achievement of a $30.0 million success-based development milestone for the completion of enrollment of a Phase 3 clinical trial for sepiapterin for PKU in February 2023, and no milestones achieved in the year ended December 31, 2022.

Payroll, benefits, and share-based stock compensation. Consists of costs incurred for salaries and wages, bonus, payroll taxes, benefits and stock-based compensation associated with employees involved in research and development activities. Stock-based compensation may fluctuate from period to period based on factors that are not within our control, such as our stock price on the dates stock-based grants are issued.

For the year ended December 31, 2024, compared to the years ended December 31, 2023 and 2022, the change in payroll, benefits, and share-based stock compensation expenses primarily relates to our reduction in workforce in

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connection with our strategic pipeline prioritization in 2023 and discontinuation of our preclinical and early research programs in our gene therapy platform.

Facilities and other. Consists of indirect costs incurred for the benefit of multiple programs, including information technology, and other facility-based expenses, such as rent expense.

For the year ended December 31, 2024, compared to the years ended December 31, 2023 and 2022, the change in facilities and other expenses primarily related to decreases in facility-based expenses at our facility in Hopewell Township, New Jersey as a result of an amendment and restatement of our lease for such facility.

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:

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 those products or product candidates. For example, if the EMA or the 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.

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 we will continue to incur significant selling, general and administrative expenses 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 Original Royalty Purchase Agreement, the A&R Royalty Purchase Agreement, the 2026 Convertible Notes outstanding, the Blackstone Credit Agreement that we repaid and terminated in October 2023, the 3.00% convertible senior notes due 2022, or the 2022 Convertible Notes, that we repaid in August 2022, offset by interest income earned on investments.

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

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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.

Of our policies, revenue recognition related to net product revenue is considered critical to an understanding of our consolidated financial statements as it requires the application of the most subjective and complex judgment, involving critical accounting estimates and assumptions impacting our consolidated financial statements.

Revenue recognition related to net product revenue

Net product revenues. Our net product revenue primarily consists of sales of Translarna in territories outside of the U.S. and sales of Emflaza in the U.S., both for the treatment of DMD.  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.

During the years ended December 31, 2024, 2023, and 2022, net product sales in the United States were $207.2 million, $255.1 million, and $218.3 million, respectively, consisting solely of sales of Emflaza, and net product sales outside of the United States were $393.8 million, $406.1 million, and $316.9 million, respectively, consisting of sales of Translarna, Tegsedi, Waylivra, and Upstaza. Translarna net product revenues made up $339.9 million, $355.8 million, and $288.6 million of the net product sales outside the United States for the years ended December 31, 2024, 2023 and 2022, respectively. During the year ended December 31, 2024, three countries, the United States, Russia, and Brazil, accounted for at least 10% of our net product sales, representing $207.2 million, $105.4 million, and $72.1 million of net product sales, respectively. During the years ended December 31, 2023 and 2022, two countries, the United States and Russia, accounted for at least 10% of our net product sales, representing $255.1 million and $86.0 million, and $218.3 million and $59.7 million, respectively.

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.

For a description of our significant accounting policies, see note 2 to our consolidated financial statements.

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Year ended December 31, 2024 compared to year ended December 31, 2023

The following table summarizes revenues and selected expense and other income data for the year ended December 31, 2024 and 2023:

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Net product revenue.   Net product revenue was $601.0 million for the year ended December 31, 2024, a decrease of $60.3 million, or 9%, from net product revenue of $661.2 million for the year ended December 31, 2023. Translarna net product revenues were $339.9 million for the year ended December 31, 2024, a decrease of $15.9 million, or 4%, compared to $355.8 million for the year ended December 31, 2023. These results were due to the timing of bulk patient orders, as well as the residual impact from the CHMP negative opinion in September 2023. Emflaza net product revenues were $207.2 million for the year ended December 31, 2024, a decrease of $47.9 million, or 19%, compared to $255.1 million for the year ended December 31, 2023. These results were driven by the expiration of Emflaza’s orphan drug exclusivity in February 2024. The remaining change of $3.5 million was due to an increase of $5.4 million in net product sales relating to Tegsedi and Waylivra, and a decrease in net product sales of $1.9 million relating to Upstaza.

Collaboration revenue.   Collaboration revenue was $0.3 million for the year ended December 31, 2024, a decrease of $99.7 million, or 100%, from collaboration revenue of $100.0 million for the year ended December 31, 2023. The decrease relates to sales milestone of $100.0 million that was recognized for the achievement of $1.5 billion in worldwide annual net sales from Evrysdi in the year ended December 31, 2023.

Royalty revenue. Royalty revenue was $203.9 million for the year ended December 31, 2024, an increase of $35.0 million, or 21%, from $168.9 million for the year ended December 31, 2023. The increase in royalty revenue was due to higher Evrysdi sales in the year ended December 31, 2024, compared to the year ended December 31, 2023. In accordance with the SMA License Agreement, we are entitled to royalties on worldwide annual net sales of the product.

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Manufacturing revenue. Manufacturing revenues were $1.7 million for the year ended December 31, 2024, a decrease of $6.0 million, or 78%, from $7.7 million for the year ended December 31, 2023. The decrease was due to the completion of all manufacturing services related to the production of plasmid DNA and AAV vectors for gene therapy applications for external customers. In June 2024, we sold our gene therapy manufacturing business in Hopewell Township, New Jersey. Accordingly, we do not expect to have manufacturing revenue going forward.

Cost of product sales, excluding amortization of acquired intangible asset.  Cost of product sales, excluding amortization of acquired intangible asset, was $57.4 million for the year ended December 31, 2024, a decrease of $8.1

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million, or 12%, from $65.5 million for the year ended December 31, 2023. Cost of product sales excluding amortization of acquired intangible asset consisted primarily of royalty payments associated with Emflaza, Translarna, and Upstaza net product sales, costs associated with Emflaza, Translarna, and Upstaza products sold during the period, and royalty expense related to royalty revenues and collaboration milestone revenues. The decrease in cost of product sales, excluding amortization of acquired intangible asset, was primarily due to decreases in costs related to royalty and collaboration revenues, partially offset by increases in royalty costs driven by Emflaza.

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Amortization of acquired intangible asset.  Amortization of acquired intangible asset was $60.7 million for the year ended December 31, 2024, a decrease of $161.9 million, or 73%, from $222.6 million for the year ended December 31, 2023. These amounts are related to the Emflaza rights acquisition, as well as the Waylivra, Tegsedi, and Upstaza/Kebilidi intangible assets, which are all being amortized on a straight-line basis over their estimated useful lives. The amortization decrease was driven by the Emflaza rights intangible asset being fully amortized as of February 2024, therefore, milestones are recorded on the consolidated statement of operations within cost of product sales, excluding amortization of acquired intangible assets from February 2024 onward.

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Research and development expense.   Research and development expense was $534.5 million for the year ended December 31, 2024, a decrease of $132.1 million, or 20%, compared to $666.6 million for the year ended December 31, 2023. The decrease in research and development expenses related to decreases in program spend related to our strategic portfolio prioritization as we continued to focus our resources on our differentiated, high potential research and development programs. Research and development expense also included a total of $65.0 million regulatory success-based milestones paid to the former Censa securityholders for the year ended December 31, 2024, as compared to a $30.0 million success-based development milestone paid to the former Censa securityholders for the year ended December 31, 2023.

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Selling, general and administrative expense.  Selling, general and administrative expense was $300.9 million for the year ended December 31, 2024, a decrease of $31.6 million, or 10%, from $332.5 million for the year ended December 31, 2023. The decrease reflected lower employee costs as a result of the reduction in workforce in 2023.

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Change in the fair value of contingent consideration. Change in the fair value of contingent consideration was a gain of $4.5 million for the year ended December 31, 2024, a decrease of $123.2 million, or 96%, from a gain of $127.7 million for the year ended December 31, 2023. The decrease is primarily related to our strategic portfolio prioritization in 2023 and decision to discontinue our preclinical and early research programs in our gene therapy platform in May 2023, which included programs for FA and Angelman syndrome. As a result, we fully impaired the FA and Angelman syndrome intangible assets and determined that the fair value for all of the contingent consideration payable related to FA and Angelman syndrome was $0. As a result, we recorded a fair value change of $128.4 million for the year ended December 31, 2023 for the contingent consideration related to FA and Angelman syndrome.

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Intangible asset impairment. Intangible asset impairment was $159.5 million for the year ended December 31, 2024, a decrease of $58.3 million, or 27%, from intangible asset impairment of $217.8 million for the year ended December 31, 2023. During the year ended December 31, 2024, as a result of our annual impairment test for our PTC-AADC indefinite lived intangible asset, we impaired $159.5 million due to a decrease in projected cash flows due to refinements in current market assumptions and the timing of patient treatments. During the year ended December 31, 2023, as a result of our strategic portfolio prioritization in 2023 and decision to discontinue our preclinical and early research programs in our gene therapy platform, which included programs for FA and Angelman syndrome, we fully impaired the FA and Angelman syndrome intangible assets and recorded impairment expense of $217.8 million.

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Tangible asset impairment and losses (gains) on transactions, net. Tangible asset impairment and losses (gains) on transactions, net was $0.8 million for the year ended December 31, 2024, an increase of $0.8 million, or 100%, from impairment of tangible assets of $0.0 million for the year ended December 31, 2023. The increase in tangible asset impairment and losses (gains) on transactions, net, was due to a $4.4 million loss primarily related to the sale of certain assets for gene therapy manufacturing, and a $4.1 million loss primarily related to fixed asset impairments in connection with the South Plainfield, New Jersey office closure and Warren, New Jersey lease modification. These amounts were partially offset by a gain of $2.2 million on lease terminations, and a gain of $5.5 million on lease modifications.

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Interest expense, net.   Interest expense, net was $167.0 million for the year ended December 31, 2024, an increase of $37.8 million, or 29%, from interest expense, net of $129.2 million for the year ended December 31, 2023. The increase in interest expense, net was primarily due to interest expense recorded from the liability for the sale of future royalties related to the A&R Royalty Purchase Agreement and the Original Royalty Purchase Agreement, offset by a decrease in interest expense due to the termination of our Blackstone Credit Agreement.

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Other income, net.  Other income, net was $6.5 million for the year ended December 31, 2024, a decrease of $3.6 million, or 35%, from other income, net of $10.1 million for the year ended December 31, 2023. The decrease in other income, net resulted primarily from a decrease in unrealized and realized foreign exchange gains of $8.0 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023. In addition, we had unrealized gains on our ClearPoint equity investments of $7.7 million and unrealized and realized losses on our ClearPoint convertible debt security of $2.6 million for the year ended December 31, 2024, as compared to unrealized and realized losses on our ClearPoint equity investments and ClearPoint convertible debt security of $2.3 million and $2.7 million, respectively, for the year ended December 31, 2023. For the years ended December 31, 2024 and 2023, we had net realized gains of $0.1 million on marketable securities – available for sale and $4.8 million on marketable securities – equity investments, respectively.

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Gain on sale of priority review voucher. Gain on sale of priority review voucher was $99.9 million for the year ended December 31, 2024, an increase of $99.9 million, or 100%, from gain on sale of priority review voucher of $0.0 million for the year ended December 31, 2023. In connection with our FDA approval of Kebilidi, we received a Priority Review Voucher, or PRV, and sold the PRV for aggregate net proceeds of $148.0 million. We had previously recorded an indefinite lived intangible asset for the PRV of $48.1 million in connection with the acquisition of Agilis in 2018, which was included as part of the book balance of our PTC-AADC indefinite lived intangible asset balance. Accordingly, we derecognized the book value of the PRV and recorded a gain of $99.9 million upon the sale.

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Loss on extinguishment of debt.  Loss on extinguishment of debt was $0.0 million for the year ended December 31, 2024, a decrease of $137.6 million, or 100%, from loss on extinguishment of debt of $137.6 million for the year ended December 31, 2023. The decrease was primarily due to the early termination of our Blackstone Credit Agreement in 2023, with no similar event occurring in 2024. We recorded a loss on the extinguishment of debt of $92.7 million for the period ended December 31, 2023. The loss on extinguishment of debt consisted of $82.0 million in prepayment premiums, exit fees, and creditor expenses and debt issuance costs of $10.7 million. In addition, we recorded $44.9 million on the loss of extinguishment of debt relating to the A&R Royalty Purchase Agreement.

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Income tax (expense) benefit.   Income tax expense was $0.2 million for the year ended December 31, 2024, a change of $69.7 million, or over 100%, from income tax benefit of $69.5 million for the year ended December 31, 2023. The change in income tax (expense) benefit was attributable to an increase of current federal and state tax expense driven by the recognition of previously deferred revenue from the A&R Royalty Purchase Agreement.

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Year ended December 31, 2023 compared to year ended December 31, 2022

The following table summarizes revenues and selected expense and other income data for the years ended December 31, 2023 and 2022:

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Net product revenue.   Net product revenue was $661.2 million for the year ended December 31, 2023, an increase of $126.0 million, or 24%, from net product revenue of $535.2 million for the year ended December 31, 2022. Translarna net product revenues were $355.8 million for the year ended December 31, 2023, an increase of $67.2 million, or 23%, compared to $288.6 million for the year ended December 31, 2022. These results were driven by treatment of new patients in existing geographies and continued geographic expansion. Emflaza net product revenues were $255.1 million for the year ended December 31, 2023, an increase of $36.8 million, or 17%, compared to $218.3 million for the year ended December 31, 2022. These results were driven by new patient starts and high compliance. The remaining increase of $22.0 million was due to an increase in net product sales of Tegsedi, Waylivra, and Upstaza.

Collaboration revenue.   Collaboration revenue was $100.0 million for the year ended December 31, 2023, an increase of $50.0 million, or 100%, from collaboration revenue of $50.1 million for the year ended December 31, 2022. The increase is due to an increase in actual milestones that were achieved in the year ended December 31, 2023 compared to the year ended December 31, 2022, respectively. A sales milestone of $100.0 million was recognized for the achievement of $1.5 billion in worldwide annual net sales from Evrysdi in the year ended December 31, 2023. A sales milestone of $50.0 million was recognized for the achievement of $750.0 million in worldwide annual net sales from Evrysdi in the year ended December 31, 2022.

Royalty revenue. Royalty revenue was $168.9 million for the year ended December 31, 2023, an increase of $55.3 million, or 49%, from $113.5 million for the year ended December 31, 2022. The increase in royalty revenue was due to higher Evrysdi sales in the year ended December 31, 2023 compared to the year ended December 31, 2022. In accordance with the SMA License Agreement, we are entitled to royalties on worldwide annual net sales of the product.

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Manufacturing revenue. Manufacturing revenues were $7.7 million for the year ended December 31, 2023, an increase of $7.7 million, or over 100%, from $0.0 million for the year ended December 31, 2022. The increase in manufacturing revenue was due to the manufacturing services related to the production of plasmid DNA and AAV vectors for gene therapy applications for external customers.

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Cost of product sales, excluding amortization of acquired intangible asset.  Cost of product sales, excluding amortization of acquired intangible asset, was $65.5 million for the year ended December 31, 2023, an increase of $20.8

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million, or 47%, from $44.7 million for the year ended December 31, 2022. Cost of product sales excluding amortization of acquired intangible asset, consisted primarily of royalty payments associated with Emflaza, Translarna and Upstaza net product sales, excluding contingent payments to Marathon, costs associated with Emflaza, Translarna and Upstaza product sold during the period, inventory reserves, and royalty expense related to royalty revenues and collaboration milestone revenues. The increase in cost of product sales, excluding amortization of acquired intangible asset, was primarily due to the increases in net product revenue, Upstaza inventory reserves, royalty revenues, and collaboration milestone revenue.

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Amortization of acquired intangible asset.  Amortization of acquired intangible asset was $222.6 million for the year ended December 31, 2023, an increase of $106.1 million, or 91%, from $116.6 million for the year ended December 31, 2022. These amounts were related to the Emflaza rights acquisition, as well as the Waylivra, Tegsedi, and Upstaza intangible assets, which are all being amortized on a straight-line basis over their estimated useful lives. The amortization increase was primarily related to additional Marathon contingent payments for Emflaza.

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Research and development expense.   Research and development expense was $666.6 million for the year ended December 31, 2023, an increase of $15.1 million, or 2%, compared to $651.5 million for the year ended December 31, 2022. The increase in research and development expenses included the achievement of a $30.0 million success-based development milestone for the completion of enrollment of a Phase 3 clinical trial for sepiapterin for PKU. The increase also included restructuring costs from a reduction in workforce in connection with our strategic pipeline prioritization and discontinuation of our preclinical and early research programs in our gene therapy platform in the year ended December 31, 2023. These increases were partially offset by decreases in program spend related to our strategic portfolio prioritization as we continued to focus our resources on our differentiated, high potential research and development programs.

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Selling, general and administrative expense.  Selling, general and administrative expense was $332.5 million for the year ended December 31, 2023, an increase of $6.5 million, or 2%, from $326.0 million for the year ended December 31, 2022. The increase reflected our continued investment to support our commercial activities including our expanding commercial portfolio. The increase also includes restructuring costs from a reduction in workforce in connection with our strategic pipeline prioritization and discontinuation of our preclinical and early research programs in our gene therapy platform in the year ended December 31, 2023.

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Change in the fair value of contingent consideration. Change in the fair value of contingent consideration was a gain of $127.7 million for the year ended December 31, 2023, a change of $101.8 million, or over 100%, from a gain of $25.9 million for the year ended December 31, 2022. The change was primarily related to our strategic portfolio prioritization and decision to discontinue our preclinical and early research programs in our gene therapy platform, which included programs for FA and Angelman syndrome, which was announced in May 2023. As a result, we fully impaired the FA and Angelman syndrome intangible assets and determined that the fair value for all of the contingent consideration payable related to FA and Angelman syndrome was $0. As a result, we recorded a fair value change of $128.4 million for the year ended December 31, 2023 for the contingent consideration related to FA and Angelman syndrome

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Intangible asset impairment. Intangible asset impairment was $217.8 million for the year ended December 31, 2023, an increase of $184.4 million, or over 100%, from intangible asset impairment of $33.4 million for the year ended December 31, 2022. The change was due to our strategic portfolio prioritization and decision to discontinue our preclinical and early research programs in our gene therapy platform, which included programs for FA and Angelman syndrome, which was announced in May 2023. As a result, we fully impaired the FA and Angelman syndrome intangible assets and recorded impairment expense of $217.8 million during the year ended December 31, 2023. During the year ended December 31, 2022, a partial impairment of $33.4 million was recorded due to a decrease in projected cash flows for the Upstaza indefinite lived intangible asset due to refinements in market assumptions.

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Interest expense, net.   Interest expense, net was $129.2 million for the year ended December 31, 2023, an increase of $38.3 million, or 42%, from interest expense, net of $90.9 million for the year ended December 31, 2022. The increase in interest expense, net was primarily due to interest expense recorded from the liability for the sale of future royalties related to the A&R Royalty Purchase Agreement and the Original Royalty Purchase Agreement.

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Other income (expense), net.   Other income, net was $10.1 million for the year ended December 31, 2023, a change of $59.3 million, or over 100%, from other expense, net of $49.2 million for the year ended December 31, 2022. The change in other income (expense), net resulted primarily from unrealized foreign exchange gains of $11.7 million and realized foreign currency exchanges losses of $2.7 million, for the year ended December 31, 2023, as compared to unrealized foreign exchange losses of $14.4 million and a non cash foreign currency remeasurement loss of $16.9 million from the remeasurement of our intercompany loan for the year ended December 31, 2022. In addition, we had unrealized and realized losses on our equity investments and convertible debt security in ClearPoint of $2.3 million and $2.7 million, respectively, for the year ended December 31, 2023, as compared to unrealized losses on our equity investments and convertible debt security in ClearPoint, of $3.5 million and $5.8 million, respectively, for the year ended December 31, 2022.

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Loss on extinguishment of debt.  Loss on extinguishment of debt was $137.6 million for the year ended December 31, 2023, an increase of $137.6 million, or 100%, from loss on extinguishment of debt of $0.0 million for the year ended December 31, 2022. The increase was primarily due to the early termination of our Blackstone Credit Agreement. We recorded a loss on the extinguishment of debt of $92.7 million for the period ended December 31, 2023. The loss on extinguishment of debt consisted of $82.0 million in prepayment premiums, exit fees, and creditor expenses and debt issuance costs of $10.7 million. In addition, we recorded $44.9 million on the loss of extinguishment of debt relating to the A&R Royalty Purchase Agreement.

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Income tax benefit.   Income tax benefit was $69.5 million for the year ended December 31, 2023, an increase of $41.0 million, or over 100%, from income tax benefit of $28.5 million for the year ended December 31, 2022. The increase in income tax benefit was attributable to the receipt of an outstanding state tax refund received during the year ended December 31, 2023, and the subsequent release of the associated ASC 740 income tax reserve, as well as the reversal of the deferred tax liability recognized in conjunction with the discontinuation of our preclinical and early research programs in our gene therapy platform, which included programs for FA and Angelman syndrome, during the year ended December 31, 2023.

