UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2016
Commission File Number 001-37558
NABRIVA THERAPEUTICS AG
(Translation of registrant’s name into English)
Leberstrasse 20
1110 Vienna, Austria; Tel: +43 (0)1 740 930
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
FORM 20-F x FORM 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
Explanatory Note
On November 16, 2016, we furnished a Report on Form 6-K to the SEC that included our consolidated interim financial statements for the nine months ended September 30, 2016 and 2015. The financial results included in the Form 6-K were reported in US dollars following the Company’s determination in January 2016 that the Company’s functional currency was the US dollar. We are furnishing our consolidated interim financial statements and related analysis of the financial results for the nine months ended September 30, 2016 and 2015, which are attached as Exhibit 99.1 to this Report on Form 6-K, to recast our financial statements and related analysis of the financial results in euros in compliance with Regulation S-X 3-20(e). All of the other information contained in our consolidated interim financial statements attached hereto remains unchanged.
The information contained in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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NABRIVA THERAPEUTICS AG |
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By: |
/s/ Colin Broom |
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Colin Broom |
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Chief Executive Officer |
Date: November 29, 2016
Exhibit 99.1
Nabriva Therapeutics AG
FINANCIAL REVIEW
Overview
We are a clinical stage biopharmaceutical company engaged in the research and development of novel anti-infective agents to treat serious infections, with a focus on the pleuromutilin class of antibiotics. We are developing our lead product candidate, lefamulin, to be the first pleuromutilin antibiotic for systemic administration in humans. We are developing both intravenous, or IV, and oral formulations of lefamulin for the treatment of community-acquired bacterial pneumonia, or CABP, and intend to develop lefamulin for additional indications other than pneumonia. We initiated two pivotal, international Phase 3 clinical trials of lefamulin for the treatment of moderate to severe CABP. These are the first clinical trials we have conducted with lefamulin for the treatment of CABP. We initiated the first of these trials in September 2015 and the second trial in April 2016. Based on our estimates regarding patient enrollment, we expect to have top-line data available for both trials in the second half of 2017. If the results of these trials are favorable, including achievement of the primary efficacy endpoints of the trials, we expect to submit applications for marketing approval for lefamulin for the treatment of CABP in both the United States and Europe in 2018.
We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we continue the development of and potentially seek marketing approval for lefamulin and, possibly, other product candidates and continue our research activities. Our expenses will increase if we suffer any delays in our Phase 3 clinical trials of lefamulin for CABP, including delays in enrollment of patients. If we obtain marketing approval for lefamulin or any other product candidate that we develop, we expect to incur significant commercialization expenses related to product sales, marketing, distribution and manufacturing. Furthermore, we expect to continue to incur additional costs associated with operating as a public company.
Based on our current plans, we do not expect to generate significant revenue unless and until we obtain marketing approval for, and commercialize, lefamulin. We do not expect to obtain marketing approval before 2018, if at all. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. Adequate additional financing may not be available to us on acceptable terms, or at all. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization effort.
Other Income
Other income increased by €1.2 million from €2.5 million for the nine months ended September 30, 2015 to €3.7 million for the nine months ended September 30, 2016. The increase was primarily due to a €1.3 million increase in anticipated grant income from research premiums provided by the Austrian government as a result of higher applicable research and development expenses in the respective period compared to the same period in 2015.
Research and Development Expenses
For the nine months ended September 30, 2016 research and development expense was €31.3 million, a 125.2% increase from the €13.9 million of research and development expense during the same nine-month period in 2015. The increase was primarily due to higher costs related to our Phase 3 clinical trials of lefamulin. Direct costs for our other programs and initiatives were relatively limited during both of the nine month periods. Indirect costs related to research and development increased in the nine-month period ended September 30, 2016 compared to the same period in 2015 primarily due to the addition of employees in our clinical development department in the United States.
General and Administrative Expenses
For the nine months ended September 30, 2016 general and administrative expenses were €8.4 million or a 115.4% increase from €3.9 million during the same nine-month period in 2015. The increase was primarily due to increased staff costs related to additional employees in the United States and increased professional service fees related to operating as a public company.
Other Gains, Net
Other net gains (losses), increased by €0.2 million to a €0.4 million gain during the nine months ended September 30, 2016 compared to the same period in 2015. The change during the nine months ended September 30, 2016 reflects gains from the re- measurement of foreign currency balances.
Financial Income and Expenses
During the nine months ended September 30, 2016 net financial income was €0.2 million compared to financial expense of €6.6 million during the nine months ended September 30, 2015.
During the nine months ended September 30, 2016, net interest and similar expenses decreased by €3.8 million compared to the same period in 2015 primarily due to the decrease in the effective interest accrued under the convertible loan agreements and the decrease in interest on the Kreos loan, which was fully repaid in November 2015.
For the nine months ended September 30, 2016, other net financial expenses decreased to €0.0 from €3.0 for the nine months ended September 30, 2015. Other financial income and expenses for the nine months ended September 30, 2015 were mainly related to the expenses recognized due to the fair value adjustments of the conversion rights related to our outstanding convertible loans. This expense was partly offset by benefits of approximately €3.3 million due to the waiver of interest on our outstanding convertible loans and benefits of approximately €1.5 million resulting from the termination of call options related to our outstanding convertible loans, all of which were due to our April 2015 financing.
