On October 25, 2019, the Company completed the acquisition of substantially all of the assets of BioElectron pursuant to the Asset Acquisition Agreement by and between the Company and BioElectron, dated October 1, 2019. BioElectron was a private company with a pipeline focused on inflammatory and central nervous system (CNS) disorders. The lead program, PTC743, is pivotal trial ready for CNS disorders with substantial unmet need and significant commercial opportunity that are complementary to PTC’s existing pipeline.

Upon the closing of the Asset Acquisition, the Company paid to BioElectron total upfront consideration of $10.0 million , funded with cash on hand, 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 the Company. Subject to the terms and conditions of the Asset Acquisition Agreement, BioElectron may become entitled to receive contingent milestone payments of up to $200.0 million (in cash or in shares of the Company’s common stock, as determined by the Company) from the Company based on the achievement of certain regulatory and net sales milestones. Subject to the terms and conditions of the Asset Acquisition Agreement, BioElectron may also become entitled to contingent payments based on a percentage of net sales of certain products.

The Company concluded that the transaction included inputs and processes that did not constitute a business under the revised guidance of ASU 2017-01, which allows for a screen to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. The Company determined that substantially all of the fair value is concentrated in PTC743 and accounted for the transaction as an asset acquisition under ASC 805-50.

The purchase price consisted of upfront consideration of $10.0 million in cash and approximately $0.5 million of acquisition costs, resulting in $10.5 million of total consideration transferred. As PTC743 is an IPR&D asset, the Company concluded that it did not have any alternative future use, and accordingly, the fair value amount allocated to the IPR&D asset of $10.0 million was expensed to research and development during the twelve month period ended December 31, 2019 and included within operating activities in the statement of cash flows. The remaining assets acquired and liabilities assumed were immaterial. Additionally, as noted above, BioElectron may be entitled to receive contingent milestone payment and contingent royalty payments. The Company will record the milestone and royalty payments if and when they become payable, in accordance with the applicable guidance. These payments will be capitalized and amortized over their expected useful lives.

On August 23, 2018, the Company completed its acquisition of Agilis pursuant to the Merger Agreement. Agilis was a privately-held biotechnology company advancing an innovative gene therapy platform for rare monogenic diseases that affect the central nervous system. Upon completion of the Merger, the Company acquired Agilis's lead product candidate, PTC-AADC, for the treatment of AADC deficiency, as well as three other gene therapies.

Upon the closing of the Merger, the Company paid to Agilis equityholders total upfront consideration comprised of $49.2 million in cash and 3,500,907 shares of the Company’s common stock (the “Closing Stock Consideration”). The Closing Stock Consideration was determined by dividing $150.0 million by the volume-weighted average price per share of the Company’s common stock on Nasdaq for the 10 consecutive trading-day period ending on the second trading-day immediately preceding the closing of the Merger. The fair value of the stock on the acquisition date was determined to be $155.9 million.

Pursuant to the Merger Agreement, Agilis equityholders may become entitled to receive contingent consideration payments from the Company based on (i) the achievement of certain development milestones up to an aggregate maximum amount of $60.0 million, (ii) the achievement of certain regulatory approval milestones together with a milestone payment following the receipt of a priority review voucher up to an aggregate maximum amount of $535.0 million, (iii) the achievement of certain net sales milestones up to an aggregate maximum amount of $150.0 million, and (iv) a percentage of annual net sales for Friedreich Ataxia and Angelman Syndrome during specified terms, ranging from 2%-6%. The fair value of the contingent consideration payments at the acquisition date was estimated to be $290.5 million. Under the Merger Agreement, the Company is required to pay $40.0 million of the development milestone payments mentioned above upon the passing of the second anniversary of the closing of the Merger, regardless of whether the applicable milestones have been achieved. The fair value of the deferred consideration payments at the closing date was estimated to be $38.1 million. Refer to Footnote 4 for further fair value considerations.

The Company evaluated the acquisition of Agilis under ASU 2017-01, Business Combinations: Clarifying the Definition of a Business. Because the business contained both inputs and processes necessary to manage products and provide economic benefits directly to its owners and substantially all the value of the acquisition did not relate to a similar group of assets, it was determined that the acquisition represents a business combination. Therefore, the transaction has been accounted for using the acquisition method of accounting. Under the acquisition method of accounting, the total purchase price of the acquisition is allocated to the net tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the date of acquisition.

The Company recorded the assets acquired and liabilities assumed as of the date of acquisition based on the information available at that time. The Company finalized its accounting for the Merger during the three month period ended December 31, 2018. The following table presents the preliminary allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date of August 23, 2018, the measurement period adjustments recorded during the period from the acquisition date through December 31, 2018, and the final allocation of the purchase price as of December 31, 2018.



