Please ensure Javascript is enabled for purposes of website accessibility

Here's Why PTC Therapeutics Fell 24.1% in September

By Maxx Chatsko - Oct 7, 2019 at 12:53PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company more than doubled its cash balance from the end of June with two fundraising transactions.

What happened

Shares of PTC Therapeutics (PTCT 1.82%) dropped more than 24% last month, according to data provided by S&P Global Market Intelligence. The biopharmaceutical company tumbled after announcing two fundraising transactions: one selling debt notes and one selling common stock.

The business raised up to $402.5 million combined through the debt and stock offerings in September. The company ended June with $363 million in cash on its balance sheet but decided that might not be enough to fund operations after burning $72.9 million in cash in the first half of 2019.

A declining chart on a chalkboard.

Image source: Getty Images.

So what

PTC Therapeutics reported revenue of $139 million and an operating loss of $108 million in the first half of 2019. Nearly half of total operating expenses in that span were categorized as research and development, but investors think the investment could pay off for the pharmaceutical company.

For instance, PTC Therapeutics is developing 11 unique drug candidates across rare diseases and oncology and exploring three supplemental approvals among its four marketed drug products. Five of the company's drug candidates are gene therapies, which have very strict regulations in place for manufacturing and administration. The company has been investing heavily in infrastructure and relationships to build leadership in the field, but it has proven expensive.

Now what

The abrupt tumble taken by shares of PTC Therapeutics last month should come as no surprise given the dilutive fundraising transactions that were conducted. The extra cash will be needed to support ongoing growth efforts and to invest in research and development activities that will lay the foundation for future growth. Simply put, not much has changed for the business, but investors need to keep an eye on swelling operating losses and cash burn.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

PTC Therapeutics, Inc. Stock Quote
PTC Therapeutics, Inc.
PTCT
$52.10 (1.82%) $0.93

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
394%
 
S&P 500 Returns
127%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.