0001558370-20-011813.txt : 20201027 0001558370-20-011813.hdr.sgml : 20201027 20201027171916 ACCESSION NUMBER: 0001558370-20-011813 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 59 CONFORMED PERIOD OF REPORT: 20200930 FILED AS OF DATE: 20201027 DATE AS OF CHANGE: 20201027 FILER: COMPANY DATA: COMPANY CONFORMED NAME: uniQure N.V. CENTRAL INDEX KEY: 0001590560 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36294 FILM NUMBER: 201265043 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-20200930x10q.htm 10-Q
4371195444487510P5D0001590560--12-312020Q3falseP1YP3Ytruetrue0001590560us-gaap:CommonStockMember2020-07-012020-09-300001590560us-gaap:CommonStockMember2020-01-012020-09-300001590560us-gaap:CommonStockMember2019-07-012019-09-300001590560us-gaap:RetainedEarningsMember2020-09-300001590560us-gaap:AdditionalPaidInCapitalMember2020-09-300001590560us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001590560us-gaap:RetainedEarningsMember2020-06-300001590560us-gaap:AdditionalPaidInCapitalMember2020-06-300001590560us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000015905602020-06-300001590560us-gaap:RetainedEarningsMember2019-12-310001590560us-gaap:AdditionalPaidInCapitalMember2019-12-310001590560us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001590560us-gaap:RetainedEarningsMember2019-09-300001590560us-gaap:AdditionalPaidInCapitalMember2019-09-300001590560us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300001590560us-gaap:RetainedEarningsMember2019-06-300001590560us-gaap:AdditionalPaidInCapitalMember2019-06-300001590560us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300001590560us-gaap:RetainedEarningsMember2018-12-310001590560us-gaap:AdditionalPaidInCapitalMember2018-12-310001590560us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001590560us-gaap:EmployeeStockMemberqure:EmployeeSharePurchasePlanMember2020-01-012020-09-300001590560us-gaap:EmployeeStockMemberqure:EmployeeSharePurchasePlanMember2019-01-012019-09-300001590560qure:EmployeeConsultantsAndDirectorsStockOptionsMemberqure:The2014PlanMember2019-12-310001590560us-gaap:EmployeeStockMemberqure:EmployeeSharePurchasePlanMember2020-09-300001590560us-gaap:EmployeeStockMemberqure:EmployeeSharePurchasePlanMember2019-09-300001590560us-gaap:EmployeeStockMemberqure:EmployeeSharePurchasePlanMember2018-06-300001590560qure:The2014PlanMember2018-06-300001590560qure:The2014PlanMember2018-06-012018-06-300001590560us-gaap:RestrictedStockMemberqure:The2014PlanMember2019-12-310001590560us-gaap:PerformanceSharesMemberqure:The2014PlanMember2019-12-310001590560qure:DirectorsAndOfficersMemberus-gaap:RestrictedStockMemberqure:The2014PlanMember2020-01-012020-09-300001590560us-gaap:EmployeeStockMemberqure:EmployeeSharePurchasePlanMember2018-06-012018-06-300001590560srt:MinimumMemberus-gaap:RestrictedStockMemberqure:The2014PlanMember2020-01-012020-09-300001590560srt:MaximumMemberus-gaap:RestrictedStockMemberqure:The2014PlanMember2020-01-012020-09-300001590560srt:DirectorMemberqure:The2014PlanMember2020-01-012020-09-300001590560qure:The2014PlanMemberus-gaap:ShareBasedCompensationAwardTrancheOneMember2020-01-012020-09-300001590560us-gaap:PerformanceSharesMember2020-01-012020-09-300001590560srt:DirectorMemberus-gaap:RestrictedStockMemberqure:The2014PlanMember2017-03-012017-03-310001590560qure:PlanIn2014Member2020-01-012020-09-300001590560qure:LicenseRevenueFromRelatedPartyMember2020-07-012020-09-300001590560qure:CollaborativeRevenueFromRelatedPartyMember2020-07-012020-09-300001590560us-gaap:CollaborativeArrangementMember2020-01-012020-09-300001590560qure:LicenseRevenueFromRelatedPartyMember2020-01-012020-09-300001590560qure:CollaborativeRevenueFromRelatedPartyMember2020-01-012020-09-300001590560qure:LicenseRevenueFromRelatedPartyMember2019-07-012019-09-300001590560qure:CollaborativeRevenueFromRelatedPartyMember2019-07-012019-09-300001590560us-gaap:CollaborativeArrangementMember2019-01-012019-12-310001590560qure:LicenseRevenueFromRelatedPartyMember