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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 primarily consisted of 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 or similar styled programs in the EEA and other territories. In January 2024, the CHMP issued a negative opinion for the renewal of the conditional marketing authorization following a re-examination procedure. In May 2024, the EC decided not to adopt the CHMP’s negative opinion for the renewal of the conditional marketing authorization of Translarna and returned such opinion to the CHMP for re-evaluation. In June 2024, following the EC’s request for re-review, the CHMP issued a negative opinion on the renewal of the conditional marketing authorization of Translarna for the treatment of nmDMD. On October 18, 2024, the CHMP maintained its negative opinion for the renewal of the conditional marketing authorization following the requested reexamination procedure. In accordance with EMA regulations, the EC has 67 days from the date of issuance to adopt the opinion. At this time, the EC has not yet adopted the negative opinion. If the EC adopts the negative opinion, Translarna would no longer have marketing authorization in the member states of the EEA. The marketing authorization for Translarna remains in effect, pending the EC’s potential adoption of the negative opinion. We are exploring other potential mechanisms by which we may provide Translarna to nmDMD patients in the EEA if the negative opinion is adopted by the EC. Emflaza is approved in the United States for the treatment of DMD in patients two years and older. Our ability to generate product revenue from Emflaza will largely depend on the coverage and reimbursement levels set by governmental authorities,

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private health insurers and other third-party payors.  Additionally, Emflaza’s seven-year period of orphan drug exclusivity related to the treatment of DMD in patients five years and older expired in February 2024. We have previously relied on this exclusivity period to commercialize Emflaza in the United States. We expect the expiration of this orphan drug exclusivity to have a significant negative impact on Emflaza net product revenue. Emflaza’s orphan drug exclusivity related to the treatment of DMD in patients two years of age to less than five expires in June 2026.

We have financed our operations to date primarily through private offerings of convertible senior notes, public and “at the market offerings” of common stock, proceeds from royalty purchase agreements, net proceeds from our borrowings under our credit agreement with Blackstone, private placements of our convertible preferred stock and common stock, collaborations, bank and institutional lender debt, other convertible debt, grant funding and clinical trial support from governmental and philanthropic organizations and patient advocacy groups in the disease area 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 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 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Funding” for additional information.

In September 2019, we issued $287.5 million aggregate principal amount of 2026 Convertible Notes, which included an option to purchase up to an additional $37.5 million in aggregate principal amount of the 2026 Convertible Notes, which was exercised in full by the initial purchasers. 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.

Holders may convert their 2026 Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding March 15, 2026 only under the following circumstances: (1) during any calendar quarter commencing on or after December 31, 2019 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price (as defined in the 2026 Convertible Notes Indenture) per $1,000 principal amount of 2026 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) during any period after we have issued notice of redemption until the close of business on the scheduled trading day immediately preceding the relevant redemption date; or (4) upon the occurrence of specified corporate events. On or after March 15, 2026, until the close of business on the business day immediately preceding the maturity date, holders may convert their 2026 Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or any combination thereof at our election.

The conversion rate for the 2026 Convertible Notes was initially, and remains, 19.0404 shares of our common stock per $1,000 principal amount of the 2026 Convertible Notes, which is equivalent to an initial conversion price of approximately $52.52 per share of our common stock. The conversion rate may be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

We were not permitted to redeem the 2026 Convertible Notes prior to September 20, 2023. We may redeem for cash all or any portion of the 2026 Convertible Notes, at our option, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect on the last trading day of, and for at least 19 other trading days (whether or not consecutive) during, any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount

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of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2026 Convertible Notes, which means that we are not required to redeem or retire the 2026 Convertible Notes periodically.

If we undergo a “fundamental change” (as defined in the 2026 Convertible Notes Indenture), subject to certain conditions, holders of the 2026 Convertible Notes may require us to repurchase for cash all or part of their 2026 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2026 Convertible Notes represent senior unsecured obligations and will rank senior in right of payment to our future indebtedness that is expressly subordinated in right of payment to the notes, equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated, effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) incurred by our subsidiaries. The 2026 Convertible Notes Indenture contains customary events of default with respect to the 2026 Convertible Notes, including that upon certain events of default (including our failure to make any payment of principal or interest on the 2026 Convertible Notes when due and payable) occurring and continuing, the 2026 Convertible Notes Trustee by notice to us, or the holders of at least 25% in principal amount of the outstanding 2026 Convertible Notes by notice to us and the Convertible Notes Trustee, may, and the 2026 Convertible Notes Trustee at the request of such holders (subject to the provisions of the 2026 Convertible Notes Indenture) will, declare 100% of the principal of and accrued and unpaid interest, if any, on all the 2026 Convertible Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving us or a significant subsidiary, 100% of the principal of and accrued and unpaid interest on the 2026 Convertible Notes will automatically become due and payable. Upon such a declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately.

In October 2022, we entered into the Blackstone Credit Agreement for fundings of up to $950.0 million consisting of a committed loan facility consisting of a senior secured term loan facility funded on the Closing Date, in the aggregate principal amount of $300.0 million, and a delayed draw term loan facility of up to $150.0 million to be funded at our request within 18 months of the Closing Date subject to specified conditions, and further contemplating the potential for up to $500.0 million of additional financing, to the extent that we request such additional financing and subject to the Lenders’ agreement to provide such additional financing and to mutual agreement on terms. In October 2023, we terminated the Blackstone Credit Agreement. We recorded a loss on the extinguishment of debt of $92.7 million which is included on the statement of operations for the period ended December 31, 2023. The loss on extinguishment of debt consisted of $82.0 million in prepayment premiums, exit fees, and creditor expenses and debt issuance costs of $10.7 million. All liens and security interests securing the loans made pursuant to the Blackstone Credit Agreement were released upon termination.

We have received fundings from Royalty Pharma under the A&R Royalty Purchase Agreement in July 2020, October 2023 and June 2024 totaling $1.9 billion (less Royalty payments received by us with respect to the Assigned Royalty Rights). In exchange for these fundings, we sold Royalty Pharma 90.49% of the Royalty, which will be reduced to 83.33% after Royalty Pharma receives $1.3 billion in aggregate payments, or the Assigned Royalty Cap, from the Royalty assigned under the Original Royalty Purchase Agreement.  We currently retain 9.51% of the Royalty, which increases to 16.67% after the Assigned Royalty Cap has been met. We have the option to sell our retained portions of the Royalty to Royalty Pharma in up to three tranches for the following payments: (1) $100.0 million in exchange for 3.81% of the Royalty, which increases to 6.67% after the Assigned Royalty Cap has been met, (2) $100.0 million in exchange for 3.81% of the Royalty, which increases to 6.67% after the Assigned Royalty Cap has been met, and (3) $50.0 million in exchange for 1.90% of the Royalty, which increases to 3.33% after the Assigned Royalty Cap has been met, in each case less Royalty payments received by us with respect to the Assigned Royalty Rights

In November 2024, we and Novartis entered into the Novartis Agreement relating to our PTC518 HD program which includes related molecules. Pursuant to the Novartis Agreement, we will continue to conduct the ongoing Phase 2A Clinical Trial and the ongoing OLE Clinical Trial pursuant to its existing development plan, with the goal of transitioning the ongoing OLE Clinical Trial to Novartis within 12 months after the effective date. Novartis will be responsible for all other development of licensed compounds and licensed products and the manufacture and commercialization of licensed

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compounds and licensed products worldwide. Under the Novartis Agreement, and upon the closing of the transaction contemplated by the Novartis Agreement in January 2025, we received an upfront payment of $1.0 billion on the effective date and can receive up to $1.9 billion in development, regulatory and sales milestones, a 40% share of U.S. profits and losses, and tiered double-digit royalties on ex-U.S. sales.

Cash flows

As of December 31, 2024, we had cash and cash equivalents and marketable securities of $1,139.7 million.

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

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Net cash used in operating activities was $107.7 million, $158.4 million, and $356.7 million for the years ended December 31, 2024, 2023, and 2022, respectively. The net cash used in operating activities primarily related to supporting clinical development and commercial activities for the years ended December 31, 2024, 2023, and 2022.

Net cash provided by investing activities was $44.2 million for the year ended December 31, 2024. Net cash used in investing activities was $176.7 million for the year ended December 31, 2023.  Net cash provided by investing activities was $290.2 million for the year ended December 31, 2022. The cash provided by investing activities for the year ended December 31, 2024 was primarily attributable to the sale and redemption of marketable securities – available for sale, sale and redemption of marketable securities – equity investments, proceeds from sales of fixed assets, proceeds from the sale of the PRV, and proceeds from settlement of the ClearPoint convertible debt security, offset by the acquisition of product rights, purchases of marketable securities – available for sale, purchases of fixed assets, and purchases of marketable securities –equity investments. The cash used in investing activities for the year ended December 31, 2023 is primarily attributable to the purchases of marketable securities – available for sale, purchases of marketable securities – equity investments, purchases of fixed assets, and the acquisition of product rights, offset by the sale and redemption of marketable securities – available for sale, sale and redemption of marketable securities – equity investments, and the sale and redemption of ClearPoint Equity Investments. The cash provided by investing activities for the years ended December 31, 2022 was primarily related to net sales and redemptions of marketable securities – available for sale and net sales and redemptions of marketable securities – equity investments, partially offset by purchases of marketable securities – available for sale, purchases of marketable securities – equity investments, purchases of fixed assets, and the acquisition of product rights.

Net cash provided by financing activities was $255.9 million, $646.4 million, and $168.0 million for the years ended December 31, 2024, 2023 and 2022, respectively. The cash provided by financing activities for the year ended December 31, 2024 was primarily attributable to the proceeds received from the A&R Royalty Purchase Agreement, exercise of options, issuance of stock under our Employee Stock Purchase Plan, or ESPP, offset by payments on contingent consideration obligation, and payments on our finance lease principal. The cash provided by financing activities for the year ended December 31, 2023 was primarily attributable to the proceeds received from the A&R Royalty Purchase Agreement, exercise of options, issuance of stock under our ESPP, offset by the repayment of the senior secured term loan, debt issuance costs, debt extinguishment costs related to senior secured term loan, and payments on our finance lease principal. The cash provided by financing activities for the year ended December 31, 2022 was primarily attributable to the proceeds from the issuance of the senior secured term loan under the Blackstone Credit Agreement, the stock purchase agreement entered into in connection with the execution of the Blackstone Credit Agreement, the exercise of options, and issuance of stock under our ESPP, offset by the repayment of the 2022 Convertible Notes, payments on contingent consideration obligation, and payments on our finance lease principal.

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Funding requirements

We anticipate that we will continue to incur significant expenses in connection with our commercialization efforts in the United States, the EEA, Latin America and other territories, including expenses related to our commercial infrastructure and corresponding sales and marketing, legal and regulatory, and distribution and manufacturing undertakings as well as administrative and employee-based expenses. In addition to the foregoing, we expect to continue to incur significant costs in connection with ongoing, planned and potential future clinical trials and studies for sepiapterin and our splicing and inflammation and ferroptosis programs as well as studies in our products for maintaining authorizations, label extensions and additional indications. 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 are exploring other potential mechanisms by which we may provide Translarna to nmDMD patients in the EEA if the EC adopts the CHMP’s negative opinion for Translarna. In July 2024, we re-submitted the NDA to the FDA for Translarna for the treatment of nmDMD. In October 2024, the FDA accepted for review the resubmission of the NDA for Translarna for the treatment of nmDMD. As this was an NDA resubmission following a complete response letter to the NDA which was filed over protest in 2016, the FDA is not obligated to follow the review timelines under PDUFA guidelines and an action date has not been provided. In March 2024, we submitted an MAA to the EMA for sepiapterin for the treatment of PKU in the EEA, which was validated and accepted for review by the EMA in May 2024. We expect an opinion from the CHMP in the second quarter of 2025. In July 2024, we submitted an NDA to the FDA for sepiapterin for the treatment of pediatric and adult patients with PKU, including the full spectrum of ages and disease subtypes, in the United States. In September 2024, the FDA accepted for filing the NDA, with a target regulatory action date of July 29, 2025. We also made regulatory submissions for sepiapterin for the treatment of PKU in Brazil in the third quarter of 2024 and in Japan in the fourth quarter of 2024, with a regulatory decision in Japan expected in the fourth quarter of 2025 In December 2024, we submitted an NDA to the FDA for vatiquinone for the treatment of children and adults living with FA. In February 2025, the FDA accepted for filing the NDA and granted priority review with a target regulatory action date of August 19, 2025. These efforts may significantly impact the timing and extent of our commercialization and manufacturing expenses.

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

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We believe that our cash flows from product sales, together with existing cash and cash equivalents, 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:

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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.

In May 2024, the MAA submission for sepiapterin for the treatment of PKU was validated and accepted by the EMA. Pursuant to the Censa Merger Agreement, the acceptance triggered a $15.0 million regulatory milestone to the former Censa securityholders. In July 2024, we announced the submission of an NDA to the FDA for sepiapterin for the treatment of pediatric and adult patients with PKU, including the full spectrum of ages and disease subtypes. Pursuant to the Censa Merger Agreement, the decision to submit the NDA triggered a $25.0 million regulatory milestone to the former Censa securityholders. In September 2024, we announced the FDA acceptance for filing of the NDA. Pursuant to the Censa Merger Agreement, the acceptance triggered a $25.0 million regulatory milestone to the former Censa securityholders. Together, the $65.0 million of regulatory milestones were paid and recorded in research and development expense on our consolidated statements of operations for the year ended December 31, 2024.

In March 2024, we submitted a BLA to the FDA for our gene therapy for the treatment of AADC deficiency in the United States, which the FDA accepted in May 2024. As a result of the acceptance, we paid a $20.0 million milestone payment to former equity holders of Agilis, during the year ended December 31, 2024. On November 13, 2024, our BLA for our gene therapy treatment of AADC deficiency was approved by the FDA. In connection with the approval, we were granted a rare disease PRV. The FDA approval of the BLA and the PRV triggered $11.0 million in regulatory milestones, which were recorded in accounts payable and accrued expenses on the balance sheet as of December 31, 2024. As of December 31, 2024, there are no remaining regulatory milestones. As of December 31, 2024, the remaining potential sales milestone related to Upstaza/Kebilidi is $50.0 million.

We also have certain significant contractual obligations and commercial commitments that require funding. We lease office and shell condition, modifiable space for our principal office in Warren, New Jersey and we occupy under leases

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that expire in 2039, with three consecutive five-year renewal options to renew the leases at our option. Additionally, we entered into a lease agreement for approximately 103,000 square feet of laboratory and office space in Bridgewater, New Jersey. The rental term for such facility commenced on May 1, 2020 with an initial term of seven years and two consecutive five year renewal periods at our option. In addition, we lease office space, vehicles and equipment in various other locations in the U.S. and other countries for our employees and operations. We have a total of $127.7 million in obligations that stem from our operating leases.

We have a total of $24.0 million in obligations that stem from a commercial manufacturing services agreement entered into with MassBio on June 19, 2020, for a term of 12.5 years. Pursuant to the terms of the agreement, MassBio agreed to provide us with four dedicated rooms for our Upstaza/Kebilidi program.

Under an Exclusive License and Supply Agreement, or the Faes Agreement, with Faes Farma, S.A., or Faes, we are required to pay royalties as a percentage of or as a fixed payment with respect to net product sales by us allocable to the Emflaza oral suspension product. We are required to pay Faes an annual royalty during the first twelve calendar years from the FDA approval date of the Emflaza oral suspension product.

Under various agreements, including the sponsored research agreement with the SMA Foundation discussed below, we will be required to pay royalties and milestone payments upon the successful development and commercialization of products.

We have entered into a sponsored research agreement with the SMA Foundation in connection with our SMA program. We may become obligated to pay the SMA Foundation single-digit royalties on worldwide net product sales of any collaboration product that we successfully develop and subsequently commercialize or, with respect to collaboration products we outlicense, including Evrysdi, a specified percentage of certain payments we receive from our licensee. We are not obligated to make such payments unless and until annual sales of a collaboration product exceed a designated threshold. Since inception, the SMA Foundation has earned $52.5 million, all of which was paid as of December 31, 2024.  We have reached our obligation to make such payments to the SMA Foundation of an aggregate of $52.5 million as of December 31, 2024. Refer to “Ongoing Acquisition- Related Obligations” in Item 1. Business.

Additionally, we have employment agreements with certain employees which require the funding of a specific level of payments, if certain events, such as a change in control or termination without cause, occur.

We have never been profitable and 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 stockholders 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.

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Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 Annual Report on Form 10-K. 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 I, Item 1A. Risk Factors, of this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements.

We are a 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 little to 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 diversified therapeutic portfolio 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 relating to neurology and metabolism.

We have two products, TranslarnaTM (ataluren) and Emflaza® (deflazacort), for the treatment of Duchenne muscular dystrophy, or DMD, a rare, life threatening disorder. Translarna currently has conditional marketing authorization in the European Economic Area, or EEA, for the treatment of nonsense mutation Duchenne muscular dystrophy, or nmDMD, in ambulatory patients aged two years and older. Translarna also has marketing authorization in Russia for the treatment of

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nmDMD in patients aged two years and older, and in Brazil for the treatment of nmDMD in ambulatory patients two years and older and for continued treatment of patients that become non-ambulatory, as well as in various other countries. During the year ended December 31, 2023, we recognized $355.8 million in sales of 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 year ended December 31, 2023, Emflaza achieved net sales of $255.1 million.

Our marketing authorization for Translarna in the EEA is subject to annual review and renewal by the European Commission, or EC, 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 September 2022, we submitted a Type II variation to the EMA to support conversion of the conditional marketing authorization for Translarna to a standard marketing authorization, which included a report on the placebo-controlled trial of Study 041 and data from the open-label extension as further described below. Study 041 was an 18-month, placebo-controlled trial, followed by an 18-month open-label extension of Translarna in the treatment of ambulatory patients with nmDMD aged five years or older. In February 2023, we also submitted an annual marketing authorization renewal request to the EMA. In September 2023, the Committee for Medicinal Products for Human Use, or CHMP, gave a negative opinion on the conversion of the conditional marketing authorization to full marketing authorization of Translarna for the treatment of nmDMD and a negative opinion on the renewal of the existing conditional marketing authorization of Translarna for the treatment of nmDMD. On January 25, 2024, the CHMP issued a negative opinion for the renewal of the conditional marketing authorization following a re-examination procedure. In accordance with EMA regulations, the EC has 67 days to adopt the opinion. If the EC adopts the negative opinion, Translarna would no longer have marketing authorization in the member states of the EEA. We are exploring other potential mechanisms in which we may provide Translarna to nmDMD patients in the EEA if the negative opinion is adopted by the EC.

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, or similar styled 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 the EC adopts the CHMP’s negative opinion, or we are otherwise unable to renew our EEA marketing authorization during any annual renewal cycle, or we are unable to identify other potential mechanisms in which we may provide Translarna to nmDMD patients in the EEA should the EC adopts the CHMP’s negative opinion or our product label is materially restricted, we would lose all, or a significant portion of, our ability to generate revenue from sales of Translarna in the EEA and other territories. For more information regarding the risks associated with the a potential EC adoption of the CHMP’s negative opinion on Translarna’s marketing authorization, see Item 1A. Risk Factors, “We may be unable to continue to commercialize Translarna for nonsense mutation Duchenne muscular dystrophy in the European Economic Area if the European Commission adopts the negative opinion issued by the Committee for Medicinal Products for Human Use of the European Medicines Agency for the renewal of the existing conditional authorization for Translarna.”

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

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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. Following this announcement, we submitted a meeting request to the FDA to gain clarity on the regulatory pathway for a potential re-submission of an NDA for Translarna. The FDA provided initial written feedback that Study 041 does not provide substantial evidence of effectiveness to support NDA re-submission. We held a Type C meeting with the FDA in the fourth quarter of 2023 to discuss the totality of Translarna data. Based on this discussion, the FDA suggested we request a pre-submission Type C meeting to discuss the specific contents of an NDA resubmission based on results from Study 041 and from our international drug registry study for nmDMD patients receiving Translarna. This meeting is scheduled for March 2024.

We have previously relied on Emflaza’s seven-year marketing exclusivity period in the United States for its approved indications under the provisions of the Orphan Drug Act of 1983, or the Orphan Drug Act, when commercializing Emflaza. Emflaza’s seven-year period of orphan drug exclusivity related to the treatment of DMD in patients five years and older expired in February 2024. We expect the expiration of this orphan drug exclusivity to have a significant negative impact on Emflaza net product revenue. Emflaza’s orphan drug exclusivity related to the treatment of DMD in patients two years of age to less than five expires in June 2026.

Upstaza is a gene therapy 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. In July 2022, the EC approved Upstaza for the treatment of AADC deficiency for patients 18 months and older within the EEA. In November 2022, the Medicines and Healthcare products Regulatory Agency approved Upstaza for the treatment of AADC deficiency for patients 18 months and older within the United Kingdom. We are also preparing a biologics license application, or BLA, for Upstaza for the treatment of AADC deficiency in the United States. In October 2022, we held a Type C meeting with the FDA to discuss the details of a potential submission package for Upstaza. At that meeting, the FDA asked for additional bioanalytical data in support of comparability between the drug product used in the clinical studies and the commercial drug product. We completed these analyses and provided the results to the FDA for review. The FDA stated that the data that we provided were still not sufficient. However, the FDA also said that the available data from the ongoing clinical study in the United States assessing the safety of the drug delivery cannula for Upstaza could be used to support a BLA for accelerated approval based on biomarker data demonstrating a treatment-related increase in de novo dopamine production. At the FDA’s suggestion, we held a pre-BLA meeting in December 2023. We expect to submit a BLA to the FDA for Upstaza for the treatment of AADC deficiency in March 2024.

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. In August 2021, ANVISA, the Brazilian health regulatory authority, approved Waylivra as the first treatment for familial chylomicronemia syndrome, or FCS, in Brazil. In December 2022, ANVISA approved Waylivra for the treatment of familial partial lipodystrophy, or FPL. Waylivra has also received marketing authorization in the EU for the treatment of FCS.

