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, | |||
2024 | 2023 | |||
€1,000 | €1,000 | |||
Assets |
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Property, plant and equipment | 8 | |||
Investments in financial assets | 18 | — | — | |
Non-current assets | ||||
Other taxes | ||||
Prepayments and other receivables | 7 | |||
Cash and cash equivalents | 5 | |||
Financial asset - current | 6 | — | — | |
Current assets | ||||
Total assets | ||||
Equity and liabilities |
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Equity |
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Equity attributable to owners of the Company | ||||
Total equity | 13 | |||
Liabilities |
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Borrowings | 10 | — | ||
Lease liabilities | 11 | |||
Deferred income | 12 | |||
Non-current liabilities | ||||
Borrowings | 10 | — | ||
Lease liabilities | 11 | |||
Derivative financial instruments | 10 | |||
Trade payables | ||||
Social securities and other taxes | ||||
Deferred income | 12 | |||
Other current liabilities | 9 | |||
Current liabilities | ||||
Total liabilities | ||||
Total equity and liabilities |
The accompanying notes are an integral part of these unaudited interim 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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| 2024 | 2023 |
| 2024 | 2023 | ||
€1,000 | €1,000 | €1,000 | €1,000 | |||||
Revenue | 14 | |||||||
Other income | 15 | — | ||||||
Research and development costs | 16 | ( | ( | ( | ( | |||
General and administrative costs | 17 | ( | ( | ( | ( | |||
Total operating costs | ( | ( | ( | ( | ||||
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Operating result | ( | ( | ( | ( | ||||
Finance income and expense | ||||||||
Results related to associates and financial assets | 18 | — | — | — | — | |||
Result on derecognition of subsidiary | — | — | ||||||
Results related to financial liabilities measured at fair value through profit or loss | 10 | |||||||
Results on derecognition of financial liabilities | 19 | — | — | |||||
Result before corporate income taxes | ( | ( | ( | ( | ||||
Corporate income taxes | 20 | — | ||||||
Result for the period | ( | ( | ( | ( | ||||
Other comprehensive income | ||||||||
Items that will not be reclassified subsequently to profit or loss | ||||||||
Fair value loss on investment in financial asset designated as at FVTOCI | — | ( | — | ( | ||||
Items that may be reclassified subsequently to profit or loss | ||||||||
Foreign exchange differences on translation of foreign operations | ( | ( | ||||||
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Total comprehensive loss | ( | ( | ( | ( | ||||
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 accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
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PROQR THERAPEUTICS N.V.
Unaudited Condensed Consolidated Statement of Changes in Equity
Attributable to owners of the Company | ||||||||||||||||||
| Number |
| Share |
| Share |
| Equity settled |
| 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 | |||||||||
Balance at January 1, 2023 |
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Result for the period |
| — | — | — | — | — | ( | ( | ( | |||||||||
Other comprehensive income |
| — | — | — | — | ( | ( | — | ( | |||||||||
Recognition of share-based payments |
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Treasury shares transferred | ( | — | — | — | — | — | — | — | — | |||||||||
Share options lapsed | — | — | — | ( | — | — | — | — | ||||||||||
Share options exercised | — | ( | — | — | ||||||||||||||
Balance at September 30, 2023 |
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Balance at January 1, 2024 |
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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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Treasury shares transferred | ( | — | — | — | — | — | — | — | — | |||||||||
Share options lapsed | — | — | — | ( | — | — | — | — | ||||||||||
Share options exercised / RSUs vested | — | ( | — | — | ||||||||||||||
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Balance at September 30, 2024 |
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The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
PROQR THERAPEUTICS N.V.
Unaudited Condensed Consolidated Statement of Cash Flows
Three month period | Nine month period | |||||||
ended September 30, |
| ended September 30, | ||||||
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| 2024 | 2023 | 2024 | 2023 | |||
€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 | 13 | |||||||
— Financial income and expenses | ( | ( | ( | ( | ||||
— Results on derecognition of subsidiary | — | ( | — | ( | ||||
— Results on derecognition of financial liabilities | 19 | — | ( | — | ( | |||
— Results related to financial liabilities measured at fair value through profit or loss | 10 | ( | ( | ( | ( | |||
— Income tax expenses | 20 | — | ( | ( | ( | |||
Changes in working capital | ( | ( | ||||||
Cash (used in) / generated by operations | ( | ( | ( | |||||
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Corporate income tax received | ||||||||
Interest received | ||||||||
Interest paid | ( | — | ( | — | ||||
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Net cash (used in) / generated by operating activities | ( | ( | ( | |||||
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Cash flow from investing activities | ||||||||
Increase in financial asset - current | 6 | — | — | ( | — | |||
Decrease in financial asset - current | 6 | — | — | |||||
Purchases of property, plant and equipment | ( | ( | ( | ( | ||||
Proceeds from sale of property, plant and equipment | — | — | — | |||||
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Net cash generated by / (used in) investing activities | ( | ( | ( | |||||
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Cash flow from financing activities |
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Proceeds from exercise of share options | 13 | |||||||
Repayment of lease liability | 11 | ( | ( |
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Net cash used in 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 accompanying notes are an integral part of these unaudited interim 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 biotechnology company domiciled in the Netherlands that primarily focuses on the discovery and development of novel therapeutic medicines.
Since September 18, 2014, the Company’s ordinary shares have been listed on Nasdaq. They are currently trading at Nasdaq Capital Market under ticker symbol PRQR.
The Company was incorporated in the Netherlands, on February 21, 2012 (Chamber of Commerce no. 54600790) 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. ( |
ProQR Therapeutics N.V. is also statutory director of Stichting Bewaarneming Aandelen ProQR (“ESOP Foundation”) and has full control over this entity.
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 interim condensed consolidated financial statements for the three and nine month periods ended September 30, 2024 have been prepared in accordance with IAS 34 Interim Financial Statements. They should be read in conjunction with the Company’s annual financial statements for the year ended December 31, 2023. These interim condensed consolidated financial statements do not include all information required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Company’s financial position and performance since the last annual financial statements. 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 interim condensed consolidated financial statements. The accounting policies adopted in the preparation of the interim 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, 2023.
During the nine month period ended September 30, 2024, the Company invested in financial assets in the form of deposits with an original maturity of longer than three months but shorter than twelve months as described in Note 6. Financial assets are measured at amortized cost as they give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
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 management of ProQR has, upon preparing and finalizing these interim condensed consolidated financial statements, assessed the Company’s ability to fund its operations for a period of at least one year after the date of signing these interim condensed consolidated financial statements. Management expects the Company to continue as a going concern based on its existing funding, taking into account the Company’s current cash position and the projected cash flows based on the activities under execution on the basis of ProQR’s business plan and budget. Thus, we continue to adopt the going concern basis of accounting in preparing the interim condensed consolidated financial statements.
The carrying amount of all financial assets and financial liabilities is a reasonable approximation of the fair value and therefore, information about the fair values of each class has not been disclosed.
The Company operates in
3. Adoption of New and Revised International Financial Reporting Standards
New Standards and Interpretations, which became effective as of January 1, 2024, 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.
The significant judgements made by management in applying the Company’s accounting policies, except for the significant judgements related to revenue recognition from milestone payments as further described below and in Note 14, and the key sources of estimation uncertainty were the same as those described in the Company’s annual financial statements for the year ended December 31, 2023.
Revenue recognition for the Eli Lilly collaboration and license agreement
a. Identification of the performance obligation
Note 14 describes the Company’s original research and collaboration agreement with Eli Lilly and Company, and the amended and restated research and collaboration agreement (collectively, the “Collaboration agreement”). Under the Collaboration agreement, ProQR provides Eli Lilly with a license (with a right to sub-license) to exploit compounds resulting from the collaboration. A significant amount of judgement is required to determine whether the license is distinct from the other promises in the contract. The license was concluded not to be distinct from the other promises in the contract based on the following considerations:
| ● | the license has no stand-alone value to Eli Lilly without the Company being involved in the research and development collaboration, and; |
| ● | there are significant interdependencies between the license and the research and development services to be provided by the Company. |
ProQR’s services are evaluated as predominant at inception of the contract and contractually only ProQR can perform these services as they are specific to the skills of the Company. The resulting compounds from the collaboration do not represent a series of distinct promises because they were not predetermined at the inception of the contract and can be terminated or replaced at the discretion of Lilly subject to the terms and conditions of the Collaboration agreement.
b. Determining the timing of satisfaction of performance obligations
Under the Collaboration agreement, the Company recognizes revenue over time, using an input method that estimates the satisfaction of the performance obligation as the percentage of labor hours incurred compared to the total estimated labor hours required to complete the promised services. As our estimate of the total labor hours required is dependent on the evolution of the research and development activities, it may be subject to change. If the progression and/or outcome of certain research and development activities would be different from the assumptions that were made during the preparation of these financial statements, this could lead to material adjustments to the total estimated labor hours, which might result in a reallocation of revenue between current and future periods. Our total deferred revenue balance amounts to €
c. Determining the transaction price
The Company applied judgement to determine whether the equity investments made by Eli Lilly in ProQR are part of the transaction price for the Collaboration agreement. The Company concluded that the differences between the prices that Eli Lilly paid for the shares and the ProQR stock closing prices on the days of entering into the equity investment agreements arose because of the Company’s existing obligations to deliver research and development services to Eli Lilly under the terms of the Collaboration agreement. Therefore, the above differences between the closing share prices on the agreement effective dates and the equity investment prices paid by Eli Lilly are considered to be part of the transaction price of the contract and are initially allocated to deferred revenue.
The contract also includes variable consideration, but no variable consideration was included in the initial transaction price at the inception, as it is not highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company includes such variable consideration in the transaction price when the uncertainty associated with the variable consideration is resolved.
As further described in Note 14, during 2024, the Company reached milestones under the agreement, which were added to the transaction price and recognized partially as revenue during 2024 with the remainder recorded in future periods based on progress towards satisfaction of performance obligation.
The Collaboration agreement includes sales-based royalties, including commercial milestone payments based on the level of sales. Related revenue is recognized as the subsequent underlying sales occur at a point in time.
Research and development expenditures
Research expenditures are reflected in the income statement. Development expenses are currently also 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.
5. Cash and Cash Equivalents
At September 30, 2024, the Company’s cash and cash equivalents were €
6. Financial Asset – Current
During the nine month period ended September 30, 2024, the Company placed a term deposit with an initial maturity longer than 3 months but less than 12 months. This deposit did not qualify as a cash equivalent. The deposit was held at a bank with an investment grade credit rating. Short-term credit ratings must be rated A-1/P-1/F1 at a minimum by at least one of the NRSROs specifically Moody’s, Standard & Poor’s or Fitch. The deposit was repaid as of September 30, 2024.
7. Prepayments and Other Receivables
September 30, | December 31, | |||
2024 | 2023 | |||
€1.000 | €1.000 | |||
Prepayments | | |||
Other Receivables | ||||
At September 30, 2024 and December 31, 2023 prepayments consisted principally of payments made by the Company for services not yet provided by vendors. At September 30, 2024 and December 31, 2023 other receivables consisted principally of amounts receivable from research collaboration partners and deposits.
8. Property, Plant and Equipment
At September 30, 2024 and December 31, 2023, 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 €
9. Other Current Liabilities
At September 30, 2024, other current liabilities amount to €
10. Borrowings
| September 30, | December 31, | ||
| 2024 | 2023 | ||
€1.000 | €1.000 | |||
Innovation credit | ||||
Accrued interest on innovation credit | ||||
Total borrowings | ||||
Current portion | ( | — | ||
— |
On December 10, 2018 ProQR was awarded an Innovation credit for the sepofarsen program. Amounts were drawn under this facility from 2018 through 2022. The credit of €
In December 2023, ProQR received a conditional waiver of the balance of the Innovation credit including accrued interest. Consequently, the repayment of the total loan of €
In September 2022, ProQR extinguished its debt with Pontifax and Kreos by repaying all outstanding principal amounts. Pontifax’ and Kreos’ warrants remain in place until their
11. Lease Liabilities
At September 30, 2024 and December 31, 2023, lease liabilities primarily consisted of the Company’s lease of office and laboratory facilities at Zernikedreef in Leiden, the Netherlands.
The Company leases office and laboratory facilities of
The initial lease agreement for the Leiden office and laboratory facilities was accounted for as of commencement date July 1, 2020. This period was extended by
The carrying amount of the right-of-use asset is disclosed in Note 8.
12. Deferred Income
The following table summarizes details of deferred income at September 30, 2024 and December 31, 2023. The nature of the deferred income is described in Note 14 and 15.
September 30, | December 31, | |||
2024 | 2023 | |||
€1.000 | €1.000 | |||
Payments from Eli Lilly | ||||
Payments from Rett Syndrome Research Trust | — | |||
Current deferred income | ||||
Payments from Eli Lilly | ||||
Non-current deferred income | ||||
Total deferred income |
13. Shareholders’ Equity
The authorized share capital of the Company amounting to €
On September 30, 2024, the Company filed a shelf registration statement on Form F-3, which permitted the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $
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 and Restricted Stock Units (“RSUs”) 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, 2024 were €
14. Revenue
Eli Lilly
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 received an upfront payment and equity consideration, and is eligible to receive milestone payments and royalties on the net sales of any resulting products. In September 2021, the Company issued
With regard to its original collaboration with Lilly, the Company concluded as follows:
| ● | There is |
| ● | The transaction price of this agreement includes fixed components, consisting of an up-front fee and an equity component. The agreement also contains variable parts, which are included in the transaction price to the extent that it is highly probably that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Milestone payments will only be included to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the milestones is subsequently resolved. Sales-based milestones and sales-based royalties will be included as the underlying sales occur. |
| ● | The Company recognizes revenue over time, using an input method that estimates the satisfaction of the performance obligation as the percentage of labor hours incurred compared to the total estimated labor hours required to complete the promised services. |
In December 2022, the Company and Lilly amended their research and collaboration agreement described above, which expanded the collaboration. Under the amended and restated research and collaboration agreement, Lilly will gain access to additional targets in the central nervous system and peripheral nervous system with ProQR’s Axiomer platform.
Pursuant to the amended and restated agreement, the Company issued
With regard to the amended and restated research and collaboration agreement with Lilly, the Company concluded as follows:
| ● | There is |
| ● | The transaction price of this agreement includes fixed components, consisting of an up-front fee and an equity component (discount), and variable components. The variable components are not yet fully included in the transaction price. Milestone payments will only be included to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the milestones is subsequently resolved. As further described in the note, the |
| Company reached certain milestones. Sales-based milestones and sales-based royalties will be included as the underlying sales occur. |
| ● | The Company recognizes revenue over time, using an input method that estimates the satisfaction of the performance obligation as the percentage of labor hours incurred compared to the total estimated labor hours required to complete the promised services. |
During the nine month period ended September 30, 2024, the Company reached milestones amounting to $
15. Other Income
Nine month period | ||||
ended September 30, | ||||
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| 2024 | 2023 | |
€1.000 | €1.000 | |||
Grant income | ||||
Other income | — | |||
In January, 2024, the Company entered into an agreement with the Rett Syndrome Research Trust (“RSRT”) that focuses on the design and development of editing oligonucleotides (“EONs”) using the Company’s Axiomer technology platform targeting the transcription factor Methyl CpG binding protein 2 (“MECP2”) and correcting mutations of interest. Under the agreement, RSRT awarded the Company up to €
Grants are recognized in other income in the same period in which the related R&D costs are recognized.
16. Research and Development Costs
Research and development costs amount to €
17. General and Administrative Costs
General and administrative costs amount to €
18. Investments in Financial Assets
Investment in financial assets consist of the Company’s investment in Phoenicis Therapeutics Inc. (“Phoenicis”) and Yarrow Biotechnology Inc (“Yarrow”).
ProQR holds a
ProQR holds a
19. Results Related to Derecognition of Financial Liabilities
Nine month period | ||||
ended September 30, | ||||
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| 2024 | 2023 | |
€1.000 | €1.000 | |||
Gain on waiver of Amylon convertible loans | — | |||
— | ||||
Convertible loans
Convertible loans were issued to Amylon Therapeutics B.V. (“Amylon”), an
In 2023 and 2022, Amylon entered into waiver agreements with its lenders. Such lenders’ loan agreements with Amylon are severed and any claims to repayment of any outstanding debt and accumulated interest are renounced. The amount of convertible loans and accumulated interest that was waived under these agreements in the nine month period ended September 30, 2024 is €
In the third quarter of 2023, Amylon was legally dissolved.
20. Income Taxes
The current income tax liability amounts to €
Tax 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.
The income tax benefit for the nine month period ended September 30, 2024, amounts to €
21. Related-Party Transactions
The Company does not have any transactions with related parties other than compensation to its Board members.
22. Events After Balance Sheet Date
On October 22, 2024, the Company consummated an underwritten public offering of
Concurrently with the Offering, ProQR has entered into a share purchase agreement with Lilly pursuant to which ProQR agreed to offer and sell, and Lilly agreed to purchase,