Cash Flows
Operating Activities
Cash flow utilized by operating activities increased by €17.1 million from €16.4 million for the nine months ended September 30, 2015 to €33.5 million for the nine months ended September 30, 2016 due to a €13.9 million increase in net loss before non-cash items of €5.5 million for a change in cash of €19.4 million, partly offset by lower tax payments of €0.3 million, improved working capital of €1.3 million primarily from higher trade payables and other liabilities and lower cash interest expense of €0.7 million.
Investing Activities
Cash flow from investing activities changed by €23.0 million from €0.1 million cash outflow in the nine months ended September 30, 2015 to €22.9 million cash inflow in the nine months ended September 30, 2016 primarily due to the sale of available-for sale assets and the redemption of term deposits. Other investing activities were relatively insignificant in both years and related primarily to the acquisition of equipment in support of our research and development activities.
Financing Activities
Cash flow generated from financing activities decreased by €126.5 million from €126.7 million in the nine months ended September 30, 2015 to €0.2 million during the nine months ended September 30, 2016 primarily due to proceeds of €136.6 million from our April 2015 financing as well as our Initial Public Offering in September 2015, €3.1 million from the issuance of an additional convertible loan in January 2015 and proceeds of €1.0 million from a silent partnership agreement entered into in January 2015. The period over period decrease in financing cash inflows was partially offset by a €3.1 million decrease of cash outflows for repayments of long-term borrowings, and a €10.9 million decrease in equity transaction costs.
Nabriva Therapeutics AG
Index to Unaudited Condensed Consolidated Interim Financial Statements
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Unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) |
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F-2 |
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Unaudited Condensed Consolidated Statement of Financial Position |
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F-3 |
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Unaudited Condensed Consolidated Statement of Cash Flows |
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F-4 |
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Unaudited Condensed Consolidated Statement of Changes in Equity |
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F-5 |
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Notes to the Unaudited Condensed Consolidated Interim Financial Statements |
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F-6 |
Nabriva Therapeutics AG
Unaudited Condensed Consolidated Statement of Comprehensive Income (Loss)
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Nine Months Ended |
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(Euro in thousands, except per share data) |
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Notes |
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2015 |
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2016 |
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Other income |
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€ |
2,517 |
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€ |
3,741 |
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Research and development expenses |
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6 |
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(13,891 |
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(31,271 |
) | ||
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General and administrative expenses |
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(3,896 |
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(8,431 |
) | ||
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Other gains (losses), net |
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153 |
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361 |
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Operating result |
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€ |
(15,117 |
) |
€ |
(35,600 |
) |
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Financial income |
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7 |
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6,157 |
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209 |
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Financial expenses |
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7 |
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(12,740 |
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(31 |
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Financial result |
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7 |
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€ |
(6,583 |
) |
€ |
178 |
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Loss before taxes |
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€ |
(21,700 |
) |
€ |
(35,422 |
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Tax benefit |
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216 |
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— |
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Loss for the period |
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€ |
(21,484 |
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€ |
(35,422 |
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Other comprehensive income (loss) (OCI) |
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Items that may be reclassified subsequently to profit or loss, net of tax |
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Exchange differences on translating foreign operations |
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23 |
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(2,414 |
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Fair value gains on available-for-sale financial assets |
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— |
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62 |
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Other comprehensive income (loss) for the period |
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23 |
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(2,352 |
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Total comprehensive loss for the period |
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€ |
(21,461 |
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€ |
(37,774 |
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All results are derived from continuing activities in respect of current and preceding years and are attributable to shareholders of the Company.
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Nine Months Ended |
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Loss per share |
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2015 |
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2016 |
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Basic (€ per share) |
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(30.36 |
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(16.68 |
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Diluted (€ per share) |
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(30.36 |
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(16.68 |
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The notes are an integral part of these unaudited condensed consolidated interim financial statements.
Nabriva Therapeutics AG
Unaudited Condensed Consolidated Statement of Financial Position
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(Euro in thousands) |
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Notes |
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As of December |
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As of September |
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Assets |
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Non-current assets |
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Property, plant and equipment |
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€ |
382 |
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€ |
463 |
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Intangible assets |
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3 |
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171 |
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Long-term receivables |
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395 |
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392 |
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Deferred tax assets |
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566 |
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936 |
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1,346 |
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1,962 |
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Current assets |
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Current receivables |
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4,414 |
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8,264 |
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Marketable securities and term deposits |
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8 |
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68,884 |
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44,027 |
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Cash and cash equivalents |
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9 |
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33,477 |
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22,206 |
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106,775 |
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74,497 |
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Total assets |
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€ |
108,121 |
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€ |
76,459 |
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Equity and liabilities |
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Capital and reserves |
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Share capital |
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€ |
2,119 |
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€ |
2,128 |
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Capital reserves |
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223,107 |
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225,042 |
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Other reserves |
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(98 |
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(2,450 |
) | ||
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Treasury shares |
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(19 |
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(2 |
) | ||
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Accumulated losses |
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(125,613 |
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(161,035 |
) | ||
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99,496 |
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63,683 |
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Non-current liabilities |
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Other liabilities |
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11 |
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77 |
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87 |
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77 |
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87 |
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Current liabilities |
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Trade payables |
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2,689 |
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2,419 |
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Other liabilities |
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11 |
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5,703 |
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10,244 |
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Current income tax liabilities |
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|
156 |
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26 |
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|
|
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|
8,548 |
|
12,689 |
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Total equity and liabilities |
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€ |
108,121 |
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€ |
76,459 |
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The notes are an integral part of these unaudited condensed consolidated interim financial statements.
