outperform [v] initiation

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19 January 2016 Americas/United States

Equity Research Biotechnology

PTC Therapeutics, Inc. (PTCT) Rating OUTPERFORM [V] Price (15-Jan-16,US$) 23.11 Target price (US$) 36.00 52-week price range 77.53 - 22.66 Market cap (US$ m) 792.02 Enterprise value (US$ m) 893.30 *Stock ratings are relative to the coverage universe in each

analyst's or each team's respective sector.

¹Target price is for 12 months.

[V] = Stock Considered Volatile (see Disclosure Appendix)

Research Analysts

Alethia Young

212 538 0640

[email protected]

Eliana Merle

212 538 0678

[email protected]

Grant Hesser

212 325 2587

[email protected]

INITIATION

Low Expectations May Create the Opportunity ■ We are initiating coverage of PTC Therapeutics with an Outperform rating and a

$36 target price. Much of the pipeline remains a free call option, including cystic

fibrosis and SMA. We think that there is still a shot for approval in the US with its

Ph2 and Ph3 dataset. At these levels, key focus is on whether the company

remains on the EU/ROW market, and we think that it's likely.

■ US Advisory Panel Likely Early 2H 2016: We should know in early February

whether the FDA accepts PTC's ataluren filing. One strong point that PTC has

going is that atuluren's safety profile is good after being exposed to hundreds of

patients in the EU. We estimate 2021 sales of $320M and assign a 40%

probability of success.

■ Key Sales Oppy from Conditionally Approved ROW Territory: Our checks

suggest the majority of the WW DMD population resides ex-US (EMEA & LatAm)

where Translarna is conditionally approved. As we stated, the biggest risk is

whether the EMA will allow it to remain on market after the conditional didn't hit

significance. We assume 100% success to $350M 2020 ROW sales, and we may

learn about the approval status mid-year.

■ Many Pipeline Call Options: We assume a 0% POS in Europe to CF & a 0%

POS in the US. PTC submitted its CF drug in the EU for full approval on the Ph2.

We may learn more about that in the middle of the year. We are cautious on

approval before the ph3, which is set to read out in late 2016.

■ Valuation: Our $36 TP and Outperform rating is derived from DCF valuation. We

assumed a 12% discount rate, which is in-line with small-cap peers, and a

2% terminal growth rate since the company has a platform technology.

Downside risks include clinical delays, conditional approval removed in

Europe, no FDA approval in US, and CF trial failure.

Share price performance

On 15-Jan-2016 the S&P 500 INDEX closed at 1880.33

Daily Jan16, 2015 - Jan15, 2016, 01/16/15 = US$58.6

Quarterly EPS Q1 Q2 Q3 Q4 2014A -0.42 -0.69 -0.77 -0.54 2015E -0.85 -0.89 -1.04 -1.05 2016E -1.02 -1.00 -1.04 -1.08

Financial and valuation metrics

Year 12/14A 12/15E 12/16E 12/17E EPS (CS adj.) (US$) -2.45 -3.84 -4.15 -2.13 Prev. EPS (US$) - - - - P/E (x) -9.4 -6.0 -5.6 -10.8 P/E rel. (%) -52.9 -34.0 -33.6 -73.8 Revenue (US$ m) 25.2 35.7 92.9 192.2 EBITDA (US$ m) -73.0 -125.3 -136.1 -67.8 OCFPS (US$) -1.97 -4.31 -4.10 -1.99 P/OCF (x) -26.3 -5.4 -5.6 -11.6 EV/EBITDA (current) -10.2 -7.1 -7.6 -16.5 Net debt (US$ m) -47 101 248 328 ROIC (%) -28.74 -47.23 -50.00 -24.91

Number of shares (m) 34.27 IC (current, US$ m) 251.00 Net debt (Next Qtr., US$ m) - EV/IC (x) - Net debt/tot eq (Next Qtr.,%) - Dividend (current, US$) - Source: Company data, Thomson Reuters, Credit Suisse estimates

19 January 2016

PTC Therapeutics, Inc. (PTCT) 2

PTC Therapeutics, Inc. (PTCT)

Price (15 Jan 2016): US$23.11; Rating: OUTPERFORM; Target Price: US$36

Income Statement 12/14A 12/15E 12/16E 12/17E

Revenue (US$ m) 25.2 35.7 92.9 192.2 EBITDA (73) (125) (136) (68) Depr. & amort. (4) (2) (3) (3) EBIT (US$) (77) (128) (139) (71) Net interest exp 1 (1) (1) (1) Associates - - - - Other adj. (0) (1) (1) (1) PBT (US$) (76) (129) (140) (72) Income taxes 5 (0) -0 -0 Profit after tax (71) (129) (140) (72) Minorities - - - - Preferred dividends - - - - Associates & other 0 0 0 0 Net profit (US$) (71) (129) (140) (72) Other NPAT adjustments 0 0 0 0 Reported net income (71) (129) (140) (72)

Cash Flow 12/14A 12/15E 12/16E 12/17E

EBIT (77) (128) (139) (71) Net interest 1 (1) (1) (1) Cash taxes paid - - - - Change in working capital 13 (18) (2) 1 Other cash & non-cash items 5 1 2 3 Cash flow from operations (57) (145) (139) (68) CAPEX (5) (4) (8) (12) Free cashflow to the firm (62) (149) (147) (80) Aquisitions - - - - Divestments 0 0 0 0 Other investment/(outflows) (141) 0 0 0 Cash flow from investments (145) (4) (8) (12) Net share issue(/repurchase) 236 0 0 0 Dividends paid 0 0 0 0 Issuance (retirement) of debt (0) 150 100 100 Other (1) (150) (100) (100) Cashflow from financing activities 235 0 0 (0) Effect of exchange rates - - - - Changes in Net Cash/Debt 32 (149) (147) (80) Net debt at start (15) (47) 101 248 Change in net debt (32) 149 147 80 Net debt at end (47) 101 248 328