We also have a spinal muscular atrophy, or SMA, collaboration with F. Hoffman La Roche Ltd. and Hoffman La Roche inc., which we refer to collectively as Roche, and the Spinal Muscular Atrophy Foundation, or SMA Foundation. The SMA program has one approved product, Evrysdi® (risdiplam), 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 EC 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 has also received marketing authorization for the treatment of SMA in over 100 countries. In May 2022, the FDA approved a label expansion for Evrysdi to include infants under two months old with SMA. In August 2023, the EC approved an extension of the Evrysdi marketing authorization to include infants under two months old in the EU.

One of our most advanced clinical stage molecules is sepiapterin. Sepiapterin is a precursor to intracellular tetrahydrobiopterin, which is a critical enzymatic cofactor involved in metabolism and synthesis of numerous metabolic

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products, for orphan diseases. In May 2023, we announced that the primary endpoint was achieved in our registration-directed Phase 3 trial for sepiapterin for phenylketonuria, or PKU. The primary endpoint of the study was the achievement of statistically-significant reduction in blood Phe level. The primary analysis population included those patients who have a greater than 30% reduction in blood Phe levels during the Part 1 run-in phase of the trial. Sepiapterin demonstrated Phe level reduction of approximately 63% in the overall primary analysis population and Phe level reduction of approximately 69% in the subset for classical PKU patients. Additionally, sepiapterin was well tolerated with no serious adverse events. Following the placebo-controlled study, patients were eligible to enroll in a long-term open-label study, which is still ongoing and will evaluate long-term safety, durability and Phe tolerance. We expect to submit a marketing authorization application, or MAA, to the EMA for sepiapterin for the treatment of PKU in the EEA in March 2024. Additionally, we participated in a pre-NDA meeting with the FDA in the third quarter of 2023. At that meeting, the FDA stated that the sepiapterin clinical safety and efficacy data supported NDA submission for the treatment of pediatric and adult PKU patients. However, the FDA has requested that we complete a 26-week nonclinical mouse study to assess sepiapterin carcinogenicity potential prior to NDA submission. This nonclinical study was not initially required when we acquired sepiapterin, as the NDA submission was planned under the Section 505(b)(2) pathway. Given that sepiapterin is a novel therapy with distinct pharmacology, biodistribution, mechanism of action and differentiated efficacy, we subsequently decided to make the NDA submission under the Section 505(b)(1) pathway, which requires the 26-week study, which is considered a required NDA component needed to inform labeling and is typically completed prior to submission. Based on the timing to complete this study, we expect to submit an NDA to the FDA for sepiapterin for the treatment of PKU no later than the third quarter of 2024 and we intend to discuss with the FDA the potential for an earlier submission if we are permitted to submit the 26-week mouse study report during the NDA review process.

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. In June 2023, we announced interim data from the 12-week placebo-controlled phase. The study demonstrated dose-dependent lowering of Huntingtin, or HTT, protein levels in peripheral blood cells, reaching an approximate mean 30% reduction in mutant HTT levels at the 10mg dose level. In addition, PTC518 exposure in the cerebrospinal fluid was consistent with or higher than plasma unbound drug levels. Furthermore, PTC518 was well tolerated with no treatment-related serious adverse events. The Phase 2 study is actively ongoing outside the United States, while it has been paused within the United States as the FDA requested additional data to allow the Phase 2 study to proceed. We expect to provide 12-month interim data from the Phase 2 study of PTC518 for the treatment of HD in the second quarter of 2024. We expect to submit a safety data update to the FDA in the second quarter of 2024 to support lifting of the partial clinical hold on the program.

Our ferroptosis and inflammation 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 ferroptosis and inflammation platform are vatiquinone and utreloxastat.  We announced topline results from a registration-directed Phase 3 trial of vatiquinone in children and young adults with Friedreich ataxia, called MOVE-FA, in May 2023. While the study did not meet its primary endpoint of statistically significant change in modified Friedreich Ataxia Rating Scale, or mFARS, score at 72 weeks in the primary analysis population, vatiquinone treatment did demonstrate significant benefit on key disease subscales and secondary endpoints. In addition, in the population of subjects that completed the study protocol, significance was reached in the mFARS endpoint and several secondary endpoints, including the upright stability subscale. Furthermore, vatiquinone was well tolerated. In the first quarter of 2024, we met with the FDA, who expressed willingness to review an NDA for vatiquinone for the treatment of Friedreich ataxia based on the MOVE-FA trial as well as data from the ongoing open label extension study following the MOVE-FA trial, potentially allowing for the submission of an NDA in late 2024. In the first quarter of 2024, we also received scientific advice from the EMA on the MOVE-FA trial results, in which the EMA stated that the MOVE-FA data would likely not be sufficient for conditional authorization. In the third quarter of 2021, we completed a Phase 1 trial in healthy volunteers to evaluate the safety and pharmacology of utreloxastat. Utreloxastat was found to be well-tolerated with no reported serious adverse events while demonstrating predictable pharmacology. We initiated a Phase 2 registration

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directed trial of utreloxastat for amyotrophic lateral sclerosis, or ALS, in the first quarter of 2022. We expect topline results from this trial in the fourth quarter of 2024.

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 for rare diseases.

In May 2023 and September 2023, we announced strategic pipeline prioritizations following reviews of our portfolio.  In connection with the strategic pipeline prioritizations, we reduced our workforce by 32%, which primarily affected employees in the United States, including those employees involved in early-stage research and gene therapy manufacturing and associated selling, general and administrative functions. We substantially completed the reduction in workforce in January 2024. We also decided to discontinue our preclinical and early research programs for our gene therapy platform, which included programs for Friedreich ataxia and Angelman syndrome, as well as our oncology platform, which included programs for unesbulin for the treatment of diffuse intrinsic pontine glioma and leiomyosarcoma.

Overview—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. During 2023, our revenues were 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 or through similar styled programs, and from sales of Emflaza for the treatment of DMD in the United States. We also generated revenue from sales of Upstaza for the treatment of AADC deficiency in the EEA and have recognized revenue associated with milestone and royalty payments from Roche pursuant to a License and Collaboration Agreement, or the SMA License Agreement, by and among us, Roche and, for the limited purposes set forth therein, the SMA Foundation, under our SMA program.

See “Item 1. Business—Commercial Matters—Market Access Considerations” for additional information and “Item 1A. Risk Factors—Commercialization of Translarna and Upstaza has been in, and is expected to continue to take place in, countries that tend to impose strict price controls, which may adversely affect our revenues. Failure to obtain and maintain acceptable pricing and reimbursement terms for Translarna for the treatment of nmDMD or Upstaza for the treatment of AADC deficiency in the EEA and other countries where Translarna is available would delay or prevent us from marketing our product in such regions, which would adversely affect our business, results of operations, and financial condition.”

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 the Securities Act of 1933, as amended, or the Securities Act. We did not issue or sell any shares of common stock pursuant to the Sales Agreement during the years ending December 31, 2023, 2022, and 2021. 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 December 31, 2023.

In September 2019, we issued $287.5 million aggregate principal amount of 1.50% convertible senior notes due September 15, 2026, or the 2026 Convertible Notes, which included an option to purchase up to an additional $37.5 million in aggregate principal amount of the 2026 Convertible Notes, which was exercised in full by the initial purchasers. We received net proceeds of $279.3 million after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by us. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

In July 2020, we entered into a Royalty Purchase Agreement, or the Original Royalty Purchase Agreement, with RPI Intermediate Finance Trust, or RPI, and, for the limited purposes set forth in the agreement, Royalty Pharma plc. Pursuant to the Original Royalty Purchase Agreement, we sold to RPI 42.933%, or the Original Assigned Royalty Rights, of the

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Royalty (as defined below) for $650.0 million. At that time, we 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.

In June 2021, we filed a Certificate of Amendment to our Restated Certificate of Incorporation, which increased the number of authorized shares of our common stock from 125,000,000 to 250,000,000 shares.

In October 2022, we entered into the Credit Agreement, dated October 27, 2022, by and among us and certain of our subsidiaries from time to time party thereto, as guarantors, or, collectively with us, the Loan Parties, funds and other affiliated entities advised or managed by Blackstone Life Sciences and Blackstone Credit, or collectively, Blackstone, as lenders, together with their permitted assignees, the Lenders, and Wilmington Trust, National Association, as the administrative agent for the Lenders, or the Blackstone Credit Agreement. The Blackstone Credit Agreement provided for fundings of up to $950.0 million consisting of a committed loan facility consisting of a senior secured term loan facility funded on October 27, 2022, or the Closing Date, in the aggregate principal amount of $300.0 million, and a delayed draw term loan facility of up to $150.0 million to be funded at our request within 18 months of the Closing Date subject to specified conditions, and further contemplating the potential for up to $500.0 million of additional financing, to the extent that we requested such additional financing and subject to the Lenders’ agreement to provide such additional financing and to mutual agreement on terms. In October 2023, we terminated the Blackstone Credit Agreement. In connection with the termination of the Blackstone Credit Agreement, we repaid outstanding principal of $300.0 million, accrued interest of $2.1 million, an additional $82.0 million in prepayment premiums, exit fees, and creditor expenses, and $0.2 million in legal fees. We recorded a loss on the extinguishment of debt of $92.7 million which is included on the statement of operations for the period ended December 31, 2023. The loss on extinguishment of debt consisted of $82.0 million in prepayment premiums, exit fees, and creditor expenses and debt issuance costs of $10.7 million. All liens and security interests securing the loans made pursuant to the Blackstone Credit Agreement were released upon termination.

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In October 2023, we entered into an Amended and Restated Royalty Purchase Agreement, or the A&R Royalty Purchase Agreement, with Royalty Pharma Investments 2019 ICAV, or Royalty Pharma, and, for the limited purposes set forth in the agreement, Royalty Pharma plc which amends and restates in its entirety the Original Royalty Purchase Agreement.  Pursuant to the A&R Royalty Purchase Agreement, we have sold or agreed to sell to Royalty Pharma certain portions of our remaining retained right, title and interest in and to 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 under the SMA program (all such Royalty rights retained by us, are referred to as the Retained Royalty Rights, and all such Royalty rights that are sold to Royalty Pharma pursuant to the A&R Royalty Purchase Agreement, are referred to as the A&R Assigned Royalty Rights).  At closing, Royalty Pharma paid us $1.0 billion in cash consideration for 38.0447% of our Retained Royalty Rights (which is in addition to the 42.9330% assigned to Royalty Pharma in connection with the Original Royalty Purchase Agreement and referred to as the Original Assigned Royalty Rights, for a total of 80.9777% of the total Royalty) until such time as Royalty Pharma has received payments in respect of the Original Assigned Royalty Rights equal to $1.3 billion in the aggregate, and thereafter 66.6667% of the total Royalty. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

We have financed our operations to date primarily through the private offerings of convertible senior notes, public and “at the market offerings” of common stock, proceeds from royalty purchase agreements, net proceeds from our borrowings under our credit agreement with Blackstone, private placements of our convertible preferred stock and common stock, collaborations, bank and institutional lender debt, other convertible debt, grant funding and clinical trial support from governmental and philanthropic organizations and patient advocacy groups in the disease area addressed by our product candidates. We have relied on revenue generated from net sales of Translarna for the treatment of nmDMD in territories outside of the United States since 2014, Emflaza for the treatment of DMD in the United States since 2017 and Upstaza for the treatment of AADC deficiency in the EEA since 2022. We have also relied on revenue associated with milestone and royalty payments from Roche pursuant to the SMA License Agreement, under our SMA program.

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As of December 31, 2023, we had an accumulated deficit of $3,283.6 million. We had a net loss of $626.6 million, $559.0 million, and $523.9 million for the fiscal years ended December 31, 2023, 2022, and 2021, respectively.

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We anticipate that we will continue to incur significant expenses in connection with our commercialization efforts in the United States, the EEA, Latin America and other territories, including expenses related to our commercial infrastructure and corresponding sales and marketing, legal and regulatory, and distribution and manufacturing undertakings as well as administrative and employee-based expenses. In addition to the foregoing, we expect to continue to incur significant costs in connection with ongoing, planned and potential future clinical trials and studies for sepiapterin and our splicing and ferroptosis and inflammation programs as well as studies in our products for maintaining authorizations, label extensions and additional indications. 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 are exploring other potential mechanisms in which we may provide Translarna to nmDMD patients in the EEA if the EC adopts the CHMP’s negative opinion for Translarna following a re-examination procedure. We anticipate submitting a BLA to the FDA for Upstaza for the treatment of AADC deficiency in the United States in March 2024. We also expect to submit an MAA to the EMA for sepiapterin for the treatment of PKU in March 2024 and we expect to submit an NDA to the FDA for sepiapterin for the treatment of PKU no later than the third quarter of 2024. These efforts may significantly impact the timing and extent of our commercialization and manufacturing 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 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. Borrowings under the Blackstone Credit Agreement, which was terminated in October 2023, bore interest at a variable rate equal to, at our option, either an adjusted Term SOFR rate plus seven and a quarter percent (7.25%) or the Base Rate plus six and a quarter percent (6.25%), subject to a floor of one percent (1%) and two percent (2%) with respect to Term SOFR rate and Base Rate (each as defined in the Blackstone Credit Agreement), respectively.

In February 2023, we completed enrollment of our Phase 3 placebo-controlled clinical trial for sepiapterin for PKU.  In connection with this event and pursuant to the Censa Merger Agreement, we paid a $30.0 million development milestone to the former Censa securityholders during the year ended December 31, 2023. We elected to pay this milestone in the form of shares of our common stock, less certain cash payments in accordance with the Censa Merger Agreement. Pursuant to such election, we issued 657,462 shares of our common stock and paid $0.4 million to the former Censa securityholders.

We expect to make additional payments to the former Censa securityholders of $65.0 million in the aggregate in cash upon the potential achievement in 2024 of certain regulatory milestones relating to sepiapterin. Furthermore, we expect to pay the former equityholders of Agilis Biotherapeutics, Inc., or Agilis, $20.0 million in development milestone payments upon the acceptance for filing by the FDA of a BLA for Upstaza for the treatment of AADC deficiency and $4.5 million in regulatory milestone payments upon the approval of the BLA from the FDA pursuant to the Agreement and Plan of Merger, dated as of July 19, 2018, or the Agilis Merger Agreement, by and among us, Agility Merger Sub, Inc., a Delaware corporation and our wholly owned, indirect subsidiary, Agilis and, solely in its capacity as the representative, agent and attorney-in-fact of the equityholders of Agilis, Shareholder Representative Services LLC. We anticipate submitting a BLA to the FDA for Upstaza for the treatment of AADC deficiency in the United States in March 2024.

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.

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Financial operations overview

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. Our process for recognizing revenue is described below under “Critical accounting policies and significant judgments and estimates—Revenue recognition”.

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 December 31, 2023, we had recognized a total of $310.0 million in milestone payments and $341.8 million royalties on net sales pursuant to the SMA License Agreement. As of December 31, 2023, there are no remaining research and development event milestones that we can receive. The remaining potential sales milestones as of December 31, 2023 are $150.0 million upon achievement of certain sales events.

In July 2020, we entered into the Original Royalty Purchase Agreement. Pursuant to the Original Royalty Purchase Agreement, we sold to Royalty Pharma the Original Assigned Royalty Rights of the Royalty for $650.0 million. At that time, we 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.

In October 2023, we entered into the A&R Royalty Purchase Agreement. At closing, Royalty Pharma paid us $1.0 billion in cash consideration for 38.0447% of our Retained Royalty Rights (which is in addition to the Original Assigned Royalty Rights, for a total of 80.9777% of the total Royalty) until such time as Royalty Pharma has received payments in respect of the Original Assigned Royalty Rights equal to $1.3 billion in the aggregate, and thereafter 66.6667% of the total Royalty. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

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:

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 our activities for sepiapterin and our splicing and ferroptosis and inflammation programs and performance of any 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

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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. In 2023, as part of our strategic pipeline prioritizations, we decided to discontinue our preclinical and early research programs for our gene therapy and oncology platforms, reducing research and development expenses in these areas.

The following table provides research and development expense for our most advanced principal product development programs, for the years ended December 31, 2023, 2022, and 2021.

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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:

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 those products or product candidates. 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.

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 we will continue to incur significant selling, general and administrative expenses 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.

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Interest expense, net

Interest expense, net consists of interest expense from the liability for the sale of future royalties related to the Original Royalty Purchase Agreement, the A&R Royalty Purchase Agreement, the 2026 Convertible Notes outstanding, the Blackstone Credit Agreement that we repaid and terminated in October 2023, the 3.00% convertible senior notes due 2022, or the 2022 Convertible Notes, that we repaid in August 2022 offset by interest income earned on investments.

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.

Of our policies, the following are considered critical to an understanding of our consolidated financial statements as they require the application of the most subjective and complex judgment, involving critical accounting estimates and assumptions impacting our consolidated financial statements:

Revenue recognition related to net product revenue

Net product revenues. Our net product revenue primarily consists of sales of Translarna in territories outside of the U.S. and sales of Emflaza in the U.S., both for the treatment of DMD.  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.

During the years ended December 31, 2023, 2022, and 2021, net product sales in the United States were $255.1 million, $218.3 million, and $187.3 million, respectively, consisting solely of sales of Emflaza, and net product sales outside of the United States were $406.1 million, $316.9 million, and $241.6 million respectively, consisting of sales of Translarna, Tegsedi, Waylivra, and Upstaza. Translarna net product revenues made up $355.8 million, $288.6 million, and $236.0 million of the net product sales outside the United States for the years ended December 31, 2023, 2022, and 2021, respectively. During the years ended December 31, 2023 and 2022, two countries, the United States and Russia, accounted for at least 10% of our net product sales, representing $255.1 million and $86.0 million, and $218.3 million and $59.7

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million, respectively. During the year ended December 31, 2021, only the United States accounted for at least 10% of our net product sales.

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.

Contingent consideration from business combinations

The consideration for our business acquisitions may include future payments that are contingent upon the occurrence of a particular event or events. The obligations for such contingent consideration payments are recorded at fair value on the acquisition date. The contingent consideration obligations are then evaluated each reporting period. Changes in the fair value of contingent consideration, other than changes due to payments, are recognized as a gain or loss and recorded within the change in the fair value of deferred and contingent consideration on the consolidated statements of operations. The fair value of the development and regulatory milestones are estimated utilizing a probability adjusted, discounted cash flow approach. The discount rates are estimated utilizing Corporate B rated bonds maturing in the years of expected payments based on our estimated development timelines for the acquired product candidate. The fair value of the net sales milestones is determined utilizing a valuation framework that estimates net sales volatility to simulate a range of possible payment scenarios. The average of the payments in these scenarios is then discounted to calculate present fair value.

For a description of our significant accounting policies, see note 2 to our consolidated financial statements.

Year ended December 31, 2023 compared to year ended December 31, 2022

The following table summarizes revenues and selected expense and other income data for the year ended December 31, 2023 and 2022:

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Net product revenue.   Net product revenue was $661.2 million for the year ended December 31, 2023, an increase of $126.0 million, or 24%, from net product revenue of $535.2 million for the year ended December 31, 2022. Translarna net product revenues were $355.8 million for the year ended December 31, 2023, an increase of $67.2 million, or 23%, compared to $288.6 million for the year ended December 31, 2022. These results were driven by treatment of new patients in existing geographies and continued geographic expansion. Emflaza net product revenues were $255.1 million for the year ended December 31, 2023, an increase of $36.8 million, or 17%, compared to $218.3 million for the year ended

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December 31, 2022. These results were driven by new patient starts and high compliance. The remaining increase of $22.0 million was due to an increase in net product sales of Tegsedi, Waylivra, and Upstaza.

Collaboration revenue.   Collaboration revenue was $100.0 million for the year ended December 31, 2023, an increase of $50.0 million, or 100%, from collaboration revenue of $50.1 million for the year ended December 31, 2022. The increase is due to an increase in actual milestones that were achieved in the year ended December 31, 2023 compared to the year ended December 31, 2022, respectively. A sales milestone of $100.0 million was recognized for the achievement of $1.5 billion in worldwide annual net sales from Evrysdi in the year ended December 31, 2023. A sales milestone of $50.0 million was recognized for the achievement of $750.0 million in worldwide annual net sales from Evrysdi in the year ended December 31, 2022.

Royalty revenue. Royalty revenue was $168.9 million for the year ended December 31, 2023, an increase of $55.3 million, or 49%, from $113.5 million for the year ended December 31, 2022. The increase in royalty revenue was due to higher Evrysdi sales in the year ended December 31, 2023 compared to the year ended December 31, 2022. In accordance with the SMA License Agreement, we are entitled to royalties on worldwide annual net sales of the product.

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Manufacturing revenue. Manufacturing revenues were $7.7 million for the year ended December 31, 2023, an increase of $7.7 million, or over 100%, from $0.0 million for the year ended December 31, 2022. The increase is due to the manufacturing services related to the production of plasmid DNA and AAV vectors for gene therapy applications for external customers.

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Cost of product sales, excluding amortization of acquired intangible asset.  Cost of product sales, excluding amortization of acquired intangible asset, was $65.5 million for the year ended December 31, 2023, an increase of $20.8 million, or 47%, from $44.7 million for the year ended December 31, 2022. Cost of product sales excluding amortization of acquired intangible asset, consist primarily of royalty payments associated with Emflaza, Translarna and Upstaza net product sales, excluding contingent payments to Marathon, costs associated with Emflaza, Translarna and Upstaza product sold during the period, inventory reserves, 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 increases in net product revenue, Upstaza inventory reserves, royalty revenues, and collaboration milestone revenue.

