PROQR THERAPEUTICS N.V.
Index to Unaudited Condensed Consolidated Financial Statements
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Notes to Unaudited Condensed Consolidated Financial Statements | 5 |
PROQR THERAPEUTICS N.V.
Unaudited Condensed Consolidated Statement of Financial Position
September 30, | December 31, | |||
2021 | 2020 | |||
€ 1,000 | € 1,000 | |||
Assets |
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Current assets |
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Cash and cash equivalents | ||||
Prepayments and other receivables | ||||
Social securities and other taxes | ||||
Total current assets | ||||
Property, plant and equipment | ||||
Investments in associates | ||||
Investments in financial assets | — | |||
Total assets | ||||
Equity and liabilities |
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Equity |
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Equity attributable to owners of the Company | ||||
Non-controlling interests | ( | ( | ||
Total equity | ||||
Current liabilities |
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Borrowings | ||||
Lease liabilities | ||||
Derivative financial instruments | ||||
Trade payables | ||||
Current income tax liability | — | — | ||
Social securities and other taxes | ||||
Pension premiums | — | |||
Deferred income | ||||
Other current liabilities | ||||
Total current liabilities | ||||
Borrowings | ||||
Lease liabilities | ||||
Total liabilities | ||||
Total equity and liabilities |
The notes are an integral part of these condensed consolidated financial statements.
PROQR THERAPEUTICS N.V.
Unaudited Condensed Consolidated Statement of Profit or Loss and OCI
(€ in thousands, except share and per share data)
Three month period | Nine month period | |||||||
ended September 30, |
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| 2021 | 2020 | ||
€ 1,000 | € 1,000 | € 1,000 | € 1,000 | |||||
Revenue | — | — | ||||||
Other income | ||||||||
Research and development costs | ( | ( | ( | ( | ||||
General and administrative costs | ( | ( | ( | ( | ||||
Total operating costs | ( | ( | ( | ( | ||||
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Operating result | ( | ( | ( | ( | ||||
Finance income and expense | ( | ( | ( | |||||
Results related to associates | ( | ( | ( | ( | ||||
Gain on recognition of financial asset | — | — | — | |||||
Results related to financial liabilities measured at fair value through profit or loss | ( | ( | ( | ( | ||||
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Result before corporate income taxes | ( | ( | ( | ( | ||||
Income taxes | ( | ( | ( | ( | ||||
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Result for the period | ( | ( | ( | ( | ||||
Other comprehensive income (foreign exchange differences on foreign operation) | ( | ( | ||||||
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Total comprehensive income | ( | ( | ( | ( | ||||
Result attributable to |
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Owners of the Company | ( | ( | ( | ( | ||||
Non-controlling interests | ( | ( | ( | ( | ||||
( | ( | ( | ( | |||||
Total comprehensive income attributable to | ||||||||
Owners of the Company | ( | ( | ( | ( | ||||
Non-controlling interests | ( | ( | ( | ( | ||||
( | ( | ( | ( | |||||
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Share information |
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Weighted average number of shares outstanding1 | ||||||||
Earnings per share attributable to owners of the Company (Euro per share) | ||||||||
Basic loss per share1 | ( | ( | ( | ( | ||||
Diluted loss per share1 | ( | ( | ( | ( | ||||
The notes are an integral part of these condensed consolidated financial statements.
| 1. | For these periods the potential exercise of share options is not included in the diluted earnings per share as the Company was loss-making. Due to the anti-dilutive nature of the outstanding options, basic and diluted earnings per share are equal. |
PROQR THERAPEUTICS N.V.
Unaudited Condensed Consolidated Statement of Changes in Equity
Attributable to owners of the Company | ||||||||||||||||||||
| Number |
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| Share |
| Equity settled |
| Option |
| Translation |
| Accumulated |
| Total |
| Non- |
| Total | |
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| € 1,000 | € 1,000 | € 1,000 | € 1,000 | € 1,000 | € 1,000 | € 1,000 | € 1,000 | € 1,000 | ||||||||||
Balance at January 1, 2020 |
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Result for the period |
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Other comprehensive income |
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Recognition of share-based payments |
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Issuance of ordinary shares | — | — | — | — | — | |||||||||||||||
Treasury shares transferred | ( | — | — | — | — | — | — | — | — | — | ||||||||||
Recognition of equity component of convertible loan | — | — | — | — | — | — | — | |||||||||||||
Share options lapsed | — | — | — | ( | — | — | — | — | — | |||||||||||
Share options exercised | — | ( | — | — | — | |||||||||||||||
Balance at September 30, 2020 |
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Balance at January 1, 2021 |
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Result for the period |
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Other comprehensive income |
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Recognition of share-based payments |
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Issuance of ordinary shares | — | — | — | — | — | |||||||||||||||
Treasury shares transferred | ( | — | — | — | — | — | — | — | — | — | ||||||||||
Share options lapsed | — | — | — | ( | — | — | — | — | — | |||||||||||
Share options exercised | ( | — | — | — | ||||||||||||||||
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Balance at September 30, 2021 |
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The notes are an integral part of these condensed consolidated financial statements
PROQR THERAPEUTICS N.V.