Balance Sheet (US$) 12/14A 12/15E 12/16E 12/17E

Assets Cash & cash equivalents 50 51 4 24 Account receivables 4 1 1 1 Inventory 0 0 0 0 Other current assets 269 267 269 269 Total current assets 324 319 274 294 Total fixed assets 9 11 16 25 Intangible assets and goodwill 0 0 0 0 Investment securities - - - - Other assets 0 0 0 0 Total assets 333 330 291 319 Liabilities Accounts payables 29 5 6 7 Short-term debt 0 0 0 0 Other short term liabilities 3 153 253 353 Total current liabilities 32 159 259 360 Long-term debt 2 2 2 2 Other liabilities 0 (0) (0) (0) Total liabilities 35 161 261 362

Shareholder equity 298 169 29 (43) Minority interests - - - - Total liabilities and equity 333 330 291 319 Net debt (47) 101 248 328

Per share 12/14A 12/15E 12/16E 12/17E

No. of shares (wtd avg) 29 34 34 34 CS adj. EPS (2.45) (3.84) (4.15) (2.13) Prev. EPS (US$) Dividend (US$) 0.00 0.00 0.00 0.00 Dividend payout ratio -0.00 -0.00 -0.00 -0.00 Free cash flow per share (2.13) (4.42) (4.33) (2.35)

Earnings 12/14A 12/15E 12/16E 12/17E

Sales growth (%) (27.2) 41.5 160.1 107.0 EBIT growth (%) (69.4) (66.0) (8.8) 48.8 Net profit growth (%) (38.1) (81.2) (8.5) 48.4 EPS growth (%) 39.0 (56.5) (8.1) 48.6 EBITDA margin (%) (289.3) (350.9) (146.5) (35.3) EBIT margin (%) (304.5) (357.3) (149.5) (36.9) Pretax margin (%) (300.7) (360.8) (150.8) (37.6) Net margin (%) (282.1) (361.4) (150.8) (37.6)

Valuation 12/14A 12/15E 12/16E 12/17E

EV/Sales (x) 29.49 25.01 11.20 5.83 EV/EBITDA (x) (10.2) (7.1) (7.6) (16.5) EV/EBIT (x) (9.7) (7.0) (7.5) (15.8) P/E (x) (9.4) (6.0) (5.6) (10.8) Price to book (x) 2.2 4.6 26.7 (18.3) Asset turnover 0.1 0.1 0.3 0.6

Returns 12/14A 12/15E 12/16E 12/17E

ROE stated-return on (%) (32.7) (55.2) (140.9) 1065.1 ROIC (%) (0.3) (0.5) (0.5) (0.2) Interest burden (%) 0.99 1.01 1.01 1.02 Tax rate (%) 6.2 (0.2) -0.0 -0.0 Financial leverage (%) 0.01 0.90 8.60 (8.21)

Gearing 12/14A 12/15E 12/16E 12/17E

Net debt/equity (%) (15.9) 59.8 846.2 (764.3) Net Debt to EBITDA (x) 0.6 Net

Cash Net

Cash Net

Cash Interest coverage ratio (X) 65.2 (187.1) (203.5) (104.1)

Quarterly EPS Q1 Q2 Q3 Q4

2014A -0.42 -0.69 -0.77 -0.54 2015E -0.85 -0.89 -1.04 -1.05 2016E -1.02 -1.00 -1.04 -1.08

Share price performance

On 15-Jan-2016 the S&P 500 INDEX closed at 1880.33

Daily Jan16, 2015 - Jan15, 2016, 01/16/15 = US$58.6

Source: Company data, Thomson Reuters, Credit Suisse estimates

19 January 2016


PTC – Four Key Charts

Figure 1: Key PTC Catalysts Figure 2: Key DMD Events

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Figure 3: Key DMD Programs Figure 4: DMD Model Assumptions

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Milestone Indication Date

Complete US submission for ataluren DMD YE 2015

FDA Accepts filing (60 days) DMD 1Q16 (late Feb)

Panel (typically 1-2 months prior) DMD June-July 2016

Priority Review (6 months PDUFA) DMD 3Q16 Late Aug

Official notes from EMA posted Cystic fibrosis June-July 2016

Top-line data for cystic fibrosis Phase 3 DMD 3Q16 Late Aug

SMA early data (potentially new RG7916) SMA Over 2016

Event Company Date

Etepliresen briefing docs Sarepta Jan 20, 2016

Eteplirsen AdCom Sarepta Jan 22, 2016

Eteplirsen PDUFA Sarepta Feb 26, 2016

Eteplirsen PDUFA Sarepta Jan 22, 2016

Completed submission of US filing for

ataluren PTC End of 2015

Enrollment completed for eteplirsen

Ph3Sarepta End of 2015



EMA filing for eteplirsen Sarepta 2016

Top-line (48 week) data from Ph3

(PROMOVI) confirmatory trial of

etepliresen exon 51

Sarepta 2017

Company Product Target Phase% of DMD

population

PTC TranslarnaNonsense

MutationFDA review ~10%

BioMarinKyndrisa

(drisapersen) Exon 51 Rejected 13%

Sarepta Eteplirsen Exon 51 FDA review 13%

Pfizer PF-06252616 anti-Myostatin

antibody2

Santhera Catenaanalog of

CoQ103

DMD Model Assumptions US EU

Total DMD Patients 15,000 19,000

Patients with nonsense mutation (NM) 13% 13%

% Diagnosed 80% 80%

Translarna peak market share 75% 75%

Price per patient $300,000 $300,000

Gross to net 95% 95%

Compliance 90% 90%

Launch Year 2017 2014

Peak Sales (2023) $390 M $370 M

19 January 2016


Key Focus Is Actually the Ex-US Market Opportunity Since Translarna is Approved Ex-US

We Think That the Biggest Risk to PTC Is If Europe

Removes Its Conditional Approval Leading to

Removal of PTC's Marketing License

PTC has a very pivotal next 12 months coming up for its story. Expectations are low overall.

By the end of 2016, we should know whether the FDA will accept the filing and have a

panel about ataluren for the nonsense DMD mutation in the US. We will also likely get its

Ph3 cystic fibrosis study that is reading out potentially at the end of '16. We should also

learn whether the EMA will keep ataluren on the market in Europe. We have highlighted

the catalysts in Figure 5.

Figure 5: Key PTC Catalysts

Source: Company data, Credit Suisse.

A key question is whether ataluren will remain on the market. We should get clarity

to that question over the 1H 2016.

PTC released its Ph3 DMD study in late 2015. The trial did not show significance on the

six-min walk, which was its primary endpoint. The trial did show significance on the pooled

data between Ph2 and 3 and the 300-400 meter pre-specified analysis. This global trial

was supposed to serve as the confirmatory trial for Europe.

We think that ataluren stays on the market in EU, and that should be a key focus because that is about $350M in peak revenues for PTC at risk.

■ It’s a safe drug with very low discontinuations.

■ We couldn't find an example of when a safe drug was taken off the market after a

Phase 3 confirmatory trial.

■ Patient advocates since boys are still on the drug.

■ There is some efficacy in its global study that seems to be rationalized.

■ The EU has vetted ataluren closely; it was rejected, reconsidered, and then approved.

■ No other treatment for nonsense mutation DMD & other DMD trials have struggled to

show a statistically significant benefit.

Milestone Indication Date

Complete US submission for ataluren DMD YE 2015

FDA Accepts filing (60 days) DMD 1Q16 (late Feb)

Panel (typically 1-2 months prior) DMD June-July 2016

Priority Review (6 months PDUFA) DMD 3Q16 Late Aug

Official notes from EMA posted Cystic fibrosis June-July 2016

Top-line data for cystic fibrosis Phase 3 DMD 3Q16 Late Aug

SMA early data (potentially new RG7916) SMA Over 2016

19 January 2016


On the potential US approval, we think that it really comes down to PTC's potential upcoming panel if the FDA accepts its filing. The following are key points to consider.

■ The safety profile is relatively benign, which makes the risk/benefit ratio better than

what would be the case for Kyndrisa.

■ Pooled efficacy and pre-specified analysis showed significance.

■ EMA reviewers are very familiar with ataluren and the details of the data. The same

people that reviewed it before will likely review again. These are also the same people

reviewing ataluren's full approval for cystic fibrosis.

We still give 40% probability of success to our US revenues. We can't really predict

what the FDA might do for ataluren. We think it is hard to make a read from other

DMD drugs that are not even the same mechanism or for the same type of DMD

Our peak estimates in the US are $320M. We think 40% is a fair probable adjustment

since we view regulatory decision making, especially in DMD, as hard to predict.

For now, cystic fibrosis and SMA are free call options to the PTC story.

Global CF ataluren sales could be as large as DMD. We assume about a $900M

opportunity in cystic fibrosis. PTC has submitted on a rolling basis its data for CF in

Europe. We assume a 0% probability of success in the EU and 0% probability of success

in the US. We think that we may get some clarity by mid-2016 but note the process is

iterative when working with the EMA. So, there could likely be some back and forth, which

is typical. In speaking to PTC, we think that mid-2016 is a reasonable timepoint to highlight

as to when we might know more details.

Valuation

We rate PTC shares Outperform with a $36 TP.

We assume a 12% discount rate, which is in-line with small-cap peers. We assume a 2%

terminal growth rate since the company has a platform technology. Downside risks include

clinical delays, conditional approval removed in Europe, no FDA approval in US, and CF

trial failure.

19 January 2016


Figure 6: PTC DCF

Source: Credit Suisse estimates.

Risks to our $36 TP and Outperform Rating:

■ Ataluren is removed from the market in Europe

■ Ataluren does not receive approval in the US for nmDMD

■ Cystic fibrosis Ph3 trial fails

■ SMA study has more safety setbacks

■ Delays to clinical and regulatory timelines

DCF 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E

EBIT -$43 -$173 -$105 -$45 $56 $101 $163 $193 $197 $201 $205 $210 $212 $213 $214

Tax rate 0% 0% 0% 0% 0% 0% 0% 0% 0% 20% 20% 20% 20% 20% 20%

D&A $1 $3 $3 $5 $8 $9 $11 $13 $15 $16 $18 $19 $20 $21 $21

Share based compensation $9 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34

Change in WC -$4 -$2 $1 $0 $16 -$1 -$9 -$9 -$12 -$6 -$8 -$4 -$1 -$1 -$1

CAPEX -$1 -$8 -$12 -$20 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25

Free cash flow -$39 -$146 -$78 -$26 $89 $118 $173 $207 $209 $180 $183 $191 $198 $199 $201

Discount period 0 0.25 1.25 2.25 3.25 4.25 5.25 6.25 7.25 8.25 9.25 10.25 11.25 12.25 13.25

Discount factor 1.0 1.0 0.9 0.8 0.7 0.6 0.6 0.5 0.4 0.4 0.4 0.3 0.3 0.2 0.2

PV of FCF -$39 -$142 -$68 -$21 $61 $73 $96 $102 $92 $71 $64 $60 $55 $50 $45

Discount rate 12.0%

Terminal growth rate 2.0%

PV of FCF $499

TV $456

TV as % of Total 37%

NPV $955

Cash $278

Cash per share $8

$/Sh $36

Shares Outstanding 34

19 January 2016


2016 Is Pivotal for DMD regulatory landscape 3 main players in DMD but PTC treats a different mutation

Sarepta and PTC are the key players to watch after Drisapersen was rejected in mid-

January. Sarepta's eteplirsen and BioMarin's Kyndrisa are used for exon skipping. PTC

has a drug ataluren for a nonsense read-through.

Figure 7: Key DMD Events

Source: Company data, Credit Suisse estimates.

We think the FDA will review each approval case separately as we have seen different issues discussed when comparing the Sarepta and BioMarin briefing documents

If the FDA accepts PTC's filing around Feb, we think the FDA will focus on understanding

consistency between the two Ph2 and Ph3 PTC studies.

■ We think consistency of response between primary and secondary endpoints will be a

focus

■ Ataluren has been dosed in many patients and has been safe. Discontinuations in the

real world have been low. We don't think that safety will be a major focus

Event Company Date

Etepliresen briefing docs Sarepta Jan 20, 2016

Eteplirsen AdCom Sarepta Jan 22, 2016

Eteplirsen PDUFA Sarepta Feb 26, 2016

Eteplirsen PDUFA Sarepta Jan 22, 2016



Enrollment completed for eteplirsen

Ph3Sarepta End of 2015



EMA filing for eteplirsen Sarepta 2016

Top-line (48 week) data from Ph3

(PROMOVI) confirmatory trial of

etepliresen exon 51

Sarepta 2017

19 January 2016


Figure 8: Key Programs Moving Toward Approval


We think about the risk/benefit profile of each drug separately and PTC has no competitors in the nonsense mutation market.

