0001558370-17-007866.txt : 20171101 0001558370-17-007866.hdr.sgml : 20171101 20171101062614 ACCESSION NUMBER: 0001558370-17-007866 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 71 CONFORMED PERIOD OF REPORT: 20170930 FILED AS OF DATE: 20171101 DATE AS OF CHANGE: 20171101 FILER: COMPANY DATA: COMPANY CONFORMED NAME: uniQure N.V. CENTRAL INDEX KEY: 0001590560 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36294 FILM NUMBER: 171167263 BUSINESS ADDRESS: STREET 1: PAASHEUVELWEG 25A CITY: AMSTERDAM STATE: P7 ZIP: 1105 BP BUSINESS PHONE: 1-339-970-7000 MAIL ADDRESS: STREET 1: PAASHEUVELWEG 25A CITY: AMSTERDAM STATE: P7 ZIP: 1105 BP FORMER COMPANY: FORMER CONFORMED NAME: uniQure B.V. DATE OF NAME CHANGE: 20131030 10-Q 1 qure-20170930x10q.htm 10-Q qure_Current_Folio_10Q

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10-Q

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the quarterly period ended September 30, 2017

 

 

 

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

 

For the transition period from _______ to _______

 

 

 

Commission file number: 001-36294

 

uniQure N.V.

(Exact name of Registrant as specified in its charter)

 

 The Netherlands

(State or other jurisdiction of incorporation or organization)

Not applicable

(I.R.S. Employer Identification No.)

 

Paasheuvelweg 25a,

1105 BP Amsterdam, The Netherlands

(Address of principal executive offices) (Zip Code)

 

+31-20-240-6000

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒ No ☐. 

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ☒ No ☐. 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer  ☐

Accelerated filer  ☒

Non-accelerated filer (do not check if smaller reporting company)

Emerging growth company ☒

Smaller reporting company  ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)    Yes ☐ No ☒

 

As of October 30, 2017, the registrant had 30,800,080 shares of ordinary shares, par value €0.05, outstanding.


 

 

 


 

TABLE OF CONTENTS

 

 

    

 

    

Page

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1 

 

Financial Statements

 

4

 

 

 

 

 

Item 2 

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

25

 

 

 

 

 

Item 3 

 

Quantitative and Qualitative Disclosures About Market Risk

 

41

 

 

 

 

 

Item 4 

 

Controls and Procedures

 

41

 

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

 

Item 1 

 

Legal Proceedings

 

42

 

 

 

 

 

Item 1A 

 

Risk Factors

 

42

 

 

 

 

 

Item 2 

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

64

 

 

 

 

 

Item 3 

 

Defaults Upon Senior Securities

 

64

 

 

 

 

 

Item 4 

 

Mine Safety Disclosures

 

64

 

 

 

 

 

Item 5 

 

Other Information

 

64

 

 

 

 

 

Item 6 

 

Exhibits

 

64

 

 

2


 

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD‑LOOKING STATEMENTS

This Quarterly Report on Form 10‑Q contains “forward‑looking statements” as defined under federal securities laws. Forward-looking statements are based on our current expectations of future event and many of these statements can be identified using terminology such as “believes,” “expects,” “anticipates,” “plans,” “may,” “will,” “projects,” “continues,” “estimates,” “potential,” “opportunity” and similar expressions. These forward‑looking statements may be found in Part II, Item 1A “Risk Factors,” Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10‑Q.

Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or implied. The most significant factors known to us that could materially adversely affect our business, operations, industry, financial position or future financial performance include those discussed in Part II, Item 1A “Risk Factors,” as well as those discussed in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, as well as other factors which may be identified from time to time in our other filings with the Securities and Exchange Commission (“SEC”), including our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2017, or in the documents where such forward‑looking statements appear. You should carefully consider that information before you make an investment decision.

You should not place undue reliance on these statements, which speak only as of the date that they were made. Our actual results or experience could differ significantly from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, and in our Annual Report on Form 10-K for the year ended December 31, 2016, including in “Part I, Item 1A. Risk Factors,” as well as others that we may consider immaterial or do not anticipate at this time. These cautionary statements should be considered in connection with any written or oral forward‑looking statements that we may make in the future or may file or furnish with the SEC. We do not undertake any obligation to release publicly any revisions to these forward‑looking statements after completion of the filing of this Quarterly Report on Form 10‑Q to reflect later events or circumstances or to reflect the occurrence of unanticipated events. All forward‑looking statements attributable to us are expressly qualified in their entirety by these cautionary statements.

In addition, with respect to all our forward‑looking statements, we claim the protection of the safe harbor for forward‑looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

 

 

3


 

Part I – FINANCIAL INFORMATION

 

Item 1.        Financial Statements

uniQure N.V.

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

    

2017

    

2016

 

 

in thousands, except share and per share amounts

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

88,934

 

$

132,496

Accounts receivable and accrued income

 

 

 —

 

 

3,680

Accounts receivable and accrued income from related party

 

 

1,945

 

 

5,500

Prepaid expenses

 

 

689

 

 

996

Other current assets

 

 

747

 

 

1,274

Total current assets

 

 

92,315

 

 

143,946

Non-current assets

 

 

 

 

 

 

Property, plant and equipment, net

 

 

34,653

 

 

35,702

Intangible assets, net

 

 

9,027

 

 

8,324

Goodwill

 

 

522

 

 

465

Other non-current assets

 

 

2,469

 

 

1,828

Total non-current assets

 

 

46,671

 

 

46,319

Total assets

 

$

138,986

 

$

190,265

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

2,987

 

$

5,524

Accrued expenses and other current liabilities

 

 

10,165

 

 

9,766

Current portion of long-term debt

 

 

6,232

 

 

