Think is a possible already known bug, but on a fresh copy of the “ST2 Demo Theme” from github.
If you click “wordpress”->“regenerate function.php” it will add the code
function pgwp_sanitize_placeholder($input) { return $input; }
and removes code
require_once "inc/custom.php";
Which will break the theme causing a PHP wordpress error. Only until you manually edit out
function pgwp_sanitize_placeholder($input) { return $input; }
and add
require_once "inc/custom.php";
back to the function.php will it resolve the error.
If you just add the “inc/custom.php” it throws an error claiming function “pgwp_sanitize_placeholder” is already declared in one of the files called by “custom.php”.