Nabriva Therapeutics AG
Unaudited Condensed Consolidated Statement of Cash Flows
|
|
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Nine Months Ended |
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(Euro in thousands) |
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Notes |
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2015 |
|
2016 |
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Cash flow from operating activities |
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|
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|
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Loss for the period |
|
|
|
€ |
(21,484 |
) |
€ |
(35,422 |
) |
|
Adjustments for: |
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|
|
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Taxes on income recognized in profit or loss |
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(216 |
) |
— |
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Financial income recognized in profit or loss |
|
|
|
(6,157 |
) |
(209 |
) | ||
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Financial expense recognized in profit or loss |
|
|
|
12,740 |
|
31 |
| ||
|
Depreciation and amortization expense |
|
|
|
105 |
|
154 |
| ||
|
Valuation stock option program |
|
|
|
789 |
|
1,776 |
| ||
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Other non-cash-income |
|
|
|
(60 |
) |
— |
| ||
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Changes in long-term receivables |
|
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|
(18 |
) |
(7 |
) | ||
|
Changes in current receivables |
|
|
|
(2,107 |
) |
(3,958 |
) | ||
|
Changes in trade and other liabilities |
|
|
|
1,374 |
|
4,502 |
| ||
|
Interest paid |
|
|
|
(583 |
) |
— |
| ||
|
Interest received |
|
|
|
3 |
|
118 |
| ||
|
Taxes paid |
|
|
|
(836 |
) |
(526 |
) | ||
|
Cash flow utilized by operating activities |
|
|
|
(16,450 |
) |
(33,541 |
) | ||
|
Purchase of plant and equipment and intangible assets |
|
|
|
(102 |
) |
(408 |
) | ||
|
Purchases of available-for-sale financial assets |
|
|
|
— |
|
(12,543 |
) | ||
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Investments in term deposits |
|
|
|
— |
|
(9 |
) | ||
|
Proceeds from term deposits |
|
|
|
— |
|
13,439 |
| ||
|
Proceeds from sale of available-for-sale financial assets |
|
|
|
— |
|
22,397 |
| ||
|
Cash flow provided (utilized) by investing activities |
|
|
|
(102 |
) |
22,876 |
| ||
|
Proceeds from initial public offering |
|
|
|
94,485 |
|
— |
| ||
|
Proceeds from April 2015 financing |
|
|
|
42,096 |
|
— |
| ||
|
Other proceeds from shareholders |
|
|
|
9 |
|
— |
| ||
|
Proceeds from new silent partnership |
|
|
|
1,000 |
|
— |
| ||
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Proceeds from exercise of call options |
|
|
|
— |
|
217 |
| ||
|
Proceeds from convertible loans |
|
|
|
3,097 |
|
— |
| ||
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Repayments of long-term borrowings |
|
|
|
(3,069 |
) |
— |
| ||
|
Repayments of substance participation rights |
|
|
|
(5 |
) |
— |
| ||
|
Equity transaction costs |
|
|
|
(10,866 |
) |
— |
| ||
|
Cash flow generated from financing activities |
|
|
|
126,747 |
|
217 |
| ||
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Net cash flow |
|
|
|
110,195 |
|
(10,448 |
) | ||
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Cash and cash equivalents at beginning of period |
|
9 |
|
1,770 |
|
33,477 |
| ||
|
Effects of exchange rate changes on the balance of cash & cash equivalents held in foreign currencies |
|
|
|
21 |
|
(823 |
) | ||
|
Cash and cash equivalents at end of period |
|
9 |
|
€ |
111,986 |
|
€ |
22,206 |
|
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
Nabriva Therapeutics AG
Unaudited Condensed Consolidated Statement of Changes in Equity
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(Euro in thousands) |
|
Nominal |
|
Capital |
|
Treasury |
|
Accumulated |
|
Foreign |
|
Fair value |
|
Total |
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|
Notes |
|
4.1 |
|
4.1 |
|
|
|
|
|
|
|
|
|
|
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|
January 1, 2015 |
|
€ |
328 |
|
€ |
66,458 |
|
€ |
(19 |
) |
€ |
(96,905 |
) |
€ |
(21 |
) |
€ |
— |
|
€ |
(30,159 |
) |
|
Paid in capital |
|
1,546 |
|
135,035 |
|
— |
|
— |
|
— |
|
— |
|
136,581 |
| |||||||
|
Conversion of convertible loans |
|
204 |
|
30,177 |
|
— |
|
— |
|
— |
|
— |
|
30,381 |
| |||||||
|
Contribution of silent partnerships |
|
15 |
|
2,255 |
|
— |
|
— |
|
— |
|
— |
|
2,270 |
| |||||||
|
Bifurcation of liability component due to preferred dividend rights |
|
— |
|
(1,538 |
) |
— |
|
— |
|
— |
|
— |
|
(1,538 |
) | |||||||
|
Exercised options |
|
9 |
|
1,295 |
|
— |
|
— |
|
— |
|
— |
|
1,304 |
| |||||||
|
Equity transaction costs |
|
— |
|
(13,289 |
) |
— |
|
— |
|
— |
|
— |
|
(13,289 |
) | |||||||
|
Stock options |
|
— |
|
785 |
|
— |
|
— |
|
— |
|
— |
|
785 |
| |||||||
|
Loss for the period |
|
— |
|
— |
|
— |
|
(21,484 |
) |
— |
|
— |
|
(21,484 |
) | |||||||
|
Other comprehensive income, net of tax |
|
— |
|
— |
|
— |
|
— |
|
23 |
|
— |
|
23 |
| |||||||
|
Total comprehensive loss for the period |
|
— |
|
— |