605

Current portion of deferred rent

 

 

724

 

 

684

Current portion of deferred revenue

 

 

4,249

 

 

6,142

Current portion of contingent consideration

 

 

1,017

 

 

 —

Total current liabilities

 

 

25,374

 

 

22,721

Non-current liabilities

 

 

 

 

 

 

Long-term debt, net of current portion

 

 

14,353

 

 

19,631

Deferred rent, net of current portion

 

 

8,829

 

 

6,781

Deferred revenue, net of current portion

 

 

67,863

 

 

75,612

Contingent consideration, net of current portion

 

 

2,593

 

 

1,838

Other non-current liabilities

 

 

367

 

 

51

Total non-current liabilities

 

 

94,005

 

 

103,913

Total liabilities

 

 

119,379

 

 

126,634

Commitments and contingencies (see note 14)

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

Ordinary shares, €0.05 par value: 60,000,000 shares authorized at September 30, 2017 and December 31, 2016 and 25,635,849 and 25,257,420 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively.

 

 

1,612

 

 

1,593

Additional paid-in-capital

 

 

471,648

 

 

464,653

Accumulated other comprehensive loss

 

 

(5,809)

 

 

(6,557)

Accumulated deficit

 

 

(447,844)

 

 

(396,058)

Total shareholders' equity

 

 

19,607

 

 

63,631

Total liabilities and shareholders' equity

 

$

138,986

 

$

190,265

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

4


 

uniQure N.V.

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 

 

Nine months ended September 30, 

 

    

2017

    

2016

    

2017

    

2016

 

 

in thousands, except share and per share amounts

License revenues

 

$

 —

 

$

246

 

$

 8

 

$

736

License revenues from related party

 

 

1,124

 

 

993

 

 

3,060

 

 

2,977

Collaboration revenues

 

 

 —

 

 

1,850

 

 

4,638

 

 

4,835

Collaboration revenues from related party

 

 

1,136

 

 

4,132

 

 

2,817

 

 

7,419

Total revenues

 

 

2,260

 

 

7,221

 

 

10,523

 

 

15,967

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

(20,103)

 

 

(16,604)

 

 

(53,963)

 

 

(52,531)

Selling, general and administrative expenses

 

 

(5,584)

 

 

(5,113)

 

 

(17,352)

 

 

(20,245)

Total operating expenses

 

 

(25,687)

 

 

(21,717)

 

 

(71,315)

 

 

(72,776)

Other income

 

 

14,413

 

 

336

 

 

14,995

 

 

1,256

Other expense

 

 

(261)

 

 

 —

 

 

(2,901)

 

 

 —

Loss from operations

 

 

(9,275)

 

 

(14,160)

 

 

(48,698)

 

 

(55,553)

Interest income

 

 

10

 

 

14

 

 

33

 

 

51

Interest expense

 

 

(577)

 

 

(507)

 

 

(1,583)

 

 

(1,685)

Foreign currency gains / (losses), net

 

 

(681)

 

 

(496)

 

 

(1,845)

 

 

(1,764)

Other non-operating income, net

 

 

 —

 

 

54

 

 

29

 

 

701

Loss before income tax expense

 

 

(10,523)

 

 

(15,095)

 

 

(52,064)

 

 

(58,250)

Income tax benefit / (expense)

 

 

278

 

 

(177)

 

 

278

 

 

(401)

Net loss

 

$

(10,245)

 

$

(15,272)

 

$

(51,786)

 

$

(58,651)

Other comprehensive loss, net of income tax:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments net of tax impact of $0.3 million and $(0.2) million for the three months ended September 30, 2017 and 2016, respectively, and $0.3 million and $(0.4) million for the nine months ended September 30, 2017 and 2016, respectively.

 

 

22

 

 

2,801

 

 

748

 

 

3,380

Total comprehensive loss

 

$

(10,223)

 

$

(12,471)

 

$

(51,038)

 

$

(55,271)

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per ordinary share

 

$

(0.40)

 

 

(0.61)

 

 

(2.03)

 

 

(2.35)

Weighted average shares used in computing basic and diluted net loss per ordinary share

 

 

25,632,642

 

 

25,142,660

 

 

25,546,225

 

 

24,972,839

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5


 

uniQure N.V.

 

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

other

 

 

 

 

Total

 

 

Ordinary shares

 

paid-in

 

comprehensive

 

 Accumulated 

 

shareholders’

 

    

   No. of shares   

    

   Amount   

    

      capital      

    

income/(loss)

    

deficit

    

equity

 

 

in thousands, except share and per share amounts

Balance at December 31, 2016

 

25,257,420

 

$

1,593

 

$

464,653

 

$

(6,557)

 

$

(396,058)

 

$

63,631

Loss for the period

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(51,786)

 

 

(51,786)

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

748

 

 

 —

 

 

748

Exercise of share options

 

294,929

 

 

15

 

 

1,021

 

 

 —

 

 

 —

 

 

1,036

Shares distributed during the period

 

83,500

 

 

4

 

 

(4)

 

 

 —

 

 

 —

 

 

 —

Share-based compensation expense

 

 —

 

 

 —

 

 

5,978

 

 

 —

 

 

 —

 

 

5,978

Balance at September 30, 2017

 

25,635,849

 

$

1,612

 

$

471,648

 

$

(5,809)

 

$

(447,844)

 

$

19,607

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

6


 

uniQure N.V.