2019-01-012019-09-300001590560qure:CollaborativeRevenueFromRelatedPartyMember2019-01-012019-09-300001590560us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001590560us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300001590560us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300001590560us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-09-3000015905602019-01-010001590560us-gaap:RetainedEarningsMember2020-07-012020-09-300001590560us-gaap:RetainedEarningsMember2020-01-012020-09-300001590560us-gaap:RetainedEarningsMember2019-07-012019-09-300001590560us-gaap:RetainedEarningsMember2019-01-012019-09-300001590560qure:AmendedFacility2018Memberqure:VentureDebtLoanFacilityWithHerculesMember2020-09-300001590560qure:AmendedFacility2018Memberqure:VentureDebtLoanFacilityWithHerculesMember2019-12-310001590560qure:AmendedFacility2018Memberqure:HerculesTechnologyGrowthCorp.Memberqure:SecondAmendedAndRestatedLoanAndSecurityAgreementMember2019-12-310001590560qure:AmendedFacility2016Memberqure:HerculesTechnologyGrowthCorp.Memberqure:SecondAmendedAndRestatedLoanAndSecurityAgreementMember2018-12-060001590560us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-09-300001590560us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001590560qure:AmsterdamMember2017-12-010001590560qure:AmsterdamMember2016-03-310001590560qure:LexingtonUsMember2018-11-300001590560qure:AmsterdamMember2016-06-300001590560qure:OtherMember2020-09-300001590560qure:AmendedFacility2018Memberqure:VentureDebtLoanFacilityWithHerculesMemberqure:HerculesTechnologyGrowthCorp.Member2020-07-012020-09-300001590560qure:AmendedFacility2018Memberqure:VentureDebtLoanFacilityWithHerculesMemberqure:HerculesTechnologyGrowthCorp.Member2020-01-012020-09-300001590560qure:AmendedFacility2018Memberqure:VentureDebtLoanFacilityWithHerculesMemberqure:HerculesTechnologyGrowthCorp.Member2019-07-012019-09-300001590560qure:AmendedFacility2018Memberqure:VentureDebtLoanFacilityWithHerculesMemberqure:HerculesTechnologyGrowthCorp.Member2019-01-012019-09-300001590560qure:AmendedFacility2018Memberqure:HerculesTechnologyGrowthCorp.Member2019-01-012019-09-300001590560qure:AmendedFacility2018Memberqure:HerculesTechnologyGrowthCorp.Member2020-07-012020-09-300001590560qure:AmendedFacility2018Memberqure:HerculesTechnologyGrowthCorp.Member2019-07-012019-09-300001590560us-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2020-09-300001590560us-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2019-12-310001590560us-gaap:RestrictedStockMemberqure:The2014PlanMember2020-09-300001590560us-gaap:PerformanceSharesMemberqure:The2014PlanMember2020-09-300001590560qure:EmployeeConsultantsAndDirectorsStockOptionsMemberqure:The2014PlanMember2020-09-300001590560qure:The2014PlanMember2020-09-300001590560us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberqure:RelatedPartyMember2020-09-300001590560us-gaap:FairValueMeasurementsRecurringMemberqure:RelatedPartyMember2020-09-300001590560us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberqure:RelatedPartyMember2019-12-310001590560us-gaap:FairValueMeasurementsRecurringMemberqure:RelatedPartyMember2019-12-310001590560qure:AmendedFacility2018Memberqure:HerculesTechnologyGrowthCorp.Memberqure:SecondAmendedAndRestatedLoanAndSecurityAgreementMemberus-gaap:PrimeRateMember2018-12-062018-12-060001590560us-gaap:CommonStockMember2020-09-300001590560us-gaap:CommonStockMember2020-06-300001590560us-gaap:CommonStockMember2019-12-310001590560us-gaap:CommonStockMember2019-09-300001590560us-gaap:CommonStockMember2019-06-300001590560us-gaap:CommonStockMember2018-12-310001590560qure:BmsWarrantsMember2020-09-300001590560qure:BmsWarrantsMember2015-04-0600015905602018-12-3100015905602019-09-300001590560us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-09-300001590560us-gaap:FairValueMeasurementsRecurringMember2020-09-300001590560us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-310001590560us-gaap:FairValueMeasurementsRecurringMember2019-12-3100