|
— |
|
(21,484 |
) |
23 |
|
— |
|
(21,461 |
) | |||||||
|
September 30, 2015 |
|
€ |
2,102 |
|
€ |
221,178 |
|
€ |
(19 |
) |
€ |
(118,389 |
) |
€ |
2 |
|
€ |
— |
|
€ |
104,874 |
|
|
January 1, 2016 |
|
€ |
2,119 |
|
€ |
223,107 |
|
€ |
(19 |
) |
€ |
(125,613 |
) |
€ |
(36 |
) |
€ |
(62 |
) |
€ |
99,496 |
|
|
Exercised options (SOP) |
|
9 |
|
1,822 |
|
17 |
|
— |
|
— |
|
— |
|
1,848 |
| |||||||
|
Stock options |
|
— |
|
113 |
|
— |
|
— |
|
— |
|
— |
|
113 |
| |||||||
|
Loss for the period |
|
— |
|
— |
|
— |
|
(35,422 |
) |
— |
|
— |
|
(35,422 |
) | |||||||
|
Other comprehensive income, net of tax |
|
— |
|
— |
|
— |
|
— |
|
(2,414 |
) |
62 |
|
(2,352 |
) | |||||||
|
Total comprehensive income (loss) for the period |
|
— |
|
— |
|
— |
|
(35,422 |
) |
(2,414 |
) |
62 |
|
(37,774 |
) | |||||||
|
September 30, 2016 |
|
€ |
2,128 |
|
€ |
225,042 |
|
€ |
(2 |
) |
€ |
(161,035 |
) |
€ |
(2,450 |
) |
€ |
— |
|
€ |
63,683 |
|
The notes are an integral part of these unaudited condensed consolidated interim financial statements.
Nabriva Therapeutics AG
(Euro in thousands, except per share data)
1. General Information
Nabriva Therapeutics AG, together with its 100% owned and consolidated U.S. subsidiary Nabriva Therapeutics US, Inc., (“Nabriva”, “the Group” or the “Company”) is a clinical stage biopharmaceutical company engaged in the research and development of novel anti-infective agents to treat serious infections, with a focus on the pleuromutilin class of antibiotics. Nabriva was incorporated in Austria as a spin-off from Sandoz GmbH in October 2005 and commenced operations in February 2006. The Company’s headquarters are at Leberstrasse20, A-1110 Vienna. Nabriva Therapeutics US, Inc. was founded and began operations in the United States in August 2014.
The Management Board approved the unaudited condensed consolidated interim financial statements for issuance on November 17, 2016.
2. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of these unaudited condensed consolidated interim financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise noted.
2.1 Basis of Preparation
The unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with the International Accounting Standard, or IAS, 34 “Interim Financial Reporting” and are presented in Euros. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with the International Financial Reporting Standards, or IFRSs, have been condensed or omitted. Accordingly, these unaudited condensed consolidated interim financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2015, which have been prepared in accordance with IFRS as issued by the IASB.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It requires management to exercise its judgment in the process of applying the Company’s accounting policies. In the opinion of management, the unaudited condensed consolidated interim financial statements contain all adjustments that are necessary to state fairly the Company’s financial position as of September 30, 2016 and comprehensive income (loss) and cash flows for the nine months ended September 30, 2015 and September 30, 2016.
Going concern
Since inception, the Company’s activities have consisted primarily of raising capital and performing research and development activities to advance its product candidates. The Company is still in the development phase and has not been marketing any products commercially to date. Since inception, the Company has incurred significant losses from operations and expects losses to continue for the foreseeable future, as a result of the Company’s R&D activities and in line with its long-term business plan and the general biopharmaceutical business model. The Company’s success depends primarily on the successful development and regulatory approval of its product candidates and its ability to finance operations. The Company anticipates the receipt of top-line phase 3 clinical trial data readout in the second half of 2017.
These consolidated financial statements have been prepared on a going concern basis that contemplates that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations. Management continues to forecast that the Company’s cash balances will be sufficient to fund the operations for at least the next twelve months.
Share capital
The number of common shares outstanding as of September 30, 2016 was 2,128,006.
2.2 Application of International Financial Reporting Standards (IFRSs)
The accounting policies adopted are consistent with those of the previously completed financial year. The application of any amendments to existing standards that are required to be applied for the first time from January 1, 2016 are not expected to have a material impact on the Company’s consolidated financial statements for the year ending December 31, 2016. The following new IFRSs that may have an impact on the Company’s financial statements have been issued by the IASB:
· In July 2014, the IASB issued the complete version of IFRS 9 “Financial instruments,” applicable to financial years beginning on or after January 1, 2018, which replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. We are in the process of assessing IFRS 9’s impact on us.