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30, 

 

    

2017

    

2016

 

 

 

in thousands

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(51,786)

 

$

(58,651)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation, amortization and impairments

 

 

6,036

 

 

4,543

Share-based compensation expense

 

 

5,978

 

 

5,020

Change in fair value of derivative financial instruments and contingent consideration

 

 

2,704

 

 

(2,270)

Unrealized foreign exchange results

 

 

1,821

 

 

1,779

Change in deferred taxes

 

 

 -

 

 

401

Change in lease incentive

 

 

1,938

 

 

(468)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, prepaid expenses and other current assets

 

 

9,477

 

 

(4,685)

Inventories

 

 

 -

 

 

406

Accounts payable

 

 

(1,440)

 

 

32

Accrued expenses and other liabilities

 

 

(1,331)

 

 

2,029

Deferred revenue

 

 

(19,620)

 

 

(4,651)

Net cash used in operating activities

 

 

(46,223)

 

 

(56,515)

Cash flows from investing activities

 

 

 

 

 

 

Restricted cash

 

 

(567)

 

 

(617)

Purchase of intangible assets

 

 

(1,124)

 

 

(1,897)

Purchase of property, plant and equipment

 

 

(3,244)

 

 

(11,034)

Net cash used in investing activities

 

 

(4,935)

 

 

(13,548)

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of shares

 

 

1,036

 

 

2,218

Repayment of capital lease obligations

 

 

 -

 

 

(149)

Net cash generated from financing activities

 

 

1,036

 

 

2,069

Currency effect cash and cash equivalents

 

 

6,560

 

 

3,919

Net decrease in cash and cash equivalents

 

 

(43,562)

 

 

(64,075)

Cash and cash equivalents at beginning of period

 

 

132,496

 

 

221,626

Cash and cash equivalents at the end of period

 

$

88,934

 

$

157,551

Supplemental cash flow disclosures:

 

 

 

 

 

 

Cash paid for interest

 

$

1,130

 

$

1,594

Non-cash increases/(decreases) in accounts payables related to purchases of intangible assets and property, plant and equipment

 

$

(1,635)

 

$

828

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

7


 

1General business information

 

uniQure (the “Company”) was incorporated on January 9, 2012 as a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) under the laws of the Netherlands. The Company is a leader in the field of gene therapy and seeks to deliver to patients suffering from rare and other devastating diseases single treatments with potentially curative results. The Company’s business was founded in 1998 and was initially operated through its predecessor company, Amsterdam Molecular Therapeutics (AMT) Holding N.V (“AMT”). In 2012, AMT undertook a corporate reorganization, pursuant to which uniQure B.V. acquired the entire business and assets of AMT and completed a share-for-share exchange with the shareholders of AMT. Effective February 10, 2014, in connection with its initial public offering, the Company converted into a public company with limited liability (naamloze vennootschap) and changed its legal name from uniQure B.V. to uniQure N.V.

 

The Company is registered in the trade register of the Chamber of Commerce (Kamer van Koophandel) in Amsterdam, the Netherlands under number 54385229. The Company’s headquarters are in Amsterdam, the Netherlands, and its registered office is located at Paasheuvelweg 25a, Amsterdam 1105 BP, the Netherlands and its telephone number is +31 20 240 6000. The Company’s website address is www.uniqure.com.

 

Effective January 1, 2017, the Company ceased to qualify as a foreign private issuer under the rules and regulations of the Securities Act of 1933, as amended (the “Securities Act”). As a result, as of January 1, 2017, the Company began filing electronically with the Securities and Exchange Commission (the “SEC”) its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Prior to this time, the Company filed its annual report on Form 20-F and furnished quarterly financial reports as an exhibit on Form 6-K with the SEC.

 

The Company’s ordinary shares are listed on the NASDAQ Global Select Market and trades under the symbol “QURE”.

 

2Summary of significant accounting policies

 

2.1Basis of preparation

 

The Company prepared these unaudited consolidated financial statements in compliance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. Any reference in these notes to applicable guidance is meant to refer to authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

 

The unaudited consolidated financial statements are presented in U.S. dollars, except where otherwise indicated. Transactions denominated in currencies other than U.S. dollars are presented in the transaction currency with the U.S. dollar amount included in parenthesis, converted at the foreign exchange rate as of the transaction date.

 

2.2Unaudited interim financial information

 

The accompanying interim financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the financial position, results of operations and changes in financial position for the periods presented.

 

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. The results of operations for the nine months ended September 30, 2017, are not necessarily indicative of the results to be expected for the full year ending December 31, 2017, or for any other future year or interim period. The accompanying financial statements should be read in conjunction with the audited

8


 

financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 15, 2017.

 

2.3Use of estimates

 

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

 

2.4Accounting policies

 

The principal accounting policies applied in the preparation of these unaudited consolidated financial statements are described in the Company’s audited financial statements as of and for the year ended December 31, 2016, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 15, 2017. There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2017.

 

2.5Recent accounting pronouncements

 

There have been no new accounting pronouncements or changes to accounting pronouncements during the nine months ended September 30, 2017, compared to the recent accounting pronouncements described in Note 2.3.22 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, which could be expected to materially impact the Company’s unaudited condensed consolidated financial statements except the ones discussed below:

 

In May 2017, the FASB issued ASU 2017-09, Compensation-stock compensation (topic 718)- scope of modification accounting (“ASU 2017-09”), which provides clarity regarding the applicability of modification accounting in relation to share-based payment awards. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes because of the change in terms or conditions. The effective date for the standard is for fiscal years beginning after December 15, 2017, which for the Company is January 1, 2018. Early adoption is permitted. The new standard is to be applied prospectively. The Company does not expect ASU 2017-09 to have a material impact on its consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 will be effective for the Company beginning in the first quarter of 2019 and early application is permitted. The Company does expect ASU 2016-02 to have a material impact on its consolidated financial statements, primarily from recognition of a right-of-use asset and lease liability in the balance sheet and a shift of cash outflows from operating activities to financing activities.