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Amortization of acquired intangible asset.  Amortization of acquired intangible asset was $222.6 million for the year ended December 31, 2023, an increase of $106.1 million, or 91%, from $116.6 million for the year ended December 31, 2022. These amounts are related to the Emflaza rights acquisition, as well as the Waylivra, Tegsedi, and Upstaza intangible assets, which are all being amortized on a straight-line basis over their estimated useful lives. The amortization increase is primarily related to additional Marathon contingent payments for Emflaza.

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Research and development expense.   Research and development expense was $666.6 million for the year ended December 31, 2023, an increase of $15.1 million, or 2%, compared to $651.5 million for the year ended December 31, 2022. The increase in research and development expenses includes the achievement of a $30.0 million success-based development milestone for the completion of enrollment of a Phase 3 clinical trial for sepiapterin for PKU. The increase also includes restructuring costs from a reduction in workforce in connection with our strategic pipeline prioritization and discontinuation of our preclinical and early research programs in our gene therapy platform in the year ended December 31, 2023. These increases were partially offset by decreases in program spend related to our strategic portfolio prioritization as we continue to focus our resources on our differentiated, high potential research and development programs.

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Selling, general and administrative expense.  Selling, general and administrative expense was $332.5 million for the year ended December 31, 2023, an increase of $6.5 million, or 2%, from $326.0 million for the year ended December 31, 2022. The increase reflects our continued investment to support our commercial activities including our expanding commercial portfolio. The increase also includes restructuring costs from a reduction in workforce in connection with our strategic pipeline prioritization and discontinuation of our preclinical and early research programs in our gene therapy platform in the year ended December 31, 2023.

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Change in the fair value of contingent consideration. Change in the fair value of contingent consideration was a gain of $127.7 million for the year ended December 31, 2023, a change of $101.8 million, or over 100%, from a gain of $25.9 million for the year ended December 31, 2022. The change is primarily related to our strategic portfolio prioritization and decision to discontinue our preclinical and early research programs in our gene therapy platform, which included programs for Friedreich ataxia and Angelman syndrome, which was announced in May 2023. As a result, we fully impaired the Friedreich ataxia and Angelman syndrome intangible assets and determined that the fair value for all of the contingent consideration payable related to Friedreich ataxia and Angelman syndrome was $0. As a result, we recorded a fair value change of $128.4 million for the year ended December 31, 2023 for the contingent consideration related to Friedreich ataxia and Angelman syndrome

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Intangible asset impairment. Intangible asset impairment was $217.8 million for the year ended December 31, 2023, an increase of $184.4 million, or over 100%, from intangible asset impairment of $33.4 million for the year ended December 31, 2022. The change is due to our strategic portfolio prioritization and decision to discontinue our preclinical and early research programs in our gene therapy platform, which included programs for Friedreich ataxia and Angelman syndrome, which was announced in May 2023. As a result, we fully impaired the Friedreich ataxia and Angelman syndrome intangible assets and recorded impairment expense of $217.8 million during the year ended December 31, 2023. During the year ended December 31, 2022, a partial impairment of $33.4 million was recorded due to a decrease in projected cash flows for the Upstaza indefinite lived intangible asset due to refinements in market assumptions.

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Interest expense, net.   Interest expense, net was $129.2 million for the year ended December 31, 2023, an increase of $38.3 million, or 42%, from interest expense, net of $90.9 million for the year ended December 31, 2022. The increase in interest expense, net was primarily due to interest expense recorded from the liability for the sale of future royalties related to the A&R Royalty Purchase Agreement and the Original Royalty Purchase Agreement.

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Other income (expense), net.  Other income, net was $10.1 million for the year ended December 31, 2023, a change

of $59.3 million, or over 100%, from other expense, net of $49.2 million for the year ended December 31, 2022. The change in other income (expense), net resulted primarily from unrealized foreign exchange gains of $11.7 million and realized foreign currency exchanges losses of $2.7 million, for the year ended December 31, 2023, as compared to unrealized foreign exchange losses of $14.4 million and a non cash foreign currency remeasurement loss of $16.9 million from the remeasurement of our intercompany loan for the year ended December 31, 2022. In addition, we had unrealized and realized losses on our equity investments and convertible debt security in ClearPoint Neuro, Inc. (formerly MRI Interventions, Inc.), or ClearPoint, of $2.7 million and $2.3 million, respectively, for the year ended December 31, 2023, as compared to unrealized losses on our equity investments and convertible debt security in ClearPoint, of $3.5 million and $5.8 million, respectively, for the year ended December 31, 2022.

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Loss on extinguishment of debt.  Loss on extinguishment of debt was $137.6 million for the year ended December 31, 2023, an increase of $137.6 million, or 100%, from loss on extinguishment of debt of $0.0 million for the year ended December 31, 2022. The increase was primarily due to the early termination of our Blackstone Credit Agreement. We recorded a loss on the extinguishment of debt of $92.7 million for the period ended December 31, 2023. The loss on extinguishment of debt consisted of $82.0 million in prepayment premiums, exit fees, and creditor expenses and debt issuance costs of $10.7 million. In addition, we recorded $44.9 million on the loss of extinguishment of debt relating to the A&R Royalty Purchase Agreement.

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Income tax benefit.   Income tax benefit was $69.5 million for the year ended December 31, 2023, an increase of $41.0 million, or over 100%, from income tax benefit of $28.5 million for the year ended December 31, 2022. The increase in income tax benefit is attributable to the receipt of an outstanding state tax refund received during the year ended December 31, 2023, and the subsequent release of the associated ASC 740 income tax reserve, as well as the reversal of the deferred tax liability recognized in conjunction with the discontinuation of our preclinical and early research programs in our gene therapy platform, which included programs for Friedreich ataxia and Angelman syndrome, during the year ended December 31, 2023.

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Year ended December 31, 2022 compared to year ended December 31, 2021

The following table summarizes revenues and selected expense and other income data for the years ended December 31, 2022 and 2021:

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Net product revenue.   Net product revenue was $535.2 million for the year ended December 31, 2022, an increase of $106.3 million, or 25%, from net product revenue of $428.9 million for the year ended December 31, 2021. Translarna net product revenues were $288.6 million for the year ended December 31, 2022, an increase of $52.6 million, or 22%, compared to $236.0 million for the year ended December 31, 2021. These results were driven by treatment of new patients in existing geographies and continued geographic expansion. Emflaza net product revenues were $218.3 million for the year ended December 31, 2022, an increase of $31.0 million, or 17%, compared to $187.3 million for the year ended December 31, 2021. These results were driven by new patient prescriptions, continued high compliance, and appropriate weight-based dosing. The remaining increase of $22.7 million was due to an increase in net product sales of Tegsedi, Waylivra, and Upstaza.

Collaboration revenue.   Collaboration revenue was $50.1 million for the year ended December 31, 2022, a decrease of $5.0 million, or 9%, from collaboration revenue of $55.0 million for the year ended December 31, 2021. The decrease is due to a decrease in actual milestones that were achieved in the year ended December 31, 2022 compared to the year ended December 31, 2021, respectively. A sales milestone of $50.0 million was recognized for the achievement of $750.0 million in worldwide annual net sales from Evrysdi in the year ended December 31, 2022. In March 2021, the first commercial sale of Evrysdi in the EU was made. This event triggered a $20.0 million milestone payment to us from Roche. Additionally, in June 2021, the Japanese Ministry of Health, Labor and Welfare approved Evrysdi for the treatment of SMA in Japan. In August 2021, the first commercial sale of Evrysdi in Japan triggered a $10.0 million milestone payment to us from Roche.  In December 2021, we recorded our first sales milestone of $25.0 million for the achievement of $500.0 million in worldwide annual net sales from Evrysdi.

Royalty revenue. Royalty revenue was $113.5 million for the year ended December 31, 2022, an increase of $58.9 million, or over 100%, from $54.6 million for the year ended December 31, 2021. The increase in royalty revenue was due to higher Evrysdi sales in the year ended December 31, 2022 as compared to the year ended December 31, 2021. In accordance with the SMA License Agreement, we are entitled to royalties on worldwide annual net sales of the product.

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Cost of product sales, excluding amortization of acquired intangible asset.  Cost of product sales, excluding amortization of acquired intangible asset, was $44.7 million for the year end December 31, 2022, an increase of $12.4 million, or 38%, from $32.3 million for the year ended December 31, 2021. Cost of product sales, excluding amortization of acquired intangible asset, consist primarily of royalty payments associated with Emflaza, Translarna and Upstaza net product sales, excluding contingent payments to Marathon, costs associated with Emflaza, Translarna and Upstaza product

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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 increases in net product revenue, royalty revenues, and collaboration milestone revenue.

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Amortization of acquired intangible asset.  Amortization of acquired intangible asset was $116.6 million for the year ended December 31, 2022, an increase of $61.8 million, or over 100%, from $54.8 million for the year ended December 31, 2021. These amounts are related to the Emflaza rights acquisition, as well as the Waylivra, Tegsedi, and Upstaza intangible assets, which are all being amortized on a straight-line basis over their estimated useful lives. With the approval of Upstaza by the EC in July 2022, $89.6 million was reclassified from indefinite lived intangible assets to definite lived intangible assets, which is being amortized over its expected useful life. The amortization increase is primarily related to the additional Marathon contingent payments, which includes a $50.0 million contingent payment made in the year ended December 31, 2022.

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Research and development expense.   Research and development expense was $651.5 million for the year ended December 31, 2022, an increase of $110.8 million, or 20%, compared to $540.7 million for the year ended December 31, 2021.  The increase in research and development expenses is primarily related to increased investment in research programs and advancement of the clinical pipeline.

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Selling, general and administrative expense.  Selling, general and administrative expense was $326.0 million for the year ended December 31, 2022, an increase of $40.2 million, or 14%, from $285.8 million for the year ended December 31, 2021. The increase reflects our continued investment to support our commercial activities including our expanding commercial portfolio.

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Change in the fair value of contingent consideration. Change in the fair value of contingent consideration was a gain of $25.9 million for the year ended December 31, 2022, a change of $25.4 million, or over 100%, from a gain of $0.5 million for the year ended December 31, 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.

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Intangible asset impairment. Intangible asset impairment was $33.4 million for the year ended December 31, 2022, an increase of $33.4 million, 100%, from intangible asset impairment of $0.0 million for the year ended December 31, 2021. The increase was due to a decrease in projected cash flows for the Upstaza indefinite lived intangible asset due to refinements in current market assumptions and the timing of patient treatments, resulting in a partial impairment.

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Interest expense, net.   Interest expense, net was $90.9 million for the year ended December 31, 2022, an increase of $4.8 million, 6%, from interest expense, net of $86.0 million for the year ended December 31, 2021.  The increase in interest expense, net was primarily due to interest expense recorded from the senior secured term loan, partially offset by lower interest expense due to the repayment of the 2022 Convertible Notes.

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Other expense, net.   Other expense, net was $49.2 million for the year ended December 31, 2022, a decrease of $8.7 million, 15%, from other expense, net of $57.9 million for the year ended December 31, 2021. The decrease in other expense, net resulted primarily from an unrealized foreign exchange loss of $14.4 million and a non cash foreign currency remeasurement loss of $16.9 million from the remeasurement of our intercompany loan for the year end December 31, 2022, as compared to an unrealized foreign exchange loss of $41.0 million from the remeasurement of our intercompany loan for the year ended December 31, 2021. In addition, we had unrealized losses on our equity investments and convertible debt security in ClearPoint, of $3.5 million and $5.8 million, respectively, for the year ended December 31, 2022, as compared to unrealized losses on our equity investments and convertible debt security in ClearPoint of $6.1 million and $8.3 million, respectively, for the year ended December 31, 2021

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Income tax benefit (expense).   Income tax benefit was $28.5 million for the year ended December 31, 2022, a change of $34.0 million, or over 100%, from income tax expense of $5.6 million for the year ended December 31, 2021. The change in income tax benefit (expense) is primarily attributable to the partial amortization of an intangible which had

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previously been classified as an indefinite lived intangible, and the subsequent release of a portion of the valuation allowance associated with this asset.

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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 primarily consisted of 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 or similar styled programs in the EEA and other territories. On January 25, 2024, the CHMP issued a negative opinion for the renewal of the conditional marketing authorization following a re-examination procedure. In accordance with EMA regulations, the EC has 67 days to adopt the opinion from the date of its issuance. If the EC adopts the negative opinion, Translarna would no longer have marketing authorization in the EEA. Emflaza is approved in the United States for the treatment of DMD in patients two years and older. 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.  Additionally, Emflaza’s seven-year period of orphan drug exclusivity related to the treatment of DMD in patients five years and older expired in February 2024. We have previously relied on this exclusivity period to commercialize Emflaza in the United States. We expect the expiration of this orphan drug exclusivity to have a significant negative impact on Emflaza net product revenue. Emflaza’s orphan drug exclusivity related to the treatment of DMD in patients two years of age to less than five expires in June 2026.

We have financed our operations to date primarily through private offerings of convertible senior notes, public and “at the market offerings” of common stock, proceeds from royalty purchase agreements, net proceeds from our borrowings under our credit agreement with Blackstone, private placements of our convertible preferred stock and common stock, collaborations, bank and institutional lender debt, other convertible debt, grant funding and clinical trial support from governmental and philanthropic organizations and patient advocacy groups in the disease area 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 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 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Funding” for additional information regarding the transactions described in this paragraph.

In September 2019, we issued $287.5 million aggregate principal amount of 2026 Convertible Notes, which included an option to purchase up to an additional $37.5 million in aggregate principal amount of the 2026 Convertible Notes, which was exercised in full by the initial purchasers. 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.

Holders may convert their 2026 Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding March 15, 2026 only under the following circumstances: (1) during any calendar quarter commencing on or after December 31, 2019 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive

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trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price (as defined in the 2026 Convertible Notes Indenture) per $1,000 principal amount of 2026 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) during any period after we have issued notice of redemption until the close of business on the scheduled trading day immediately preceding the relevant redemption date; or (4) upon the occurrence of specified corporate events. On or after March 15, 2026, until the close of business on the business day immediately preceding the maturity date, holders may convert their 2026 Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or any combination thereof at our election.

The conversion rate for the 2026 Convertible Notes was initially, and remains, 19.0404 shares of our common stock per $1,000 principal amount of the 2026 Convertible Notes, which is equivalent to an initial conversion price of approximately $52.52 per share of our common stock. The conversion rate may be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

We were not permitted to redeem the 2026 Convertible Notes prior to September 20, 2023. We may redeem for cash all or any portion of the 2026 Convertible Notes, at our option, if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect on the last trading day of, and for at least 19 other trading days (whether or not consecutive) during, any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2026 Convertible Notes, which means that we are not required to redeem or retire the 2026 Convertible Notes periodically.

If we undergo a “fundamental change” (as defined in the 2026 Convertible Notes Indenture), subject to certain conditions, holders of the 2026 Convertible Notes may require us to repurchase for cash all or part of their 2026 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2026 Convertible Notes represent senior unsecured obligations and will rank senior in right of payment to our future indebtedness that is expressly subordinated in right of payment to the notes, equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated, effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) incurred by our subsidiaries. The 2026 Convertible Notes Indenture contains customary events of default with respect to the 2026 Convertible Notes, including that upon certain events of default (including our failure to make any payment of principal or interest on the 2026 Convertible Notes when due and payable) occurring and continuing, the 2026 Convertible Notes Trustee by notice to us, or the holders of at least 25% in principal amount of the outstanding 2026 Convertible Notes by notice to us and the Convertible Notes Trustee, may, and the 2026 Convertible Notes Trustee at the request of such holders (subject to the provisions of the 2026 Convertible Notes Indenture) will, declare 100% of the principal of and accrued and unpaid interest, if any, on all the 2026 Convertible Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving us or a significant subsidiary, 100% of the principal of and accrued and unpaid interest on the 2026 Convertible Notes will automatically become due and payable. Upon such a declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately.

In July 2020, we entered into the Original Royalty Purchase Agreement. Pursuant to the Original Royalty Purchase Agreement, we sold to Royalty Pharma the Original Assigned Royalty Rights in consideration for $650.0 million. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Funding” for additional information regarding this transaction.

In October 2022, we entered into the Blackstone Credit Agreement for fundings of up to $950.0 million consisting of a committed loan facility consisting of a senior secured term loan facility funded on the Closing Date, in the aggregate

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principal amount of $300.0 million, and a delayed draw term loan facility of up to $150.0 million to be funded at our request within 18 months of the Closing Date subject to specified conditions, and further contemplating the potential for up to $500.0 million of additional financing, to the extent that we request such additional financing and subject to the Lenders’ agreement to provide such additional financing and to mutual agreement on terms. In October 2023, we terminated the Blackstone Credit Agreement. We recorded a loss on the extinguishment of debt of $92.7 million which is included on the statement of operations for the period ended December 31, 2023. The loss on extinguishment of debt consisted of $82.0 million in prepayment premiums, exit fees, and creditor expenses and debt issuance costs of $10.7 million. All liens and security interests securing the loans made pursuant to the Blackstone Credit Agreement were released upon termination.

In October 2023, we entered into the A&R Royalty Purchase Agreement.  At closing, Royalty Pharma paid us $1.0 billion in cash consideration for 38.0447% of our Retained Royalty Rights (which is in addition to the Original Assigned Royalty Rights, for a total of 80.9777% of the total Royalty) until such time as Royalty Pharma has received payments in respect of the Original Assigned Royalty Rights equal to $1.3 billion in the aggregate, and thereafter 66.6667% of the total Royalty.  In addition, we may sell to Royalty Pharma the remainder of our Retained Royalty Rights in exchange for an aggregate of $500.0 million in additional cash consideration after the closing of the A&R Royalty Purchase Agreement, less royalties received in respect of the Retained Royalty Rights put to Royalty Pharma, which will be payable by Royalty Pharma pursuant to five put options held by us that are exercisable at our option between January 1, 2024 and December 31, 2025.  If we exercise two or fewer of the put options, Royalty Pharma may exercise a call option during the period from and after January 1, 2026 until and including March 31, 2026 for up to 50% of the remainder of our Retained Royalty Rights less amounts exercised by us via our put options at a purchase price that is proportional to the purchase price of our unexercised put options. Royalty Pharma’s exercise of the call option would result in Royalty Pharma owning 90.4888% of the total Royalty until such time as Royalty Pharma has received payments in respect of the Original Assigned Royalty Rights equal to $1.3 billion in the aggregate, and thereafter 83.3333% of the total Royalty.

The A&R Royalty Purchase Agreement includes specified negative and affirmative covenants with respect to our rights under the SMA License Agreement as well as other customary representations and warranties, covenants and other provisions. The A&R Royalty Purchase Agreement will terminate 60 days following the date on which Roche is no longer obligated to make any payments of the Royalty pursuant to the SMA License Agreement.

Cash flows

As of December 31, 2023, we had cash and cash equivalents and marketable securities of $876.7 million.

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

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Net cash used in operating activities was $158.4 million, $356.7 million, and $251.3 million for the years ended December 31, 2023, 2022, and 2021, respectively. The net cash used in operating activities primarily relates to supporting clinical development and commercial activities for the years ended December 31, 2023, 2022, and 2021.

Net cash used in investing activities was $176.7 million for the year ended December 31, 2023. Net cash provided by investing activities was $290.2 million and 219.2 million for the years ended December 31, 2022, and 2021, respectively. The cash used in investing activities for the year ended December 31, 2023 is primarily attributable to the purchases of marketable securities – available for sale, purchases of marketable securities – equity investments, purchases of fixed assets, and the acquisition of product rights, offset by the sale and redemption of marketable securities – available for sale,

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sale and redemption of marketable securities – equity investments, and the sale and redemption of ClearPoint Equity Investments. The cash provided by investing activities for the years ended December 31, 2022 and December 31, 2021 were primarily related to net sales and redemptions of marketable securities – available for sale and net sales and redemptions of marketable securities – equity investments, partially offset by purchases of marketable securities – available for sale, purchases of marketable securities – equity investments, purchases of fixed assets, and the acquisition of product rights.

Net cash provided by financing activities was $646.4 million, $168.0 million, and $20.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. The cash provided by financing activities for the year ended December 31, 2023 is primarily attributable to the proceeds received from the A&R Royalty Purchase Agreement, exercise of options, issuance of stock under our Employee Stock Purchase Plan, or ESPP, offset by the repayment of the senior secured term loan, debt issuance costs, debt extinguishment costs related to senior secured term loan, and payments on our finance lease principal. The cash provided by financing activities for the year ended December 31, 2022 is primarily attributable to the proceeds from the issuance of the senior secured term loan under the Blackstone Credit Agreement, the stock purchase agreement entered into in connection with the execution of the Blackstone Credit Agreement, the exercise of options, and issuance of stock under our ESPP, offset by the repayment of the 2022 Convertible Notes, payments on contingent consideration obligation, and payments on our finance lease principal. The cash provided by financing activities for the year ended December 31, 2021 is primarily attributable to the exercise of options, and issuance of stock under our ESPP offset by payments on our finance lease principal.