Unlike Sarepta and BioMarin that have drugs in the same Exon 51 market, PTC's ataluren

is used in the nonsense mutation form of DMD. Both markets have about 2,000 patients in

the US. PTC is already approved in Europe conditionally. However, its Phase 3 did not hit

its primary endpoint. A key question to the PTC story is whether it remains on the market

in Europe.

Exon 51 is about 13% of the market, but nonsense mutations make up about a similar size of the market

We have included how BioMarin and Sarepta both characterize the market. Both have

cited about 20% of the population that may not be amenable to exon skipping therapies.

Figure 9: Exon Skipping Mix—BioMarin Figure 10: Exon Skipping Mix—Sarepta

Source: Company data. Source: Company data.

Company Product Target Phase% of DMD

population

PTC TranslarnaNonsense

MutationFDA review ~10%

BioMarinKyndrisa

(drisapersen) Exon 51 Rejected 13%

Sarepta Eteplirsen Exon 51 FDA review 13%

Pfizer PF-06252616 anti-Myostatin

antibody2

Santhera Catenaanalog of

CoQ103

19 January 2016


Our Atalauren Take — We Think There Is a

Reasonable Case to Be Made for Approval and That

the Outcome Is Not Completely Driven by a BioMarin

Rejection. There is definitely risk

Before Kyndrisa was rejected, sentiment seemed to be that if BioMarin was ot approved, it

would not bode well for PTC. We think there are some important decisions to consider.

Different drug, different mutation, different mechanism vs. Kyndrisa when thinking about what the FDA will do.

We think the FDA will ultimately look at every potential DMD approval case separately.

The profiles and populations of these drugs are quite different, while not achieving

statistical significance is the only similarity.

A key risk is whether Europe will keep ataluren on the market; we think that the safety profile, patient advocates, and subgroup analysis may compel them.

The drug was conditionally approved in Europe, and that regulatory body has closely given

the data due diligence. Upon first review, ataluren was not approved in Europe. After PTC

provided more data and analysis at the request of the EMA, it was conditionally approved.

We think consistency is a key measure in its two studies (ACT DMD and Study 007). In the case of BioMarin, we think the agency did focus on pooled analysis, which was a key discussion point during their panel.

PTC conducted a Phase 2b that was 174 patients and a Phase 3 that was 200 patients.

The trial did not meet its endpoint in the overall ITT population. Six-min walk benefit was

15 meters with a p value of .21. Pre-specified population was with a 300-400 meter

baseline. The pooled studies of its Ph2b and Ph3 was a pre-specified meta-analysis that

showed significance as well.

Figure 11: Pooled Ataluren Studies—All Baselines Figure 12: Pooled Ataluren Studies—300-400 Meters


Consistent results were seen across the 300-400 meter walking subgroup.

There is consensus that, after patients fall below 350 meters walking, a decline happens

faster. Our checks think the FDA will make a decision on the entire group rather than a

narrow label. PTC would agree with that statement as well we think. For the sake of a

potential PTC panel, we do think there will be a lot of discussion about this subgroup. We

saw in the BioMarin panel that the FDA did look closely at its subgroup analysis. 99

patients in their ACT-DMD study had a baseline six-min walk of 300-400 meters. This is

due to the fact that they did enrich their population on walk and age.

■ This population showed 47 meters. vs. 15m seen in the overall ITT.

■ Secondary endpoints such as a ten-min run/walk, stair climb, and stair descend

showed numerical trends favoring ataluren.

Pooled (all pts, n=291) meters walked p value

6 min walk 22 meters 0.015

10 min walk 1.4 seconds 0.025

Stair climb 1.6 seconds 0.018

Stair descend 2 seconds 0.004

300-400 meters pts

(n=143)meters walked p value

6 min walk 45 meters <.001

10 min walk 2.2 seconds 0.008

Stair climb 3.4 seconds <.001

Stair descend 4.3 seconds <.001

19 January 2016


Figure 13: Enrollment Strategy in Two Studies Figure 14: Six-Min Walk in Two Studies, Groups


Safety is very benign and favorable risk/benefit profile.

Both PTC and BioMarin trials failed their Ph3 studies. However, the safety profile is

different. Therefore, we think that the risk/benefit formula is more favorable for ataluren

than drisapersen in our opinion.

We think that having years of safety is meaningful to the agency. PTC conducted its first

Phase 2b in 2008 for 48 weeks and its Phase 3 in 2013. PTC has dosed close to 400

patients in Phase 2b and 3. This makes its patient experience the most robust in the

industry.

Figure 15: Patient & Study Experience with PTC


FDA confirmed that PTC did not need dystrophin as a measurement Ph3, which gives us some comfort that this will not be a point of contention with the agency.

Therefore, we think that it will not be a major focus at its upcoming panel. We note that it

was discussed at BioMarin's panel in a fair amount of detail. Our checks tended to believe

that dystrophin should be showing something, but it didn't view it as a strong measure of

clinical outcomes either.

As reference with Kyndrisa (BioMarin product), we expect PTC will learn from feedback given to BioMarin in explaining their not significant result in Phase 3

We think PTC will spend more time educating the FDA about the natural history of DMD.

PTC has conducted varying ranges of sensitivity analysis around the different subgroups

around walk

Study Phase Population # of patients Start date

Safety 1 Healthy patients 62 2004

004 2a nmDMD patients 38 2005

007 2b nmDMD patients 174 2008

020 3 nmDMD patients 220 2013

19 January 2016


Figure 16: Ataluren sensitivity analysis on walk

Source: PTC Therapeutics

19 January 2016


Modeling DMD Assuming peak share of 75%, we model 2021 WW sales of ~$670M for PTC.

We start our DMD model with total DMD patients of ~15k in the US with ~19k in the EU.

These figures were back-calculated based on nonsense mutation prevalence rates cited

by both PTC and Sarepta at ~13%. We then looked at the diagnosis rate of DMD and

noted that the diagnosis rate is higher than other rare diseases. We assume the current

US diagnosis rate at 75% and believe it will increase to 80% over time.