In July 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date (“ASU 2015-14”), which deferred the effective date for ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), by one year. ASU 2014-09 will supersede the revenue recognition requirements in ASC 605, Revenue Recognition, and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. In 2016, the FASB issued ASU 2016-08, 2016-10 and 2016-12, which provided further clarification on ASU 2014-09. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, which for the Company is January 1, 2018.  

 

The Company has one active product development collaboration with Bristol Myers Squibb (“BMS”). ASU 2014-09 provides for two possible implementation methods, (i) full retrospective application to all periods from January 1, 2015

9


 

onwards for revenue recognized in relation to collaborations; or (ii) application of the standard from January 1, 2018, onwards to the BMS collaboration with an adjustment to retained earnings as of December 31, 2017, to include the cumulative adjustment to revenue recognized in prior periods in relation to the BMS collaboration.

 

The Company currently accounts for the BMS collaboration agreement as a revenue arrangement with multiple elements. The Company’s substantive deliverables under the BMS collaboration agreement include an exclusive license to its technology in the field of cardiovascular disease, research and development services for specific targets chosen by BMS and general development of the Company’s proprietary vector technology, participation in the Joint Steering Committee, and clinical and commercial manufacturing.

 

The Company is continuing to assess the method of adoption as well as its financial statement disclosures.

 

3             Fair value measurement

 

The Company measures certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. U.S. GAAP, requires disclosure of methodologies used in determining the reported fair values, and establishes a hierarchy of inputs used when available. The three levels of the fair value hierarchy are described below:

·

Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date.

·

Level 2 - Valuations based on quoted prices for similar assets or liabilities in markets that are not active or models for which the inputs are observable, either directly or indirectly.

·

Level 3 - Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and are unobservable.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

 

Items measured at fair value on a recurring basis include financial instruments and contingent consideration. The carrying amount of cash and cash equivalents, accounts receivable from collaborators, prepaid expenses, other assets, accounts payable, accrued expenses and other current liabilities reflected in the consolidated balance sheets approximate their fair values due to their short-term maturities.

10


 

 

The following table sets forth the Company’s assets and liabilities that are required to be measured at fair value on a recurring basis as of September 30, 2017, and December 31, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quoted prices
in active
markets
(Level 1)

 

Significant
other
observable
inputs
(Level 2)

 

Significant
unobservable
inputs
(Level 3)

 

Total

 

Classification in consolidated
balance sheets

 

 

 

in thousands

 

 

At December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

132,496

 

$

 —

 

$

 —

 

$

132,496

 

 

Total assets

 

 

132,496

 

 

 —

 

 

 —

 

 

132,496

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments - debt

 

 

 —

 

 

 —

 

 

11

 

 

11

 

Accrued expenses and other current liabilities

Derivative financial instruments - related party

 

 

 —

 

 

 —

 

 

51

 

 

51

 

Other non-current liabilities

Contingent consideration

 

 

 —

 

 

 —

 

 

1,838

 

 

1,838

 

 

Total liabilities

 

$

 —

 

$

 —

 

$

1,900

 

$

1,900

 

 

At September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

88,934

 

$

 —

 

$

 —

 

$

88,934

 

 

Total assets

 

 

88,934

 

 

 —

 

 

 —

 

 

88,934

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative financial instruments - debt

 

 

 —

 

 

 —

 

 

 3

 

 

 3

 

Accrued expenses and other current liabilities

Derivative financial instruments - related party

 

 

 —

 

 

 —

 

 

35

 

 

35

 

Other non-current liabilities

Contingent consideration

 

 

 —

 

 

 —

 

 

3,610

 

 

3,610

 

 

Total liabilities

 

$

 —

 

$

 —

 

$

3,648

 

$

3,648

 

 

 

Changes in Level 3 items during the nine months ended September 30, 2017, and 2016, are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative

 

 

 

 

 

Contingent

 

financial

 

 

 

 

    

consideration

    

instruments

    

Total

 

 

in thousands

Balance at December 31, 2016

 

$

1,838

 

$

62

 

$

1,900

(Gains) / losses recognized in profit or loss

 

 

2,704

 

 

(29)

 

 

2,675

Amounts due (presented in Accrued expenses and other current liabilities)

 

 

(1,181)

 

 

 —

 

 

(1,181)

Currency translation effects

 

 

249

 

 

 5

 

 

254

Balance at September 30, 2017

 

$

3,610

 

$

38

 

$

3,648

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative

 

 

 

 

 

Contingent

 

financial

 

 

 

 

    

consideration

    

instruments

    

Total

 

 

in thousands

Balance at December 31, 2015

 

$

2,926

 

$

837

 

$

3,763

(Gains) / losses recognized in profit or loss

 

 

(1,569)

 

 

(701)

 

 

(2,270)

Currency translation effects

 

 

87

 

 

20

 

 

107

Balance at September 30, 2016

 

$

1,444

 

$

156

 

$

1,600

 

Contingent consideration

 

In connection with the Company’s acquisition of InoCard GmbH (“InoCard”) in 2014, the Company recorded contingent consideration related to amounts potentially payable to InoCard’s former shareholders. In August 2017, the Company and the former shareholders amended the 2014 sale and purchase agreement to waive certain of the Company’s obligations regarding the development of the acquired program pursuant to a plan to be agreed to between the Company and the InoCard former shareholders. The parties also modified the conditions of the agreed milestone payments, including a reduction of the percentage of any future milestone that can be settled in the form of Company ordinary shares from 100% to 50%.  The Company recorded $2.3 million in research and development cost in the three and nine months ended September 30, 2017, related to the increase of fair value of the contingent consideration resulting from these modifications.  