Funding requirements

We anticipate that we will continue to incur significant expenses in connection with our commercialization efforts in the United States, the EEA, Latin America and other territories, including expenses related to our commercial infrastructure and corresponding sales and marketing, legal and regulatory, and distribution and manufacturing undertakings as well as administrative and employee-based expenses. In addition to the foregoing, we expect to continue to incur significant costs in connection with ongoing, planned and potential future clinical trials and studies for sepiapterin and our splicing and ferroptosis and inflammation programs as well as studies in our products for maintaining authorizations, label extensions and additional indications. 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 are exploring other potential mechanisms in which we may provide Translarna to nmDMD patients in the EEA if the EC ratifies the CHMP’s negative opinion for Translarna following a re-examination procedure. We anticipate submitting a BLA to the FDA for Upstaza for the treatment of AADC deficiency in the United States in March 2024. We also expect to submit an MAA to the EMA for sepiapterin for the treatment of PKU in March 2024 and we expect to submit an NDA to the FDA for sepiapterin for the treatment of PKU no later than the third quarter of 2024. These efforts may significantly impact the timing and extent of our commercialization and manufacturing expenses.

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

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We believe that our cash flows from product sales, together with existing cash and cash equivalents, 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:

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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.

In February 2023, we completed enrollment of our Phase 3 placebo-controlled clinical trial for sepiapterin for PKU.  In connection with this event and pursuant to the Censa Merger Agreement, we paid a $30.0 million development milestone to the former Censa securityholders during the year ended December 31, 2023. We elected to pay this milestone in the form of shares of our common stock, less certain cash payments in accordance with the Censa Merger Agreement. Pursuant to such election, we issued 657,462 shares of our common stock and paid $0.4 million to the former Censa securityholders.

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We expect to make additional payments to the former Censa securityholders of $65.0 million in the aggregate in cash upon the potential achievement in 2024 of certain regulatory milestones relating to sepiapterin pursuant to the Censa Merger Agreement. We also expect to pay the former equityholders of Agilis $20.0 million in development milestone payments upon the acceptance for filing by the FDA of a BLA for Upstaza for the treatment of AADC deficiency and $4.5 million in regulatory milestone payments upon the approval of the BLA from the FDA.  We anticipate submitting a BLA to the FDA for Upstaza for the treatment of AADC deficiency in the United States in March 2024. 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 also have certain significant contractual obligations and commercial commitments that require funding. We lease office space for our principal office in South Plainfield, New Jersey and we occupy under leases that expire in 2024, with two consecutive five-year renewal options to renew the leases after 2024. Additionally, we entered into a lease agreement for approximately 103,000 square feet of laboratory and office space in Bridgewater, New Jersey.  The rental term for such facility commenced on May 1, 2020 with an initial term of seven years and two consecutive five year renewal periods at our option. We have significant lease obligations that stem from our lease of office, manufacturing, and laboratory space in Hopewell, New Jersey. The rental term for such facility commenced on July 1, 2020, with an initial term of fifteen years and two consecutive 10-year renewal periods at our option. We also lease 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 for such facility commenced on June 1, 2022, with an initial term of seventeen years followed by three consecutive five-year renewal periods at our option. In addition, we lease office space, vehicles and equipment in various other locations in the U.S. and other countries for our employees and operations. We have a total of $252.6 million in obligations that stem from our operating leases.

We have a total of $27.0 million in obligations that stem from a commercial manufacturing services agreement entered into with MassBio on June 19, 2020, for a term of 12.5 years. Pursuant to the terms of the agreement, MassBio agreed to provide us with four dedicated rooms for our Upstaza program.

Under an Exclusive License and Supply Agreement, or the Faes Agreement, with Faes Farma, S.A., or Faes, we are required to pay royalties as a percentage of or as a fixed payment with respect to net product sales by us allocable to the Emflaza oral suspension product. We are required to pay Faes an annual minimum royalty during the first seven calendar years from the FDA approval date of the Emflaza oral suspension product. The minimum royalty based on the euro to U.S. dollar exchange rate as of December 31, 2023 is $1.7 million, which represents the last annual minimum royalty payment due. Thereafter, a fixed percentage royalty is due during the remainder of the Faes Agreement term.

Under various agreements, including the sponsored research agreement with the SMA Foundation discussed below, we will be required to pay royalties and milestone payments upon the successful development and commercialization of products.

We have entered into a sponsored research agreement with the SMA Foundation in connection with our spinal muscular atrophy program. We may become obligated to pay the SMA Foundation single-digit royalties on worldwide net product sales of any collaboration product that we successfully develop and subsequently commercialize or, with respect to collaboration products we outlicense, including Evrysdi, a specified percentage of certain payments we receive from our licensee. We are not obligated to make such payments unless and until annual sales of a collaboration product exceed a designated threshold. Since inception, the SMA Foundation has earned $52.5 million, $35.3 million which was paid and $17.2 million which was accrued as of December 31, 2023.  We have reached our obligation to make such payments to the SMA Foundation of an aggregate of $52.5 million as of December 31, 2023. Refer to “Ongoing Acquisition- Related Obligations” in Item 1. Business.

Additionally, we have employment agreements with certain employees which require the funding of a specific level of payments, if certain events, such as a change in control or termination without cause, occur.

We have never been profitable and 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

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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 stockholders 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.

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 Annual Report on Form 10-K. 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 I, Item 1A. Risk Factors, of this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements.

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 little to 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 relating to neurology, metabolism and oncology.

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 European Economic Area, or EEA, for the treatment of nonsense mutation Duchenne muscular dystrophy, or nmDMD, in ambulatory patients

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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 year ended December 31, 2022, we recognized $288.6 million in sales of 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 year ended December 31, 2022, Emflaza achieved net sales of $218.3 million.

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. In September 2022, we submitted a Type II variation to the EMA to support conversion of the conditional marketing authorization for Translarna to a standard marketing authorization, which included a report on the placebo-controlled trial of Study 041 and data from the open-label extension. We expect an opinion from the Committee for Medicinal Products for Human Use in the first half of 2023.

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. Following this announcement, we submitted a meeting request to the FDA to gain clarity on the regulatory pathway for a potential re-submission of an NDA for

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Translarna. The FDA provided initial written feedback that Study 041 does not provide substantial evidence of effectiveness to support NDA re-submission. We recently had an informal meeting with the FDA, during which we discussed the potential path to an NDA re-submission for Translarna. Based on the meeting discussion, we plan to request an additional Type C meeting with the FDA in the near future to review the totality of data collected to date, including dystrophin and other mechanistic data as well as additional analyses that could support the benefit of Translarna.

We have a pipeline of gene therapy product candidates for rare monogenic diseases that affect the CNS, including Upstaza 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 EEA. In July 2022, the European Commission approved Upstaza for the treatment of AADC deficiency for patients 18 months and older within the EEA. In November 2022, the Medicines and Healthcare Products Regulatory Agency approved Upstaza for the treatment of AADC deficiency for patients 18 months and older within the United Kingdom. We are also preparing a biologics license application, or BLA, for Upstaza for the treatment of AADC deficiency in the United States. In October 2022, we held a type C meeting with the FDA to discuss the details of a potential submission package for Upstaza. At such meeting, the FDA asked for additional bioanalytical data in support of comparability between the drug product used in the clinical studies and the commercial drug product. We have completed these analyses and provided the results to the FDA for review. We expect to submit a BLA to the FDA in the first half of 2023.

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. In December 2022, ANVISA approved Waylivra for the treatment of familial partial lipodystrophy, or FPL. Waylivra has also received marketing authorization in the EU for the treatment of FCS.

We also have a spinal muscular atrophy, or SMA, collaboration with F. Hoffman-La Roche Ltd. and Hoffman-La Roche Inc., which we refer to collectively as Roche, and the Spinal Muscular Atrophy Foundation, or SMA Foundation. The SMA program has one approved product, Evrysdi® (risdiplam), 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 and we expect the EMA to make a regulatory decision on approval for a label expansion for Evrysdi to include infants under two months old with SMA in 2023. 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. Enrollment in the Phase 2 study remains active and ongoing outside of the United States. Enrollment within the United States is paused as the FDA has requested additional data to allow the Phase 2 study to proceed; discussions are ongoing with the FDA to allow the resumption of U.S. enrollment. We expect data from the initial 12-week phase of the Phase 2 study in the second quarter of 2023.

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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 utreloxastat. 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 completed enrollment in this trial after previously experiencing delays in enrollment due to the COVID-19 pandemic. We anticipate results from the Phase 2/3 trial to be available in the second 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 utreloxastat. Utreloxastat was found to be well-tolerated with no reported serious adverse events while demonstrating predictable pharmacology. We initiated a Phase 2 trial of utreloxastat for amyotrophic lateral sclerosis in the first quarter of 2022 and enrollment is ongoing.

The most advanced molecule in our metabolic platform is 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 sepiapterin for PKU in the third quarter of 2021 with the primary endpoint in the study of achieving statistically-significant reduction in blood Phe level. The primary analysis population includes those patients who have a greater than 30% reduction in blood Phe levels during the Part 1 run-in phase of the trial. In January 2023, we announced preliminary data from the Part 1 run-in phase of this trial, including that the mean reduction in blood Phe levels in an initial cohort of subjects during the Part 1 would be recognized as clinically meaningful if maintained in Part 2 of the  trial. We now expect results from Part 2 of this trial to be available in May 2023 as the trial is overenrolled and additional time is required for the entirety of the primary analysis population to complete the study.

Unesbulin is our most advanced oncology agent. 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 enrollment is ongoing.  The initiation of our registration-directed Phase 2/3 trial of unesbulin for DIPG was delayed as we continued to track the progress of patients in our Phase 1 trial and analyze the corresponding data. We now expect to initiate a registration-directed Phase 2/3 trial of unesbulin for the treatment of DIPG in the fourth quarter of 2023.

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 for rare diseases.

COVID-19 Impact

The global pandemic caused by a strain of novel coronavirus, COVID-19, has impacted the timing of certain of our clinical trials and regulatory submissions as well as other aspects of our business operations. 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 have previously, and may once again, 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 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.”

Overview—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. During 2022, our revenues were 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 also generated revenue

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from sales of Upstaza for the treatment of AADC deficiency in the EEA and have recognized revenue associated with milestone and royalty payments from Roche pursuant to a License and Collaboration Agreement, or the SMA License Agreement, by and among us, Roche and, for the limited purposes set forth therein, the SMA Foundation, under our SMA program.

See “Item 1. Business—Commercial Matters—Market Access Considerations” for additional information and “Item 1A. Risk Factors—Commercialization of Translarna and Upstaza has been in, and is expected to continue to take place in, countries that tend to impose strict price controls, which may adversely affect our revenues. Failure to obtain and maintain acceptable pricing and reimbursement terms for Translarna for the treatment of nmDMD or Upstaza for the treatment of AADC deficiency in the EEA and other countries where Translarna is available would delay or prevent us from marketing our product in such regions, which would adversely affect our business, results of operations, and financial condition.”

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 the Securities Act of 1933, as amended, or the Securities Act. During the year ended December 31, 2020, we issued and sold an aggregate of 542,470 shares of common stock pursuant to the Sales Agreement at a weighted average public offering price of $53.37 per share. We received net proceeds of $28.1 million after deducting agent discounts and commissions and other offering expenses payable by us. We did not issue or sell any shares of common stock pursuant to the Sales Agreement during the years ending December 31, 2021 and December 31, 2022. 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 December 31, 2022.

In September 2019, we issued $287.5 million aggregate principal amount of 1.50% convertible senior notes due September 15, 2026, or the 2026 Convertible Notes, which included an option to purchase up to an additional $37.5 million in aggregate principal amount of the 2026 Convertible Notes, which was exercised in full by the initial purchasers. We received net proceeds of $279.3 million after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by us. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

On April 29, 2020, we entered into a Rights Exchange Agreement, or the Rights Exchange Agreement, pursuant to which we issued 2,821,176 shares of our common stock and paid $36.9 million, in the aggregate, to certain former equityholders, or the Participating Rightholders, of Agilis Biotherapeutics, Inc., or Agilis, in exchange for the cancellation and forfeiture by the Participating Rightholders of their rights to receive certain milestone-based contingent payments under the Agreement and Plan of Merger, dated as of July 19, 2018 by and among us, Agility Merger Sub, Inc. and, solely in its capacity as the representative, agent and attorney-in-fact of the equityholders of Agilis, Shareholder Representative Services LLC, or the Agilis Merger Agreement.

On May 29, 2020, we acquired Censa Pharmaceuticals, Inc., or Censa, for total upfront consideration composed of (i) cash consideration of $15.0 million, which consisted of an upfront payment of $10.4 million and an additional $4.6 million for the net assets on Censa's opening balance sheet as of the date of the acquisition, and (ii) 845,364 shares of our common stock, which were valued at $42.9 million based on the closing stock price on the acquisition date. The number of shares issued was determined using a 30-day VWAP pursuant to the Agreement and Plan of Merger, dated as of May 5, 2020, or the Censa Merger Agreement, by and among us, Hydro Merger Sub, Inc., our wholly owned, indirect subsidiary, and, solely in its capacity as the representative, agent and attorney-in-fact of the securityholders of Censa, Shareholder Representative Services LLC.

In July 2020, we entered into a Royalty Purchase Agreement, or the Royalty Purchase Agreement, with RPI 2019 Intermediate Finance Trust, or RPI, pursuant to which 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 the sale of the Assigned Royalty Payments, RPI paid us $650.0 million in cash consideration. The Royalty Purchase Agreement will terminate 60 days following the earlier

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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 Payments.

In June 2021, we filed a Certificate of Amendment to our Restated Certificate of Incorporation, which increased the number of authorized shares of our common stock from 125,000,000 to 250,000,000 shares.

In October 2022, we entered into a credit agreement, or the Blackstone Credit Agreement, for fundings of up to $950.0 million consisting of a committed loan facility consisting of a senior secured term loan facility funded on October 27, 2022, or the Closing Date, in the aggregate principal amount of $300.0 million, and a delayed draw term loan facility of up to $150.0 million to be funded at our request within 18 months of the Closing Date subject to specified conditions, and further contemplating the potential for up to $500.0 million of additional financing, to the extent that we request such additional financing and subject to the Lenders’ agreement to provide such additional financing and to mutual agreement on terms among us and certain of our subsidiaries, or, collectively with us, the Loan Parties, and funds and other affiliated entities advised or managed by Blackstone Life Sciences and Blackstone Credit, or collectively, Blackstone, and such lenders, together with their permitted assignees, the Lenders, and Wilmington Trust, National Association, as the administrative agent for the Lenders. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

In connection with the execution of the Blackstone Credit Agreement, we and certain entities affiliated with the Lenders, or the Purchasers, also entered into a stock purchase agreement on the Closing Date for the sale and issuance of 1,095,290 shares of common stock to the Purchasers at a price of $45.65 per share, for an aggregate purchase price of approximately $50.0 million. The per share price represents the closing price of our common stock on the Nasdaq Global Select Market on October 26, 2022.

To date, we have financed our operations primarily through our offering of  the 2026 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 the Royalty Purchase Agreement, net proceeds from our borrowings under the Blackstone Credit Agreement, private placements of our convertible preferred stock and common stock, collaborations, bank and institutional lender debt, other convertible debt, grant funding and clinical trial support from governmental and philanthropic organizations and patient advocacy groups in the disease areas addressed by our product candidates. We have relied on revenue generated from net sales of Translarna for the treatment of nmDMD in territories outside of the United States since 2014, Emflaza for the treatment of DMD in the United States since 2017 and Upstaza for the treatment of AADC deficiency in the EEA since May 2022. We have also relied on revenue associated with milestone and royalty payments from Roche pursuant to the SMA License Agreement, under our SMA program.

​

As of December 31, 2022, we had an accumulated deficit of $2,657.0 million. We had a net loss of $559.0 million, $523.9 million, and $438.2 million for the fiscal years ended December 31, 2022, 2021, and 2020, 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 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 also 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 first half of 2023. 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

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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 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. On August 15, 2022, we repaid the outstanding principal amount and accrued interest, totaling $152.3 million, of the 3.00% convertible senior notes due August 15, 2022, or the 2022 Convertible Notes, that was due upon maturity in accordance with the terms of the 2022 Convertible Notes.

Borrowings under the Blackstone Credit Agreement bear interest at a variable rate equal to, at our option, either an adjusted Term SOFR rate plus seven and a quarter percent (7.25%) or the Base Rate plus six and a quarter percent (6.25%), subject to a floor of one percent (1%) and two percent (2%) with respect to Term SOFR rate and Base Rate (each as defined in the Blackstone Credit Agreement), respectively.

In October 2022, we paid the former equityholders of Agilis $50.0 million in regulatory milestone payments as a result of the European Commission’s marketing approval of Upstaza for the treatment of AADC deficiency in July 2022. In 2022, we also paid Marathon Pharmaceuticals, LLC (now known as Complete Pharma Holdings, LLC), or Marathon, a single $50.0 million sales-based milestone in accordance with the asset purchase agreement, dated March 15, 2017, as amended on April 20, 2017, or the Emflaza Asset Purchase Agreement, by and between us and Marathon.

In February 2023, we completed enrollment of our Phase 3 placebo-controlled clinical trial for sepiapterin for PKU.  In connection with this event and in accordance with the Censa Merger Agreement, we are obligated to pay a $30.0 million development milestone to the former Censa securityholders, which we have the option to pay in cash or shares of our common stock.

We expect to make additional payments to the former Censa securityholders of $50.0 million in the aggregate upon the potential achievement in 2023 of certain development and regulatory milestones relating to sepiapterin. Furthermore, we expect to pay the former equityholders of Agilis 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 first half of 2023.

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

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. Our process for recognizing revenue is described below under “Critical accounting policies and significant judgments and estimates—Revenue recognition”.

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 December 31, 2022, we had recognized a total of $210.0 million in milestone payments and $172.9 million royalties on net sales pursuant to the SMA License Agreement. As of December 31, 2022, there are no remaining research and development event milestones that we can receive. The remaining potential sales milestones as of December 31, 2022 are $250.0 million upon achievement of certain sales events.

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Pursuant to the Royalty Purchase Agreement, we sold to RPI the Assigned Royalty Payment, 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 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 Payments.

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:

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 performance of any 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 table provides research and development expense for our most advanced principal product development programs, for the years ended December 31, 2022, 2021, and 2020.

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

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A change in the outcome of any of these variables with respect to the development of any of our products or product candidates could mean a significant change in the costs and timing associated with the development of that product candidates. 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 candidate 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, the 2026 Convertible Notes outstanding, the Blackstone Credit Agreement, the 2022 Convertible Notes that we repaid in August 2022 and from our credit and security agreement, or the MidCap Credit Agreement, with MidCap Financial Trust that was terminated in July 2020 offset by interest income earned on investments.

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.

Of our policies, the following are considered critical to an understanding of our consolidated financial statements as they require the application of the most subjective and complex judgment, involving critical accounting estimates and assumptions impacting our consolidated financial statements:

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Revenue recognition related to net product revenue

Our net product revenue primarily consists of sales of Translarna in territories outside of the U.S. and sales of Emflaza in the U.S., both for the treatment of DMD.  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.

During the years ended December 31, 2022, 2021, and 2020, net product sales in the United States were $218.3 million, $187.3 million, and $139.0 million, respectively, consisting solely of sales of Emflaza, and net product sales outside of the United States were $316.9 million, $241.6 million, and $194.4 million respectively, consisting of sales of Translarna, Tegsedi, Waylivra, and Upstaza. Translarna net product revenues made up $288.6 million, $236.0 million, and $191.9 million of the net product sales outside the United States for the years ended December 31, 2022, 2021, and 2020, respectively. During the year ended December 31, 2022, two countries, the United States and Russia, accounted for at least 10% of our net product sales, representing $218.3 million and $59.7 million, respectively. During the years ended December 31, 2021 and 2020, only the United States accounted for at least 10% of our net product sales.

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.

Liability for sale of future royalties

In July 2020, we entered into the Royalty Purchase Agreement with RPI, pursuant to which we sold to RPI the Assigned Royalty Payment. In consideration for the sale of the Assigned Royalty Payments, RPI paid us $650.0 million in cash consideration. 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 Payments.

The cash consideration obtained pursuant to the Royalty Purchase Agreement is classified as debt and is recorded as “liability for sale of future royalties-current” and “liability for sale of future royalties-noncurrent” on our consolidated balance sheet based on the timing of the expected payments to be made to RPI. The fair value for the liability for sale of

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future royalties at the time of the transaction was based on our estimates of future royalties expected to be paid to RPI over the life of the arrangement, which was determined using forecasts from market data sources, which are considered Level 3 inputs. The liability is amortized using the effective interest method over the life of the arrangement, in accordance with the respective guidance. We utilize the prospective method to account for subsequent changes in the estimated future payments to be made to RPI.

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Contingent consideration from business combinations

The consideration for our business acquisitions may include future payments that are contingent upon the occurrence of a particular event or events. The obligations for such contingent consideration payments are recorded at fair value on the acquisition date. The contingent consideration obligations are then evaluated each reporting period. Changes in the fair value of contingent consideration, other than changes due to payments, are recognized as a gain or loss and recorded within the change in the fair value of deferred and contingent consideration in the consolidated statements of operations.  The fair value of development and regulatory milestones are estimated utilizing a probability adjusted, discounted cash flow approach. The discount rates are estimated utilizing Corporate B rated bonds maturing in the years of expected payments based on our estimated development timelines for the acquired product candidate. The fair value of the net sales milestones and royalties is based on probability adjusted sales estimates and estimated discount rates and utilizes an option pricing model with Monte Carlo simulation to simulate a range of possible payment scenarios, and the average of the payments in these scenarios is then discounted to calculate present fair value.

