obsv-ex991

(in USD ’000)	Notes	March 31, 2021			December 31, 2020
ASSETS
Current assets
Cash and cash equivalents	4		67,998			31,183
Other receivables			364			397
Prepaid expenses			4,607			5,388
Total current assets			72,969			36,968
Non-current assets
Right-of-use assets			1,271			1,425
Furniture, fixtures and equipment			133			151
Intangible assets	5		26,608			26,608
Other long-term assets			280			295
Total non-current assets			28,292			28,479
Total assets			101,261			65,447
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Other payables and current liabilities			5,708			10,760
Accrued expenses			10,622			10,248
Current lease liabilities			674			696
Total current liabilities			17,004			21,704
Non-current liabilities
Non-current lease liabilities			731			952
Non-current borrowings	6		25,411			25,300
Post-employment obligations			7,790			8,218
Other long-term liabilities			858			919
Total non-current liabilities			34,790			35,389
Shareholders’ equity
Share capital			6,948			4,878
Treasury shares			(938	)		(304	)
Share premium			414,483			356,822
Reserves			28,373			26,353
Accumulated losses			(399,399	)		(379,395	)
Total shareholders’ equity	7		49,467			8,354
Total liabilities and shareholders’ equity			101,261			65,447

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

(in USD ’000, except per share data)		Three-month period ended March 31,
	Notes	2021			2020
Operating income other than revenue			6			4
OPERATING EXPENSES
Research and development expenses	8		(15,516	)		(17,188	)
General and administrative expenses			(4,191	)		(3,709	)
Total operating expenses			(19,707	)		(20,897	)
OPERATING LOSS			(19,701	)		(20,893	)
Finance income			629			60
Finance expense			(911	)		(1,011	)
NET LOSS BEFORE TAX			(19,983	)		(21,844	)
Income tax expense	9		(21	)		(19	)
NET LOSS FOR THE PERIOD			(20,004	)		(21,863	)
Net loss per share
Basic	10		(0.29	)		(0.48	)
Diluted	10		(0.29	)		(0.48	)
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			(20,004	)		(21,863	)

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

		Three-month period ended March 31,
(in USD ’000)	Notes	2021			2020
NET LOSS BEFORE TAX FOR THE PERIOD			(19,982	)		(21,844	)
Adjustments for:
Depreciation expense			178			181
Post-employment cost / (benefit)			115			(10	)
Share-based compensation expense			2,019			2,746
Finance result, net			282			952
Decrease in other receivables			11			253
Decrease / (increase) in prepaid expenses and other long term-assets			782			(1,476	)
(Decrease) / increase in other payables and current liabilities			(5,113	)		3,409
Increase in accrued expenses and other long-term liabilities			373			726
NET CASH FLOWS USED IN OPERATING ACTIVITIES			(21,335	)		(15,063	)
Payments for plant and equipment			(4	)		—
NET CASH FLOWS USED IN INVESTING ACTIVITIES			(4	)		—
Proceeds from issue of shares			38,339			8,799
Payment of share issuance costs			(1,358	)		(264	)
Proceeds from exercise of warrants			22,117			—
Principal elements of lease payments			(167	)		(151	)
Interest paid			(561	)		(387	)
NET CASH FLOWS FROM FINANCING ACTIVITIES			58,370			7,997
Net increase / (decrease) in cash and cash equivalents			37,031			(7,066	)
Cash and cash equivalents as at January 1,			31,183			69,370
Effects of exchange rate changes on cash and cash equivalents			(216	)		(262	)
Cash and cash equivalents as at March 31,			67,998			62,042

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

(in USD ’000)	Share capital		Treasury shares			Share premium			Reserves			Accumulated losses			Total
January 1, 2020		3,812		(313	)		320,955			21,912			(297,411	)		48,955
Loss for the period		—		—			—			—			(21,863	)		(21,863	)
Other comprehensive loss		—		—			—			—			—			—
Total comprehensive loss		—		—			—			—			(21,863	)		(21,863	)
Issuance of shares - EIP 2013		5		—			703			(703	)		—			5
Issuance of shares - ATM program		—		195			8,339			—			—			8,534
Share issuance costs		—		—			(256	)		—			—			(256	)
Share-based remuneration		—		—			—			2,746			—			2,746
March 31, 2020		3,817		(118	)		329,741			23,955			(319,274	)		38,121