We model a 2017 US launch for PTC but factor in a 40% probability of success.

Figure 17 is a chart that outlines our major DMD model assumptions.

Figure 17: DMD Model Assumptions

Source: Company data, Credit Suisse estimates.

DMD Model Assumptions US EU

Total DMD Patients 15,000 19,000

Patients with nonsense mutation (NM) 13% 13%

% Diagnosed 80% 80%

Translarna peak market share 75% 75%

Price per patient $300,000 $300,000

Gross to net 95% 95%

Compliance 90% 90%

Launch Year 2017 2014

Peak Sales (2023) $390 M $370 M

19 January 2016


Nonsense Mutation Cystic Fibrosis — A Free Shot on a Big Goal?

First Phase 3 Missed, but a Second Phase 3 Trial Is

Reading Out in 2H16

It is suspected that the first Phase 3 was confounded by use of an inhaled antibiotic Tobi.

The first Phase 3 was a randomized, placebo-controlled worldwide trial. It is expected that

TOBI binds in the same place as ataluren, preventing the drug's effect.

We expect Phase 3 ACT CF data in late 2016–early 2017

The company is running a second Phase 3 trial – ACT CF. Patient screening closed in

October, and it expects to have completed enrollment by the end of 2015 and have data

about a year later in late 2016–early 2017.

CF application submitted in the EU in September, and we expect a decision by the

EMA in mid-2016.

PTCT says it is expecting a potential CF launch in 2016 in the EU. We are skeptical

whether PTC will have to wait for its new Ph3 trial to be complete. We assume a 0%

probability of success on EU CF revenues and no probability of success on US CF

revenues as well until we get additional data.

High Unmet Need for nmCF: We Model $900M Peak

Sales If It Works

Of the CF population (7k patients worldwide), approximately 10% have a nonsense

mutation.

Nonsense mutation is the most severe form of cystic fibrosis, as no CFTR protein is

produced at all. In other mutations (e.g., the gating mutation), small levels of CFTR protein

are produced. We note that Vertex is not developing treatments for nonsense mutation

and that PTC has no competitors in this space for which the only treatments available are

palliative.

19 January 2016


Figure 18: Different Types of Mutations Causing CFTR Deficiency (CF)

Source: Company data.

Of the 70K+ CF prevalence, roughly 10% is due to nonsense mutations. PTC’s

ataluren is the only drug in development here.

Vertex is not developing therapies for nonsense mediated CF mutations. To our

knowledge, PTC is the only player in this particular market. About 7K patients have

nonsense mediated form of cystic fibrosis. Ataluren can promote read-through of CFTR

protein in nonsense mutation models.

In the mouse model, ataluren showed selectively dose dependent ribosome read-through

of premature stop codons. Read-through was not induced for normal stop codons. These

types of data were consistent with the profile of ataluren in DMD.

Figure 19: How Nonsense Read-Through Works


Ph3 ataluren CF study did not reach primary endpoint but that may have been due

to use of an inhaled antibiotic that binds at the same place as ataluren.

PTC conducted a large Ph3 study for ataluren over 2009-2010.

PTC’s Phase 3 was conducted in 11 countries in North America and Europe.

Randomization was 1 to 1. There were three stratification factors, including age (under 18

and over 18), chronic inhaled antibiotic use (yes or no), and percent predicted FEV1

(45-< 65% or >65-90%). All antibiotics were allowed.

19 January 2016


Figure 20: Study Design for Phase 3 Study


The study did not hit on its primary endpoint (change in FEV1 at 48 weeks), but

average treatment effect was stat sig.

The primary endpoint was mean relative change in percent predicted FEV1 from baseline

to week 48. Figure 21 shows the data from the ITT population. Placebo patients lost 5.5%

of their predicted FEV1 function vs ataluren patients that lost 2.5% of their predicted lung

function. There was a 3% difference between the two groups. The result was not stat sig

at 48 weeks. However, if you average treatment effect across all visits, it was stat sig.

19 January 2016


Figure 21: Mean Change in % FEV Over Visits


Younger patients and higher baseline FEV1 patients performed better on the study.

Younger patients had a larger effect than older patients. Patients who had an FEV1 over

65% had a greater treatment effect. The goal is to preserve lung function, which may be

why younger patients & higher FEV1 patients performed better. No antibiotics (or

aminoglycosides) were excluded from this study, which is a key aspect that ultimately

affected the study results.

Figure 22: Key Baseline Characteristics for Phase 3 Ataluren Study


Excluding patients not on TOBI (an inhaled antibiotic) led to a very stat sig result.

A pre-specified subset analysis suggested that inhaled aminoglycosides (like tobramycin)

may have affected the response. For patients not receiving inhaled tobramycin, the FEV1

was 5.7%. Patients taking tobramycin had a FEV1 of -1.4%.

Ataluren

(n=116)

Placebo

(n=116)

Median age (range) 22 (6-49) 22 (8-53)

Median Baseline FEV (range)63.4% (39.4-

90.3%)

59% (36.2-

92.6%)

Baseline inhaled antibiotic use

Aminoglycoside (tobramycin) 44 (38%) 42 (36%)

Colistin 30 (26%) 22 (19%)

Aztreonam 10 (8%) 8 (7%)

19 January 2016


Figure 23: Subset Analysis Patients with Tobramycin or Without Tobramycin


This effect was not seen with other inhaled antibiotics, so patients have other

options if they want to take ataluren and an antibiotic.

Chronic bacterial infections of the CF airways happen often. This means that most patients

will be on an inhaled antibiotic. There are many different antibiotics that are given, which

are tobramycin (TOBI), aztreonam lysinate (Caytson), and colistin.

It was later learned that TOBI binds to the same site as ataluren. We think that this

confounded the results from the study since TOBI pts were included.

TOBI binds to ribosome at the same site where ataluren acts, and it interferes with the

mechanism of action. In this study, patients on TOBI had no treatment effect. The

investigators were unsure at the start of the study whether this may be a confounding

issue, so they stratified for use vs no use of antibiotics.

Pulmonary exacerbation data showed a similar result (meaning data were better

when excluding TOBI).

