On June 24, 2020, uniQure biopharma B.V., a wholly-owned subsidiary of uniQure N.V., entered into a commercialization and license agreement (the “CSL Behring Agreement”) with CSL Behring LLC (“CSL Behring”) providing CSL Behring exclusive global rights to etranacogene dezaparvovec, the Company’s investigational gene therapy for patients with hemophilia B (the “Product”).

Under the terms of the CSL Behring Agreement, the Company will receive a $450 million upfront cash payment upon the closing of the CSL Behring Agreement and be eligible to receive up to $1.6 billion in payments based on regulatory and commercial milestones. The Company will also be eligible to receive tiered double-digit royalties in a range of up to a low-twenties percent of net sales of the Product based on sales thresholds.

Pursuant to the CSL Behring Agreement, the Company will be responsible for the completion of the HOPE-B clinical trial, manufacturing process validation, and the manufacturing supply of Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization. Pursuant to a development and commercial supply agreement, the Company will supply Product to CSL Behring at an agreed-upon price per the contract. The Company and CSL Behring executed the development and commercial supply agreement simultaneously with the CSL Behring Agreement. Certain provisions will not become effective until after the Company receives regulatory approval to close the transaction. Clinical development and regulatory activities performed by the Company pursuant to the CSL Behring Agreement will be reimbursed by CSL Behring. CSL Behring will be responsible for global regulatory submissions and commercialization requirements for Product.

Closing of the CSL Behring Agreement is contingent on the successful completion of reviews under antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date. Closing of the transaction is dependent on the timing, extent, and result of the regulatory review process. The Company does not believe that the consummation of the transaction will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge on antitrust grounds will not be made, or if such a challenge is made, what the result would be. In accordance with its existing license and other agreements the Company is contractually required to pay in total a low to high single digit percentage of any upfront payment to its licensors and financial advisor (“License Fees”).

As of June 30, 2020, the Company concluded it has no enforceable right to receive any of the upfront payment, the regulatory and sales milestone payments or the royalties (together “CSL License Revenue”) that it may receive in accordance with the CSL Behring Agreement, as all payments are contingent upon the successful completion of reviews under antitrust laws in the United States, Australia and the United Kingdom. Therefore, the Company determined it will not recognize any revenue in relation to the CSL License Revenue, in accordance with ASC 606.

The Company determined that in accordance with Dutch taw law it will recognize the CSL Behring License Revenue as well as the License Fees as taxable results as of the date on which the Company is contractually entitled to receive (or obligated to make) a payment under the CSL Behring Agreement. The Company expects to continue to incur taxable losses in the Netherlands except for the period in which it receives the $450 million upfront payment. In the event that the Company recognizes the $450 million upfront payment in 2020, such payment will be subject to Dutch corporate income tax at a rate of 25.0%. Any CSL License Revenue including the upfront payment that the Company recognizes thereafter will be subject to Dutch corporate income tax at a rate of 21.7%. However, the Company does not expect it will be required to pay any income taxes in the period in which it recognizes the $450 million upfront payment as taxable revenue as such payment is not expected to exceed the net operating losses the Company has carried forward in the Netherlands. The Company has historically recorded a full valuation allowance against its net deferred tax assets.

Future taxable income or losses of the Company and a potential reversal of the valuation allowance will be impacted by a variety of factors, of which some are outside of the Company’s control. Such factors include the outcome and timing of the reviews under antitrust laws in the United States, Australia, and the United Kingdom, the change in the Dutch corporate income tax rate in 2021, additional net operating losses the Company may generate in relation to the CSL Behring Agreement, and the amount of License Fees the Company is required to pay.

The Company recognizes deferred tax assets to the extent that it determines that these assets are more likely than not to be realized. In making such a determination, the Company weighed all available positive and negative evidence, including future income projections from the CSL Behring Agreement, and concluded that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company continued to record a full valuation allowance as of June 30, 2020.