January 1, 2021		4,878		(304	)		356,822			26,353			(379,395	)		8,354
Loss for the period		—		—			—			—			(20,004	)		(20,004	)
Other comprehensive loss		—		—			—			—			—			—
Total comprehensive loss		—		—			—			—			(20,004	)		(20,004	)
Issuance of treasury shares		1,515		(1,515	)		—			—			—			—
Issuance of shares - ATM program		—		882			37,457			—			—			38,339
Share issuance costs		—		—			(1,358	)		—			—			(1,358	)
Exercise of warrants		555		—			21,562			—			—			22,117
Share-based remuneration		—		—			—			2,019			—			2,019
March 31, 2021		6,948		(938	)		414,483			28,373			(399,399	)		49,467

The accompanying notes form an integral part of these unaudited 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, ebopiprant and nolasiban) 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 3, 2021.

These unaudited three-month interim condensed 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”).

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, 2020 (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 Company has incurred recurring losses since inception, including net losses of USD 20.0 million for the three-month period ended March 31, 2021. As of March 31, 2021, the Company had accumulated losses of USD 430.0 million, out of which USD 30.6 million were offset with share premium. The Company expects to continue to generate operating losses in the foreseeable future, even though certain spending associated with its ongoing clinical trials has been and may be further delayed as a result of the COVID-19 pandemic. As of March 31, 2021, the Company had cash and cash equivalents of USD 68.0 million. Subsequent to March 31, 2021, the Company raised additional proceeds of USD 2.3 million (see note 12) and expects that its current cash and cash equivalents will be sufficient to fund its operations (without consideration of any commercialization expenses) and meet all of its obligations as they fall due for at least twelve months from the date of the issuance of these unaudited condensed consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The future viability of the Company is dependent on its ability to raise additional capital to finance its future operations. The Company will seek additional funding through public or private financings, debt financing or collaboration agreements. The sale of additional equity may dilute existing shareholders and newly issued shares may contain senior rights and preferences compared to currently outstanding common shares. Issued debt securities may contain covenants and limit the Company’s ability to pay dividends or make other distributions to shareholders. The inability to obtain funding, as and when needed, would have a negative impact on the Company’s financial condition and ability to pursue its business strategies. If the Company is unable to obtain the required funding to run its operations and to develop and commercialize its product candidates, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects, or the Company may be unable to continue operations. Management is currently exploring options to obtain additional funding through collaborations with third parties related to the future potential development and/or commercialization of its product candidates. However, there is no assurance that the Company will be successful in raising funds, closing a collaboration agreement, obtaining sufficient funding on terms acceptable to the Company, or if at all, which could have a material adverse effect on the Group’s business, results of operations and financial conditions.

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. The Company bases the estimates on historical experience and on various other assumptions that the Company believes are reasonable, the results of which form the basis for making judgments about the carrying value of assets, liabilities and equity and the amount of revenues and expenses. 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, 2021 and 2020.

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, 2021 and December 31, 2020, the Group holds a number of licenses to develop and commercialize several biopharmaceutical product candidates, the value of which is recorded at USD 26.6 million.

In August 2019, the Company entered into a loan and security agreement with Oxford Finance for a term loan of up to USD 75.0 million, subject to funding in three tranches. The Company received gross proceeds of USD 25.0 million, net of transaction costs of USD 0.3 million, from the first tranche of the credit facility upon entering into the agreement and has used the funds for its various clinical trials programs. The Company could not draw the second tranche of USD 25.0 million due to the failure to meet the primary endpoint of the Phase 3 IMPLANT 4 clinical trial of nolasiban. Pursuant to an amendment to the loan and security agreement signed in April 2020, the third tranche of USD 25.0 million may be drawn at any time between April 7, 2020 and August 1, 2024 upon request of the Company and at the lender’s discretion.