015905602019-06-300001590560us-gaap:EmployeeStockOptionMemberqure:ShareOption2014PlanMember2020-01-012020-09-300001590560us-gaap:EmployeeStockOptionMemberqure:ShareOption2012PlanMember2020-01-012020-09-300001590560us-gaap:EmployeeStockOptionMemberqure:EmployeeSharePurchasePlanMember2020-01-012020-09-300001590560qure:BristolMyersSquibbMemberqure:BmsWarrantsMember2020-01-012020-09-300001590560qure:RestrictedShareUnitsAndPerformanceShareUnitsMember2020-01-012020-09-300001590560us-gaap:EmployeeStockOptionMemberqure:ShareOption2014PlanMember2019-01-012019-09-300001590560us-gaap:EmployeeStockOptionMemberqure:ShareOption2012PlanMember2019-01-012019-09-300001590560us-gaap:EmployeeStockOptionMemberqure:EmployeeSharePurchasePlanMember2019-01-012019-09-300001590560qure:BristolMyersSquibbMemberqure:BmsWarrantsMember2019-01-012019-09-300001590560qure:RestrictedShareUnitsAndPerformanceShareUnitsMember2019-01-012019-09-300001590560us-gaap:SellingGeneralAndAdministrativeExpensesMemberqure:The2014PlanMember2020-07-012020-09-300001590560us-gaap:RestrictedStockMemberqure:The2014PlanMember2020-07-012020-09-300001590560us-gaap:ResearchAndDevelopmentExpenseMemberqure:The2014PlanMember2020-07-012020-09-300001590560us-gaap:PerformanceSharesMemberqure:The2014PlanMember2020-07-012020-09-300001590560qure:EmployeeConsultantsAndDirectorsStockOptionsMemberqure:The2014PlanMember2020-07-012020-09-300001590560qure:The2014PlanMember2020-07-012020-09-300001590560us-gaap:SellingGeneralAndAdministrativeExpensesMemberqure:The2014PlanMember2020-01-012020-09-300001590560us-gaap:RestrictedStockMemberqure:The2014PlanMember2020-01-012020-09-300001590560us-gaap:ResearchAndDevelopmentExpenseMemberqure:The2014PlanMember2020-01-012020-09-300001590560us-gaap:PerformanceSharesMemberqure:The2014PlanMember2020-01-012020-09-300001590560qure:The2014PlanMember2020-01-012020-09-300001590560us-gaap:SellingGeneralAndAdministrativeExpensesMemberqure:The2014PlanMember2019-07-012019-09-300001590560us-gaap:RestrictedStockMemberqure:The2014PlanMember2019-07-012019-09-300001590560us-gaap:ResearchAndDevelopmentExpenseMemberqure:The2014PlanMember2019-07-012019-09-300001590560us-gaap:PerformanceSharesMemberqure:The2014PlanMember2019-07-012019-09-300001590560qure:EmployeeConsultantsAndDirectorsStockOptionsMemberqure:The2014PlanMember2019-07-012019-09-300001590560qure:The2014PlanMember2019-07-012019-09-300001590560us-gaap:SellingGeneralAndAdministrativeExpensesMemberqure:The2014PlanMember2019-01-012019-09-300001590560us-gaap:RestrictedStockMemberqure:The2014PlanMember2019-01-012019-09-300001590560us-gaap:ResearchAndDevelopmentExpenseMemberqure:The2014PlanMember2019-01-012019-09-300001590560us-gaap:PerformanceSharesMemberqure:The2014PlanMember2019-01-012019-09-300001590560qure:EmployeeConsultantsAndDirectorsStockOptionsMemberqure:The2014PlanMember2019-01-012019-09-300001590560qure:The2014PlanMember2019-01-012019-09-300001590560us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-3000015905602020-07-012020-09-300001590560us-gaap:AdditionalPaidInCapitalMember2020-01-012020-09-300001590560us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-3000015905602019-07-012019-09-300001590560qure:BristolMyersSquibbMemberus-gaap:CollaborativeArrangementMember2020-09-300001590560qure:BristolMyersSquibbMemberus-gaap:CollaborativeArrangementMember2019-12-310001590560qure:BristolMyersSquibbMemberqure:CollaborativeArrangementLicenseRevenueMember2015-05-212015-05-210001590560qure:CslBehringCollaborationMember2020-06-242020-06-240001590560qure:CslBehringCollaborationMemberqure:TransactionPaymentReceivedIn2020Member2020-01-012020-09-300001590560qure:CslBehringCollaborationMemberqure:TransactionPaymentReceivedAfter2020Member2020-01-012020-09-300001590560qure:CslBehringCollaborationMember2020-01-012020-09-300001590560qure:BristolMyersSquibbMemberqure:SecondThirdAndFourthTargetsSelectionMemberqure:CollaborativeArrangementLicenseRevenueMember2015-05-212015-05-210001590560us-gaap:AdditionalPaidInCapitalMember2019-01-012019-09-300001590560us-gaap:CommonStockMember2019-01-012019-09-300001590560qure:EmployeeConsultantsAndDirectorsStockOptionsMemberqure:The2014PlanMember2020-01-012020-09-300001590560qure:LicenseRevenueFromRelatedPartyMemberqure:CollaborativeArrangementLicenseRevenueMember2020-01-012020-09-300001590560qure:CslBehringCollaborationMember2020-06-240001590560srt:WeightedAverageMemberqure:BmsSecondWarrantMember2020-01-012020-09-300001590560srt:WeightedAverageMemberqure:BmsFirstWarrantMember2020-01-012020-09-300001590560srt:MinimumMemberqure:BmsSecondWarrantMember2020-01-012020-09-300001590560srt:MinimumMemberqure:BmsFirstWarrantMember2020-01-012020-09-300001590560srt:MaximumMemberqure:BmsSecondWarrantMember2020-01-012020-09-300001590560srt:MaximumMemberqure:BmsFirstWarrantMember2020-01-012020-09-300001590560qure:BristolMyersSquibbMemberqure:FirstSixNewTargetsOrDesignationOfSixthTargetMemberus-gaap:InvesteeMember2020-01-012020-09-300001590560qure:BristolMyersSquibbMemberqure:FirstNineNewTargetsOrDesignationOfNinthTargetMemberus-gaap:InvesteeMember2020-01-012020-09-300001590560qure:AmsterdamMember2020-01-012020-09-300001590560qure:AmsterdamMember2020-02-012020-02-290001590560qure:AmsterdamMember2017-12-012017-12-310001590560qure:AmsterdamMember2017-01-012017-12-310001590560qure:AmsterdamMember2017-12-012017-12-010001590560qure:BristolMyersSquibbMemberqure:FirstSixNewTargetsOrDesignationOfSixthTargetMemberus-gaap:CollaborativeArrangementMember2020-01-012020-09-300001590560qure:BristolMyersSquibbMemberqure:FirstNineNewTargetsOrDesignationOfNinthTargetMemberus-gaap:CollaborativeArrangementMember2020-01-012020-09-300001590560qure:BristolMyersSquibbMemberqure:OtherSelectedTargetsMemberqure:CollaborativeArrangementLicenseRevenueMember2020-01-012020-09-300001590560qure:BristolMyersSquibbMemberqure:FifthThroughTenthTargetsSelectionMemberqure:CollaborativeArrangementLicenseRevenueMember2020-01-012020-09-300001590560qure:LexingtonUsMember2020-09-300001590560qure:AmsterdamMember2020-09-300001590560qure:LexingtonUsMember2018-11-012018-11-300001590560us-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMember2020-01-012020-09-300001590560qure:BmsWarrantsMember2020-01-012020-09-300001590560qure:BristolMyersSquibbMemberus-gaap:CollaborativeArrangementMember2019-02-012019-02-280001590560qure:AmendedFacility2018Memberqure:HerculesTechnologyGrowthCorp.Memberqure:SecondAmendedAndRestatedLoanAndSecurityAgreementMemberus-gaap:PrimeRateMember2018-12-060001590560qure:AmendedFacility2018Memberqure:HerculesTechnologyGrowthCorp.Memberqure:SecondAmendedAndRestatedLoanAndSecurityAgreementMember2018-12-062018-12-060001590560qure:AmendedFacility2016Memberqure:HerculesTechnologyGrowthCorp.Memberqure:SecondAmendedAndRestatedLoanAndSecurityAgreementMember2020-05-310001590560qure:AmendedFacility2018Memberqure:HerculesTechnologyGrowthCorp.Member2020-01-012020-09-300001590560qure:AmendedFacility2018Memberqure:HerculesTechnologyGrowthCorp.Memberqure:SecondAmendedAndRestatedLoanAndSecurityAgreementMember2020-09-300001590560qure:BristolMyersSquibbMemberus-gaap:CollaborativeArrangementMember2020-01-012020-09-300001590560srt:MinimumMemberqure:BmsWarrantsMember2020-01-012020-09-300001590560srt:MaximumMemberqure:BmsWarrantsMember2020-01-012020-09-3000015905602019-01-012019-09-300001590560qure:BristolMyersSquibbMemberqure:CollaborativeArrangementLicenseRevenueMember2020-01-012020-09-300001590560qure:AmendedFacility2018Memberqure:VentureDebtLoanFacilityWithHerculesMember2020-01-012020-09-300001590560qure:AmendedFacility2018Memberqure:HerculesTechnologyGrowthCorp.Memberqure:SecondAmendedAndRestatedLoanAndSecurityAgreementMember2018-12-060001590560qure:BmsWarrantsMemberus-gaap:CollaborativeArrangementMember2020-01-012020-09-3000015905602020-09-3000015905602019-12-3100015905602020-10-2200015905602020-01-012020-09-30iso4217:USDiso4217:EURxbrli:sharesiso4217:USDqure:itemxbrli:purequre:flooriso4217:EURiso4217:USDxbrli:sharesutr:sqftiso4217:EURxbrli:shares