Unaudited Condensed Consolidated Statement of Cash Flows
Three month period | Nine month period | |||||||
ended September 30, |
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| 2021 | 2020 | 2021 | 2020 | |||
€ 1,000 | € 1,000 | € 1,000 | € 1,000 | |||||
Cash flows from operating activities |
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Net result | ( | ( | ( | ( | ||||
Adjustments for: | ||||||||
— Depreciation | ||||||||
— Share-based compensation | ||||||||
— Other income | — | — | — | ( | ||||
— Financial income and expenses | ( | |||||||
— Results related to associates | ||||||||
— Gain on recognition of financial asset | — | — | ( | — | ||||
— Results related to financial liabilities measured at fair value through profit or loss | ||||||||
— Net foreign exchange gain / (loss) | ( | ( | ||||||
— Income tax expenses | ||||||||
Changes in working capital | ( | ( | ||||||
Cash used in operations | ( | ( | ( | ( | ||||
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Corporate income tax paid | ( | ( | ( | ( | ||||
Interest received | — | |||||||
Interest paid | ( | ( | ( | ( | ||||
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Net cash used in operating activities | ( | ( | ( | ( | ||||
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Cash flow from investing activities | ||||||||
Purchases of property, plant and equipment | ( | ( | ( | ( | ||||
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Net cash used in investing activities | ( | ( | ( | ( | ||||
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Cash flow from financing activities |
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Proceeds from issuance of shares, net of transaction costs | — | — | ||||||
Proceeds from exercise of share options | ||||||||
Proceeds from borrowings | — | |||||||
Proceeds from convertible loans | — | — | ||||||
Repayment of lease liability | ( | ( | ( | ( | ||||
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Net cash generated by financing activities | ||||||||
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Net increase (decrease) in cash and cash equivalents | ( | |||||||
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Currency effect cash and cash equivalents | ( | ( | ||||||
Cash and cash equivalents, at beginning of the period | ||||||||
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Cash and cash equivalents at the end of the period | ||||||||
The notes are an integral part of these condensed consolidated financial statements.
PROQR THERAPEUTICS N.V.
Notes to Unaudited Condensed Consolidated Financial Statements
1. General information
ProQR Therapeutics N.V., or “ProQR” or the “Company”, is a development stage company domiciled in the Netherlands that primarily focuses on the development and commercialization of novel therapeutic medicines.
Since September 18, 2014, the Company’s ordinary shares are listed on the NASDAQ Global Market under ticker symbol PRQR.
The Company was incorporated in the Netherlands, on February 21, 2012 and was reorganized from a private company with limited liability to a public company with limited liability on September 23, 2014. The Company has its statutory seat in Leiden, the Netherlands. The address of its headquarters and registered office is Zernikedreef 9, 2333 CK Leiden, the Netherlands.
ProQR Therapeutics N.V. is the ultimate parent company of the following entities:
| ● | ProQR Therapeutics Holding B.V. ( |
| ● | ProQR Therapeutics I B.V. ( |
| ● | ProQR Therapeutics II B.V. ( |
| ● | ProQR Therapeutics III B.V. ( |
| ● | ProQR Therapeutics IV B.V. ( |
| ● | ProQR Therapeutics V B.V. ( |
| ● | ProQR Therapeutics VI B.V. ( |
| ● | ProQR Therapeutics VII B.V. ( |
| ● | ProQR Therapeutics VIII B.V. ( |
| ● | ProQR Therapeutics IX B.V. ( |
| ● | ProQR Therapeutics I Inc. ( |
| ● | Amylon Therapeutics B.V. ( |
| ● | Amylon Therapeutics Inc. ( |
ProQR Therapeutics N.V. is also statutory director of Stichting Bewaarneming Aandelen ProQR (“ESOP Foundation”) and has full control over this entity. The Company holds an
As used in these condensed consolidated financial statements, unless the context indicates otherwise, all references to “ProQR” or the “Company” refer to ProQR Therapeutics N.V. including its subsidiaries and the ESOP Foundation.