· In May 2014, the IASB issued the IFRS 15 “Revenue from contracts with customers,” applicable to financial years beginning on or after January 1, 2017, which deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. We are in the process of assessing IFRS 15’s impact on us.
· In January 2016, the IASB issued IFRS 16 “Leases,” applicable to financial years beginning on or after January 1, 2019 which relates to the recognition, measurement, presentation and disclosure of leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17. We are in the process of assessing IFRS 16’s impact on us.
2.3 Change in functional currency
The Company has significantly expanded its presence and operations in the United States, and has begun and will continue to incur a majority of its expenses for its clinical trials in U.S. dollars, in addition to the increase in administrative cost incurred in the United States as a result of the increased presence there. Also, the majority of the funds raised from its third quarter 2015 initial public offering as well as its other financing activities are currently invested, and are expected to remain invested, in U.S. dollar denominated instruments to fund its U.S. operations. The Company has determined that as of January 1, 2016 its functional currency was no longer the euro and began reporting using the U.S. dollar as its functional currency.
The translation procedures applicable to the new functional currency have been applied prospectively in accordance with IAS 21.35 from the date of the change. According to IAS 21.37 all items have been translated into the new functional currency using the exchange rate at the date of the change. The resulting translated amounts for non-monetary items are treated as their historical cost. Exchange differences arising from the translation of a foreign operation previously recognized in other comprehensive income in accordance with IAS 21.32 and 39(c) are not reclassified from equity to profit or loss until the disposal of the operation.
2.4 Consolidation
The unaudited condensed consolidated interim financial statements incorporate the financial statements of Nabriva Therapeutics AG and its 100% owned U.S. subsidiary. Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit and loss and other comprehensive income from the date the Company gains control until the date the Company ceases to control the subsidiary.
As of September 30, 2016, the Company had one 100% owned subsidiary, Nabriva Therapeutics US, Inc., King of Prussia, PA, USA, founded in August 2014. Nabriva’s chief executive officer, as well as the majority of the clinical development team, are employed with the U.S. subsidiary.
The financial information of all consolidated companies has been prepared in accordance with IFRS and the Company’s accounting policies with a cut-off date of September 30. All intra group balances and transactions between members of the group are eliminated upon consolidation.
2.5 Segment Reporting
The Company operates in one reportable segment, which comprises the discovery and development of novel anti-infective agents to treat serious infections, with a focus on the pleuromutilin class of antibiotics. The management team is the chief operating decision maker, and it reviews the consolidated operating results regularly to make decisions about the allocation of the Company’s resources and to assess overall performance.
2.6 Income Taxes
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss. In Austria taxes on income are calculated using the current corporate income tax rate of 25%. Under the Austrian Corporate Income Tax Act (KStG) a minimum amount of corporate income tax is levied even if there is a tax loss. In the U.S. Nabriva is subject to state taxes of 9.99% and federal taxes of 34%.
3. Financial Risk Management
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance. The Company has not used derivatives or other hedging instruments to mitigate these risk factors.
The unaudited condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual consolidated financial statements; they should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2015.
Gary Sender was appointed as Chief Financial Officer on May 2, 2016 and thereby replaced Ralf Schmid. There have been no other changes in the Company’s finance department, which is responsible for financial risk management, or in the Company’s financial risk management policies since December 31, 2015.
4. Critical Accounting Estimates and Assumptions
The preparation of unaudited condensed consolidated interim financial statements requires management to make estimates and other judgments that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of the consolidated interim financial statements and the reported amounts of income and expenses during the reporting period. Actual results may differ from those estimates.
In preparing these unaudited condensed consolidated interim financial statements, the significant judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were generally the same as those that applied to the consolidated financial statements for the year ended December 31, 2015. Please see Note 4 to the Company’s audited consolidated financial statements for the year ended December 31, 2015 included in the Company’s annual report on Form 20-F, which was filed with the U.S. Securities and Exchange Commission on April 28, 2016.
5. Seasonality of Operations
The Company’s financial results have varied substantially, and are expected to continue to vary, from quarter to quarter. The Company therefore believes that period-to-period comparisons should not be relied upon as indicative of future financial results.
6. Research and Development Expenses
Research and development expenses mainly increased in the nine months ended September 30, 2016 as compared to the nine months ended September 30, 2015 due to increased third party expenses related to Phase 3 clinical trials of lefamulin, manufacturing of the related clinical trial supply as well as increased headcount in the U.S. subsidiary.