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, 2020

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 25

1105 BP Amsterdam, The Netherlands

(Address of principal executive offices) (Zip Code)

+31-20-240-6000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading Symbol(s)

Name of each exchange on which registered

Ordinary Shares, par value €0.05

QURE

The Nasdaq Global Select Market

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 every Interactive Data File required to be submitted 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 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

Smaller reporting company 

Emerging growth 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  

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 22, 2020, the registrant had 44,496,141 ordinary shares, par value €0.05, outstanding.

TABLE OF CONTENTS

 

    

    

Page

PART I – FINANCIAL INFORMATION

Item 1

Financial Statements

2

Item 2

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

20

Item 3

Quantitative and Qualitative Disclosures About Market Risk

39

Item 4

Controls and Procedures

39

PART II – OTHER INFORMATION

Item 1

Legal Proceedings

40

Item 1A

Risk Factors

40

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

67

Item 3

Defaults Upon Senior Securities

67

Item 4

Mine Safety Disclosures

67

Item 5

Other Information

67

Item 6

Exhibits

67

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 events 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, which include statements related to the COVID-19 coronavirus pandemic, 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 are only predictions based on management’s current views and assumptions and involve risks and uncertainties, and actual results could 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 Quarterly Report on Form 10-Q, 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 SEC on March 2, 2020, 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 forward-looking 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, 2020, and in our Annual Report on Form 10-K for the year ended December 31, 2019, 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 of 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.

1

Part I – FINANCIAL INFORMATION

Item 1.Financial Statements

uniQure N.V.

UNAUDITED CONSOLIDATED BALANCE SHEETS

September 30, 

December 31, 

    

2020

    

2019

(in thousands, except share and per share amounts)

Current assets

Cash and cash equivalents

$

279,493

$

377,793

Accounts receivable and accrued income from related party

223

947

Prepaid expenses

4,168

4,718

Other current assets and receivables

3,496

748

Total current assets

287,380

384,206

Non-current assets

Property, plant and equipment, net of accumulated depreciation of $33.2 million as of September 30, 2020 and $28.6 million as of December 31, 2019, respectively

29,636

28,771

Operating lease right-of-use assets

26,207

26,797

Intangible assets, net

4,052

5,427

Goodwill

518

496

Restricted cash

2,714

2,933

Total non-current assets

63,127

64,424

Total assets

$

350,507

$

448,630

Current liabilities

Accounts payable

$

2,348

$

5,681

Accrued expenses and other current liabilities

17,784

12,457

Current portion of operating lease liabilities

5,552

5,865

Current portion of deferred revenue

7,666

7,627

Total current liabilities

33,350

31,630

Non-current liabilities

Long-term debt

35,494

36,062

Operating lease liabilities, net of current portion

30,333

31,133

Deferred revenue, net of current portion

22,413

23,138

Derivative financial instruments related party

547

3,075

Other non-current liabilities

477

534

Total non-current liabilities

89,264

93,942

Total liabilities

122,614

125,572

Commitments and contingencies

Shareholders' equity

Ordinary shares, €0.05 par value: 60,000,000 shares authorized at September 30, 2020 and December 31, 2019 and 44,487,510 and 43,711,954 ordinary shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

2,694

2,651

Additional paid-in-capital

1,006,898

986,803

Accumulated other comprehensive loss

2,333

(6,689)

Accumulated deficit

(784,032)

(659,707)

Total shareholders' equity

227,893

323,058

Total liabilities and shareholders' equity

$

350,507

$

448,630

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

2

uniQure N.V.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

Three months ended September 30, 

Nine months ended September 30, 

    

2020

    

2019

    

2020

    

2019

(in thousands, except share and per share amounts)

(in thousands, except share and per share amounts)

License revenues from related party

1,776

842

3,353

3,507

Collaboration revenues from related party

13

204

75

1,149

Total revenues

1,789

1,046

3,428

4,656

Operating expenses:

Research and development expenses

(36,302)

(23,554)

(90,716)

(68,245)

Selling, general and administrative expenses

(10,789)

(8,929)

(31,372)

(24,866)

Total operating expenses

(47,091)

(32,483)

(122,088)

(93,111)

Other income

1,032

453

2,558

1,332

Other expense

(220)

(342)

(1,059)

(1,038)

Loss from operations

(44,490)

(31,326)

(117,161)

(88,161)

Interest income

13

868

916

2,038

Interest expense

(942)

(960)

(2,887)

(2,854)

Foreign currency (losses) / gains, net

(8,681)

6,041

(7,724)

7,063

Other non-operating gains / (losses), net

325

1,773

2,531

(861)

Net loss

$

(53,775)

$

(23,604)

$

(124,325)

$

(82,775)

Other comprehensive income / (loss):

Foreign currency translation adjustments

9,652

(6,164)

9,022

(7,423)

Total comprehensive loss

$

(44,123)

$

(29,768)

$

(115,303)

$

(90,198)

Basic and diluted net loss per ordinary share

$

(1.21)

$

(0.58)

$

(2.80)

$

(2.14)

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

44,471,844

40,738,938

44,379,924

38,757,898

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

3

uniQure N.V.