Indefinite-lived intangible assets annual impairment assessment

Indefinite-lived intangible assets consist of IPR&D acquired in business combinations. Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Several methods may be used to determine the estimated fair value of the IPR&D. We utilize the “income method”, and use estimated future net cash flows that are derived from projected sales revenues and estimated costs. These projections are based on factors such as relevant market size, patent protection, and expected pricing and industry trends. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. The estimated fair value is then compared to the carrying value of IPR&D.

We performed an annual impairment test for our indefinite-lived intangible assets as of October 1, 2022. In the fourth quarter of 2022, we recorded a partial impairment on the Upstaza indefinite lived intangible asset of $33.4 million, which is recorded as intangible asset impairment in the statement of operations. The impairment was related to a decrease in projected cash flows due to refinements in current market assumptions and the timing of patient treatments.  To calculate the impairment amount, we utilized a discounted cash flow model under the income method, which primarily utilized Level 3 fair value inputs. Some of the more significant assumptions inherent in the development of the model included the estimated annual cash flows, particularly net revenues and operations costs, the appropriate discount rate to select in order to measure the risk inherent in the future cash flows, and the probability of success. Refer to note 18 for further information regarding our intangible assets.

For a description of our significant accounting policies, see note 2 to our consolidated financial statements.

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Year ended December 31, 2022 compared to year ended December 31, 2021

The following table summarizes revenues and selected expense and other income data for the year ended December 31, 2022 and 2021:

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Net product revenue.   Net product revenue was $535.2 million for the year ended December 31, 2022, an increase of $106.3 million, or 25%, from net product revenue of $428.9 million for the year ended December 31, 2021. Translarna net product revenues were $288.6 million for the year ended December 31, 2022, an increase of $52.6 million, or 22%, compared to $236.0 million for the year ended December 31, 2021. These results were driven by treatment of new patients in existing geographies and continued geographic expansion. Emflaza net product revenues were $218.3 million for the year ended December 31, 2022, an increase of $31.0 million, or 17%, compared to $187.3 million for the year ended December 31, 2021. These results were driven by new patient prescriptions, continued high compliance, and appropriate weight-based dosing. The remaining increase of $22.7 million was due to an increase in net product sales of Tegsedi, Waylivra, and Upstaza.

Collaboration revenue.   Collaboration revenue was $50.1 million for the year ended December 31, 2022, a decrease of $5.0 million, or 9%, from collaboration revenue of $55.0 million for the year ended December 31, 2021. The decrease is due to a decrease in actual milestones that were achieved in the year ended December 31, 2022 compared to the year ended December 31, 2021, respectively. A sales milestone of $50.0 million was recognized for the achievement of $750.0 million in worldwide annual net sales from Evrysdi in the year ended December 31, 2022. In March 2021, the first commercial sale of Evrysdi in the EU was made. This event triggered a $20.0 million milestone payment to us from Roche. Additionally, in June 2021, the Japanese Ministry of Health, Labor and Welfare approved Evrysdi for the treatment of SMA in Japan. In August 2021, the first commercial sale of Evrysdi in Japan triggered a $10.0 million milestone payment to us from Roche.  In December 2021, we recorded our first sales milestone of $25.0 million for the achievement of $500.0 million in worldwide annual net sales from Evrysdi.

Royalty revenue. Royalty revenue was $113.5 million for the years ended December 31, 2022, an increase of $58.9 million, or over 100%, from $54.6 million for the years ended December 31, 2021. The increase in royalty revenue was due to higher Evrysdi sales in the year ended December 31, 2022 as compared to the year ended December 31, 2021. In accordance with the SMA License Agreement, we are entitled to royalties on worldwide annual net sales of the product.

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Cost of product sales, excluding amortization of acquired intangible asset.  Cost of product sales, excluding amortization of acquired intangible asset, was $44.7 million for the year end December 31, 2022, an increase of $12.4 million, or 38%, from $32.3 million for the year ended December 31, 2021. Cost of product sales consist primarily of royalty payments associated with Emflaza, Translarna and Upstaza net product sales, excluding contingent payments to Marathon, costs associated with Emflaza, Translarna and Upstaza product sold during the period, and royalty expense related to royalty revenues and collaboration milestone revenues. The increase in cost of product sales, excluding

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amortization of acquired intangible asset, is primarily due to the increases in net product revenue, royalty revenues, and collaboration milestone revenue.

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Amortization of acquired intangible asset.  Amortization of acquired intangible asset was $116.6 million for the year ended December 31, 2022, an increase of $61.8 million, or over 100%, from $54.8 million for the year ended December 31, 2021. These amounts are related to the Emflaza rights acquisition, as well as the Waylivra, Tegsedi, and Upstaza intangible assets, which are all being amortized on a straight-line basis over their estimated useful lives. With the approval of Upstaza by the European Commission in July 2022, $89.6 million was reclassified from indefinite lived intangible assets to definite lived intangible assets, which is being amortized over its expected useful life. The amortization increase is primarily related to the additional Marathon contingent payments, which includes a $50.0 million contingent payment made in the year ended December 31, 2022.

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Research and development expense.   Research and development expense was $651.5 million for the year ended December 31, 2022, an increase of $110.8 million, or 20%, compared to $540.7 million for the year ended December 31, 2021.  The increase in research and development expenses is primarily related to increased investment in research programs and advancement of the clinical pipeline.

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Selling, general and administrative expense.  Selling, general and administrative expense was $326.0 million for the year ended December 31, 2022, an increase of $40.2 million, or 14%, from $285.8 million for the year ended December 31, 2021. The increase reflects our continued investment to support our commercial activities including our expanding commercial portfolio.

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Change in the fair value of deferred and contingent consideration. Change in the fair value of deferred and contingent consideration was a gain of $25.9 million for the year ended December 31, 2022, a change of $25.4 million, or over 100%, from a gain of $0.5 million for the year ended December 31, 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.

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Intangible asset impairment. Intangible asset impairment was $33.4 million for the year ended December 31, 2022, an increase of $33.4 million, 100%, from intangible asset impairment of $0.0 million for the year ended December 31, 2021. The increase was due to a decrease in projected cash flows for the Upstaza indefinite lived intangible asset due to refinements in current market assumptions and the timing of patient treatments, resulting in a partial impairment.

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Interest expense, net.   Interest expense, net was $90.9 million for the year ended December 31, 2022, an increase of $4.8 million, 6%, from interest expense, net of $86.0 million for the year ended December 31, 2021.  The increase in interest expense, net was primarily due to interest expense recorded from the senior secured term loan, partially offset by lower interest expense due to the repayment of the 2022 Convertible Notes.

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Other expense, net.  Other expense, net was $49.2 million for the year ended December 31, 2022, a decrease of $8.7 million, 15%, from other expense, net of $57.9 million for the year ended December 31, 2021. The decrease in other expense, net resulted primarily from an unrealized foreign exchange loss of $14.4 million and a non cash foreign currency remeasurement loss of $16.9 million from the remeasurement of our intercompany loan for the year end December 31, 2022, as compared to an unrealized foreign exchange loss of $41.0 million from the remeasurement of our intercompany loan for the year ended December 31, 2021. In addition, we had unrealized losses on our equity investments and convertible debt security in ClearPoint Neuro, Inc. (formerly MRI Interventions, Inc.), or ClearPoint, of $3.5 million and $5.8 million, respectively, for the year ended December 31, 2022, as compared to unrealized losses on our equity investments and convertible debt security in ClearPoint of $6.1 million and $8.3 million, respectively, for the year ended December 31, 2021.

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Income tax benefit (expense).   Income tax benefit was $28.5 million for the year ended December 31, 2022, a change of $34.0 million, or over 100%, from income tax expense of $5.6 million for the year ended December 31, 2021. The change in income tax benefit (expense) is primarily attributable to the partial amortization of an intangible which had

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previously been classified as an indefinite lived intangible, and the subsequent release of a portion of the valuation allowance associated with this asset.

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Year ended December 31, 2021 compared to year ended December 31, 2020

The following table summarizes revenues and selected expense and other income data for the years ended December 31, 2021 and 2020:

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Net product revenue.   Net product revenue was $428.9 million for the year ended December 31, 2021, an increase of $95.5 million, or 29%, from net product revenue of $333.4 million for the year ended December 31, 2020.  Translarna net product revenues were $236.0 million for the year ended December 31, 2021, an increase of $44.1 million, or 23%, compared to $191.9 million for the year ended December 31, 2020. These results were driven by treatment of new patients, continued high compliance, and geographic expansion. Emflaza net product revenues were $187.3 million for the year ended December 31, 2021, an increase of $48.3 million, or 35%, compared to $139.0 million for the year ended December 31, 2021. These results were driven by continued new prescriptions, continued high compliance, and more favorable access. The remaining increase of $3.1 million was due to an increase in net product sales of Tegsedi and Waylivra.

Collaboration revenue.   Collaboration revenue was $55.0 million for the year ended December 31, 2021, an increase of $12.5 million, or 29%, from collaboration revenue of $42.6 million for the year ended December 31, 2020. The increase is primarily related to three milestones that were triggered from Roche in the years ended December 31, 2021. In March 2021, the first commercial sale of Evrysdi in the EU was made. This event triggered a $20.0 million milestone payment to us from Roche. Additionally, in June 2021, the Japanese Ministry of Health, Labor and Welfare approved Evrysdi for the treatment of SMA in Japan. In August 2021, the first commercial sale of Evrysdi in Japan triggered a $10.0 million milestone payment to us from Roche.  In December 2021, we recorded our first sales milestone of $25.0 million for the achievement of $500.0 million in worldwide annual net sales from Evrysdi. Comparatively, in the year ended December 31, 2020, the FDA approved Evrysdi for the treatment of SMA in adults and children two months and older in August 2020. The first commercial sale of Evrysdi in the United States was made in August 2020. This event triggered a $20.0 million milestone payment to us from Roche. In August 2020, the EMA accepted the MAA filed by Roche for Evrysdi for the treatment of SMA, which triggered a $15.0 million milestone payment to us from Roche. In October 2020, Chugai filed an NDA in Japan for Evrysdi for the treatment of SMA, which triggered a $7.5 million milestone payment to us from Roche.

Royalty revenue. Royalty revenue was $54.6 million for the years ended December 31, 2021, an increase of $49.9 million, or over 100%, from $4.8 million for the years ended December 31, 2020. The increase in royalty revenue was due to the FDA approval of Evrysdi in August 2020. In accordance with the SMA License Agreement, we are entitled to royalties on worldwide annual net sales of the product.

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Cost of product sales, excluding amortization of acquired intangible asset.  Cost of product sales, excluding amortization of acquired intangible asset, was $32.3 million for the year end December 31, 2021, an increase of $13.4 million, or 71%, from $18.9 million for the year ended December 31, 2020. 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 increases in net product revenue, royalty revenues, and collaboration milestone revenue.

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Amortization of acquired intangible asset.  Amortization of acquired intangible asset was $54.8 million for the year ended December 31, 2021, an increase of $17.9 million, or 48%, from $36.9 million for the year ended December 31, 2020. 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 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. 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.

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Research and development expense.   Research and development expense was $540.7 million for the year ended December 31, 2021, an increase of $63.0 million, or 13%, compared to $477.6 million for the year ended December 31, 2020.  The increase in research and development expenses is primarily related to increased investment in research programs and advancement of the clinical pipeline. This increase was partially offset by one time charges in the year ended December 31, 2020 of $53.6 million for our Censa Merger, as well as $41.4 million for our commercial manufacturing service agreement with MassBio related to dedicated manufacturing space for our lead gene therapy program, AADC deficiency.

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Selling, general and administrative expense.  Selling, general and administrative expense was $285.8 million for the year ended December 31, 2021, an increase of $40.6 million, or 17%, from $245.2 million for the year ended December 31, 2020. The increase reflects our continued investment to support our commercial activities including our expanding commercial portfolio, including an increase in rent and related expenses associated with entering into a long term lease for the Hopewell Facility that commenced on July 1, 2020.

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Change in the fair value of deferred and contingent consideration. Change in the fair value of deferred and contingent consideration was a gain of $0.5 million for the year ended December 31, 2021, a change of $23.8 million, or over 100%, from a loss of $23.3 million for the year ended December 31, 2020. 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.

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Settlement of deferred and contingent consideration. Settlement of deferred and contingent consideration was $0.0 million for year ended December 31, 2021, a decrease of $10.6 million, or 100%, from $10.6 million for the year ended December 31, 2020. The settlement of deferred and contingent consideration for the year ended December 31, 2020 is related to a loss upon the settlement of the deferred and contingent consideration liabilities as a result of the Rights Exchange Agreement with certain former equityholders of Agilis, whereby we exchanged their pro rata share of specific future cash milestone payments in the aggregate amount of $225.0 million for a combination of cash and equity. We paid $36.9 million in cash and issued 2,821,176 shares of common stock in exchange for the cancellation and forfeiture of the Participating Rightholders’ rights to receive (i) $174.0 million, in the aggregate, of potential milestone payments based on the achievement of certain regulatory milestones and (ii) $37.6 million, in the aggregate, of $40.0 million in development

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milestone payments that would have been due upon the passing of the second anniversary of the closing of the Agilis Merger, regardless of whether the milestones are achieved.

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Interest expense, net.   Interest expense, net was $86.0 million for the year ended December 31, 2021, an increase of $29.7 million, 53%, from interest expense, net of $56.4 million for the year ended December 31, 2020.  The increase 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, partially offset by a decrease in interest expense recorded from the 2022 and 2026 Convertible Notes as a result of the adoption of ASU 2020-06 and interest income from our investments.

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Other (expense) income, net.  Other expense, net was $57.9 million for the year ended December 31, 2021, a change of $143.1 million, over 100%, from other income, net of $85.2 million for the year ended December 31, 2020. The change in other (expense) income, net resulted primarily from an unrealized foreign exchange loss of $41.0 million from the remeasurement of our intercompany loan, which is recorded on a non-U.S. subsidiary and denominated in U.S. dollars, and unrealized losses on our equity investments and convertible debt security in ClearPoint Neuro, Inc. (formerly MRI Interventions, Inc.), or ClearPoint, of $6.1 million and $8.3 million, respectively.

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Income tax expense.   Income tax expense was $5.6 million for the year ended December 31, 2021, a decrease of $29.7 million, or 84%, from income tax expense of $35.2 million for the year ended December 31, 2020. We recorded a state income tax provision for the year ended December 31, 2020, which is attributable to the taxable income from the sale of our right to receive sales-based royalty payments on Roche’s worldwide net sales of Evrysdi. We also 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.

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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 primarily consisted of 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 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, net proceeds from our borrowings under the Blackstone Credit Agreement, the private placements of our preferred stock and common 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 placement 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. On August 15, 2022, we repaid the outstanding principal amount and accrued interest, totaling $152.3 million, of the 2022 Convertible Notes that was due upon maturity

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in accordance with the terms of the notes. While outstanding, the 2022 Convertible Notes bore cash interest at a rate of 3.00% per year, payable semi-annually on February 15 and August 15 of each year, beginning on February 15, 2016.

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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 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Funding” for additional information regarding the transactions described in this paragraph.

In September 2019, we issued $287.5 million aggregate principal amount of 2026 Convertible Notes, which included an option to purchase up to an additional $37.5 million in aggregate principal amount of the 2026 Convertible Notes, which was exercised in full by the initial purchasers. 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.

Holders may convert their 2026 Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding March 15, 2026 only under the following circumstances: (1) during any calendar quarter commencing on or after December 31, 2019 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price (as defined in the 2026 Convertible Notes Indenture) per $1,000 principal amount of 2026 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) during any period after we have issued notice of redemption until the close of business on the scheduled trading day immediately preceding the relevant redemption date; or (4) upon the occurrence of specified corporate events. On or after March 15, 2026, until the close of business on the business day immediately preceding the maturity date, holders may convert their 2026 Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or any combination thereof at our election.

The conversion rate for the 2026 Convertible Notes was initially, and remains, 19.0404 shares of our common stock per $1,000 principal amount of the 2026 Convertible Notes, which is equivalent to an initial conversion price of approximately $52.52 per share of our common stock. The conversion rate may be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

We are not permitted to redeem the 2026 Convertible Notes prior to September 20, 2023. We may redeem for cash all or any portion of the 2026 Convertible Notes, at our option, if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect on the last trading day of, and for at least 19 other trading days (whether or not consecutive) during, any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2026 Convertible Notes, which means that we are not required to redeem or retire the 2026 Convertible Notes periodically.

If we undergo a “fundamental change” (as defined in the 2026 Convertible Notes Indenture), subject to certain conditions, holders of the 2026 Convertible Notes may require us to repurchase for cash all or part of their 2026 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2026 Convertible Notes represent senior unsecured obligations and will rank senior in right of payment to our future indebtedness that is expressly subordinated in right of payment to the notes, equal in right of payment to our existing

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and future unsecured indebtedness that is not so subordinated, effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) incurred by our subsidiaries. The 2026 Convertible Notes Indenture contains customary events of default with respect to the 2026 Convertible Notes, including that upon certain events of default (including our failure to make any payment of principal or interest on the 2026 Convertible Notes when due and payable) occurring and continuing, the 2026 Convertible Notes Trustee by notice to us, or the holders of at least 25% in principal amount of the outstanding 2026 Convertible Notes by notice to us and the Convertible Notes Trustee, may, and the 2026 Convertible Notes Trustee at the request of such holders (subject to the provisions of the 2026 Convertible Notes Indenture) will, declare 100% of the principal of and accrued and unpaid interest, if any, on all the 2026 Convertible Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving us or a significant subsidiary, 100% of the principal of and accrued and unpaid interest on the 2026 Convertible Notes will automatically become due and payable. Upon such a declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately.

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. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Funding” for additional information regarding this transaction.

In October 2022, we entered into the Blackstone Credit Agreement for fundings of up to $950.0 million consisting of a committed loan facility of $450.0 million and further contemplating the potential for up to $500.0 million of additional financing, to the extent that we request such additional financing and subject to the Lenders’ agreement to provide such additional financing and to mutual agreement on terms.

The Blackstone Credit Agreement provides for a senior secured term loan facility funded on the Closing Date in the aggregate principal amount of $300.0 million and a committed delayed draw term loan facility of up to $150.0 million to be funded at the Company’s request within 18 months of the Closing Date subject to specified conditions. In addition, the Blackstone Credit Agreement contemplates the potential for further financings by Blackstone, by providing for incremental discretionary uncommitted further financings of up to $500.0 million. We will be required under conditions specified in the Blackstone Credit Agreement to fund a reserve account up to certain amounts specified therein.

The Loans mature on the date that is seven years from the Closing Date. Borrowings under the Blackstone Credit Agreement bear interest at a variable rate equal to, at our option, either an adjusted Term SOFR rate plus seven and a quarter percent (7.25%) or the Base Rate plus six and a quarter percent (6.25%), subject to a floor of one percent (1%) and two percent (2%) with respect to Term SOFR rate and Base Rate (each as defined in the Blackstone Credit Agreement), respectively. Payment of the Loans are subject to certain premiums specified in the Blackstone Credit Agreement, in each case, from the date the applicable Loan is funded.

All obligations under the Blackstone Credit Agreement are secured, subject to certain exceptions and specified inclusions, by security interests in certain assets of the Loan Parties, including (1) intellectual property and other assets related to Translarna, Emflaza, Upstaza, sepiapterin and, until certain release conditions are met, vatiquinone, in each case, together with any other forms, formulations, or methods of delivery of any such products, and regardless of trade or brand name, (2) future acquired intellectual property (but not internally developed intellectual property unrelated to other intellectual property collateral) and other related assets, and (3) the equity interests held by the Loan Parties in certain of their subsidiaries. The Blackstone Credit Agreement contains certain negative covenants with which we must remain in compliance. The Blackstone Credit Agreement also requires that we maintain consolidated liquidity of at least $100.0 million as of the last day of each fiscal quarter, which shall be increased to $200.0 million upon our consummating acquisitions meeting certain consolidated thresholds described therein. In addition, we will be required under conditions specified in the Blackstone Credit Agreement to fund a reserve account up to certain amounts specified therein. The funds in the reserve account are available to prepay the Loans at any time at our option, and are, if funded, subject to release upon certain further conditions. Upon any such release, such funds are freely available for our use subject to the generally applicable terms and conditions of the Blackstone Credit Agreement. The Blackstone Credit Agreement contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default. In connection with the execution of the Blackstone Credit Agreement, we and the Purchasers also entered into the Stock Purchase

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Agreement for the sale and issuance of 1,095,290 shares of common stock to the Purchasers at a price of $45.65 per share, for an aggregate purchase price of approximately $50.0 million. The per share price represents the closing price of our common stock on the Nasdaq Global Select Market on October 26, 2022.

Cash flows

As of December 31, 2022, we had cash and cash equivalents and marketable securities of $410.7 million.

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

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Net cash used in operating activities was $356.7 million, $251.3 million, and $194.1 million for the years ended December 31, 2022, 2021, and 2020, respectively. The cash used in operating activities primarily related to supporting clinical development, including the manufacture of drug product, commercial activities for Emflaza, Translarna, and Upstaza, and costs associated with the expansion of our international infrastructure for the years ended December 31, 2022, 2021, and 2020.

Net cash provided by investing activities was $290.2 million and 219.2 million for the years ended December 31, 2022 and 2021, respectively. Net cash used in investing activities was $561.5 million for the year ended December 31, 2020. The cash provided by investing activities for the years ended December 31, 2022 and December 31, 2021 were primarily related to net sales and redemptions of marketable securities, partially offset by purchases of marketable securities, purchases of fixed assets and the acquisition of product rights. The cash used in investing activities for the year ended December 31, 2020 was primarily related to purchases of marketable securities, the acquisition of product rights, purchases of fixed assets, and our purchase of convertible debt security, partially offset by net sales and redemptions of marketable securities.