|
|
|
Nine Months Ended |
| ||||
|
(Euro in thousands) |
|
2015 |
|
2016 |
| ||
|
Research materials and purchased services |
|
€ |
8,799 |
|
€ |
23,572 |
|
|
Staff costs |
|
2,788 |
|
5,080 |
| ||
|
Other research and development expenses |
|
2,237 |
|
2,535 |
| ||
|
Depreciation and amortization |
|
67 |
|
84 |
| ||
|
Total |
|
€ |
13,891 |
|
€ |
31,271 |
|
Research materials and purchased services include all expenses for materials and services in respect of research activities. They consist of:
|
|
|
Nine Months Ended |
| ||||
|
(Euro in thousands) |
|
2015 |
|
2016 |
| ||
|
Clinical phase I, II and III studies |
|
€ |
4,546 |
|
€ |
17,521 |
|
|
Non-clinical research & development |
|
4,035 |
|
5,736 |
| ||
|
Laboratory & research materials |
|
218 |
|
315 |
| ||
|
Total |
|
€ |
8,799 |
|
€ |
23,572 |
|
Other research and development expenses consist of:
|
|
|
Nine Months Ended |
| ||||
|
(Euro in thousands) |
|
2015 |
|
2016 |
| ||
|
Infrastructure expenses |
|
€ |
877 |
|
€ |
838 |
|
|
Advisory and external consultancy expenses |
|
725 |
|
903 |
| ||
|
Intellectual property and trademark related expenses |
|
301 |
|
334 |
| ||
|
Other expenses |
|
334 |
|
460 |
| ||
|
Total |
|
€ |
2,237 |
|
€ |
2,535 |
|
7. Financial Income and Expenses
|
|
|
Nine Months Ended |
| ||||
|
(Euro in thousands) |
|
2015 |
|
2016 |
| ||
|
Interest income |
|
|
|
|
| ||
|
Bank deposits |
|
€ |
3 |
|
€ |
6 |
|
|
Other interest |
|
— |
|
203 |
| ||
|
Total |
|
€ |
3 |
|
€ |
209 |
|
|
Interest and similar expense |
|
|
|
|
| ||
|
Kreos Loan 2014 |
|
€ |
(716 |
) |
€ |
— |
|
|
FFG Loan |
|
(36 |
) |
— |
| ||
|
Convertible loans |
|
(2,583 |
) |
— |
| ||
|
Preferred dividend rights |
|
— |
|
— |
| ||
|
Other financing fees |
|
(157 |
) |
— |
| ||
|
Interest according to IAS 20.10A |
|
(60 |
) |
— |
| ||
|
Total |
|
€ |
(3,552 |
) |
€ |
— |
|
|
Silent partnership |
|
|
|
|
| ||
|
Adjustment to amortized cost following a change in expected exit proceeds |
|
€ |
(748 |
) |
€ |
— |
|
|
Total |
|
€ |
(748 |
) |
€ |
— |
|
|
Other finance income/(expenses) |
|
|
|
|
| ||
|
Realized losses from sale of available-for-sale financial assets |
|
€ |
— |
|
€ |
(31 |
) |
|
Adjustment of carrying amount of financial liabilities according to IAS 39.40/IAS 39.AG8 due to extension of repayment date for CLAs |
|
1,063 |
|
— |
| ||
|
Adjustment of carrying amount of financial liabilities according to IAS 39.40/IAS 39.AG8 due to acceleration of repayment date for one CLA |
|
(260 |
) |
— |
| ||
|
Adjustment of carrying amount of financial liabilities according to IAS 39.40 due to waiver of interest for CLAs |
|
3,274 |
|
— |
| ||
|
Valuation call options related to CLAs |
|
344 |
|
— |
| ||
|
Termination of call options related to CLAs |
|
1,473 |
|
— |
| ||
|
Valuation call options related to Kreos Loan 2014 |
|
(474 |
) |
— |
| ||
|
Valuation conversion rights related to CLAs |
|
(7,601 |
) |
— |
| ||
|
Adjustment of carrying amount of AWS Profit Share |
|
(105 |
) |
— |
| ||
|
Total |
|
€ |
(2,286 |
) |
€ |
(31 |
) |
|
Total financial result |
|
€ |
(6,583 |
) |
€ |
178 |
|
Interest income arises on cash and cash equivalents as well as marketable securities and term deposits. In 2015 interest expenses consist of interest payable on borrowings of all kinds (e.g. bank and other loans) and are expensed as incurred.
8. Financial Instruments
In accordance with IAS 39 and IFRS 7, the Company’s financial instruments are classified as follows:
|
(Euro in thousands) |
|
Loans and |
|
Available for |
|
Total |
| |||
|
As of September 30, 2016 |
|
|
|
|
|
|
| |||
|
Assets as per condensed consolidated statement of financial position |
|
|
|
|
|
|
| |||
|
Current receivables |
|
€ |
11 |
|
€ |
— |
|
€ |
11 |
|
|
Marketable securities and term deposits |
|
26,995 |
|
17,032 |
|
44,027 |
| |||
|
Cash and cash equivalents |
|
22,206 |
|
— |
|
22,206 |
| |||
|
Total |
|
€ |
49,212 |
|
€ |
17,032 |
|
€ |
66,244 |
|
|
(Euro in thousands) |
|
Other |
|
FVTPL |
|
Total |
| |||
|
Liabilities as per condensed consolidated statement of financial position |
|
|
|
|
|
|
| |||
|
Trade payables |
|
€ |
2,419 |
|
€ |
— |
|
€ |
2,419 |
|
|
Total |
|
€ |
2,419 |
|
€ |
— |
|
€ |
2,419 |
|
In the table above, current receivables are only included to the extent they are classified as financial instruments. Current receivables as shown in the condensed consolidated statement of financial position also include other receivables, which mainly result from tax receivables and prepaid expenses.
The carrying amounts for current receivables and trade payables are assumed to approximate their fair value due to their relatively short maturity.
The following table presents the financial instruments measured at fair value and classified by level of the following fair value measurement hierarchy:
· Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
· Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (as exchange rates) (Level 2).
· Valuation techniques that include inputs for the asset or liability that are not based on observable market data (those are unobservable inputs) (Level 3).