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30

Accumulated

Additional

other

Total

Ordinary shares

paid-in

comprehensive

 Accumulated 

shareholders’

   No. of shares   

    

   Amount   

    

      capital      

    

(loss)/income

    

deficit

    

equity

(in thousands, except share and per share amounts)

Balance at June 30, 2019

37,839,833

$

2,327

$

732,924

$

(8,518)

$

(594,677)

$

132,056

Loss for the period

(23,604)

(23,604)

Other comprehensive loss

(6,164)

(6,164)

Follow-on public offering

5,625,000

311

242,480

242,791

Exercise of share options

119,225

6

1,172

1,178

Restricted and performance share units distributed during the period

26,211

2

(2)

Share-based compensation expense

3,876

3,876

Issuance of ordinary shares relating to employee stock purchase plan

2,148

99

99

Balance at September 30, 2019

43,612,417

$

2,646

$

980,549

$

(14,682)

$

(618,281)

$

350,232

Balance at June 30, 2020

44,444,405

$

2,692

$

1,000,389

$

(7,319)

$

(730,257)

$

265,505

Loss for the period

(53,775)

(53,775)

Other comprehensive income

9,652

9,652

Exercise of share options

7,348

139

139

Restricted and performance share units distributed during the period

35,480

2

(2)

Share-based compensation expense

6,372

6,372

Issuance of ordinary shares relating to employee stock purchase plan

277

Balance at September 30, 2020

44,487,510

$

2,694

$

1,006,898

$

2,333

$

(784,032)

$

227,893

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

4

uniQure N.V.

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30

Accumulated

Additional

other

Total

Ordinary shares

paid-in

comprehensive

Accumulated 

shareholders’

No. of shares   

    

Amount   

    

capital      

    

(loss)/income

    

deficit

    

equity

(in thousands, except share and per share amounts)

Balance at December 31, 2018

37,351,653

$

2,299

$

720,072

$

(7,259)

$

(535,506)

$

179,606

Loss for the period

(82,775)

(82,775)

Other comprehensive loss

(7,423)

(7,423)

Follow-on public offering

5,625,000

311

242,480

242,791

Hercules warrants exercise

37,175

2

1,271

1,273

Exercise of share options

355,879

20

3,714

3,734

Restricted and performance share units distributed during the period

235,692

14

(14)

Share-based compensation expense

12,762

12,762

Issuance of ordinary shares relating to employee stock purchase plan

7,018

264

264

Balance at September 30, 2019

43,612,417

$

2,646

$

980,549

$

(14,682)

$

(618,281)

$

350,232

Balance at December 31, 2019

43,711,954

$

2,651

$

986,803

$

(6,689)

$

(659,707)

$

323,058

Loss for the period

(124,325)

(124,325)

Other comprehensive income

9,022

9,022

Exercise of share options

211,288

12

3,529

3,541

Restricted and performance share units distributed during the period

560,986

31

(31)

Share-based compensation expense

16,450

16,450

Issuance of ordinary shares relating to employee stock purchase plan

3,282

147

147

Balance at September 30, 2020

44,487,510

$

2,694

$

1,006,898

$

2,333

$

(784,032)

$

227,893

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

5

uniQure N.V.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended September 30, 

        

2020

        

2019

(in thousands)

Cash flows from operating activities

Net loss

$

(124,325)

$

(82,775)

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

Depreciation and amortization

8,354

4,932

Share-based compensation expense

16,450

12,762

Change in fair value of derivative financial instruments

(2,531)

862

Unrealized foreign exchange losses / (gains)

7,758

(6,692)

Changes in operating assets and liabilities:

Accounts receivable and accrued income, prepaid expenses and other current assets and receivables

(1,183)

(2,879)

Accounts payable

(3,724)

(418)

Accrued expenses, other liabilities and operating leases

3,630

4,934

Deferred revenue

(2,082)

(3,403)

Net cash used in operating activities

(97,653)

(72,677)

Cash flows from investing activities

Purchases of intangible assets

(2,314)

(996)

Purchases of property, plant and equipment

(4,475)

(3,688)

Net cash used in investing activities

(6,789)

(4,684)

Cash flows from financing activities

Proceeds from issuance of shares related to employee stock option and purchase plans

3,688

3,998

Proceeds from public offering of shares, net of issuance costs

-

243,013

Proceeds from exercise of warrants

-

500

Net cash generated from financing activities

3,688

247,511

Currency effect on cash, cash equivalents and restricted cash

2,235

(1,415)

Net (decrease) / increase in cash, cash equivalents and restricted cash

(98,519)

168,735

Cash, cash equivalents and restricted cash at beginning of period

380,726

237,342

Cash, cash equivalents and restricted cash at the end of period

$

282,207

$

406,077

Cash and cash equivalents

$

279,493

$

403,163

Restricted cash related to leasehold and other deposits

2,714

2,914

Total cash, cash equivalents and restricted cash

$

282,207

$

406,077

Supplemental cash flow disclosures:

Cash paid for interest

$

(3,342)

$

(2,330)

Non-cash increases in accounts payables and accrued expenses and other current liabilities related to purchases of intangible assets and property, plant and equipment

$

116

$

583

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

6

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 25, Amsterdam 1105 BP, the Netherlands and its telephone number is +31 20 240 6000.

The Company’s ordinary shares are listed on the Nasdaq Global Select Market and trade 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 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 period 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, 2020, are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 or for any other future year or interim period. The accompanying financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020.

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.

7

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, 2019, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020. There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2020.