Subgroup analysis of no inhaled antibiotics and just no TOBI showed a 40-43% reduction

in pulmonary events vs. placebo. The ITT population showed only a 23% reduction in

pulmonary events.

19 January 2016


Figure 24: Pulmonary Exacerbations


The safety profile was consistent with the DMD study.

Most common AEs were related to cystic fibrosis, which are pulmonary and

gastrointestinal. As far as lab values go, there were mildly elevated increases in the

ataluren arm.

Figure 25: Safety Profile in CF Study


Ataluren Placebo Hazard ratio p value

Overall, n 116 116

Rate (95% CI) 1.42 (1.06-1.95) 1.78 (1.28-2.68) .77 (.57-1.05) 0.099

No inhaled antibiotics, n 52 53

Rate (95% CI) 1.30 (.76-1.85) 2.15 (1.51-2.78) .57 (.37-.89) 0.013

Inhaled antibiotics, n 64 63

Rate (95% CI) 1.52 (1.01-2.02) 1.46 (.97-1.96) 1.01 (.67-1.54) 0.95

No inhaled tobramycin, n 72 74

Rate (95% CI) 1.42 (.92-1.93) 2.18 (1.62-2.74) .60 (.42-.86) 0.0061

Inhaled tobramycin, n 44 42

Rate (95% CI) 1.42 (.89-1.95) 1.06 (.67-1.45) 1.33 (.79-2.25) 0.3

Ataluren

(n=120)

Placebo

(n=118)

Grade 1 (mild) 18 (15%) 20 (17%)

Grade 2 (moderate) 81 (68%) 65 (55%)

Grade 3 (severe) 19 (16%) 30 (25%)

Grade 4 (life-threatening) 0 0

Grade 5 (death) 0 0

Patients w/ at least one treatment emergent

SAE45 (38%) 48 (41%)

Discontinuation due to AE 8 (7%) 3 (3%)

Treatment emergent AE that lead to

discontinuation

Cystic fibrosis related diabetes 1 (<1%) 0

Abdominal pain 0 1 (<1%)

Abdominal pain upper 0 1 (<1%)

Diarrhea 1 (<1%) 0

Pancreatitis 1 (<1%) 0

Pyrexia 1 (<1%) 0

Urinary Tract infection 1 (<1%) 0

Headache 0 1 (<1%)

Hypercreatininaemia 2 (2%) 0

Nephrolithiasis 1 (<1%) 0

Renal failure 2 (2%) 0

Pulmonary exacerbation 1 (<1%) 0

Haemoptysis 0 1 (<1%)

Rash 2 (2%) 0

19 January 2016


Management Stuart W. Peltz, Ph.D.—Chief Executive Officer

Stuart W. Peltz, Ph.D. founded PTC Therapeutics, Inc. in 1998 and has served as chief

executive officer and a member of the board of directors since the company's inception.

Prior to founding PTC, Dr. Peltz was a professor in the department of molecular genetics &

microbiology at the Robert Wood Johnson Medical School, Rutgers University.

Shane Kovacs—Executive Vice President, Chief Financial Officer, and Head of Corporate Development

Mr. Kovacs joined PTC in June 2013. Prior to joining PTC, Mr. Kovacs served as

managing director, health care investment banking at Credit Suisse. In this capacity, he

focused on advising life sciences companies on transactions ranging from equity and debt

financings to mergers and acquisitions.

Robert Spiegel, M.D., FACP—Chief Medical Officer

In 2011, Dr. Spiegel joined PTC on a part-time consulting basis as chief medical officer

and joined full time in 2014. He is responsible for all aspects of clinical development. Prior

to joining PTC, Dr. Spiegel was chief medical officer of Schering-Plough and was involved

in the filing of new drug applications and interacting with regulatory authorities in the U.S.

and globally.

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Figure 26: Credit Suisse HOLT Analysis

Source: Credit Suisse estimates, HOLT®

© Credit Suisse AG and/or its affiliates

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Excluding Gilead, Biotech CFROI performance is more muted with near-term forecasts (2016) and market expectations implying an acceleration in future CFROI.

CFROI (ex-Gilead)

* Metrics shown is US Biotechnology weighted aggregate. Source: Credit Suisse HOLT Lens

Asset Growth Levels (ex-Gilead)

Biotech (ex-Gilead) Expectations

Recent pullback in share prices has resulted in a discount to near-term forecasts

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Figure 27: PTC Income Statement

Source: Company data, Credit Suisse estimates

Total PTC sales (Adjusted) $1 $32 $16 $21 $25 $28 $89 $192 $280 $346 $409 $476 $514 $526 $538 $550 $562 $572 $581 $589

Revenues

Collaboration revenue $99 $29 $31 $22 $1 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Grant Revenue $6 $5 $3 $2 $3 $0 $0 $0 $0 $3 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Revenues $105 $34 $35 $25 $36 $16 $21 $25 $28 $93 $192 $280 $346 $409 $476 $514 $526 $538 $550 $562 $572 $581 $589

% growth -68% 2% -27% 41% 39% 29% 18% 13% 160% 107% 46% 24% 18% 16% 8% 2% 2% 2% 2% 2% 1% 1%

COGS $0 $0 $0 $0 $0 $1 $2 $2 $2 $7 $15 $22 $24 $29 $33 $36 $37 $38 $38 $39 $40 $41 $41

% growth

as % of product revenues 0% 8% 8% 8% 8% 8% 8% 8% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7%

R&D expenses (non-gaap) $59 $46 $55 $70 $102 $30 $31 $33 $34 $127 $140 $150 $104 $110 $105 $103 $105 $108 $110 $112 $114 $116 $118

as % of total revenues 56% 136% 158% 278% 287% 183% 149% 132% 123% 137% 73% 54% 30% 27% 22% 20% 20% 20% 20% 20% 20% 20% 20%

growth -21% 19% 28% 46% 5% 5% 5% 5% 24% 10% 7% -31% 6% -5% -2% 2% 2% 2% 2% 2% 1% 1%