It does not include fair value information for financial assets and liabilities not measured at fair value where the carrying amount is a reasonable approximation of the fair value.
|
(Euro in thousands) |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Total |
| ||||
|
As of September 30, 2016 |
|
|
|
|
|
|
|
|
| ||||
|
Assets as per consolidated statement of financial position |
|
|
|
|
|
|
|
|
| ||||
|
Marketable securities |
|
€ |
— |
|
€ |
17,032 |
|
€ |
— |
|
€ |
17,032 |
|
|
Total Assets |
|
€ |
— |
|
€ |
17,032 |
|
€ |
— |
|
€ |
17,032 |
|
As of September 30, 2016 and December 31, 2015 the Company did not hold any Level 3 financial instruments measured at fair value any more. All such instruments, which included the conversion right and call option derivative instruments, were exercised or terminated in 2015. Prior to this, fair values of the conversion right and call option derivate instruments (Level 3) were determined using the option pricing model (OPM). There were no transfers between Level 1 and 2 in the period.
According to IFRS 13.93(e), the following table shows the reconciliation of Level 3 fair value measurements of financial liabilities:
|
(Euro in thousands) |
|
FVTPL |
|
Total |
| ||
|
Nine Months ended September 30, 2015 |
|
|
|
|
| ||
|
Opening balance |
|
€ |
7,562 |
|
€ |
7,562 |
|
|
Total (gains) losses in profit or loss |
|
7,731 |
|
7,731 |
| ||
|
Issues of conversion rights |
|
1,076 |
|
1,076 |
| ||
|
De-recognition/Settlement by issued equity instruments |
|
(14,896 |
) |
(14,896 |
) | ||
|
Termination of options |
|
(1,473 |
) |
(1,473 |
) | ||
|
Closing Balance |
|
€ |
— |
|
€ |
— |
|
|
Nine Months ended September 30, 2016 |
|
|
|
|
| ||
|
Opening balance |
|
€ |
— |
|
€ |
— |
|
|
Closing Balance |
|
€ |
— |
|
€ |
— |
|
Total (gains) losses for the period ended September 30, 2015 result from the valuation of call options and conversion rights and are included in the finance income/expenses line item in the consolidated statement of comprehensive income (loss). Gains from the termination of options amount to € 1,473 in 2015 and result from the waiver of call option rights related to the CLAs in the course of the April 2015 financing. The line item “De-recognition/Settlement by issued equity instruments” in the table above refers to the conversion rights reclassified into equity upon conversion of the convertible loans in the course of the April 2015 financing in the amount of € 13,601 as well as the exercise of call options related to the Kreos Loan 2014 in the amount of € 1,295.
9. Cash and Cash Equivalents
Cash and cash equivalents were as follows:
|
(Euro in thousands) |
|
As of |
|
As of |
| ||
|
Cash at bank |
|
€ |
33,477 |
|
€ |
22,206 |
|
|
Total cash and cash equivalents |
|
€ |
33,477 |
|
€ |
22,206 |
|
10. Share-Based Payments
The unaudited condensed consolidated interim financial statements do not include all disclosures for share-based payments that are required in the annual consolidated financial statements and should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2015.
During the nine months ended September 30, 2016, the Company recognized a share-based payment expense of € 1,776 (nine months ended September 30, 2015: € 789).
11. Other Liabilities
Other current liabilities include the following:
|
(Euro in thousands) |
|
December |
|
September |
| ||
|
Accrued expenses for external R&D services |
|
€ |
3,057 |
|
€ |
7,503 |
|
|
Employee bonuses |
|
1,269 |
|
1,343 |
| ||
|
Social security contributions on options under the SOP 2007 and SOP 2015 |
|
353 |
|
196 |
| ||
|
Accounting, tax and audit services |
|
250 |
|
185 |
| ||
|
Unconsumed vacation |
|
248 |
|
283 |
| ||
|
Overtime |
|
15 |
|
16 |
| ||
|
Other |
|
504 |
|
710 |
| ||
|
Deferred income |
|
7 |
|
8 |
| ||
|
Total other current liabilities |
|
€ |
5,703 |
|
€ |
10,244 |
|
The increase in accrued expenses for external R&D services mainly results from increased third party expenses related to Phase 3 clinical trials.
Other non-current liabilities include an obligation to pay jubilee benefits arising under the collective bargaining agreement for the chemical industry, by which employees are entitled to receive jubilee payments after being employed for a certain number of years. For this obligation a provision of € 87 (2015: € 77) has been made.
12. Contingencies
The Company has no contingent liabilities in respect of legal claims arising in the ordinary course of business.
13. Commitments
Lease Agreements
Lease agreements as stated in the annual consolidated financial statements for the year ended December 31, 2015 are still effective. No material changes occurred in the nine month period ended September 30, 2016.