The credit facility is secured by substantially all of the Company’s assets, including the Company’s intellectual property. Each tranche bears interest at a floating interest rate of thirty day U.S. LIBOR, plus 6.25%, or a minimum of 8.68% per year in total. The Company is required to make monthly interest-only payments on each tranche through the amortization start date on August 1, 2022. The credit facility will mature on August 1, 2024, at which date a final fee payment of 6.75% of each funded tranche will be due, resulting in an effective interest rate of 10.32% per year. The credit facility contains customary conditions to borrowings and events of default and contains various negative covenants limiting the Company’s ability to, among other things, transfer or sell certain assets, allow changes in business, ownership or business locations, consummate mergers or acquisitions, incur additional indebtedness, create liens, pay dividends or make other distributions and make investments. As of March 31, 2021, the Company was in compliance with its covenants.

In 2020, the Company sold a total of 5,995,897 treasury shares at an average price of USD 2.82 per share, as part of its prior ATM program with Jefferies LLC (“Jefferies”). These multiple daily transactions generated total gross proceeds of USD 16.9 million. Directly related share issuance costs of USD 0.5 million were recorded as a deduction in equity. In March 2021, the Company terminated its prior ATM program with Jefferies and entered into a new ATM program with SVB Leerink LLC (“SVB Leerink”).

In January and February 2021, the Company announced the issuance of 6,020,248 and 11,591,124 common shares, respectively, at par value of 1/13 of a Swiss franc per share. The shares were fully subscribed for by a fully-owned subsidiary of the Company, and listed on the SIX Swiss Exchange accordingly. The shares were initially held as treasury shares.

During the three-month period ended March 31, 2021, the Company sold a total of 10,406,085 treasury shares at an average price of USD 3.68 per share, as part of its prior and current ATM programs, respectively. These multiple daily transactions generated total gross proceeds of USD 38.3 million. Directly related share issuance costs of USD 1.2 million were recorded as a deduction in equity.

In addition, during the three-month period ended March 31, 2021, the Company received proceeds of USD 22.1 million from the exercise of 6,448,240 warrants included in the units sold in the Company’s underwritten public offering in September 2020.

As at March 31, 2021, the total outstanding share capital of USD 6.9 million, fully paid, consists of 85,220,471 common shares, including 10,813,568 treasury shares. As at December 31, 2020, the total outstanding share capital of USD 4.9 million, fully paid, consists of 61,160,859 common shares, including 3,608,281 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. Research and development expenses consist of costs incurred in performing research and development activities, including salaries and bonuses, stock-based compensation, employee benefits, facilities costs, laboratory supplies, depreciation, manufacturing expenses as well as external costs of vendors engaged to conduct preclinical development activities and clinical trials.

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

Since January 1, 2020, the Company is subject in Switzerland to a municipal and cantonal income tax rate of 14.0% 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, 2021 and March 31, 2020. 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, 2021 and December 31, 2020.

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, 2021 and March 31, 2020 .

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, 2021 and March 31, 2020 were each subject to a total U.S. income tax rate of 27.3% based on both the U.S. federal and state tax rates.

As of March 31, 2021 and 2020, 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, 2021, 8,956,610 and 516,352 shares issuable upon the exercise of stock-options and warrants, respectively, 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, 2020, 108,231 non-vested shares and 5,721,075 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.

From April 1, 2021 until April 30, 2021, the Group sold an additional 754,253 treasury shares at an average price of USD 3.11 per share, as part of its ATM program. Total gross proceeds amounted to USD 2.3 million.

Unaudited Condensed Consolidated Balance Sheets as at March 31, 2021 and December 31, 2020		2
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the three-month period ended March 31, 2021		3
Unaudited Condensed Consolidated Statement of Cash Flows for the three-month period ended March 31, 2021		4
Unaudited Condensed Consolidated Statement of Changes in Equity for the three-month period ended March 31, 2021		5
Unaudited Notes to the Condensed Consolidated Financial Statements		6

(in USD ‘000)	March 31, 2021		December 31, 2020
Bank deposits		67,998		31,183
Interest bearing deposits		—		—
Total cash and cash equivalents		67,998		31,183

	Three-month period ended March 31,
	2021
Net loss attributable to shareholders (in USD ‘000)		(20,004	)
Weighted average number of common shares outstanding		68,574,364
Basic and diluted loss per share (in USD)		(0.29	)