2. Significant Accounting Policies
These condensed consolidated financial statements have been prepared in accordance with the recognition and measurement criteria of IFRS. Certain disclosures required by IAS 34 Interim Financial Statements have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2020. In the opinion of management, all events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the end of the last annual reporting period are disclosed in these condensed consolidated financial statements.
Revenue is recognized in accordance with the recognition and measurement criteria of IFRS 15 Revenue from contracts with customers.
The Company’s financial results have varied substantially, and are expected to continue to vary, from period to period. The Company believes that its ordinary activities are not linked to any particular seasonal factors.
The Company operates in
3. Adoption of new and revised International Financial Reporting Standards
The accounting policies adopted in the preparation of the condensed consolidated financial statements are consistent with those applied in the preparation of the Company’s annual financial statements for the year ended December 31, 2020.
New Standards and Interpretations, which became effective as of January 1, 2021, did not have a material impact on our condensed consolidated financial statements.
4. Critical Accounting Estimates and Judgments
In the application of the Company’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
Research and development expenditures
Research expenditures are currently not capitalized but are reflected in the income statement because the criteria for capitalization are not met. At each balance sheet date, the Company estimates the level of service performed by the vendors and the associated costs incurred for the services performed.
Although we do not expect the estimates to be materially different from amounts actually incurred, the understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and could result in reporting amounts that are too high or too low in any particular period.
Convertible debt
The terms of our convertible debt agreements are evaluated to determine whether the convertible debt instruments contain both liability and equity components, in which case the instrument is a compound financial instrument. Convertible debt agreements are also evaluated to determine whether they contain embedded derivatives, in which case the instrument is a hybrid financial instrument. Judgement is required to determine the classification of such financial instruments based on the terms and conditions of the convertible debt agreements, the currencies in which the debt instruments are denominated and the Company’s functional currency.
Estimation methods are used to determine the fair values of the liability and equity components of compound financial instruments and to determine the fair value of embedded derivatives included in hybrid financial instruments. The determination of the effective interest used for the host contracts of hybrid financial instruments and the liability
components of compound financial instruments is dependent on the outcome of such estimations. Evaluating the reasonableness of these estimations and the assumptions and inputs used in the valuation methods requires a significant amount of judgement and is therefore subject to an inherent risk of error.
5. Cash and Cash Equivalents
At September 30, 2021, the Company’s cash and cash equivalents were €
6. Property, plant and equipment
At September 30, 2021 and December 31, 2020, property plant and equipment consisted of buildings and leasehold improvements, laboratory equipment and other assets. Buildings and leasehold improvements include a right-of-use asset relating to the lease of our Leiden office and laboratory space, with a carrying amount of €
7. Current liabilities
At September 30, 2021 and December 31, 2020, the other current liabilities consisted principally of accruals for services provided by vendors not yet billed, payroll related accruals and other miscellaneous liabilities.
8. Borrowings
| September 30, | December 31, | ||
| 2021 | 2020 | ||
€ 1,000 | € 1,000 | |||
Innovation credit | ||||
Accrued interest on innovation credit | ||||
Convertible notes | ||||
Accrued interest on convertible notes | ||||
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Total borrowings | ||||
Current portion | ( | ( | ||
On December 10, 2018 ProQR was awarded an Innovation credit for the sepofarsen program for LCA 10. Amounts will be drawn under this facility from 2018 through 2022. The total credit of €
Convertible loans
On July 14, 2020, the Company entered into a convertible debt financing agreement with Pontifax Medison Debt Financing. Under the agreement, up to $
A second close of the convertible debt financing agreement was completed on August 6, 2020 with Kreos Capital. Under the second agreement, up to €
Pontifax and/or Kreos may elect to convert the outstanding loans into ProQR ordinary shares at any time prior to repayment at a fixed conversion price. ProQR also has the ability to convert the loans into its ordinary shares, at the same conversion price, if the Company’s stock price reaches a pre-determined threshold. In connection with the loan agreement, the Company issued to Pontifax and Kreos warrants to purchase up to an aggregate of
Pontifax’ conversion option and warrants are accounted for as embedded derivatives and are recognized separately from the host contract as financial liabilities at fair value through profit or loss. The host contract is recognized at amortized cost.