Other Contractual Commitments
In addition to the lease agreements described above, the Company has entered into a number of other agreements also entailing financial commitments for the future and relating mainly to services provided by third parties in connection with the conduct of clinical trials and other research and development activities. Some of these commitments are also subject to early termination clauses exercisable at the option of the Company. The remaining payments to be made under these agreements, if all milestones and other conditions are met, are estimated to be as follows:
|
(Euro in thousands) |
|
As of |
|
As of |
| ||
|
No later than 1 year |
|
€ |
19,558 |
|
€ |
46,259 |
|
|
Later than 1 year and no later than 5 years |
|
18,076 |
|
6,906 |
| ||
|
Later than 5 years |
|
— |
|
— |
| ||
|
Total |
|
€ |
37,634 |
|
€ |
53,165 |
|
14. Related Party Transactions
During the nine month periods ended September 30, 2015 and 2016, the Management Board was paid regular salaries and short term benefits. Selected members of the Supervisory Board received compensation for their board services in the form of cash compensation. In addition, Dr. George Talbot, a Supervisory Board member, was engaged by the Company for scientific consultancy services for which he received a total of € 15 and € 4 during the nine months ended September 30, 2015 and 2016, respectively, including fees related to his service as the chairman of our Clinical Advisory Board. All services of Dr. Talbot were agreed with the Supervisory Board and rendered at arm’s length.
The unaudited condensed consolidated interim financial statements do not include all disclosures for related-party transactions that are required in the annual consolidated financial statements, and should be read in conjunction with the Company’s annual consolidated financial statements for the year ended December 31, 2015.
15. Events after the Reporting Period
There were no material events after the reporting period.
Forward Looking Statements
Any statements in this document about future expectations, plans and prospects for Nabriva, including but not limited to statements about the development of Nabriva’s product candidates, such as plans for the design, conduct and timelines of Phase 3 clinical trials of lefamulin for CABP, including expected timing of enrollment and availability of data, the clinical utility of lefamulin for CABP and Nabriva’s plans for filing of regulatory approvals and efforts to bring lefamulin to market, the development of lefamulin for additional indications, the development of additional formulations of lefamulin, plans to pursue research and development of other product candidates, proposed financings, the sufficiency of Nabriva’s cash resources and other statements containing the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “likely,” “will,” “would,” “could,” “should,” “continue,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: the uncertainties inherent in the initiation and conduct of clinical trials, availability and timing of data from clinical trials, whether results of early clinical trials or trials in different disease indications will be indicative of the results of ongoing or future trials, uncertainties associated with regulatory review of clinical trials and applications for marketing approvals, the availability or commercial potential of product candidates including lefamulin for use as a first-line empiric monotherapy for the treatment of moderate to severe CABP, market conditions, the sufficiency of cash resources and need for additional financing and such other important factors as are set forth under the caption “Risk Factors” in Nabriva’s annual report on Form 20-F as filed with the United States Securities and Exchange Commission. In addition, the forward-looking statements included in this document represent Nabriva’s views as of the date of this document. Nabriva anticipates that subsequent events and developments will cause its views to change. However, while Nabriva may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing Nabriva’s views as of any date subsequent to the date of this document.
Risks Associated with our Business
· Our business is subject to a number of risks of which you should be aware. These risks are discussed more fully in the “Risk Factors” section of Nabriva’s annual report on Form 20-F as filed with the United States Securities and Exchange Commission. These risks include, but are not limited to the following:
· We depend heavily on the success of lefamulin. Our ability to generate product revenues, which may not occur for several years, if ever, will depend heavily on our obtaining marketing approval for and commercializing lefamulin.
· Our Phase 3 clinical trials of lefamulin for CABP, and other clinical trials we conduct, may not be successful. We have not yet completed any clinical trials of lefamulin for CABP. Our completed Phase 2 clinical trial evaluated lefamulin for ABSSSI. The results of our completed clinical trials may not predict success in our Phase 3 clinical trials of lefamulin for CABP.
· We have a limited operating history. We have not yet demonstrated our ability to successfully complete development of any product candidates, obtain marketing approvals, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization.
· If we are unable to obtain required marketing approvals for, commercialize, obtain and maintain patent protection for or gain market acceptance by physicians, patients and third-party payors of lefamulin or any of our other product candidates, or experience significant delays in doing so, our business will be materially harmed and our ability to generate revenue will be materially impaired.
· We have incurred significant operating losses since inception and will need substantial additional funding. If we are unable to raise capital when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts. As of September 30, 2016, we had accumulated losses of €161.0 million. We expect to incur significant expenses and increasing operating losses for at least the next several years.
· If we are classified as a passive foreign investment company in any taxable year, it may result in adverse U.S. federal income tax consequences to U.S. holders of the ADSs.
· As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and NASDAQ Stock Market corporate governance rules and are permitted to file less information with the Securities and Exchange Commission than U.S. companies. This may limit the information available to holders of the ADSs.
· We determined that, as of June 30, 2016, we no longer qualified as a “foreign private issuer” under the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). As a result, beginning January 1, 2017, we anticipate that our future annual filings with the SEC will be made on Form 10-K (including our annual report for the year ending December 31, 2016) rather than on Form 20-F. In addition, commencing on January 1, 2017, we plan to expand reporting consistent with that of a domestic U.S. filer, including filing quarterly reports on Form 10-Q and current reports on Form 8-K. We will also be subject to SEC rules governing the solicitation of proxies, consents or authorizations in respect of a security registered under the Securities Exchange Act of 1934 (the “Exchange Act”); the provisions of Regulation Fair Disclosure, which regulate the selective disclosure of material information; and the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and establishing insider liability for profits realized from any “short-swing” transactions in the Company’s equity securities. In addition, beginning January 1, 2017, we will also be subject to the NASDAQ Stock Market listing requirements applicable to domestic U.S. issuers.