obsv-ex991

(in USD ’000)	Notes	March 31, 2019			December 31, 2018
		unaudited			audited
ASSETS
Current assets
Cash and cash equivalents	4		117,321			138,640
Other receivables			993			885
Prepaid expenses			5,538			5,715
Total current assets			123,852			145,240
Non-current assets
Right-of-use assets	2.1		2,505			—
Furniture, fixtures and equipment			297			319
Intangible assets	5		21,608			21,608
Other long-term assets			273			273
Total non-current assets			24,683			22,200
Total assets			148,535			167,440
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current tax liability			1			—
Other payables and current liabilities			3,630			2,766
Accrued expenses			14,182			14,163
Current lease liabilities	2.1		580			—
Total current liabilities			18,393			16,929
Non-current liabilities
Non-current lease liabilities	2.1		1,967			—
Post-employment obligations			3,514			3,547
Other long-term liabilities			—			48
Total non-current liabilities			5,481			3,595
Shareholders’ equity
Share capital			3,427			3,420
Share premium			315,456			314,565
Reserves			15,384			12,858
Accumulated losses			(209,606	)		(183,927	)
Total shareholders’ equity	6		124,661			146,916
Total liabilities and shareholders’ equity			148,535			167,440

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

(in USD ’000, except per share data)		Three-month period ended March 31,
	Notes	2019			2018
		unaudited
Operating income other than revenue			5			5
OPERATING EXPENSES
Research and development expenses	7		(20,140	)		(16,342	)
General and administrative expenses			(5,255	)		(3,649	)
Total operating expenses			(25,395	)		(19,991	)
OPERATING LOSS			(25,390	)		(19,986	)
Finance income			262			155
Finance expense			(544	)	—
NET LOSS BEFORE TAX			(25,672	)		(19,831	)
Income tax (expense) / benefit	8		(7	)		25
NET LOSS FOR THE PERIOD			(25,679	)		(19,806	)
Net loss per share
Basic	9		(0.59	)		(0.54	)
Diluted	9		(0.59	)		(0.54	)
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			(25,679	)		(19,806	)

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

		Three-month period ended March 31,
(in USD ’000)	Notes	2019			2018
		unaudited
NET LOSS BEFORE TAX FOR THE PERIOD			(25,672	)		(19,831	)
Adjustments for:
Depreciation expense			183			26
Post-employment cost / (benefit)			5			(36	)
Share-based compensation expense			3,317			2,421
Income tax paid			—			—
Finance result, net			282			(155	)
Increase in other receivables			(113	)		(8	)
Decrease / (increase) in prepaid expenses and other long term-assets			177			(298	)
Increase / (decrease) in other payables and current liabilities			869			(1,169	)
Increase in accrued expenses and other long-term liabilities			19			4,288
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(20,933	)		(14,762	)
Payments for plant and equipment			(9	)		(96	)
NET CASH FLOWS USED IN INVESTING ACTIVITIES			(9	)		(96	)
Proceeds from issue of shares			—			8
Payment of share issuance costs			—			(710	)
Proceeds from exercise of stock-options			101		—
Principal elements of lease payments			(140	)	—
Interest received		—			—
Interest paid			(32	)	—
NET CASH FLOWS USED IN FINANCING ACTIVITIES			(71	)		(702	)
Net decrease in cash and cash equivalents			(21,013	)		(15,560	)
Cash and cash equivalents as at January 1,			138,640			110,841
Effects of exchange rate changes on cash and cash equivalents			(306	)		154
Cash and cash equivalents as at March 31,			117,321			95,435

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, 2018		2,864		219,335			7,608			(489	)		7,119			(106,667	)		122,651
Loss for the period	—		—			—			—			—				(19,806	)		(19,806	)
Other comprehensive loss	—		—			—			—			—			—			—
Total comprehensive loss	—		—			—			—			—				(19,806	)		(19,806	)
Issuance of shares - EIP 2013		7		819			(819	)	—				(819	)	—				7
Share issuance costs	—			(13	)	—			—			—			—				(13	)
Share-based remuneration	—		—				2,421		—				2,421		—				2,421
March 31, 2018		2,871		220,141			9,210			(489	)		8,721			(126,473	)		105,260