Net cash provided by financing activities was $168.0 million, $20.9 million, and $668.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. The cash provided by financing activities for the year ended December 31, 2022 is primarily attributable to the proceeds from the issuance of the senior secured term loan under the Blackstone Credit Agreement, the Stock Purchase Agreement, the exercise of options, and issuance of stock under our Employee Stock Purchase Plan,  or ESPP, offset by the repayment of the 2022 Convertible Notes, payments on contingent consideration obligation, and payments on our finance lease principal. The cash provided by financing activities for the year ended December 31, 2021 is primarily attributable to the exercise of options, and issuance of stock under our ESPP offset by payments on our finance lease principal. Net cash provided by financing activities for the year ended December 31, 2020 is primarily attributable to proceeds from the Royalty Purchase Agreement, net proceeds received from our “at the market offering” of our common stock, the exercise of options, and issuance of stock under our ESPP, partially offset by repayment on our senior secured term loan, payments on deferred consideration obligation, and 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 as well as studies in our products

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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 also 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 first half of 2023. These efforts may significantly impact the timing and extent of our commercialization expenses.

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

We believe that our cash flows from product sales, together with existing cash and cash equivalents, including our offering of the 2026 Convertible Notes, public offerings and private placements of common stock, our “at the market offering” of our common stock, proceeds from the Royalty Purchase Agreement, net proceeds from our borrowings under the Blackstone Credit 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:

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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. On August 15, 2022, we repaid the outstanding principal amount and accrued interest, totaling $152.3 million, of the 3.00% convertible senior notes due August 15, 2022, or the 2022 Convertible Notes, that was due upon maturity in accordance with the terms of the 2022 Convertible Notes.

Borrowings under the Blackstone Credit Agreement bear interest at a variable rate equal to, at our option, either an adjusted Term SOFR rate plus seven and a quarter percent (7.25%) or the Base Rate plus six and a quarter percent (6.25%), subject to a floor of one percent (1%) and two percent (2%) with respect to Term SOFR rate and Base Rate (each as defined in the Blackstone Credit Agreement), respectively.

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In October 2022, we paid the former equityholders of Agilis $50.0 million in regulatory milestone payments as a result of the European Commission’s marketing approval of Upstaza for the treatment of AADC deficiency in July 2022. In 2022, we also paid Marathon Pharmaceuticals, LLC (now known as Complete Pharma Holdings, LLC), or Marathon, a single $50.0 million sales-based milestone in accordance with the Emflaza Asset Purchase Agreement.

In February 2023, we completed enrollment of our Phase 3 placebo-controlled clinical trial for sepiapterin for PKU.  In connection with this event and in accordance with the Censa Merger Agreement, we are obligated to pay a $30.0 million development milestone to the former Censa securityholders, which we have the option to pay in cash or shares of our common stock.

We expect to make additional payments to the former Censa securityholders of $50.0 million in the aggregate upon the achievement of certain development and regulatory milestones in 2023 relating to sepiapterin. We also expect to pay the former equityholders of Agilis 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 first half of 2023. 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 also have certain significant contractual obligations and commercial commitments that require funding. We lease office space for our principal office in South Plainfield, New Jersey and we occupy under leases that expire in 2024, with two consecutive five-year renewal options to renew the leases after 2024. Additionally, we entered into a lease agreement for approximately 103,000 square feet of laboratory and office space in Bridgewater, New Jersey.  The rental term for such facility commenced on May 1, 2020 with an initial term of seven years and two consecutive five year renewal periods at our option. We have significant lease obligations that stem from our lease of office, manufacturing, and laboratory space in Hopewell, New Jersey. The rental term for such facility commenced on July 1, 2020, with an initial term of fifteen years and two consecutive 10-year renewal periods at our option. We also lease 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 for such facility commenced on June 1, 2022, with an initial term of seventeen years followed by three consecutive five-year renewal periods at our option. In addition, we lease office space, vehicles and equipment in various other locations in the U.S. and other countries for our employees and operations. We have a total of $268.0 million in obligations that stem from our operating leases.

We have a total of $30.0 million in obligations that stem from a commercial manufacturing services agreement entered into with MassBio on June 19, 2020, for a term of 12.5 years. Pursuant to the terms of the agreement, MassBio agreed to provide us with four dedicated rooms for our Upstaza program.

Under an Exclusive License and Supply Agreement, or the Faes Agreement, with Faes Farma, S.A., or Faes, we are required to pay royalties as a percentage of or as a fixed payment with respect to net product sales by us allocable to the Emflaza oral suspension product. We are required to pay Faes an annual minimum royalty during the first seven calendar years with a fixed percentage royalty during the remainder of the Faes Agreement term. The minimum royalty based on the euro to U.S. dollar exchange rate as of December 31, 2022 is $1.6 million, with the last minimum royalty payment due in 2023.

Under various agreements, we will be required to pay royalties and milestone payments upon the successful development and commercialization of products, including the following agreements with The Wellcome Trust Limited, or Wellcome Trust, and the SMA Foundation.

We have entered into funding agreements with Wellcome Trust for the research and development of small molecule compounds in connection with our oncology platform and antibacterial program. As we have discontinued development under our antibacterial program, we do not expect that milestone and royalty payments from us to Wellcome Trust will apply under that agreement. Under our oncology platform funding agreement, to the extent that we develop and commercialize certain program intellectual property on a for-profit basis ourselves or in collaboration with a partner (provided we retain overall control of worldwide commercialization), we may become obligated to pay to Wellcome Trust development and regulatory milestone payments and single-digit royalties on sales of any research program product. Our obligation to pay such royalties would continue on a country-by-country basis until the longer of the expiration of the last

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patent in the program intellectual property in such country covering the research program product and the expiration of market exclusivity of such product in such country. We made the first development milestone payment of $0.8 million to Wellcome Trust under the oncology platform funding agreement during the second quarter of 2016. During the year ended December 31, 2022, the Company incurred $2.5 million of development milestones in connection with the enrollment of patients in the registration-directed Phase 2/3 trial of unesbulin for the treatment of LMS, which is recorded in other long-term liabilities on the balance sheet and will be payable upon the earlier to occur of the first dose administered to the last patient enrolled in the study or the termination of dosing of all patients in the study. Additional milestone payments of up to an aggregate of $14.5 million may become payable by the Company to Wellcome Trust under this agreement.

We have also entered into a sponsored research agreement with the SMA Foundation in connection with our spinal muscular atrophy program. We may become obligated to pay the SMA Foundation single-digit royalties on worldwide net product sales of any collaboration product that we successfully develop and subsequently commercialize or, with respect to collaboration products we outlicense, including Evrysdi, a specified percentage of certain payments we receive from our licensee. We are not obligated to make such payments unless and until annual sales of a collaboration product exceed a designated threshold. Since inception, the SMA Foundation has earned $28.5 million, $24.5 million which was paid and $4.0 million which was accrued as of December 31, 2022.  Our obligation to make such payments would end upon our payment to the SMA Foundation of an aggregate of $52.5 million.

Additionally, we have employment agreements with certain employees which require the funding of a specific level of payments, if certain events, such as a change in control or termination without cause, occur. 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. 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.

Item 7.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 Annual Report on Form 10-K. 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 I, Item 1A. Risk Factors, of this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking statements.

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.

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 European Economic Area, or EEA, and Brazil 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

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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. During the year ended December 31, 2021, we recognized $236.0 million in sales of 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 year ended December 31, 2021, Emflaza achieved net sales of $187.3 million.

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 2021, the European Commission renewed our marketing authorization, making it effective, unless extended, through August 5, 2022. In February 2022, we submitted a marketing authorization renewal request to the EMA. 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. We expect results from the placebo-controlled trial to be available in mid-2022. We then expect to submit a report on the placebo-controlled 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. We expect results from the placebo-controlled trial of Study 041 to be available in mid-2022, and subject to a positive outcome in that study, we expect to re-submit the NDA.

We hold the rights for the commercialization of Tegsedi® (inotersen) and Waylivra® (volanesorsen) 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 have initiated our commercial launch for Tegsedi for the treatment of hATTR amyloidosis in Brazil and we continue to make Tegsedi available in certain other countries within Latin America and the Caribbean through early access 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 have initiated our commercial launch in Brazil while continuing to make Waylivra available in certain other countries within Latin

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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 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.

We also have a spinal muscular atrophy, or SMA, collaboration with F. Hoffman-La Roche Ltd. and Hoffman-La Roche Inc., which we refer to collectively as Roche, and the Spinal Muscular Atrophy Foundation, or SMA Foundation. The SMA program has one approved product, Evrysdi® (risdiplam), 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 January 2022, the FDA granted priority review of a supplemental new drug application for Evrysdi to expand the indication to include pre-symptomatic infants under two months old with SMA. 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 expect to initiate a Phase 2 study of PTC518 in the first quarter of 2022.

We have a pipeline of gene therapy product candidates for rare monogenic diseases that affect the central nervous system, or CNS, including PTC-AADC for the treatment of Aromatic L-Amino Acid Decarboxylase, or AADC, deficiency, a rare CNS disorder arising from reductions in the enzyme AADC that result from mutations in the dopa decarboxylase gene. In January 2020, we submitted a marketing authorization application, or MAA, for PTC-AADC for the treatment of AADC deficiency in the EEA to the EMA and we expect an opinion from the CHMP in April 2022. We are also preparing a biologics license application, or BLA, for PTC-AADC 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 PTC-AADC in young patients. We expect to submit a BLA to the FDA in the second quarter of 2022.

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 delays in enrolling this trial due to the COVID-19 pandemic and now anticipate results from this trial to be available in the fourth quarter of 2022.  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 expect to initiate a Phase 2 trial of PTC857 for amyotrophic lateral sclerosis in the second quarter of 2022.

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.

We also have two oncology agents in 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 expect to initiate a registration-directed Phase 2/3 trial of unesbulin for the treatment of LMS in the second 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, a small molecule dihydrooratate dehydrogenase inhibitor that inhibits de novo pyrimidine nucleotide synthesis, 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.

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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. We expect results from this trial to be available in the first half of 2022.

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 for rare diseases.

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 particular, the following expectations have been revised as a result of the impact or expected impact of the COVID-19 pandemic:

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.”

Overview—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. During 2021, our revenues were 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

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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 a License and Collaboration Agreement, or the SMA License Agreement, by and among us, Roche and, for the limited purposes set forth therein, the SMA Foundation, under our SMA program.

See “Item 1. Business—Commercial Matters—Market Access Considerations” for additional information and “Item 1A. Risk Factors—Commercialization of Translarna has been in, and is expected to continue to take place in, countries that tend to impose strict price controls, which may adversely affect our revenues. Failure to obtain and maintain acceptable pricing and reimbursement terms for Translarna for the treatment of nmDMD in the EEA and other countries where Translarna is available would delay or prevent us from marketing our product in such regions, which would adversely affect our business, results of operations, and financial condition.”

In January 2019, we closed an underwritten public offering of our common stock.  We issued and sold an aggregate of 7,563,725 shares of common stock at a public offering price of $30.20 per share, including 843,725 shares issued upon exercise by the underwriter of its option to purchase additional shares in February 2019. We received net proceeds of approximately $224.2 million after deducting underwriting discounts and commissions and other 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 the Securities Act of 1933, as amended, or the Securities Act. During the year ended December 31, 2019, we issued and sold an aggregate of 63,926 shares of common stock pursuant to the Sales Agreement at a weighted average public offering price of $46.60 per share. We received net proceeds of $2.6 million after deducting agent discounts and commissions and other offering expenses payable by us. During the year ended December 31, 2020, we issued and sold an aggregate of 542,470 shares of common stock pursuant to the Sales Agreement at a weighted average public offering price of $53.37 per share. We received net proceeds of $28.1 million after deducting agent discounts and commissions and other offering expenses payable by us. We did not issue or sell any shares of common stock pursuant to the Sales Agreement during the year ending December 31, 2021. 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 December 31, 2021.

In September 2019, we closed an underwritten public offering of our common stock. We issued and sold an aggregate of 2,475,248 shares of common stock at a public offering price of $40.40 per share. The offering included an option to purchase up to an additional 371,287 shares for a period of 30 days following the offering. This option was not exercised by the underwriter. We received net proceeds of $97.0 million after deducting underwriting discounts and commissions and other offering expenses payable by us.

In September 2019, we issued $287.5 million aggregate principal amount of 1.50% convertible senior notes due September 15, 2026, or the 2026 Convertible Notes, which included an option to purchase up to an additional $37.5 million in aggregate principal amount of the 2026 Convertible Notes, which was exercised in full by the initial purchasers. We received net proceeds of $279.3 million after deducting the initial purchasers’ discounts and commissions and the offering expenses payable by us. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and capital resources—Sources of Liquidity” for additional information.

On October 25, 2019, we completed our acquisition of substantially all of the assets of BioElectron Technology Corporation, or BioElectron, for total upfront consideration of $10.0 million in cash less (i) transaction expenses incurred by BioElectron, (ii) the amount of outstanding indebtedness of BioElectron including a $4.0 million loan advance to BioElectron plus accrued and unpaid interest thereon and (iii) $1.5 million held in an escrow account to secure potential indemnification obligations owed to us.

On April 29, 2020, we entered into a Rights Exchange Agreement, or the Rights Exchange Agreement, pursuant to which we issued 2,821,176 shares of our common stock and paid $36.9 million, in the aggregate, to certain former equityholders, or the Participating Rightholders, of Agilis Biotherapeutics, Inc., or Agilis, in exchange for the cancellation

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and forfeiture by the Participating Rightholders of their rights to receive certain milestone-based contingent payments under the Agreement and Plan of Merger, dated as of July 19, 2018 by and among us, Agility Merger Sub, Inc. and, solely in its capacity as the representative, agent and attorney-in-fact of the equityholders of Agilis, Shareholder Representative Services LLC, or the Agilis Merger Agreement.

On May 29, 2020, we acquired Censa for total upfront consideration composed of (i) cash consideration of $15.0 million, which consisted of an upfront payment of $10.4 million and an additional $4.6 million for the net assets on Censa's opening balance sheet as of the date of the acquisition, and (ii) 845,364 shares of our common stock, which were valued at $42.9 million based on the closing stock price on the acquisition date. The number of shares issued was determined using a 30-day VWAP pursuant to the Censa Merger Agreement.

In July 2020, we entered into a Royalty Purchase Agreement, or the Royalty Purchase Agreement, with RPI 2019 Intermediate Finance Trust, or RPI, pursuant to which 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 the sale of the Assigned Royalty Payments, RPI paid us $650.0 million in cash consideration. 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 Payments.

In June 2021, we filed a Certificate of Amendment to our Restated Certificate of Incorporation, which increased the number of authorized shares of our common stock from 125,000,000 to 250,000,000 shares.

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 offering, our offering of 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 the Royalty Purchase Agreement, private placements of our convertible preferred stock, collaborations, bank and institutional lender debt,  grant funding 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, under our SMA program.

As of December 31, 2021, we had an accumulated deficit of $2,098.0 million. We had a net loss of $523.9 million, $438.2 million, and $251.6 million for the fiscal years ended December 31, 2021, 2020, and 2019, 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 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 and we may also seek marketing authorization for Translarna for other indications. We submitted an MAA to the EMA for the treatment of AADC deficiency with PTC-AADC in the EEA. We are also preparing a BLA for PTC-AADC for the treatment of AADC deficiency in the United States and we anticipate submitting a BLA to the FDA in the second 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.

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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 or deliver, as the case may be, cash, shares of our common stock or any combination thereof at our election. 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. In 2021, we paid Akcea an additional milestone payment of $4.0 million upon receipt of regulatory approval for Waylivra from ANVISA for the treatment of FCS. In addition, we expect to pay Marathon Pharmaceuticals, LLC (now known as Complete Pharma Holdings, LLC), or Marathon, a single $50.0 million sales-based milestone in connection with Emflaza sales in 2022. We also expect to pay the former equityholders of Agilis an aggregate of $70.0 million upon the achievement of certain development and regulatory milestones in 2022 relating to PTC-AADC. 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

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. Our process for recognizing revenue is described below under “Critical accounting policies and significant judgments and estimates—Revenue recognition”.

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 December 31, 2021, we had recognized a total of $160.0 million in milestone payments and $59.4 million royalties on net sales pursuant to the SMA License Agreement. As of December 31, 2021, there are no remaining research and development event milestones that we can receive. The remaining potential sales milestones as of December 31, 2021 are $300.0 million upon achievement of certain sales events.

Pursuant to the Royalty Purchase Agreement, we sold to RPI the Assigned Royalty Payment, 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 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 Payments.

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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:

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 any 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 table provides research and development expense for our most advanced principal product development programs, for the years ended December 31, 2021, 2020, and 2019.

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

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A change in the outcome of any of these variables with respect to the development of any of our products or product candidates could mean a significant change in the costs and timing associated with the development of that product candidates. 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 candidate 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, the Convertible Notes outstanding, and from our credit and security agreement, or the Credit Agreement, with MidCap Financial Trust that was terminated in July 2020 offset by interest income earned on investments.

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.

Effective January 1, 2021, we early adopted the Financial Accounting Standards Board, or the FASB, Accounting Standards Update, or ASU, 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” using the modified retrospective method of adoption. ASU 2020-06 simplifies the accounting for convertible instruments by removing certain separation models in Subtopic 470- 20, Debt—Debt with Conversion and Other Options, for convertible instruments. Under ASU 2020-06, the embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate when applying the guidance in Topic 835, Interest. We now account for our Convertible Notes as single liabilities measured at amortized cost.  As a result, the adoption of the guidance had a material impact on the consolidated financial statements and accompanying notes, resulting in adjustments of $175.2 million, $54.8 million, and $120.4 million to the opening balances of additional paid-in capital, retained earnings, and long term debt, respectively, as of January 1, 2021.

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Additionally, due to the adoption, we reversed the remaining balance of the deferred tax liability of $29.6 million, which was initially recorded in connection with the Convertible Notes. Additionally, we increased the existing valuation allowance by $29.6 million as part of the adoption adjustment. We concluded that the adoption of the ASU did not change our prior valuation allowance conclusions. We have updated our debt note (Note 8) with additional and modified disclosures as required by the standard upon adoption.

Of our policies, the following are considered critical to an understanding of our consolidated financial statements as they require the application of the most subjective and complex judgment, involving critical accounting estimates and assumptions impacting our consolidated financial statements:

Revenue recognition related to net product revenue

Our net product revenue primarily consists of sales of Translarna in territories outside of the U.S. and sales of Emflaza in the U.S., both for the treatment of DMD.  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. During the years ended December 31, 2021, 2020, and 2019, net product sales in the United States were $187.3 million, $139.0 million, and $101.0 million, respectively, consisting solely of sales of Emflaza, and net product sales outside of the United States were $241.6 million, $194.4 million, and $190.3 million respectively, consisting of sales of Translarna, Tegsedi, and Waylivra. Translarna net product revenues made up $236.0 million, $191.9 million, and $190.0 million of the net product sales outside the United States for the years ended December 31, 2021, 2020, and 2019, respectively.

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. The Company considers 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.

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Liability for sale of future royalties

In July 2020, we entered into the Royalty Purchase Agreement with RPI, pursuant to which we sold to RPI the Assigned Royalty Payment. In consideration for the sale of the Assigned Royalty Payments, RPI paid us $650.0 million in cash consideration. 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 Payments.

The cash consideration obtained pursuant to the Royalty Purchase Agreement is classified as debt and is recorded as “liability for sale of future royalties-current” and “liability for sale of future royalties-noncurrent” on our consolidated balance sheet based on the timing of the expected payments to be made to RPI. The fair value for the liability for sale of future royalties at the time of the transaction was based on our estimates of future royalties expected to be paid to RPI over the life of the arrangement, which was determined using forecasts from market data sources, which are considered Level 3 inputs. The liability will be amortized using the effective interest method over the life of the arrangement, in accordance with the respective guidance. We will utilize the prospective method to account for subsequent changes in the estimated future payments to be made to RPI.

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Contingent consideration from business combinations

The consideration for our business acquisitions may include future payments that are contingent upon the occurrence of a particular event or events. The obligations for such contingent consideration payments are recorded at fair value on the acquisition date. The contingent consideration obligations are then evaluated each reporting period. Changes in the fair value of contingent consideration, other than changes due to payments, are recognized as a gain or loss and recorded within the change in the fair value of deferred and contingent consideration in the consolidated statements of operations.  The fair value of development and regulatory milestones are estimated utilizing a probability adjusted, discounted cash flow approach. The discount rates are estimated utilizing Corporate B rated bonds maturing in the years of expected payments based on our estimated development timelines for the acquired product candidate. The fair value of the net sales milestones and royalties is based on probability adjusted sales estimates and estimated discount rates and utilizes an option pricing model with Monte Carlo simulation to simulate a range of possible payment scenarios, and the average of the payments in these scenarios is then discounted to calculate present fair value.