In May 2015, the Company entered into a collaboration and license agreement (the “BMS CLA”) and various related agreements with Bristol-Myers Squibb Company (“BMS”) that provide BMS with exclusive access to the Company’s gene therapy technology platform for the research, development and commercialization of therapeutics aimed at multiple targets in cardiovascular and other diseases (“Collaboration Targets”). The initial four-year research term under the collaboration terminated on May 21, 2019. During the initial research term of the BMS CLA, the Company supported BMS in discovery, non-clinical, analytical and process development efforts in respect of the Collaboration Targets. For any Collaboration Targets that may be advanced, the Company will be responsible for manufacturing of clinical and commercial supplies using the Company’s vector technologies and industrial, proprietary insect-cell based manufacturing platform. BMS reimbursed the Company for all its research and development costs in support of the collaboration during the initial research term, and will lead development, regulatory and commercial activities for any Collaboration Targets that may be advanced. The BMS CLA provides that the Company and BMS may collaborate on up to ten Collaboration Targets in total. As of June 30, 2020, BMS has designated a total of four Collaboration Targets. In February 2019, BMS requested a one-year extension of the research term. In April 2019, following an assessment of the progress of this collaboration and the Company’s expanding proprietary programs, the Company notified BMS that the Company did not intend to agree to an extension of the research term but rather preferred to restructure or amend the collaboration to reduce or eliminate certain of the Company’s obligations under it.

The Company has agreed to certain restrictions on its ability to work independently of the collaboration, either directly or indirectly through any affiliate or third party, on certain programs that would be competitive with the collaboration programs. The Company is currently in discussions with BMS potentially to amend the BMS CLA and other related agreements following the expiration of the research term. It is currently uncertain whether a change to the BMS CLA will be agreed and, if agreed, what the specific terms of any such change may be. As a consequence, the Company has not taken into account the impact of such change, if any, on the timing of recognition of the prepaid License Revenue if and when the BMS CLA and other related agreements have been restructured or amended. The final resolution of these discussions may or may not result in material changes to the Company’s collaboration with BMS. The Company agreed, subject to certain conditions, to continue providing limited support of the pre-clinical Collaboration Targets, and any related costs will be reimbursed by BMS during these discussions.

The Company evaluated the BMS CLA and determined that its performance obligations are as follows:

(i)

Providing access to its technology and know-how in the field of gene therapy as well as actively contributing to the target selection, the collaboration as a whole, the development during the target selection, the pre-clinical and the clinical phase through participating in joint steering committee and other governing bodies (“License Revenue”);

(ii)

Providing pre-clinical Collaboration Target specific, non-clinical, analytical and process development services during the initial research term, which ended on May 21, 2019 (“Collaboration Revenue”); and

(iii)

Providing clinical and commercial manufacturing services for Collaboration Targets (“Manufacturing Revenue”). To date the Company has not generated any Manufacturing Revenue.

Amounts owed by BMS in relation the collaboration services are as follows:


	June 30,		December 31,
	2020		2019

	(in thousands)
Bristol Myers Squibb	$	222	$	947
Total	$	222	$	947

License Revenue

The Company recognized $1.5 million and $1.6 million of License Revenue for the three and six months ended June 30, 2020, respectively, compared to $2.1 million and $2.7 million during the same periods in 2019 in relation to a $60.1 million upfront payment recorded on May 21, 2015, as well as $15.0 million received in relation to the designation of the second, third and fourth Collaboration Targets in August 2015 (together “Consideration”).

The Company would be entitled to an aggregate $16.5 million in target designation payments upon the selection of the fifth through tenth Collaboration Targets. The Company would also be eligible to receive research, development and regulatory milestone payments of up to $254.0 million for a lead Collaboration Target and up to $217.0 million for each of the other selected Collaboration Targets, if defined milestones are achieved. The Company would include the variable consideration related to the selection of the fifth to tenth Collaboration Target, or any of the milestones, in the transaction price once it is considered probable that including these payments in the transaction price would not result in the reversal of cumulative revenue recognized. The Company would recognize significant amounts of License Revenue for services performed in prior periods if and when the Company considers this probable. Due to the significant uncertainty surrounding the development of gene-therapy product candidates and the dependence on BMS’s performance and decisions, the Company does not currently consider this probable.

Additionally, the Company is eligible to receive net sales-based milestone payments and tiered mid-single to low double-digit royalties on product sales. 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 the first commercial sale if there is no such exclusivity. These revenues will be recognized when performance obligations are satisfied.

The Company recognizes License Revenue over the expected performance period based on its measure of progress towards the completion of certain activities related to its services. The Company determines such progress by comparing activities performed at the end of each reporting period with total activities expected to be performed. The Company estimates total expected activities using a number of unobservable inputs, such as the probability of BMS designating additional targets, the probability of successfully completing each phase and estimated time required to provide services during the various development stages. If available, the Company uses product candidate-specific research and development plans. Alternatively, the Company assumes that completion of the pre-clinical phase requires an average of four years and that clinical development and commercial launch on average require 8.5 years.