What changed in this filing

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Item 1. Financial Statements

2020-07-30 compared with 2020-04-29 · 153 added, 78 removed, 332 unchanged (41% of the section changed)

9 unchanged sentences

Non-current assets

Property, plant and equipment, net of accumulated depreciation of $ 29.8 million as of March 31, 2020 and $ 28.6 million as of December 31, 2019 respectively

Property, plant and equipment, net of accumulated depreciation of $ 31.3 million as of June 30, 2020 and $ 28.6 million as of December 31, 2019, respectively

Operating lease right-of-use assets

19 unchanged sentences

Ordinary shares, € 0.05 par value:

60,000,000 shares authorized at March 31, 2020 and December 31, 2019 and 44,299,596 and 43,711,954 ordinary shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively.

60,000,000 shares authorized at June 30, 2020 and December 31, 2019 and 44,444,405 and 43,711,954 ordinary shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Additional paid-in-capital

6 unchanged sentences

COMPREHENSIVE LOSS

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands, except share and per share amounts)

License revenues from related party

9 unchanged sentences

Interest expense

Foreign currency gains, net

Foreign currency (losses) / gains, net

Other non-operating gains / (losses), net

Other comprehensive (loss) / income:

Other comprehensive income / (loss):

Foreign currency translation adjustments

4 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE-MONTH PERIOD ENDED MARCH 31

FOR THE THREE-MONTH PERIOD ENDED JUNE 30

Ordinary shares

3 unchanged sentences

(in thousands, except share and per share amounts)

Balance at March 31, 2019

Loss for the period

Other comprehensive income

Hercules warrants exercise

Exercise of share options

Restricted and performance share units distributed during the period

Share-based compensation expense

Issuance of ordinary shares relating to employee stock purchase plan

Balance at June 30, 2019

Balance at March 31, 2020

Loss for the period

Other comprehensive income

Exercise of share options

Restricted and performance share units distributed during the period

Share-based compensation expense

Issuance of ordinary shares relating to employee stock purchase plan

Balance at June 30, 2020

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

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE SIX-MONTH PERIOD ENDED JUNE 30

Ordinary shares

comprehensive

shareholders’

(loss)/income

(in thousands, except share and per share amounts)

Balance at December 31, 2018

6 unchanged sentences

Issuance of ordinary shares relating to employee stock purchase plan

Balance at March 31, 2019

Balance at June 30, 2019

Balance at December 31, 2019

5 unchanged sentences

Issuance of ordinary shares relating to employee stock purchase plan

Balance at March 31, 2020

Balance at June 30, 2020

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

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended March 31,

Six months ended June 30,

(in thousands)

28 unchanged sentences

Cash paid for interest

Non-cash increases in accounts payables and accrued expenses and other current liabilities related to purchases of intangible assets and property, plant and equipment

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

25 unchanged sentences

GAAP have been omitted.

The results of operations for the three months ended March 31, 2020, are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 or for any other future year or interim period.

The results of operations for the six months ended June 30, 2020, are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 or for any other future year or interim period.

The accompanying financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020 .

5 unchanged sentences

The principal accounting policies applied in the preparation of these unaudited consolidated financial statements are described in the Company’s audited financial statements as of and for the year ended December 31, 2019, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020 .

There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2020.

There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2020.

2.5 Recent accounting pronouncements

There have been no new accounting pronouncements or changes to accounting pronouncements during the three months ended March 31, 2020, as compared to the recent accounting pronouncements described in Note 2.3.23 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 , which could be expected to materially impact the Company’s unaudited consolidated financial statements.

There have been no new accounting pronouncements or changes to accounting pronouncements during the six months ended June 30, 2020, as compared to the recent accounting pronouncements described in Note 2.3.23 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 , which could be expected to materially impact the Company’s unaudited consolidated financial statements.

The Company has adopted ASU 2018-13, Fair Value Measurement (Topic 820) and additional disclosures related to significant unobservable inputs have been included within footnote 4 Fair value measurement.

Collaboration arrangements and concentration of credit risk

BMS collaboration

In May 2015, the Company entered into a collaboration and license agreement (the “BMS CLA”) and various related agreements with BMS that provide BMS with exclusive access to the Company’s gene therapy technology platform for the research, development and commercialization of therapeutics aimed at multiple targets in cardiovascular and other diseases (“Collaboration Targets”).

CSL Behring collaboration

On June 24, 2020, uniQure biopharma B.V., a wholly-owned subsidiary of uniQure N.V., entered into a commercialization and license agreement (the “CSL Behring Agreement”) with CSL Behring LLC (“CSL Behring”) providing CSL Behring exclusive global rights to etranacogene dezaparvovec, the Company’s investigational gene therapy for patients with hemophilia B (the “Product”).

Under the terms of the CSL Behring Agreement, the Company will receive a $ 450 million upfront cash payment upon the closing of the CSL Behring Agreement and be eligible to receive up to $ 1.6 billion in payments based on regulatory and commercial milestones.

The Company will also be eligible to receive tiered double-digit royalties in a range of up to a low-twenties percent of net sales of the Product based on sales thresholds.

Pursuant to the CSL Behring Agreement, the Company will be responsible for the completion of the HOPE-B clinical trial, manufacturing process validation, and the manufacturing supply of Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization.

Pursuant to a development and commercial supply agreement, the Company will supply Product to CSL Behring at an agreed-upon price per the contract.

The Company and CSL Behring executed the development and commercial supply agreement simultaneously with the CSL Behring Agreement.

Certain provisions will not become effective until after the Company receives regulatory approval to close the transaction.

Clinical development and regulatory activities performed by the Company pursuant to the CSL Behring Agreement will be reimbursed by CSL Behring.