2.5Recent accounting pronouncements

There have been no new accounting pronouncements or changes to accounting pronouncements during the nine months ended September 30, 2020, as compared to the recent accounting pronouncements described in Note 2.3.23 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which could be expected to materially impact the Company’s unaudited consolidated financial statements. The Company has adopted ASU 2018-13, Fair Value Measurement (Topic 820) and additional disclosures related to significant unobservable inputs have been included within footnote 4 Fair value measurement.

3

Collaboration arrangements and concentration of credit risk

CSL Behring collaboration

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”) pursuant to which CSL Behring will receive 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 additional payments based on regulatory and commercial milestones. The CSL Behring Agreement also provides that the Company will 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 the Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization. Concurrently with the execution of the CSL Behring Agreement, the Company and CSL Behring entered into a development and commercial supply agreement, pursuant to which, among other things, the Company will supply the Product to CSL Behring at an agreed-upon price. 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 the 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 September 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.

8

The Company determined that in accordance with Dutch tax 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 under the CSL Behring Agreement. In the event that the Company recognizes the $450 million upfront payment in 2020, such payment is expected to be subject to Dutch corporate income tax at a rate of 25.0%. 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, 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 September 30, 2020.

Bristol-Myers Squibb collaboration

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 September 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.

9

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:

September 30, 

December 31, 

    

2020

    

2019

(in thousands)

Bristol Myers Squibb

$

223

$

947

Total

$

223

$

947

License Revenue

The Company recognized $1.8 million and $3.4 million of License Revenue for the three and nine months ended September 30, 2020, respectively, compared to $0.8 million and $3.5 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 $217.0 million for each Collaboration Target, 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.

10

4

 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.

The carrying amount of cash and cash equivalents, accrued income from the related party, 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.

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, 2020, and December 31, 2019:

 

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, 2019

Assets:

Cash, cash equivalents and restricted cash

$

380,726

$

$

$

380,726

Cash and cash equivalents; restricted cash

Total assets

$

380,726

$

$

$

380,726

Liabilities:

Derivative financial instruments - related party

3,075

3,075

Total liabilities

$

$

$

3,075

$

3,075

At September 30, 2020

Assets:

Cash, cash equivalents and restricted cash

$

282,207

$

$

$

282,207

Cash and cash equivalents; restricted cash

Total assets

$

282,207

$

$

$

282,207

Liabilities:

Derivative financial instruments - related party

$

$

$

547

$

547

Total liabilities

$

$

$

547

$

547

Changes in Level 3 items during the nine months ended September 30, 2020, are as follows:

Derivative

financial

    

instruments

(in thousands)

Balance at December 31, 2019

$

3,075

Net gains recognized in profit or loss

(2,531)

Currency translation effects

3

Balance at September 30, 2020

$

547

11

BMS warrants

The Company issued derivative financial instruments related to its collaboration with BMS. The fair value of the BMS derivative financial instruments (“BMS warrants”) as of September 30, 2020, was $0.5 million compared to a fair value of $3.1 million as of December 31, 2019. Changes in the fair value of the BMS warrants are primarily impacted by changes in the Company’s share price, whereby a decrease in share price generally results in a decrease of the fair value. In addition, the Company revised certain unobservable inputs as well as valuation techniques in March 2020 which resulted in a further decrease in fair value of $0.7 million when compared to December 31, 2019. These BMS warrants are described in more detail below.

The Company granted BMS two warrants:

A warrant allowing BMS to purchase a specific number of the Company’s unregistered ordinary shares such that its ownership will equal 14.9% immediately after such purchase (“1st warrant”). The 1st 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 BMS CLA) associated with the first six new targets (a total of seven Collaboration Targets); and (ii) the date on which BMS designates the sixth new target (the seventh Collaboration Target).
A warrant allowing BMS to purchase a specific number of the Company’s unregistered ordinary shares such that its ownership will equal 19.9% immediately after such purchase (“2nd warrant” and together with the 1st warrant, the “warrants”). The 2nd warrant can be exercised on the later of (i) the date on which the Company receives from BMS the Target Designation Fees associated with the first nine new targets (a total of ten Collaboration Targets); and (ii) the date on which BMS designates the ninth new target (the tenth Collaboration Target).

Pursuant to the terms of the BMS CLA, the exercise price in respect of each warrant is equal to the greater of (i) the product of (A) $33.84 and (B) a compounded annual growth rate of 10% (or approximately $56.41 as of September 30, 2020) and (ii) the product of (A) 1.10 and (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.

As of September 30, 2020, BMS had designated a total of four Collaboration Targets, and as such, the warrants were not exercisable. The Company estimated the exercise of warrants to occur within three and five years after the balance sheet date.

The significant unobservable inputs that the Company uses to develop Level 3 fair value measurements include the number of ordinary shares outstanding at the time of BMS’s warrant exercises. The number of such ordinary shares outstanding at the time of exercise determines the number of unregistered ordinary shares to be issued in connection with the BMS warrants.