11


 

The amounts payable in accordance with the amended sale and purchase agreement are contingent upon realization of the following milestones:

 

·

Early candidate nomination of product by third party;

·

Acceptance of investigational new drug application by the United States Food and Drug Administration or an equivalent filing in defined Western European countries;

·

Completion of dosing of all patients in the first clinical study; and

·

Full proof of concept of the product in humans after finalization of the first clinical study.

The valuation of the contingent liability is based on significant inputs not observable in the market such as the probability of success (“POS”) of achieving certain research milestones (estimated as probable for the first three milestones as of the balance sheet date), the time at which the research milestones are expected to be achieved (ranging from 2018 to 2021), as well as the discount rate applied, which represents a Level 3 measurement. The POS as well as the discount rate both reflect the probability of achieving a milestone as of a specific date. In June 2017, the Company replaced the risk-adjusted discount rate of 30.0% with the Company’s weighted average rate of capital of 14.5% to reflect the full integration of the acquired business into the Company’s operation. This resulted in a $0.3 million increase of the liability.

 

Varying the timing of the milestones, the discount rate and the POS of unobservable inputs results in the following fair value changes:

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 

 

    

2017

 

 

in thousands

Change in fair value

 

 

 

Moving out of all milestones by 6 months

 

$

(231)

Increasing the POS for the first milestone by 20%

 

 

1,103

Decreasing the POS for the first milestone by 20%

 

 

(1,103)

Reducing the discount rate from 14.5% to 4.5%

 

 

1,004

Increasing the discount rate from 14.5% to 24.5%

 

 

(590)

 

 

 

 

 

 

 

 

December 31, 

 

    

2016

 

 

in thousands

Change in fair value

 

 

 

Moving out of all milestones by 6 months

 

$

(209)

Increasing the POS for the first milestone by 20%

 

 

367

Decreasing the POS for the first milestone by 20%

 

 

(367)

Reducing the discount rate from 30% to 20%

 

 

638

Increasing the discount rate from 30% to 40%

 

 

(309)

 

Derivative financial instruments

 

The Company issued derivative financial instruments related to its collaboration with Bristol-Meyers Squibb Company (“BMS”) and in relation to the issuance of the Hercules Technology Growth Corp. (“Hercules”) loan facility. The fair value of these derivative financial instruments as of September 30, 2017, was $0.0 million (December 31, 2016: $0.1 million), and these derivative financial instruments are described in more detail below.

 

There were no significant changes in the sensitivity of the fair value from (un)observable inputs as of September 30, 2017, compared to December 31, 2016.

12


 

BMS collaboration

 

On April 6, 2015, the Company entered into several agreements with BMS (the “BMS Agreements”). Pursuant to the terms of the BMS Agreements the Company granted BMS two warrants:

 

·

A warrant allowing BMS to purchase a specific number of uniQure ordinary shares such that its ownership will equal 14.9% immediately after such purchase. The warrant can be exercised on the later of (i) the date on which the Company receives from BMS the Target Designation Fees (as defined in the collaboration agreements) associated with the first six New Targets (as defined in the collaboration agreements); and (ii) the date on which BMS designates the sixth New Target.

 

·

A warrant allowing BMS to purchase a specific number of uniQure ordinary shares such that its ownership will equal 19.9% immediately after such purchase. The warrant can be exercised on the later of (i) the date on which uniQure receives from BMS the Target Designation Fees associated with the first nine New Targets; and (ii) the date on which BMS designates the ninth New Target.

Pursuant to the terms of the BMS Agreements the exercise price, in respect of each warrant, is equal to the greater of (i) the product of (A) $33.84, multiplied by (B) a compounded annual growth rate of 10% and (ii) the product of (A) 1.10 multiplied by (B) the VWAP for the 20 trading days ending on the date that is five trading days prior to the date of a notice of exercise delivered by BMS.

 

Hercules loan facility

 

On June 14, 2013, the Company entered into a venture debt loan facility with (the “Original Facility”) with Hercules Technology Growth Capital, Inc. (“Hercules”) pursuant to a Loan and Security Agreement (the “Loan Agreement”) which included a warrant. The warrant was not closely related to the host contract and was accounted for separately as a derivative financial liability measured at fair value though profit or loss. The warrant included in the Original Facility remained in place following the 2014 and 2016 amendments of the loan.

 

4            Collaboration arrangements and concentration of credit risk

 

In the three and nine months ended September 30, 2017, the Company generated all collaboration and license revenues from its Collaboration and License Agreement with BMS, and its Co-Development Agreement for hemophilia B with Chiesi Farmaceutici S.p.A. (“Chiesi”).

 

On April 19, 2017, the Company and Chiesi entered into an agreement to terminate the Glybera Commercialization Agreement following the Company’s decision to not seek renewal with the European Medicines Agency of the marketing authorization for Glybera by October 2017 (“Glybera Termination Agreement”). In July 2017, the Company and Chiesi terminated their co-development agreement in respect of the hemophilia B program (“hemophilia B Termination Agreement”). As a result, the Company holds the global rights to the development of the hemophilia B program and is not required to provide any further services in relation to the co-development and active contribution to the collaboration by providing technology access in the field of gene therapy to Chiesi. 

 

 Since June 2015, BMS has been considered a related party given the significance of its equity investment in the Company.