SG&A

Base Biz + EU DMD Franchise $16 $15 $25 $32 $61 $20 $22 $24 $27 $94 $108 $118 $128 $134 $141 $148 $153 $157 $162 $167 $172 $177 $182

growth 27% 90% 10% 10% 10% 10% 54% 15% 10% 8% 5% 5% 5% 3% 3% 3% 3% 3% 3% 3%

Blended probability adj

Operating expenses (non-gaap) $75 $61 $80 $102 $163 $51 $55 $59 $63 $228 $263 $291 $256 $273 $279 $287 $294 $302 $310 $318 $326 $334 $341

Operating Income $31 -$27 -$45 -$77 -$128 -$35 -$34 -$34 -$36 -$139 -$71 -$11 $90 $135 $197 $227 $231 $235 $239 $244 $246 $247 $248

Operating Margin -305% -357% -215% -163% -140% -128% -149% -37% -4% 26% 33% 41% 44% 44% 44% 44% 43% 43% 43% 42%

Other income/expenses $0 $2 $0 $0 -$1 $0 $0 $0 $0 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1

Interest expense -$2 -$1 -$6 $1 -$1 $1 $0 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1 -$1

Pre-tax Income $28.60 -$26.24 -$51.57 -$76 -$129 -$34.7 -$33.6 -$35.3 -$36.5 -$140 -$72 -$12 $89 $134 $196 $226 $230 $234 $238 $242 $245 $246 $247

Taxes -$2 $0 $0 -$5 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $47 $48 $48 $49 $49 $49

tax rate % -8% 0% 0% 6% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 20% 20% 20% 20% 20% 20%

Net Income $30.91 -$26 -$52 -$71 -$129 -$35 -$34 -$35 -$36 -$140 -$72 -$12 $89 $134 $196 $226 $230 $187 $191 $194 $196 $197 $197

F.D. EPS - NON GAAP $5.39 -$1.52 -$4.02 -$2.45 -$3.84 -$1.02 -$1.00 -$1.04 -$1.08 -$4.15 -$2.13 -$0.35 $2.62 $3.96 $5.77 $6.66 $6.78 $5.52 $5.62 $5.72 $5.78 $5.80 $5.82

Basic Sharecount 1 3 13 29 34 34 34 34 34 34 34 35 35 35 38 38 38 38 38 38 38 38 38

F.D. Sharecount 6 17 13 32 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34 34

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Figure 28: PTC Balance Sheet


Balance Sheet 2012A 2013A 2014A 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E

Cash and Eq. $3 $15 $50 $51 $4 $24 $97 $184 $301 $673 $878 $1,086 $1,259 $1,434 $1,617 $1,807 $1,999 $2,192

Available for sale securities $0 $127 $265 $265 $265 $265 $265 $265 $265 $265 $265 $265 $265 $265 $265 $265 $265 $265

Inventory $0 $0 $0 $0 $0 $0 $0 $0 $4 $8 $11 $12 $14 $17 $18 $18 $19 $19

Acct receivables $0 $0 $4 $1 $1 $1 $1 $4 $9 $19 $28 $35 $41 $48 $51 $53 $54 $55

Other current assets $2 $3 $4 $2 $4 $3 $4 $3 $5 $5 $6 $5 $5 $6 $6 $6 $6 $6

Total Current assets $5 $145 $324 $319 $274 $294 $367 $456 $584 $971 $1,189 $1,403 $1,585 $1,769 $1,958 $2,150 $2,343 $2,538

PP&E $8 $7 $9 $11 $16 $25 $40 $57 $73 $87 $99 $109 $118 $125 $131 $137 $141 $145

Restricted cash $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Assets $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Total Assets $13 $152 $333 $330 $291 $319 $407 $514 $658 $1,058 $1,289 $1,513 $1,703 $1,895 $2,090 $2,287 $2,485 $2,683

A/C Payables & accrued expenses $7 $12 $29 $5 $6 $7 $7 $24 $34 $39 $44 $38 $41 $42 $43 $44 $45 $47

Current part of LT debt $4 $0 $0 $150 $250 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350 $350

Deferred revenue - Current $17 $1 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3 $3

Total Current Liabilities $28 $13 $32 $159 $259 $360 $360 $378 $388 $393 $397 $392 $394 $395 $396 $398 $399 $400

Long Term Debt $0 $0 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2

Deferred revenue - Non Current $1 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other Liabilities $3 $2 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Preferred stock $81

Total Liabilities $113 $15 $35 $161 $261 $362 $363 $380 $390 $395 $399 $394 $397 $397 $399 $400 $401 $402

Total stockholders’ equity -$100 $137 $298 $169 $29 -$43 $45 $134 $268 $663 $889 $1,119 $1,307 $1,497 $1,691 $1,887 $2,084 $2,281

Total Liabilities and Equity $13 $152 $333 $330 $291 $319 $407 $514 $658 $1,058 $1,289 $1,513 $1,703 $1,895 $2,090 $2,287 $2,485 $2,683

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Figure 29: Credit Suisse Cash Flows


Cash Flow Statement 2012A 2013A 2014A 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E

Net Income -$26 -$52 -$94 -$163 -$174 -$106 -$46 $55 $100 $161 $192 $196 $153 $156 $160 $162 $162 $163

D&A $3 $2 $4 $2 $3 $3 $5 $8 $9 $11 $13 $15 $16 $18 $19 $20 $21 $21

Stock based compensation $2 $8 $19 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34 $34

Chg in valuation of warrant liability -$2 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Non cash interest expense $0 $6 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Loss on extinguishment of debt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Account receivables & deposits $0 $0 -$4 $4 $0 $0 $0 -$2 -$6 -$10 -$9 -$7 -$6 -$7 -$4 -$1 -$1 -$1

Prepaid expenses & other CA $2 -$1 -$2 $2 -$2 $1 -$1 $0 -$1 -$1 -$1 $1 $0 $0 $0 $0 $0 $0

Inventory $0 $0 $0 $0 $0 $0 $0 $0 -$4 -$4 -$4 -$1 -$2 -$2 -$1 $0 $0 $0

Account payables & accured expenses -$6 $5 $17 -$24 $0 $1 $0 $18 $10 $5 $4 -$5 $3 $1 $1 $1 $1 $1

Deferred revenue -$22 -$17 $2 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other chgs in working cap $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash from operating activities -$48 -$47 -$57 -$145 -$139 -$68 -$8 $112 $142 $197 $230 $233 $197 $200 $209 $215 $217 $218