	Preliminary Allocation as of the acquisition date of August 23, 2018			Measurement Period Adjustments			Final Allocation as of December 31, 2018
Cash and cash equivalents	$	328		$	—		$	328
Prepaid expenses and other current assets	181			—			181
Fixed assets	153			—			153
Other assets	38			—			38
Intangible assets - IPR&D	480,000			96,500			576,500
Accounts payable and accrued expenses	(3,828		)	—			(3,828		)
Deferred tax liability	(115,200		)	(6,832		)	(122,032		)
Fair value of net assets acquired	$	361,672		$	89,668		$	451,340
Goodwill	100,309			(17,968		)	82,341
Total purchase price	$	461,981		$	71,700		$	533,681

The Company incurred approximately $1.7 million in acquisition related expenses which were included in selling, general and administrative expenses in the consolidated statement of operations as of December 31, 2018 . The results of Agilis’s operations have been included in the consolidated statements of operations beginning on the acquisition date of August 23, 2018. The net loss of Agilis included in the consolidated statement of operations for the period August 23, 2018 through December 31, 2018 was $8.7 million.

The fair value of the IPR&D was capitalized as of the acquisition date and accounted for as indefinite-lived intangible assets until disposition of the assets or completion or abandonment of the associated research and development efforts. Accordingly, during the development period after the completion of the acquisition, these assets will not be amortized into earnings; rather, these assets will be subject to periodic impairment testing. Upon successful completion of the development efforts, the useful lives of the IPR&D assets will be determined and the assets will be considered definite-lived intangible assets and amortized over their expected useful lives to cost of sales.

The goodwill recorded is the excess of the purchase price of the net assets acquired net of any deferred tax adjustments. The Company currently has a deferred tax liability for the indefinite lived IPR&D intangible assets, which have no tax basis and, therefore, will not result in a future tax deduction. The goodwill is not deductible for income tax purposes.

The following table summarizes certain supplemental pro forma financial information for the twelve-month periods ended December 31, 2018 and 2017 as if the Merger had occurred as of January 1, 2017. The unaudited pro-forma financial information for the twelve-month period ended December 31, 2018 reflects adjustments of $1.7 million related to acquisition fees that are non-recurring in nature. There were no adjustments related to the twelve-month period ended December 31, 2017.

On April 20, 2017, the Company completed its previously announced acquisition of all rights to Emflaza pursuant to an Asset Purchase Agreement, dated March 15, 2017, and amended on April 20, 2017, by and between the Company and Marathon. The assets acquired by the Company in the Transaction include intellectual property rights related to Emflaza, inventories of

The Company concluded that the Transaction included inputs and processes that did not constitute a business under the revised guidance of ASU 2017-01, which allows for a screen to evaluate if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. If the screen is met, the transaction is accounted for as an asset acquisition. The Company determined that substantially all of the fair value is concentrated in the Emflaza rights intangible asset and accounted for the Transaction as an asset acquisition under ASC 805-50.

The purchase price consisted of total upfront consideration comprised of $75.0 million in cash and 6,683,598 shares of the Company's common stock with a fair value of $75.2 million. In addition, the Company incurred approximately $2.2 million of acquisition costs, which are capitalized in an asset acquisition and included in the total consideration transferred.

Marathon is entitled to receive contingent payments from the Company based on annual net sales of Emflaza beginning in 2018, up to a specified aggregate maximum amount over the expected commercial life of the asset. In addition, Marathon has the opportunity to receive a single $50.0 million sales-based milestone. In accordance with the guidance for an asset acquisition, the Company will record the milestone payment when it becomes payable to Marathon and increase the cost basis for the Emflaza rights intangible asset. Refer to Note 18 for further details.

The following tables present the total purchase consideration and the final allocation of the purchase consideration for the Transaction as of April 20, 2017 (the “Acquisition Date”):



Cash consideration	$	75,000
Fair value of PTC common stock issued to Marathon (6,683,598 shares)	75,190
Acquisition costs	2,163
Total consideration transferred	$	152,353



Purchase price	$	152,353

Total fair value of tangible assets acquired and liabilities assumed:
Inventory	3,980
Emflaza rights	$	148,373

The Emflaza rights intangible asset is being amortized to cost of product sales over its expected useful life of approximately seven years. Given the inherent uncertainty of the Company's sales projections, the Company amortizes the asset on a straight line basis. Refer to Note 18 for further details.