 

Services to the Company’s collaboration partners are rendered by the Dutch operating entity. Total collaboration and license revenue generated from these partners are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 

 

Nine months ended September 30, 

 

    

2017

    

2016

    

2017

    

2016

 

 

in thousands

Bristol Myers Squibb

 

$

2,260

 

$

5,125

 

$

5,877

 

$

10,396

Chiesi Farmaceutici S.p.A

 

 

 —

 

 

2,096

 

 

4,646

 

 

5,571

Total

 

$

2,260

 

$

7,221

 

$

10,523

 

$

15,967

13


 

 

Amounts owed by these partners in relation to the collaboration are as follows:

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31, 

 

    

2017

    

2016

 

 

in thousands

Bristol Myers Squibb

 

$

1,945

 

$

5,500

Chiesi Farmaceutici S.p.A

 

 

 —

 

 

3,680

Total

 

$

1,945

 

$

9,180

 

BMS collaboration 

 

In May 2015, the Company closed a Collaboration and License Agreement with BMS (the “BMS Collaboration Agreement”) that provides exclusive access to the Company’s gene therapy technology platform for multiple targets in cardiovascular (and other target specific) diseases. The collaboration included the Company’s proprietary gene therapy program for congestive heart failure which aims to restore the heart's ability to synthesize S100A1, a calcium sensor and master regulator of heart function, and thereby improve clinical outcomes for patients with reduced ejection fraction. Beyond cardiovascular diseases, the agreement also included the potential for a target exclusive collaboration in other disease areas. In total, the companies may collaborate on ten targets, including S100A1.

 

The Company is conducting the discovery, non-clinical, analytical and process development activities and is responsible for manufacturing of clinical and commercial supplies using the Company’s vector technologies and industrial, proprietary insect-cell based manufacturing platform. BMS reimburses the Company for all its research and development efforts in support of the Collaboration, and will lead the clinical development and regulatory activities across all programs. BMS will also be solely responsible for commercialization of all products from the collaboration.

 

The Company evaluated the BMS Collaboration Agreement and determined that it is a revenue arrangement with multiple elements. The Company’s substantive deliverables under the BMS Collaboration Agreement include an exclusive license to its technology in the field of cardiovascular disease, research and development services for specific targets chosen by BMS and general development of the Company’s proprietary vector technology, participation in the Joint Steering Committee, and clinical and commercial manufacturing. The Company concluded that the BMS Collaboration Agreement consists of three units of accounting, including (i) technology (license and target selections), know-how and manufacturing in the field of gene therapy and development and active contribution to the development through the Joint Steering Committee participations, (ii) provision of employees, goods and services for research activities for specific targets and (iii) clinical and commercial manufacturing. The Company determined that the license does not have stand-alone value to BMS without the Company’s know-how and manufacturing technology through the participation of the Joint Steering Committee and accordingly, they were combined into one unit of accounting.

 

License revenue – BMS

 

As of May 21, 2015, the effective date of the BMS Collaboration Agreement, the Company recorded deferred revenue of $60.1 million. On July 31, 2015, BMS selected the second, third and fourth collaboration targets, triggering a $15.0 million target designation payment to the Company. The Company is entitled to an aggregate of $16.5 million in target designation payments upon the selection of the fifth through tenth collaboration targets. The Company will also be eligible to receive research, development and regulatory milestone payments of up to $254.0 million for S100A1 and up to $217.0 million for each of the other selected targets, if milestones are achieved. The Company determined that the contingent payments under the BMS Collaboration Agreement relating to research, development and regulatory milestones do not constitute substantive milestones and will not be accounted for under the milestone method of revenue recognition. The events leading to these payments solely depend on BMS’ performance. Accordingly, any revenue from these contingent payments would be allocated to the first unit of accounting noted above and recognized over the expected performance period.

 

License revenue is recognized over an expected performance period of 19 years on a straight-line basis commencing on May 21, 2015. The expected performance period is reviewed quarterly and adjusted to account for changes, if any, in the Company´s estimated performance period. The estimated performance period did not change in the nine months ended September 30, 2017.

14


 

 

The Company recognized $1.1  million and $3.1 million of license revenue for the three and nine months ended September 30, 2017, respectively, and compared to $1.0 million and $3.0 million during the same periods in 2016.

 

Additionally, the Company is eligible to receive net sales-based milestone payments and tiered high single to low double-digit royalties on product sales. These revenues will be recognized when earned.

 

The royalty term is determined on a licensed-product-by-licensed-product and country-by-country basis and begins on the first commercial sale of a licensed product in a country and ends on the expiration of the last to expire of specified patents or regulatory exclusivity covering such licensed product in such country or, with a customary royalty reduction, ten years after such first commercial sale if there is no such exclusivity.

 

Collaboration revenue – BMS

 

The Company provides target-specific research and development services to BMS. Collaboration revenue related to these contracted services is recognized when earned.

 

The Company generated $1.1 million and $2.8 million of collaboration revenue during the three and nine months ended September 30, 2017, respectively, compared to $4.1 million and $7.4 million during the same periods in 2016.

 

Manufacturing revenue – BMS

 

BMS and the Company also entered into a binding term sheet for the Company to supply gene therapy products during the clinical and commercial phase to BMS. Revenues from product sales will be recognized when earned. To date the Company has not supplied any clinical and commercial product to BMS.

 

Chiesi collaboration

 

In 2013, the Company entered into two agreements with Chiesi, one for the co-development and commercialization of the hemophilia B program (the “Hemophilia Collaboration Agreement”) and one for the commercialization of Glybera (the “Glybera Agreement”, and together with the Collaboration Agreement, the “Chiesi Agreements”) in Europe and selected territories.

 

In April 2017, the parties agreed to terminate the Glybera Agreement. Accordingly, the Company will not be required to supply Glybera to Chiesi beyond October 2017. In July 2017, the parties terminated the Hemophilia Collaboration Agreement and the Company reacquired rights associated with its hemophilia B program in Europe and selected territories.

 

License revenue – Chiesi

 

Upon the closing of the Chiesi Agreements on September 30, 2013, the Company received €17.0 million ($22.1 million) in non-refundable up-front payments. The Company determined that the up-front payments constituted a single unit of accounting that should be amortized as license revenue on a straight-line basis over the performance period of July 2013 through September 2032. In July 2017, the Company fully released the outstanding deferred revenue and recorded $13.8 million other income during the three and nine months ended September 30, 2017.

 

The Company recognized $0.0 million and $0.0 million of license revenue during the three and nine months ended September 30, 2017, respectively, compared to $0.2 million and $0.7 million during the same periods in 2016. The Company recognized the license revenue for the nine months ended September 30, 2017, net of a $0.5 million reduction for amounts previously amortized and repaid by the Company in accordance with the Glybera Termination Agreement in 2017.

15


 

Collaboration revenue – Chiesi

 

Prior to the termination of the Hemophilia Collaboration Agreement up to June 30,2017, Chiesi reimbursed the Company for 50% of the agreed research and development efforts related to hemophilia B. These reimbursable amounts have been presented as collaboration revenue.

 

The Company generated $0.0 million and $4.6 million of collaboration revenue from the co-development of hemophilia B during the three and nine months ended September 30, 2017, respectively, compared to $1.9 million and $4.8 million during the same periods in 2016.

 

5            Property, plant and equipment

 

The following table presents the Company’s property, plant and equipment as of September 30, 2017, and December 31, 2016:

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31,

 

    

2017

    

2016

 

 

in thousands

Leasehold improvements

 

$

33,054

 

$

30,582

Laboratory equipment

 

 

15,952

 

 

14,166

Office equipment

 

 

2,926

 

 

2,710

Construction-in-progress

 

 

365

 

 

313

Total property, plant, and equipment

 

 

52,297

 

 

47,771

Less accumulated depreciation

 

 

(17,644)

 

 

(12,069)

Property, plant and equipment, net

 

$

34,653

 

$

35,702

 

Total depreciation expense was $1.7 million and $5.1 million during the three and nine months ended September 30, 2017, respectively, compared to $1.4 million and $4.1 million during the same periods in 2016. Depreciation expense is allocated to research and development to the extent it relates to the Company’s manufacturing facility and equipment. All other depreciation expenses are allocated to selling, general and administrative expense.

 

 

6            Intangible assets

 

The Company’s intangible assets include acquired licenses and acquired research and development (“Acquired R&D”) and are presented in the following table:

 

 

 

 

 

 

 

 

 

    

September 30, 

    

December 31,

 

 

2017

 

2016

 

 

in thousands

Licenses

 

$

9,417

 

$

7,799

Acquired research & development

 

 

5,512

 

 

4,908

Total intangible assets

 

 

14,929

 

 

12,707

Less accumulated amortization and impairment

 

 

(5,902)

 

 

(4,383)

Intangible assets, net

 

$

9,027

 

$

8,324

 

Amortization expense was $0.1 million and $0.9 million for the three and nine months ended September 30, 2017, respectively, compared to $0.1 million and $0.4 million during the same periods in 2016. All amortization was included in research and development expenses, except for $0.6 million related to the termination of the Chiesi collaboration, which was presented in other expense in the nine months ended September 30, 2017.

 

 

 

 

16


 

7             Accrued expenses and other current liabilities

 

Accrued expenses and other current liabilities include the following items:

 

 

 

 

 

 

 

 

 

 

September 30, 

 

December 31,

 

    

2017

    

2016

 

 

in thousands

Accruals for services provided by vendors-not yet billed

 

$

3,236

 

$

3,824

Personnel related accruals and liabilities

 

 

4,481

 

 

5,559

Other current liabilities

 

 

2,448

 

 

383

Total

 

$

10,165

 

$

9,766

 

According to the Glybera Termination Agreement the Company is responsible for terminating the Phase IV post-approval study. The Company accrued $0.9 million (presented as other expenses) during the three months ended June 30, 2017, related to such costs. As of September 30, 2017, the accrual for these amounts was $0.9 million of which $0.6 million is included in other current liabilities.

 

In addition, as of September 30, 2017 the Company owed $1.2 million to the former shareholders of InoCard (included in other current liabilities on the accompanying balance sheet).

 

Restructuring plan

 

In November 2016, the Company announced a plan to restructure its activities resulting from a company-wide strategic review with the aim of refocusing its pipeline, consolidating its manufacturing capabilities into its Lexington, Massachusetts site, reducing operating costs and enhancing overall execution. At various dates between December 2016 and September 2017, the Company entered into termination agreements with certain employees. Depending on the individual fact pattern the Company accrues the related termination costs over the service period or at the date of communication to the employees. Changes in accrued termination benefits (included in research and development expenses) for the nine months ended September 30, 2017, are detailed in the table below.

 

 

 

 

 

 

Accrued

 

 

termination

 

 

benefits

 

    

in thousands

Balance at December 31, 2016

 

$

1,148

Accrued through profit and loss

 

 

1,677

Payments

 

 

(1,812)

Currency translation effects

 

 

88

Balance at September 30, 2017

 

$

1,101

 

 

8           Long-term debt

 

On June 14, 2013, the Company entered into a venture debt loan facility with Hercules, which was amended and restated on June 26, 2014, and again on May 6, 2016 (“2016 Amended Facility”). The 2016 Amended Facility extended the maturity date from September 30, 2018, to May 1, 2020. As at September 30, 2017, and December 31, 2016, $20.0 million was outstanding. The interest rate is adjustable and is the greater of (i) 8.25% or (ii) 8.25% plus the prime rate less 5.25%. Under the 2016 Amended Facility, the interest rate will initially be 8.25% per annum with a back-end fee of 4.85% and a facility fee of 0.75% of the outstanding loan amounts. The interest-only payment period expires on November 2017, but can be extended to May 2018 upon the Company raising a cumulative $30.0 million in up-front corporate payments and/or proceeds from equity financings (“Raisings”), and further extended to November 2018 upon the Company raising a cumulative $50.0 million from such Raisings.