CAPEX $0 -$1 -$5 -$4 -$8 -$12 -$20 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25

Proceeds from sale of PP&E $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Purchases of Investements $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Sale/Maturities of investments $0 -$127 -$141 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Other investing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash from Investing activities $0 -$128 -$145 -$4 -$8 -$12 -$20 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25 -$25

LT debt payments -$7 -$5 $0 $150 $100 $100 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Proceeds from debt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Proceeds from issuance of stock $0 $132 $236 $0 $0 $0 $100 $0 $0 $200 $0 $0 $0 $0 $0 $0 $0 $0

Other financing $29 $61 $1 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Cash from Financing activities $22 $187 $237 $150 $100 $100 $100 $0 $0 $200 $0 $0 $0 $0 $0 $0 $0 $0

FX $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Increase/Decrease in cash -$26 $13 $34 $1 -$47 $20 $72 $87 $117 $372 $205 $208 $172 $175 $184 $190 $192 $193

Beginning Cash $28 $3 $15 $50 $51 $4 $24 $97 $184 $301 $673 $878 $1,086 $1,259 $1,434 $1,617 $1,807 $1,999

Ending Cash $3 $15 $50 $51 $4 $24 $97 $184 $301 $673 $878 $1,086 $1,259 $1,434 $1,617 $1,807 $1,999 $2,192

19 January 2016


Acknowledgement The author of this report, Alethia Young, wishes to acknowledge the contributions made by

Ashitha John, employee of Irevna, a division of CRISIL limited, a third-party provider of

offshore research support services to Credit Suisse.

19 January 2016


Companies Mentioned (Price as of 15-Jan-2016) Biomarin Pharmaceuticals, Incorporated (BMRN.OQ, $83.14) Gilead Sciences, Incorporated (GILD.OQ, $91.84) PTC Therapeutics, Inc. (PTCT.OQ, $23.11, OUTPERFORM[V], TP $36.0) Sarepta Therapeutics, Inc. (SRPT.OQ, $14.28)

Disclosure Appendix

Important Global Disclosures Alethia Young, Eliana Merle and Grant Hesser each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for Biomarin Pharmaceuticals, Incorporated (BMRN.OQ)

BMRN.OQ Closing Price Target Price

Date (US$) (US$) Rating

31-May-13 62.70 68.00 N *

18-Feb-14 76.39 73.00

09-Jun-14 61.51 73.00 O

31-Jul-14 61.82 74.00

02-Sep-14 70.39 74.00 *

24-Oct-14 81.03 75.00

11-Dec-14 92.90 95.00

26-Feb-15 108.84 115.00

13-May-15 121.47 NR

* Asterisk signifies initiation or assumption of coverage.

N EU T RA L

O U T PERFO RM

N O T RA T ED

3-Year Price and Rating History for Gilead Sciences, Incorporated (GILD.OQ)

GILD.OQ Closing Price Target Price


19-Feb-13 42.28 55.00 O

04-Apr-13 47.74 60.00

17-May-13 56.30 67.00

29-Oct-13 69.50 80.00

20-Nov-13 71.08 90.00

10-Dec-13 72.81 110.00

28-Oct-14 113.45 130.00

06-Feb-15 97.48 115.00 N

13-May-15 106.39 NR


O U T PERFO RM

N EU T RA L

N O T RA T ED

19 January 2016


3-Year Price and Rating History for PTC Therapeutics, Inc. (PTCT.OQ)

PTCT.OQ Closing Price Target Price


15-Jul-13 17.17 24.00 O *

31-Jan-14 26.07 R

18-Feb-14 28.43 35.00 O

23-May-14 20.03 40.00

23-Sep-14 40.45 55.00

08-Oct-14 39.42 R

10-Oct-14 34.59 55.00 O

06-Nov-14 42.17 66.00

24-Feb-15 71.16 100.00

05-May-15 53.13 100.00 *

15-Jun-15 50.25 NR


O U T PERFO RM

REST RICT ED

N O T RA T ED

3-Year Price and Rating History for Sarepta Therapeutics, Inc. (SRPT.OQ)

SRPT.OQ Closing Price Target Price


23-Sep-14 20.61 36.00 O *

15-Jun-15 28.54 NR


O U T PERFO RM

N O T RA T ED

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non -Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional ben chmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiv eness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12 -month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

19 January 2016


Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 56% (34% banking clients) Neutral/Hold* 31% (26% banking clients) Underperform/Sell* 12% (42% banking clients) Restricted 1% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

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Target Price and Rating Valuation Methodology and Risks: (12 months) for PTC Therapeutics, Inc. (PTCT.OQ)

Method: Our PTC TP of $36 and Outperform rating is derived from DCF valuation. We assumed a 12% discount rate, which is in-line with small-cap peers, and a 2% terminal growth rate since the company has a platform technology.

Risk: Downside risks to our PTC $36 TP and Outperform rating include: (1) Ataluren is removed from the market in Europe (2) Ataluren does not receive approval in the US for nmDMD (3) Cystic fibrosis Ph3 trial fails (4) SMA study has more safety setbacks (5) Delays to clinical and regulatory timelines

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names The subject company (PTCT.OQ, BMRN.OQ, SRPT.OQ) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (PTCT.OQ, SRPT.OQ) within the past 12 months. Credit Suisse has managed or co-managed a public offering of securities for the subject company (PTCT.OQ, SRPT.OQ) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (PTCT.OQ, SRPT.OQ) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (PTCT.OQ, BMRN.OQ, SRPT.OQ, GILD.OQ) within the next 3 months. As of the date of this report, Credit Suisse makes a market in the following subject companies (BMRN.OQ, SRPT.OQ, GILD.OQ). Credit Suisse has a material conflict of interest with the subject company (PTCT.OQ) . Credit Suisse Asset Management maintains a Board seat and a seat on the Investment Committee through Martin Schmertzler.

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Important Credit Suisse HOLT Disclosures With respect to the analysis in this report based on the Credit Suisse HOLT methodology, Credit Suisse certifies that (1) the views expressed in this report accurately reflect the Credit Suisse HOLT methodology and (2) no part of the Firm’s compensation was, is, or will be d irectly related to the specific views disclosed in this report.

19 January 2016


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19 January 2016


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