January 1, 2019		3,420		314,565			13,347			(489	)		12,858			(183,927	)		146,916
Loss for the period		—		—			—			—			—			(25,679	)		(25,679	)
Other comprehensive loss		—		—			—			—			—			—			—
Total comprehensive loss		—		—			—			—			—			(25,679	)		(25,679	)
Issuance of shares - EIP 2013		6		720			(720	)		—			(720	)		—			6
Exercise of stock-options - EIP 2017		1		171			(71	)		—			(71	)		—			101
Share-based remuneration		—		—			3,317			—			3,317			—			3,317
March 31, 2019		3,427		315,456			15,873			(489	)		15,384			(209,606	)		124,661

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

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, nolasiban 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 May 6, 2019.

These unaudited three-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, 2019, the Group adopted IFRS 16 Leases, which replaced IAS 17 Leases and Related Interpretations. The Group has adopted IFRS 16 retrospectively from January 1, 2019, but has not restated comparatives for the year ended December 31, 2018, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognized in the opening balance sheet on January 1, 2019. The new standard requires lessees to recognize a lease liability measured at the present value of the remaining lease payments and a right-of-use asset for virtually all lease contracts, removing the distinction between operating and finance leases.

The following table presents the reconciliation between the non-cancellable operating lease commitments reported as of December 31, 2018 and the lease liabilities recognized on January 1, 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on January 1, 2019 was 4.9%.

Right-of use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at December 31, 2018. Right-of-use assets mainly relate to office buildings.

The adoption of IFRS 16 Leases did not have a material impact on the Group’s net loss after tax or on the Group’s loss per share.

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, 2018 (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 the date these financial statements are issued, 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 March 31, 2019 and 2018.

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 March 31, 2019 and December 31, 2018, 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 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 5.3 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 March 31, 2019, the total outstanding share capital of USD 3.4 million, fully paid, consists of 43,534,994 common shares, excluding 354,021 non-vested shares and 1,602,601 treasury shares. As at December 31, 2018, the total outstanding share capital of USD 3.4 million, fully paid, consists of 43,443,911 common shares, excluding 430,625 non-vested shares and 1,602,601 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 periods ended March 31, 2019 and 2018. 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 March 31, 2019 and December 31, 2018.

The Company’s Irish subsidiary has no activity, and, therefore, no income tax expense was recorded in that entity for the three-month periods ended March 31, 2019 and 2018.

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 periods ended March 31, 2019 and 2018 were each subject to a total U.S. income tax rate of 27.3% based on both the U.S. federal and Massachusetts state tax rates.

As of March 31, 2019 and 2018, 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 period ended March 31, 2019, 354,021 non-vested shares and 3,067,750 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 period ended March 31, 2018, 684,868 non-vested shares and 1,881,740 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 statements 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 March 31, 2019 (unaudited) and December 31, 2018		2
Unaudited Condensed Consolidated Statement of Comprehensive Loss for the three-month period ended March 31, 2019		3
Unaudited Condensed Consolidated Statement of Cash Flows for the three-month period ended March 31, 2019		4
Unaudited Condensed Consolidated Statement of Changes in Equity for the three-month period ended March 31, 2019		5
Unaudited Notes to the Condensed Consolidated Financial Statements		6

(in USD ’000)	Total
	unaudited
Operating lease commitments disclosed as at December 31, 2018		3,074
Discounted using the Group’s incremental borrowing rate at the date of initial application		2,772
(Less): short-term and low-value leases recognized on a straight-line basis as expense		(37	)
(Less): adjustments relating to changes in the index or rate affecting variable payments		(28	)
Lease liability recognized as at January 1, 2019		2,707
Of which are:
Current lease liabilities		577
Non-current lease liabilities		2,130

(in USD ‘000)	March 31, 2019		December 31, 2018
	unaudited		audited
Bank deposits		117,321		138,640
Interest bearing deposits		—		—
Total cash and cash equivalents		117,321		138,640

unaudited (in USD ’000)	Three-month period ended March 31,
	2019		2018
Switzerland		24,253		19,018
USA		1,142		973
Total operating expenses		25,395		19,991