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March 16, 2017

Under Fire over Price, Marathon Sells Duchenne Drug Emflaza to PTC

  • PTC Therapeutics said today it has agreed to acquire the recently approved Duchenne muscular dystrophy (DMD) treatment at the center of controversy over its sky-high price.

    PTC will acquire Emflaza™ (deflazacort) for up to $190 million from Marathon Pharmaceuticals, which has retreated from earlier plans to introduce the drug to market following heavy criticism over the $89,000 price it set for the drug—a 74-fold increase over the roughly $1200 per year that patients previously paid for importing the generic version of the drug.

    Marathon’s action rekindled the debate over what to do about high-and-climbing prices for prescription drugs—a debate that has included repeated promises by President Donald Trump to curb what drug developers can charge patients for medications.

    In authorizing marketing of Emflaza on February 9, the FDA made it the first treatment approved in the U.S. for all DMD patients 5 years of age and older, regardless of their genetic mutation. The drug is designed to preserve muscle function and delay disease progression by reducing inflammation.

    On February 13, under heavy criticism from members of Congress and patient advocates, Marathon said it was “pausing” its rollout of Emflaza “in order to meet with Duchenne community leaders and explain our commercialization plans, review their concerns, discuss all options, and move forward with commercialization based on the resulting plan of action,” according to an open letter to “members of the Duchenne community” by Marathon’s chairman and CEO Jeff Aronin.

    Aronin said Marathon was increasing access to the drug in the U.S.—while justifying the price of Emflaza by stating: “The resources we invested were substantial and we don’t expect to recoup our investment for several years, and we have only 7 years of market exclusivity.”

    “We are committed to the Duchenne community for the long term and we will re-invest the earnings into developing and funding additional therapies,” Aronin promised, adding: “Anyone who needs this medicine will get this medicine.”

    In today’s statement by PTC, Aronin said access to Emflaza will be enhanced through its sale to PTC, which he said “is well known by the Duchenne community and is ideally positioned to achieve this shared goal.”

    PTC agreed to pay Marathon $140 million upfront, consisting of approximately $75 million in cash and approximately $65 million in PTC common stock. The stock portion is subject to a maximum 6.9 million share limit, with any shortfall to be made whole with additional cash consideration, PTC said.

    In addition, PTC agreed to pay Marathon based on a percentage of annual net sales of Emflaza beginning in 2018, which PTC said will range between the low to mid-20s on a blended average basis. Marathon is also eligible to receive from PTC a single $50 million sales-based milestone.

    Added Mark Rothera, PTC's chief commercial officer: “We are finalizing our commercialization plans and intend to share more information after the transaction closes.”

    PTC said the deal is expected to add to both its earnings and cash flow beginning in 2018. The transaction is expected to close in the second quarter, subject to customary closing conditions, including receipt of clearance under the Hart–Scott–Rodino Act.

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