The warrants can only be exercised following the occurrence of events contractually defined in the warrant agreements. The probability of the occurrence of these events represent another significant unobservable input used in the calculation of the fair value of the warrants. The Company estimates that the probability of the occurrence of events allowing BMS to exercise the 1st warrant is within a range of 0% to 44% and between 0% to 11% with respect to the 2nd warrant. The arithmetic averages related to these ranges are 24% and 5% for the 1st and 2nd warrant, respectively.

12

5

Right-of-use assets and lease liabilities

The Company’s most significant leases relate to office and laboratory space under the following operating lease agreements:

Lexington, Massachusetts / United States

In July 2013, the Company entered into a lease for a facility in Lexington, Massachusetts, United States. In November 2018, the term was expanded by five years from 2024 to June 2029. The lease is renewable for two subsequent five-year terms. Additionally, the lease was expanded to include an additional 30,655 square feet within the same facility and for the same term. The lease of the expansion space commenced on June 1, 2019.

Amsterdam / The Netherlands

In March 2016, the Company entered into a 16-year lease for a facility in Amsterdam, the Netherlands, and amended this agreement in June 2016. The lease for this facility terminates in February 2032, with an option to extend in increments of five-year periods. The lease contract includes variable lease payments related to annual increases in payments based on a consumer price index.

On December 1, 2017, the Company entered into an agreement to sub-lease three of the seven floors of its Amsterdam facility for a ten-year term ending on December 31, 2027, with an option for the sub-lessee to extend until December 31, 2031. In February 2020, the Company amended the agreement to sub-lease to take back one of the three floors effective March 1, 2020. The fixed lease payments to be received during the remaining term under the agreement to sub-lease amount to $6.4 million (EUR 5.5 million) as of September 30, 2020.

The table below presents the components of the Company’s lease costs for the periods indicated:

Three months ended September 30, 

    

Nine months ended September 30, 

    

2020

    

2019

    

2020

    

2019

(in thousands)

(in thousands)

Operating lease cost

$

1,317

$

1,264

$

3,896

$

3,183

Variable lease cost

155

131

453

313

Sublease income

(222)

(260)

(679)

(792)

Total lease cost

$

1,250

$

1,135

$

3,670

$

2,704

The table below presents the lease-related assets and liabilities recorded on the Consolidated balance sheets for the periods indicated.

    

September 30, 

December 31,

2020

2019

(in thousands)

Assets

Operating lease right-of-use assets

$

26,207

26,797

Liabilities

Current

Current operating lease liabilities

5,552

5,865

Non-current

Non-current operating lease liabilities

30,333

31,133

Total lease liabilities

$

35,885

36,998

13

Other information

The weighted-average remaining lease term as of September 30, 2020 is 9.6 years, compared to 10.3 years as of December 31, 2019 and the weighted-average discount rate as of September 30, 2020 is 11.35%, compared to 11.33% as of December 31, 2019. The Company derived the weighted-average discount rate, adjusted for differences such as in the term and payment patterns, from the Company’s loan from Hercules Capital which was refinanced immediately prior to the January 1, 2019 adoption date in December 2018.

Cash paid for amounts included in the measurement of lease liabilities for the periods indicated below was as follows:

Three months ended September 30, 

    

Nine months ended September 30, 

2020

    

2019

    

2020

    

2019

(in thousands)

(in thousands)

Operating cash flows for operating leases 1)

$

1,401

$

1,761

$

4,556

$

3,777

(1) The Company has received $0.5 million of landlord incentive payments in the three months ended September 30, 2019, which are not included in the cash paid amounts for the three and nine months ended September 30, 2019.)

The Company did not obtain any right-of-use assets in exchange for lease obligations in the three and nine months ended September 30, 2020. Besides the initial recognition of operating right-of-use assets of $19.0 million upon adoption of the new lease standards on January 1, 2019, the Company obtained $0.4 million and $9.0 million of additional right-of-use assets in exchange for lease obligations in the three and nine months ended September 30, 2019, respectively.

Undiscounted cash flows

The table below reconciles the undiscounted cash flows as of September 30, 2020, for each of the first five years and the total of the remaining years to the operating lease liabilities recorded on the Consolidated balance sheet as of September 30, 2020.

Lexington

Amsterdam1)

Other1)

Total

(in thousands)

2020 (three months remaining)

$

848

$

494

$

$

1,342

2021

3,455

1,978

148

5,581

2022

3,552

1,978

5,530

2023

3,650

1,978

5,628

2024

4,146

1,978

6,124

Thereafter

20,745

13,678

34,423

Total lease payments

$

36,396

$

22,084

$

148

$

58,628

Less: amount of lease payments representing interest payments

(13,180)

(9,558)

(5)

(22,743)

Present value of lease payments

23,216

12,526

143

35,885

Less: current operating lease liabilities

(3,431)

(1,978)

(143)

(5,552)

Non-current operating lease liabilities

$

19,785

$

10,548

$

$

30,333

(1) Payments are due in EUR and have been translated at the foreign exchange rate as of September 30, 2020, of $1.17/ €1.00).

14