The Kreos loan is accounted for as a compound financial instrument. The liability component is recognized at amortized cost. The equity component is initially recognized at fair value as option premium on convertible loan and will not be subsequently remeasured. Kreos’ warrants are accounted for as embedded derivatives and are recognized as financial liabilities at fair value through profit or loss.
Convertible loans were issued to Amylon Therapeutics B.V. and are interest-bearing at an average rate of
9. Lease liabilities
At September 30, 2021 and December 31, 2020, lease liabilities primarily consisted of the Company’s lease of office and laboratory facilities at Zernikedreef in Leiden, the Netherlands.
The lease agreement for our Leiden headquarters, where our main offices and laboratories are located, was put in place on July 1, 2020 and the current lease term is
10. Shareholders’ equity
The authorized share capital of the Company amounting to €
On November 7, 2018, the Company filed a shelf registration statement, which permitted the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $
On March 31, 2020, the Company entered into a sales agreement, which permitted the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $
in one or more at-the-market offerings with Citigroup Global Markets, Inc. and Cantor Fitzgerald & Co. In 2020,
In January 2021, the Company issued
In April 2021, the Company consummated an underwritten public offering of
In September 2021, the Company issued
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.
Share options
The Company operates an equity-settled share-based compensation plan, which was introduced in 2013. Options may be granted to employees, members of the Supervisory Board, members of the Management Board and consultants. The compensation expenses included in operating costs for this plan in the nine month period ended September 30, 2021 were €
11. Revenue
In September 2021, the Company entered into a global licensing and research collaboration with Eli Lilly and Company (‘Lilly’) focused on the discovery, development, and commercialization of potential new medicines for genetic disorders in the liver and nervous system. ProQR and Lilly will use ProQR’s proprietary Axiomer® RNA editing platform to progress new drug targets toward clinical development and commercialization.
Under the terms of the agreement, ProQR is eligible to receive upfront and milestone payments, and royalties on the net sales of any resulting products. Deferred revenue resulting from this transaction amounts to €
In May 2021, the Company entered into an exclusive worldwide license and discovery collaboration for an undisclosed target with Yarrow Biotechnology, Inc. (“Yarrow”). Under the terms of the agreement, ProQR is eligible to receive upfront and milestone payments, and royalties on the net sales of any resulting products. ProQR also received
Nine month period | ||||
ended September 30, | ||||
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| 2021 | 2020 | |
€ 1,000 | € 1,000 | |||
Eli Lilly collaboration revenue | — | |||
Yarrow collaboration revenue | — | |||
— | ||||
12. Other income
Nine month period | ||||
ended September 30, | ||||
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| 2021 | 2020 | |
€ 1,000 | € 1,000 | |||
Grant income | ||||
Other income | ||||
On February 9, 2018, the Company entered into a partnership agreement with Foundation Fighting Blindness (FFB), under which FFB has agreed to provide funding of $
In June 2020 ProQR received a final waiver of the full amount of the Innovation credit for the Company’s cystic fibrosis
program. Consequently, the carrying amount of €
Income in June 2020.
Grants are recognized in other income in the same period in which the related R&D costs are recognized.
13. Research and development costs
Research and development costs amount to €
14. General and administrative costs
General and administrative costs amount to €
15. Results related to associates
In January 2021, ProQR’s associate company Wings Therapeutics Inc. merged into Phoenicis Therapeutics Inc. Consequently, Wings Therapeutics Inc. ceased to exist and the related investment was derecognized. ProQR does not
have significant influence in Phoenicis Therapeutics Inc. Our interest in Phoenicis is recognized as a financial asset, as disclosed in note 16.
As disclosed in note 11, in May 2021, the Company obtained an
The results related to associates for the nine month period ended September 30, 2021 amounting to €
16. Gain on recognition of financial asset
In January 2021, Wings Therapeutics Inc. merged into Phoenicis Therapeutics Inc. by means of a non-cash transaction. ProQR holds a
The gain on recognition of financial asset for the nine month period ended September 30, 2021 of €
17. Income taxes
The current income tax liability amounts to €
On October 5, 2020, the Dutch State Secretary for Finance submitted an amendment to the Tax Plan 2021 to the House of Representatives, which provides for changes in the loss offset rules. On May 28, 2021, the amendment was substantively enacted. Effective from January 1, 2022, losses may be carried forward indefinitely. However, the offset of losses will be limited in a given year against the first € 1 million of taxable profit. For taxable profit in excess of this amount, losses may only be offset up to 50% of this excess.
18. Events after balance sheet date
No significant events occurred after the balance sheet date.