 

17


 

The amortized cost of the 2016 Amended Facility, was $20.6 million as of September 30, 2017, compared to $20.2 million as of December 31, 2016, and is recorded net of discount and debt issuance costs. The foreign currency gain on the loan in the three and nine months ended September 30, 2017, was $0.7 million and $2.3 million, respectively, compared to a foreign currency loss of $0.2 million and $0.4 million during the same periods in 2016. The fair value of the loan approximates its carrying amount, as the loan is amortized at a market conforming interest rate and the impact of discounting is insignificant.

 

Interest expense associated with the 2016 Amended Facility during the three and nine months ended September 30, 2017, was $0.6 million and $1.6 million, respectively, compared to $0.5 million and $1.7 million during the same periods in 2016.

 

As a covenant in the 2016 Amended Facility, the Company has periodic reporting requirements and is required to keep a minimum cash balance deposited in bank accounts in the United States, equivalent to the lesser of the outstanding balance of principal due and 50% of worldwide cash reserves. This restriction on the cash reserves only relates to the location of the cash reserves, and such cash reserves can be used at the discretion of the Company. In combination with other covenants, the 2016 Amended Facility restricts the Company’s ability to, among other things, incur future indebtedness and obtain additional debt financing, to make investments in securities or in other companies, to transfer assets, to perform certain corporate changes, to make loans to employees, officers and directors, and to make dividend payments and other distributions. The Company secured the facilities by pledging the shares in its subsidiaries, substantially all its receivables, moveable assets as well as the equipment, fixtures, inventory and cash of uniQure Inc.

 

9             Shareholders’ Equity

 

On September 15, 2017, the Company filed a prospectus supplement to the prospectus dated May 15, 2017, and entered into a sales agreement (the "Sales Agreement") with Leerink Partners LLC (“Leerink”) to establish an “at the market” (“ATM”) equity offering program pursuant to which Leerink can sell, with the Company’s authorization, up to 5 million ordinary shares at prevailing market prices from time to time. The Company will pay Leerink a commission equal to 3% of the gross proceeds of the sales price of all shares sold through it as sales agent under the Sales Agreement. The Company has not yet sold any ordinary shares under the Sales Agreement and has not received any gross proceeds. The Company capitalized $0.4 million of expenses related to this offering (included in other current assets in the accompanying balance sheet).

 

10             Share-based compensation

 

Share-based compensation expense recognized by classification included in the consolidated statements of operations and comprehensive loss was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

Three months ended September 30, 

 

Nine months ended September 30, 

 

    

2017

    

2016

 

2017

 

2016

 

 

in thousands

Research and development - employees

 

$

1,131

 

$

893

 

$

2,612

 

$

2,670

Selling, general and administrative - employees

 

 

1,316

 

 

30

 

 

3,366

 

 

1,680

Research and development - non-employees

 

 

 —

 

 

 —

 

 

 —

 

 

670

Total

 

$

2,447

 

$

923

 

$

5,978

 

$

5,020

 

Share-based compensation expense recognized by award type was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30, 

 

Nine months ended September 30, 

 

    

2017

    

2016

 

2017

 

2016

Award type

 

in thousands

Share options

 

$

638

 

$

718

 

$

2,347

 

$

4,408

Restricted share units (“RSUs”)

 

 

728

 

 

88

 

 

1,960

 

 

323

Performance share units (“PSUs”)

 

 

1,081

 

 

117

 

 

1,671

 

 

289

Total

 

$

2,447

 

$

923

 

$

5,978

 

$

5,020

18


 

As of September 30, 2017, the unrecognized compensation costs related to unvested awards under the various share-based compensation plans were:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average

 

    

Unrecognized

    

remaining

 

 

compensation

 

period for

 

 

costs

 

     recognition     

Award type

 

in thousands

 

in years

Share options

 

$

7,041

 

2.52

Restricted share units

 

 

4,003

 

1.64

Performance share units

 

 

3,747

 

1.84

Total

 

$

14,791

 

2.11

 

The Company satisfies the exercise of share options and vesting of RSUs and PSUs through newly issued shares.

 

The Company’s share-based compensation plans include the 2014 Amended and Restated Share Option Plan (the “2014 Plan”) and inducement grants under Rule 5653(c)(4) of the NASDAQ Global Select Market with characteristics similar to the 2014 Plan (classified as “Other Plans”). The Company previously had a 2012 Equity Incentive Plan (the “2012 Plan”) and issued options to purchase ordinary shares to the shareholders of 4D in connection with a collaboration and license agreement between the Company and 4D dated as of January 2014 (classified as “Other Plans”).

 

2014 Plan

 

Share options

 

The following table summarizes option activity under the Company’s 2014 Plan for the nine months ended September 30, 2017:

 

 

 

 

 

 

 

 

 

2014 plan

 

 

 

 

Weighted average

 

    

Options

    

exercise price

 

 

 

 

 

 

Outstanding at December 31, 2016

 

1,812,766

 

$

12.47

Granted

 

949,350

 

$

6.17

Forfeited

 

(348,697)

 

$

7.95

Expired

 

(164,106)

 

$

14.46

Exercised

 

(8,125)

 

$

7.49

Outstanding at September 30, 2017

 

2,241,188

 

$

10.38

Fully vested and exercisable

 

820,522

 

$

12.58

Outstanding and expected to vest

 

1,420,666

 

$

9.10

 

 

 

 

 

 

Total weighted average grant date fair value of options issued during the period (in $ million)

 

 

 

$