Indefinite-lived intangible assets annual impairment assessment

Indefinite-lived intangible assets consist of IPR&D acquired in business combinations. Intangible assets with indefinite lives, including IPR&D, are tested for impairment if impairment indicators arise and, at a minimum, annually. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Several methods may be used to determine the estimated fair value of the IPR&D. We utilize the “income method”, and use estimated future net cash flows that are derived from projected sales revenues and estimated costs. These projections are based on factors such as relevant market size, patent protection, and expected pricing and industry trends. The estimated future net cash flows are then discounted to the present value using an appropriate discount rate. The estimated fair value is then compared to the carrying value of IPR&D. We performed a quantitative annual impairment test for our indefinite-lived intangible assets as of October 1, 2021 and concluded that no impairment exists as of December 31, 2021.

For a description of our significant accounting policies, see note 2 to our consolidated financial statements.

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Year ended December 31, 2021 compared to year ended December 31, 2020

The following table summarizes revenues and selected expense and other income data for the year ended December 31, 2021 and 2020:

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Net product revenue.   Net product revenue was $428.9 million for the year ended December 31, 2021, an increase of $95.5 million, or 29%, from net product revenue of $333.4 million for the year ended December 31, 2020.  Translarna net product revenues were $236.0 million for the year ended December 31, 2021, an increase of $44.1 million, or 23%, compared to $191.9 million for the year ended December 31, 2020. These results were driven by treatment of new patients, continued high compliance, and geographic expansion. Emflaza net product revenues were $187.3 million for the year ended December 31, 2021, an increase of $48.3 million, or 35%, compared to $139.0 million for the year ended December 31, 2021. These results were driven by continued new prescriptions, continued high compliance, and more favorable access. The remaining increase of $3.1 million was due to an increase in net product sales of Tegsedi and Waylivra.

Collaboration revenue.   Collaboration revenue was $55.0 million for the year ended December 31, 2021, an increase of $12.5 million, or 29%, from collaboration revenue of $42.6 million for the year ended December 31, 2020. The increase is primarily related to three milestones that were triggered from Roche in the years ended December 31, 2021. In March 2021, the first commercial sale of Evrysdi in the EU was made. This event triggered a $20.0 million milestone payment to us from Roche. Additionally, in June 2021, the Japanese Ministry of Health, Labor and Welfare approved Evrysdi for the treatment of SMA in Japan. In August 2021, the first commercial sale of Evrysdi in Japan triggered a $10.0 million milestone payment to us from Roche.  In December 2021, we recorded our first sales milestone of $25.0 million for the achievement of $500.0 million in worldwide annual net sales from Evrysdi. Comparatively, in the year ended December 31, 2020, the FDA approved Evrysdi for the treatment of SMA in adults and children two months and older in August 2020. The first commercial sale of Evrysdi in the United States was made in August 2020. This event triggered a $20.0 million milestone payment to us from Roche. In August 2020, the EMA accepted the MAA filed by Roche for Evrysdi for the treatment of SMA, which triggered a $15.0 million milestone payment to us from Roche. In October 2020, Chugai filed an NDA in Japan for Evrysdi for the treatment of SMA, which triggered a $7.5 million milestone payment to us from Roche.

Royalty revenue. Royalty revenue was $54.6 million for the years ended December 31, 2021, an increase of $49.9 million, or over 100%, from $4.8 million for the years ended December 31, 2020. The increase in royalty revenue was due to the FDA approval of Evrysdi in August 2020. In accordance with the SMA License Agreement, we are entitled to royalties on worldwide annual net sales of the product.

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Cost of product sales, excluding amortization of acquired intangible asset.  Cost of product sales, excluding amortization of acquired intangible asset, was $32.3 million for the year end December 31, 2021, an increase of $13.4 million, or 71%, from $18.9 million for the year ended December 31, 2020. Cost of product sales consist primarily of royalty payments associated with Emflaza and Translarna net product sales, excluding contingent payments to Marathon,

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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 increases in net product revenue, royalty revenues, and collaboration milestone revenue.

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Amortization of acquired intangible asset.  Amortization of acquired intangible asset was $54.8 million for the year ended December 31, 2021, an increase of $17.9 million, or 48%, from $36.9 million for the year ended December 31, 2020. 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 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. 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.

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Research and development expense.   Research and development expense was $540.7 million for the year ended December 31, 2021, an increase of $63.0 million, or 13%, compared to $477.6 million for the year ended December 31, 2020.  The increase in research and development expenses is primarily related to increased investment in research programs and advancement of the clinical pipeline. This increase was partially offset by one time charges in the year ended December 31, 2020 of $53.6 million for our Censa Merger, as well as $41.4 million for our commercial manufacturing service agreement with MassBio related to dedicated manufacturing space for our lead gene therapy program, AADC deficiency.

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Selling, general and administrative expense.  Selling, general and administrative expense was $285.8 million for the year ended December 31, 2021, an increase of $40.6 million, or 17%, from $245.2 million for the year ended December 31, 2020. The increase reflects our continued investment to support our commercial activities including our expanding commercial portfolio, including an increase in rent and related expenses associated with entering into a long term lease for the Hopewell Facility that commenced on July 1, 2020.

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Change in the fair value of deferred and contingent consideration. Change in the fair value of deferred and contingent consideration was a gain of $0.5 million for the year ended December 31, 2021, a change of $23.8 million, or over 100%, from a loss of $23.3 million for the year ended December 31, 2020. 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.

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Settlement of deferred and contingent consideration. Settlement of deferred and contingent consideration was $0.0 million for year ended December 31, 2021, a decrease of $10.6 million, or 100%, from $10.6 million for the year ended December 31, 2020. The settlement of deferred and contingent consideration for the year ended December 31, 2020 is related to a loss upon the settlement of the deferred and contingent consideration liabilities as a result of the Rights Exchange Agreement with certain former equityholders of Agilis, whereby we exchanged their pro rata share of specific future cash milestone payments in the aggregate amount of $225.0 million for a combination of cash and equity. We paid $36.9 million in cash and issued 2,821,176 shares of common stock in exchange for the cancellation and forfeiture of the Participating Rightholders’ rights to receive (i) $174.0 million, in the aggregate, of potential milestone payments based on the achievement of certain regulatory milestones and (ii) $37.6 million, in the aggregate, of $40.0 million in development milestone payments that would have been due upon the passing of the second anniversary of the closing of the Agilis Merger, regardless of whether the milestones are achieved.

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Interest expense, net.   Interest expense, net was $86.0 million for the year ended December 31, 2021, an increase of $29.7 million, 53%, from interest expense, net of $56.4 million for the year ended December 31, 2020.  The increase in interest expense, net was primarily due to interest expense recorded from the liability for the sale of future royalties related

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to the Royalty Purchase Agreement, partially offset by a decrease in interest expense recorded from the 2022 and 2026 Convertible Notes as a result of the adoption of ASU 2020-06 and interest income from our investments.

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Other (expense) income, net.  Other expense, net was $57.9 million for the year ended December 31, 2021, a change of $143.1 million, over 100%, from other income, net of $85.2 million for the year ended December 31, 2020. The change in other (expense) income, net resulted primarily from an unrealized foreign exchange loss of $41.0 million from the remeasurement of our intercompany loan, which is recorded on a non-U.S. subsidiary and denominated in U.S. dollars, and unrealized losses on our equity investments and convertible debt security in ClearPoint Neuro, Inc. (formerly MRI Interventions, Inc.), or ClearPoint, of $6.1 million and $8.3 million, respectively.

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Income tax expense.   Income tax expense was $5.6 million for the year ended December 31, 2021, a decrease of $29.7 million, or 84%, from income tax expense of $35.2 million for the year ended December 31, 2020. We recorded a state income tax provision for the year ended December 31, 2020, which is attributable to the taxable income from the sale of our right to receive sales-based royalty payments on Roche’s worldwide net sales of Evrysdi. We also 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.

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Year ended December 31, 2020 compared to year ended December 31, 2019

The following table summarizes revenues and selected expense and other income data for the years ended December 31, 2020 and 2019:

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Net product revenue.   Net product revenue was $333.4 million for the year ended December 31, 2020, an increase of $42.1 million, or 14%, from net product revenue of $291.3 million for the year ended December 31, 2019.  Translarna net product revenues were $191.9 million for the year ended December 31, 2020, an increase of $1.9 million, or 1%, compared to $190.0 million for the year ended December 31, 2019. The increase in Translarna net product revenues was driven by broader uptake due to new patients in existing geographies, geographic expansion, and label updates. Emflaza net product revenues were $139.0 million for the year ended December 31, 2020, an increase of $38.0 million, or 38%, compared to $101.0 million for the year ended December 31, 2019. The increase in Emflaza net product revenue was primarily due to increased new patient prescriptions and higher compliance.  The remaining increase was due to an increase in net product sales of Tegsedi and the commercial launch of Waylivra in the year ended December 31, 2020.

Collaboration revenue.   Collaboration revenue was $42.6 million for the year ended December 31, 2020, an increase of $26.9 million, over 100%, from collaboration revenue of $15.7 million for the year ended December 31, 2019. The increase is primarily related to three milestones that were triggered from Roche in the years ended December 31, 2020. In August 2020, the FDA approved Evrysdi for the treatment of SMA in adults and children two months and older. The first commercial sale of Evrysdi in the United States was made in August 2020. This event triggered a $20.0 million milestone

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payment to us from Roche. In August 2020, the EMA accepted the MAA filed by Roche for Evrysdi for the treatment of SMA, which triggered a $15.0 million milestone payment to us from Roche.  In October 2020, Chugai filed an NDA in Japan for Evrysdi for the treatment of SMA, which triggered a $7.5 million milestone payment to us from Roche. Comparatively, in the year ended December 31, 2019, a $15.0 million milestone was triggered upon the FDA’s acceptance of the filing of the NDA for risdiplam for the treatment of SMA.

Royalty revenue. Royalty revenue was $4.8 million for the years ended December 31, 2020, an increase of $4.8 million, or 100%, from $0.0 million for the years ended December 31, 2019. The increase in royalty revenue was due to the FDA approval of Evrysdi in August 2020. 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, was $18.9 million for the year end December 31, 2020, an increase of $6.8 million, or 56%, from $12.1 million for the year ended December 31, 2019. 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 increases in net product revenue, royalty revenues, and collaboration milestone revenue.

Amortization of acquired intangible asset.  Amortization of acquired intangible asset was $36.9 million for the year ended December 31, 2020, an increase of $9.2 million, or 33%, from $27.7 million for the year ended December 31, 2019. 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 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 $477.6 million for the year ended December 31, 2020, an increase of $220.2 million, or 86%, compared to $257.5 million for the year ended December 31, 2019.  The increase in research and development expenses reflects costs associated with advancing the gene therapy and Bio-e platforms, increased investment in research programs, and advancement of the clinical pipeline. The increase also includes one-time charges of $53.6 million in acquisition related and other expenses from our acquisition of Censa pursuant to the Censa Merger Agreement and $41.4 million related to our commercial manufacturing services agreement with or MassBio related to dedicated manufacturing space for our lead gene therapy program, AADC deficiency.

Selling, general and administrative expense.  Selling, general and administrative expense was $245.2 million for the year ended December 31, 2020, an increase of $42.6 million, or 21%, from $202.5 million for the year ended December 31, 2019. The increase was primarily due to continued investment to support our commercial activities including our expanding commercial portfolio and rent and related expenses associated with entering into a long term lease for the Hopewell Facility that commenced on July 1, 2020.

Change in the fair value of deferred and contingent consideration. Change in the fair value of deferred and contingent consideration was a loss of $23.3 million for the year ended December 31, 2020, a decrease of $25.1 million, or 52%, from a loss of $48.4 million for the year ended December 31, 2019. 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.

Settlement of deferred and contingent consideration. Settlement of deferred and contingent consideration was $10.6 million for year ended December 31, 2020. The settlement of deferred and contingent consideration is related to a loss upon the settlement of the deferred and contingent consideration liabilities as a result of the Rights Exchange Agreement

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with certain former equityholders of Agilis, whereby we exchanged their pro rata share of specific future cash milestone payments in the aggregate amount of $225.0 million for a combination of cash and equity. We paid $36.9 million in cash and issued 2,821,176 shares of common stock in exchange for the cancellation and forfeiture of the Participating Rightholders’ rights to receive (i) $174.0 million, in the aggregate, of potential milestone payments based on the achievement of certain regulatory milestones and (ii) $37.6 million, in the aggregate, of $40.0 million in development milestone payments that would have been due upon the passing of the second anniversary of the closing of the Agilis Merger, regardless of whether the milestones are achieved.

Interest expense, net.   Interest expense, net was $56.4 million for the year ended December 31, 2020, an increase of $43.9 million, over 100%, from interest expense, net of $12.5 million for the year ended December 31, 2019.  The increase 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, interest expense recorded from the 2022 and 2026 Convertible Notes and the Credit Agreement, partially offset by interest income from our investments.

Other income, net.  Other income, net was $85.2 million for the year ended December 31, 2020, an increase of $71.5 million, over 100%, from other income, net of $13.7 million for the year ended December 31, 2019. The increase in other income, net resulted primarily from an unrealized foreign exchange gain of $54.6 million from the remeasurement of our intercompany loan, which is recorded on a non-U.S. subsidiary and denominated in U.S. dollars, and unrealized gains on our equity investments and convertible debt security in ClearPoint of $14.3 million and $19.3 million, respectively. These gains were partially offset by Agilis Rights Exchange transaction fees of $2.0 million.

Income tax expense.   Income tax expense was $35.2 million for the year ended December 31, 2020, an increase of $23.6 million, over 100%, from income tax expense of $11.7 million for the year ended December 31, 2019. We recorded a state income tax provision in the years ended December 31, 2020, which is attributable to the taxable income from the sale of our right to receive sales-based royalty payments on Roche’s worldwide net sales of Evrysdi. We also 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, almost all of our product revenue has been 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 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.

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In August 2015, we closed a private offering of $150.0 million in aggregate principal amount of 2022 Convertible Notes, 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.

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 or deliver, as the case may be, cash, shares of our common stock or any combination thereof at our election.

The conversion rate for the 2022 Convertible Notes was initially, and remains, 17.7487 shares of our common stock per $1,000 principal amount of the 2022 Convertible Notes, which is equivalent to an initial conversion price of approximately $56.34 per share of our common stock.

We were not permitted to redeem the 2022 Convertible Notes prior to August 20, 2018. As of August 20, 2018, we may redeem for cash all or any portion of the 2022 Convertible Notes, at our option, on or after August 20, 2018 if the last reported sale price of our common stock has been at least 130% of the conversion price then in effect on the last trading day of, and for at least 19 other trading days (whether or not consecutive) during, any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the 2022 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2022 Convertible Notes, which means that we are not required to redeem or retire the 2022 Convertible Notes periodically. There have been no redemptions to date.

If we undergo a “fundamental change” (as defined in the Indenture governing the 2022 Convertible Notes Indenture), subject to certain conditions, holders of the 2022 Convertible Notes may require us to repurchase for cash all or part of their 2022 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2022 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2022 Convertible Notes represent senior unsecured obligations and will rank senior in right of payment to our future indebtedness that is expressly subordinated in right of payment to the notes, equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated, effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) incurred by our subsidiaries. The 2022 Convertible Notes Indenture contains customary events of default with respect to the 2022 Convertible Notes, including that upon certain events of default (including our failure to make any payment of principal or interest on the 2022 Convertible Notes when due and payable) occurring and continuing, the 2022 Convertible Notes Trustee by notice to us, or the holders of at least 25% in principal amount of the outstanding 2022 Convertible Notes by notice to us and the 2022 Convertible Notes Trustee, may, and the 2022 Convertible Notes Trustee at the request of such holders (subject to the provisions of the 2022 Convertible Notes Indenture) will, declare 100% of the principal of and accrued and unpaid interest, if any, on all the 2022 Convertible Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving us or a significant subsidiary, 100% of the principal of and accrued and unpaid interest on the 2022 Convertible Notes will automatically become due and payable. Upon such a declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately.

In January 2019 and February 2019, we closed an underwritten public offering of 7,563,725 shares of our common stock and received net proceeds of approximately $224.2 million. 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. In September 2019, we closed an underwritten public offering of 2,475,248 shares of our common stock and received net proceeds of $97.0 million. See “Item 7. Management’s

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Discussion and Analysis of Financial Condition and Results of Operations—Overview—Funding” for additional information regarding the transactions described in this paragraph.

In September 2019, we issued $287.5 million aggregate principal amount of 2026 Convertible Notes, which included an option to purchase up to an additional $37.5 million in aggregate principal amount of the 2026 Convertible Notes, which was exercised in full by the initial purchasers. 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.

Holders may convert their 2026 Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding March 15, 2026 only under the following circumstances: (1) during any calendar quarter commencing on or after December 31, 2019 (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period, or the measurement period, in which the trading price (as defined in the 2026 Convertible Notes Indenture) per $1,000 principal amount of 2026 Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; (3) during any period after we have issued notice of redemption until the close of business on the scheduled trading day immediately preceding the relevant redemption date; or (4) upon the occurrence of specified corporate events. On or after March 15, 2026, until the close of business on the business day immediately preceding the maturity date, holders may convert their 2026 Convertible Notes at any time, regardless of the foregoing circumstances. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or any combination thereof at our election.

The conversion rate for the 2026 Convertible Notes was initially, and remains, 19.0404 shares of our common stock per $1,000 principal amount of the 2026 Convertible Notes, which is equivalent to an initial conversion price of approximately $52.52 per share of our common stock. The conversion rate may be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

We are not permitted to redeem the 2026 Convertible Notes prior to September 20, 2023. We may redeem for cash all or any portion of the 2026 Convertible Notes, at our option, if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect on the last trading day of, and for at least 19 other trading days (whether or not consecutive) during, any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption, at a redemption price equal to 100% of the principal amount of the 2026 Convertible Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2026 Convertible Notes, which means that we are not required to redeem or retire the 2026 Convertible Notes periodically.

If we undergo a “fundamental change” (as defined in the 2026 Convertible Notes Indenture), subject to certain conditions, holders of the 2026 Convertible Notes may require us to repurchase for cash all or part of their 2026 Convertible Notes at a repurchase price equal to 100% of the principal amount of the 2026 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The 2026 Convertible Notes represent senior unsecured obligations and will rank senior in right of payment to our future indebtedness that is expressly subordinated in right of payment to the notes, equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated, effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) incurred by our subsidiaries. The 2026 Convertible Notes Indenture contains customary events of default with respect to the 2026 Convertible Notes, including that upon certain events of default (including our failure to make any payment of principal or interest on the 2026 Convertible Notes when due and payable) occurring and continuing, the 2026 Convertible Notes Trustee by notice to us, or the holders

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of at least 25% in principal amount of the outstanding 2026 Convertible Notes by notice to us and the Convertible Notes Trustee, may, and the 2026 Convertible Notes Trustee at the request of such holders (subject to the provisions of the 2026 Convertible Notes Indenture) will, declare 100% of the principal of and accrued and unpaid interest, if any, on all the 2026 Convertible Notes to be due and payable. In case of certain events of bankruptcy, insolvency or reorganization, involving us or a significant subsidiary, 100% of the principal of and accrued and unpaid interest on the 2026 Convertible Notes will automatically become due and payable. Upon such a declaration of acceleration, such principal and accrued and unpaid interest, if any, will be due and payable immediately.

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. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview—Funding” for additional information regarding this transaction.

Cash flows

As of December 31, 2021, we had cash and cash equivalents and marketable securities of $773.4 million.

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

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Net cash used in operating activities was $251.3 million, $194.1 million, and $98.6 million for the years ended December 31, 2021, 2020, and 2019, respectively. The cash used in operating activities primarily related to supporting clinical development, including the manufacture of drug product, commercial activities for Emflaza and Translarna, and costs associated with the expansion of our international infrastructure for the years ended December 31, 2021, 2020, and 2019.

Net cash provided by investing activities was $219.2 million for the year ended December 31, 2021. Net cash used in investing activities was $561.5 million and $387.2 million for the years ended December 31, 2020 and 2019, respectively. The cash provided by investing activities for the year ended December 31, 2021 was primarily related to net sales and redemptions of marketable securities. The cash used in investing activities for the year ended December 31, 2020 was primarily related to purchases of marketable securities, the acquisition of product rights, purchases of fixed assets, and our purchase of convertible debt security, partially offset by net sales and redemptions of marketable securities. The cash used in investing activities for the year ended December 31, 2019 was primarily related to purchases of marketable securities, the acquisition of product rights, purchases of fixed assets, and our Equity Investment, partially offset by net sales and redemptions of marketable securities.

Net cash provided by financing activities was $20.9 million, $668.7 million, and $613.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. The cash provided by financing activities for the year ended December 31, 2021 is primarily attributable to the exercise of options, and issuance of stock under our Employee Stock Purchase Plan, or ESPP, offset by payments of finance lease principal. Net cash provided by financing activities for the year ended December 31, 2020 is primarily attributable to proceeds from the Royalty Purchase Agreement, net proceeds received from our “at the market offering” of our common stock, the exercise of options, and issuance of stock under our ESPP, partially offset by repayment on our senior secured term loan, payments on deferred consideration obligation, and payments of finance lease principal. Net cash provided by financing activities for the year ended December 31, 2019 is primarily attributable to net proceeds received from our public stock offerings, net proceeds received

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from our “at the market offering” of our common stock, net proceeds received from our convertible notes offering, the exercise of options, and issuance of stock under our ESPP, partially offset by repayment on our senior secured term loan.

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 submitted an MAA to the EMA for the treatment of AADC deficiency with PTC-AADC in the EEA and we expect an opinion from the CHMP in April 2022. We are preparing a BLA for PTC-AADC for the treatment of AADC deficiency in the United States and we expect to submit a BLA to the FDA in the second 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: