obsv-ex991

(in USD ’000)	Notes	September 30, 2018			December 31, 2017
		unaudited			audited
ASSETS
Current assets
Cash and cash equivalents	4		156,439			110,841
Other receivables			695			783
Prepaid expenses			1,670			1,490
Total current assets			158,804			113,114
Non-current assets
Furniture, fixtures and equipment			292			323
Intangible assets	5		21,608			21,608
Other long-term assets			273			190
Total non-current assets			22,173			22,121
Total assets			180,977			135,235
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current tax liability			17			51
Other payables and current liabilities			1,474			2,865
Accrued expenses			11,600			6,514
Total current liabilities			13,091			9,430
Non-current liabilities
Post-employment obligations			3,004			3,099
Other long-term liabilities			49			55
Total non-current liabilities			3,053			3,154
Shareholders’ equity
Share capital			3,413			2,864
Share premium			313,628			219,335
Reserves			11,041			7,119
Accumulated losses			(163,249	)		(106,667	)
Total shareholders’ equity	6		164,833			122,651
Total liabilities and shareholders’ equity			180,977			135,235

The accompanying notes form an integral part of these condensed consolidated financial statements.

(in USD ’000, except per share data)		Three-month period ended September 30,						Nine-month period ended September 30,
	Notes	2018			2017			2018			2017
		unaudited						unaudited
Operating income other than revenue			2			3			10			11
OPERATING EXPENSES
Research and development expenses	7		(15,909	)		(13,910	)		(46,945	)		(40,983	)
General and administrative expenses			(3,137	)		(3,001	)		(10,287	)		(9,601	)
Total operating expenses			(19,046	)		(16,911	)		(57,231	)		(50,584	)
OPERATING LOSS			(19,043	)		(16,908	)		(57,221	)		(50,573	)
Finance income			430			(106	)		616			754
Finance expense			—			(1	)		—			(1	)
NET LOSS BEFORE TAX			(18,613	)		(17,015	)		(56,605	)		(49,820	)
Income tax benefit / (expense)	8		23			21			23			(36	)
NET LOSS FOR THE PERIOD			(18,590	)		(16,994	)		(56,582	)		(49,856	)
Net loss per share
Basic	9		(0.42	)		(0.59	)		(1.45	)		(1.78	)
Diluted	9		(0.42	)		(0.59	)		(1.45	)		(1.78	)
OTHER COMPREHENSIVE LOSS
Items that will not be reclassified to profit and loss
Remeasurements on post-employment benefit plans			—			—			—			—
Items that may be reclassified to profit or loss
Currency translation differences			—			—			—			—
TOTAL OTHER COMPREHENSIVE LOSS			—			—			—			—
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD			(18,590	)		(16,994	)		(56,582	)		(49,856	)

The accompanying notes form an integral part of these condensed consolidated financial statements.

		Nine-month period ended September 30,
(in USD ’000)	Notes	2018			2017
		unaudited
NET LOSS BEFORE TAX FOR THE PERIOD			(56,605	)		(49,820	)
Adjustments for:
Depreciation expense			80			45
Post-employment (benefit) / cost			(95	)		8
Share-based compensation expense			6,561			6,825
Income tax paid			(12	)		—
Finance result			(616	)		(753	)
Decrease in other receivables			88			100
(Increase) / decrease in prepaid expenses and other long term-assets			(179	)		532
(Decrease) / increase in other payables and current liabilities			(1,308	)		258
Increase in accrued expenses and other long-term liabilities			5,798			1,266
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(46,288	)		(41,539	)
Cash used for rental deposits			(83	)		(96	)
Payments for plant and equipment			(129	)		(148	)
Payments for intangible assets			—			(5,000	)
NET CASH FLOWS USED IN INVESTING ACTIVITIES			(212	)		(5,244	)
Proceeds from issue of shares			97,855			96,779
Payment of share issuance costs			(6,877	)		(7,899	)
Proceeds from exercise of stock-options			504			—
Interest received			—			(1	)
NET CASH FLOWS FROM FINANCING ACTIVITIES			91,482			88,879
Net increase in cash and cash equivalents			44,982			42,096
Cash and cash equivalents as at January 1,			110,841			25,508
Effects of exchange rate changes on cash and cash equivalents			616			754
Cash and cash equivalents as at September 30,			156,439			68,358

The accompanying notes form an integral part of these condensed consolidated financial statements.

(in USD ’000) unaudited	Share capital		Share premium			Share-based payments reserve			Foreign currency translation reserve			Total reserves			Accumulated losses			Total
January 1, 2017		1,740		71,966			2,423			(489	)		1,934			(39,599	)		36,041
Loss for the period		—		—			—			—			—			(49,856	)		(49,856	)
Other comprehensive loss		—		—			—			—			—			—			—
Total comprehensive loss		—		—			—			—			—			(49,856	)		(49,856	)
Issuance of shares - IPO		496		96,254			—			—			—			—			96,750
Issuance of shares - Incentive Plan		29		2,984			(2,984	)		—			(2,984	)		—			29
Share issuance costs		—		(8,222	)		—			—			—			—			(8,222	)
Share-based remuneration		—		—			6,825			—			6,825			—			6,825
September 30, 2017		2,265		162,982			6,264			(489	)		5,775			(89,455	)		81,567

January 1, 2018		2,864		219,335			7,608			(489	)		7,119			(106,667	)		122,651
Loss for the period		—		—			—			—			—			(56,582	)		(56,582	)
Other comprehensive loss		—		—			—			—			—			—			—
Total comprehensive loss		—		—			—			—			—			(56,582	)		(56,582	)
Issuance of shares - Incentive Plan		21		2,291			(2,291	)		—			(2,291	)		—			21
Issuance of shares - Follow-on Offering		392		77,431			—			—			—			—			77,823
Issuance of shares - ATM program		130		19,881			—			—			—			—			20,011
Share issuance costs		—		(6,156	)		—			—			—			—			(6,156	)
Exercise of stock-options		6		846			(348	)		—			(348	)		—			504
Share-based remuneration		—		—			6,561			—			6,561			—			6,561
September 30, 2018		3,413		313,628			11,530			(489	)		11,041			(163,249	)		164,833

The accompanying notes form an integral part of these condensed consolidated financial statements.

Notes to the Condensed Consolidated Financial Statements for the three-month and nine-month periods ended September 30, 2018

ObsEva SA (the “Company”) was founded on November 14, 2012, and its address is 12 Chemin des Aulx, 1228 Plan-les-Ouates, Geneva, Switzerland. The terms “ObsEva” or “the Group” refer to ObsEva SA together with its subsidiaries included in the scope of consolidation (note 2.3).

The Group is focused on the development and commercialization of novel therapeutics for serious conditions that compromise women’s reproductive health and pregnancy. The Group has a portfolio of three mid- to late-stage development in-licensed compounds (linzagolix (OBE2109), nolasiban (OBE001) and OBE022) being developed in four indications. The Group has no currently marketed products.

These condensed consolidated financial statements are presented in dollars of the United States (USD), rounded to the nearest thousand except share and per share data, and have been prepared on the basis of the accounting principles described in note 2.

These condensed consolidated financial statements were authorized for issue by the Audit Committee of the Company’s Board of Directors (the “Board of Directors”) on November 5, 2018.

These unaudited three-month and nine-month condensed interim consolidated financial statements (the “condensed consolidated financial statements”) are prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting as issued by the International Accounting Standards Board (the “IASB”).

On January 1, 2018, the Group adopted IFRS 9 Financial Instruments, which replaced IAS 39 Financial Instruments: Recognition and Measurement. The adoption of the standard had no impact on the Group’s condensed consolidated financial statements.

In January 2016, the IASB issued IFRS 16 Leases, which replaced IAS 17 Leases and Related Interpretations. The new standard, which will be effective on January 1, 2019 requires lessees to recognize a lease liability reflecting future lease payments and a right-of-use asset for virtually all lease contracts, removing the distinction between operating and finance leases. As at September 30, 2018, the Group has non-cancellable operating lease commitments of USD 3 million (excluding short-term and low-value leases) and expects to recognise right-of-use assets and lease liabilities of approximately USD 2.7 million on January 1, 2019. The Group does not expect a significant impact on the net profit after tax resulting from the adoption of IFRS 16.

Other accounting policies used in the preparation and presentation of these condensed consolidated financial statements are consistent with those used in the consolidated financial statements for the year ended December 31, 2017 (the “annual financial statements”), which should be read in conjunction with these condensed consolidated financial statements as they provide an update of previously reported information.

The Group believes it will be able to meet all of its obligations as they fall due for at least 12 months from September 30, 2018, hence, the unaudited condensed consolidated financial statements have been prepared on a going concern basis.

The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent liabilities at the date of the interim financial statements. If in the future such estimates and assumptions, which are based on management’s best judgment at the date of the condensed consolidated financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate during the period in which the circumstances change.

There was no change to the scope of consolidation during the reporting period and the Company consolidates the financial operations of its two fully-owned subsidiaries, ObsEva Ireland Ltd, which is registered in Cork, Ireland and organized under the laws of Ireland,

and ObsEva USA Inc., which is registered and organized under the laws of Delaware, USA. ObsEva Ireland Ltd had no operations and no results of operations to report as of September 30, 2018 and 2017.

The carrying value less impairment provision of receivables and payables approximate their fair values due to their short-term nature.

All financial assets and liabilities, respectively, are held at their amortized cost.

The Group’s financial assets and liabilities consist of cash and cash equivalents, other receivables, other payables and accruals which are classified as loans and receivables at amortized cost according to IFRS 9.

As at September 30, 2018 and December 31, 2017, the Group holds a number of licenses to develop and commercialize several biopharmaceutical product candidates, the value of which is recorded at USD 21.6 million.

On January 30, 2017, the Company completed an IPO and issued 6,450,000 common shares at a subscription price of USD 15.00 per share and a par value of 1/13 of a Swiss franc per share. The gross proceeds of USD 96.8 million have been recorded in equity net of directly related share issuance costs of USD 8.2 million.

On October 13, 2017, the Company completed a private placement with institutional investors and issued 7,500,000 common shares at a subscription price of USD 8.00 per share and a par value of 1/13 of a Swiss franc per share. The gross proceeds of USD 60.0 million have been recorded in equity net of directly related share issuance costs of USD 3.7 million.

On March 16, 2018, the Company issued 3,499,990 common shares at par value of 1/13 of a Swiss franc per share. The shares were subscribed by the Company and are held as treasury shares, hence the operation did not impact the share capital. Share issuance costs of USD 11 thousand related to the operation were recorded as a deduction in equity.

On May 17 and 25, 2018, the Company sold 1,000,851 and 600,000 treasury shares, respectively, at a price of USD 12.50 per share, from its “at the market” (ATM) program, generating gross proceeds of USD 20.0 million. Directly related share issuance costs of USD 0.6 million were recorded as a deduction in equity.

On June 22, 2018, the Company completed an underwritten public offering of 4,750,000 common shares at a price of USD 15.39 per share, with an option to issue to an additional 712,500 common shares (the “follow-on offering”). The gross proceeds of USD 73.1 million resulting from this transaction have been recorded in equity net of directly related share issuance costs of USD 5.1 million. Subsequent to the initial closing of the follow-on offering, on July 19, 2018, the Company sold an additional 306,721 common shares for total gross proceeds of USD 4.7 million (USD 15.39 per share). These shares were sold pursuant to the 30-day option granted in connection with the follow-on offering to purchase up to an additional 712,500 common shares (“green-shoe”). Directly related share issuance costs amounted to USD 0.3 million.

As at September 30, 2018, the total outstanding share capital of USD 3.4 million, fully paid, consists of 43,342,232 common shares, excluding 508,502 non-vested shares and 1,602,601 treasury shares. As at December 31, 2017, the total outstanding share capital of USD 2.9 million, fully paid, consists of 36,342,945 common shares, excluding 778,134 non-vested shares and 10,183 treasury shares. All shares have a nominal value of 1/13 of a Swiss franc, translated into USD using historical rates at the issuance date.

Due to the difficulty in assessing when research and development projects would generate revenue, the Group expenses all research and development costs to the profit and loss accounts.

The Group is subject to income taxes in Switzerland, Ireland and the United States.

The Company is subject in Switzerland to a municipal and cantonal income tax rate of 22.6% and to a federal tax rate of 8.5% on its profits after tax. It is entitled to carry forward any loss incurred for a period of seven years and can offset such losses carried forward against future taxes. In 2015, the Company was granted by the State Council of the Canton of Geneva an exemption of income and capital tax at municipal and cantonal levels for the period from 2013 until 2022. Because of this exemption, and the fact that the Company has incurred net losses since its inception, no income tax expense at the municipal, cantonal or federal levels was recorded in the Company for the three-month and nine-month periods ended September 30, 2018 and 2017. Additionally, due to the uncertainty as to whether it will be able to use its net loss carryforwards for tax purposes in the future, no deferred taxes have been recognized on the balance sheet of the Company as of September 30, 2018 and December 31, 2017.

The Company’s Irish subsidiary has no activity, and, therefore, no income tax expense was recorded in that entity for the three-month and nine-month periods ended September 30, 2018 and 2017.

The Company’s U.S. subsidiary is a service organization for the Group and is therefore subject to taxes on the revenues generated from its services to the Group that are charged based upon the U.S. subsidiary’s cost plus arrangement with the Group. The profits of the U.S. subsidiary during the three-month and nine-month periods ended September 30, 2018 and 2017 were subject to a total U.S. income tax rate of 27.3% and 39.3%, respectively, based on both the U.S. federal and Massachusetts state tax rates.

As of September 30, 2018 and 2017, the Company has one category of shares, which are common shares. The basic loss per share is calculated by dividing the loss of the period attributable to the common shares by the weighted average number of common shares outstanding during the period as follows:

For the three-month and nine-month periods ended September 30, 2018, 508,502 non-vested shares, 1,602,601 treasury shares and 1,802,157 shares issuable upon the exercise of stock-options, which would have an anti-dilutive impact on the calculation of the diluted earnings per share, were excluded from the calculation. For the three-month and nine-month periods ended September 30, 2017, 862,980 non-vested shares, 10,183 treasury shares and 693,450 shares issuable upon the exercise of stock-options, which would have an anti-dilutive impact on the calculation of the diluted earnings per share, are excluded from the calculation.

The Group operates in one segment, which is the research and development of innovative women’s reproductive, health and pregnancy therapeutics. The marketing and commercialization of such therapeutics depend, in large part, on the success of the

development phase. The Chief Executive Officer of the Company reviews the consolidated statement of operations of the Group on an aggregated basis and manages the operations of the Group as a single operating segment. The Group currently generates no revenue from the sales of therapeutics products, and the Group’s activities are not affected by any significant seasonal effect.

Condensed Consolidated Balance Sheets as at September 30, 2018 (unaudited) and December 31, 2017		2
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three-month and nine-month periods ended September 30, 2018		3
Unaudited Condensed Consolidated Statement of Cash Flows for the nine-month period ended September 30, 2018		4
Unaudited Condensed Consolidated Statement of Changes in Equity for the nine-month period ended September 30, 2018		5
Unaudited Notes to the Condensed Consolidated Financial Statements		6

(in USD ‘000)	September 30, 2018		December 31, 2017
	unaudited		audited
Bank deposits		156,439		110,841
Interest bearing deposits		—		—
Total cash and cash equivalents		156,439		110,841

unaudited (in USD ’000)	Three-month period ended September 30,				Nine-month period ended September 30,
	2018		2017		2018		2017
Switzerland		18,070		15,849		54,209		48,179
USA		975		1,062		3,022		2,405
Total operating expenses		19,046		16,911		57,231		50,584