CSL Behring will be responsible for global regulatory submissions and commercialization requirements for Product.

Closing of the CSL Behring Agreement is contingent on the successful completion of reviews under antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date.

Closing of the transaction is dependent on the timing, extent, and result of the regulatory review process.

The Company does not believe that the consummation of the transaction will result in a violation of any applicable antitrust laws.

However, there can be no assurance that a challenge on antitrust grounds will not be made, or if such a challenge is made, what the result would be.

In accordance with its existing license and other agreements the Company is contractually required to pay in total a low to high single digit percentage of any upfront payment to its licensors and financial advisor (“License Fees”).

As of June 30, 2020, the Company concluded it has no enforceable right to receive any of the upfront payment, the regulatory and sales milestone payments or the royalties (together “CSL License Revenue”) that it may receive in accordance with the CSL Behring Agreement, as all payments are contingent upon the successful completion of reviews under antitrust laws in the United States, Australia and the United Kingdom.

Therefore, the Company determined it will not recognize any revenue in relation to the CSL License Revenue, in accordance with ASC 606.

The Company determined that in accordance with Dutch taw law it will recognize the CSL Behring License Revenue as well as the License Fees as taxable results as of the date on which the Company is contractually entitled to receive (or obligated to make) a payment under the CSL Behring Agreement.

The Company expects to continue to incur taxable losses in the Netherlands except for the period in which it receives the $ 450 million upfront payment.

In the event that the Company recognizes the $ 450 million upfront payment in 2020, such payment will be subject to Dutch corporate income tax at a rate of 25.0 %.

Any CSL License Revenue including the upfront payment that the Company recognizes thereafter will be subject to Dutch corporate income tax at a rate of 21.7 %.

However, the Company does not expect it will be required to pay any income taxes in the period in which it recognizes the $ 450 million upfront payment as taxable revenue as such payment is not expected to exceed the net operating losses the Company has carried forward in the Netherlands.

The Company has historically recorded a full valuation allowance against its net deferred tax assets.

Future taxable income or losses of the Company and a potential reversal of the valuation allowance will be impacted by a variety of factors, of which some are outside of the Company’s control.

Such factors include the outcome and timing of the reviews under antitrust laws in the United States, Australia, and the United Kingdom, the change in the Dutch corporate income tax rate in 2021, additional net operating losses the Company may generate in relation to the CSL Behring Agreement, and the amount of License Fees the Company is required to pay.

The Company recognizes deferred tax assets to the extent that it determines that these assets are more likely than not to be realized.

In making such a determination, the Company weighed all available positive and negative evidence, including future income projections from the CSL Behring Agreement, and concluded that it is more likely than not that the deferred tax assets will not be realized.

Accordingly, the Company continued to record a full valuation allowance as of June 30, 2020.

Bristol-Myers Squibb collaboration

In May 2015, the Company entered into a collaboration and license agreement (the “BMS CLA”) and various related agreements with Bristol-Myers Squibb Company (“BMS”) that provide BMS with exclusive access to the Company’s gene therapy technology platform for the research, development and commercialization of therapeutics aimed at multiple targets in cardiovascular and other diseases (“Collaboration Targets”).

The initial four-year research term under the collaboration terminated on May 21, 2019.

1 unchanged sentence

For any Collaboration Targets that may be advanced, the Company will be responsible for manufacturing of clinical and commercial supplies using the Company’s vector technologies and industrial, proprietary insect-cell based manufacturing platform.

BMS reimburses the Company for all its research and development costs in support of the collaboration during the initial research term, and will lead development, regulatory and commercial activities for any Collaboration Targets that may be advanced.

The BMS CLA provides that the companies may collaborate on up to ten Collaboration Targets in total.

As of March 31, 2020, BMS has designated a total of four Collaboration Targets.

BMS reimbursed the Company for all its research and development costs in support of the collaboration during the initial research term, and will lead development, regulatory and commercial activities for any Collaboration Targets that may be advanced.

The BMS CLA provides that the Company and BMS may collaborate on up to ten Collaboration Targets in total.

As of June 30, 2020, BMS has designated a total of four Collaboration Targets.

In February 2019, BMS requested a one-year extension of the research term.

1 unchanged sentence

The Company has agreed to certain restrictions on its ability to work independently of the collaboration, either directly or indirectly through any affiliate or third party, on certain programs that would be competitive with the collaboration programs.

Accordingly, the Company is currently in discussions with BMS potentially to restructure or amend the BMS CLA and other related agreements following the expiration of the research term.

The Company is currently in discussions with BMS potentially to amend the BMS CLA and other related agreements following the expiration of the research term.

It is currently uncertain whether a change to the BMS CLA will be agreed and, if agreed, what the specific terms of any such change may be.

11 unchanged sentences

License Revenue

The Company recognized $ 0.0 million of License Revenue for the three months ended March 31, 2020, compared to $ 0.6 million during the same period in 2019 in relation to a $ 60.1 million upfront payment recorded on May 21, 2015, as well as $ 15.0 million received in relation to the designation of the second, third and fourth Collaboration Targets in August 2015 (together “Consideration”).

The Company recognized $ 1.5 million and $ 1.6 million of License Revenue for the three and six months ended June 30, 2020, respectively, compared to $ 2.1 million and $ 2.7 million during the same periods in 2019 in relation to a $ 60.1 million upfront payment recorded on May 21, 2015, as well as $ 15.0 million received in relation to the designation of the second, third and fourth Collaboration Targets in August 2015 (together “Consideration”).

The Company would be entitled to an aggregate $ 16.5 million in target designation payments upon the selection of the fifth through tenth Collaboration Targets.

22 unchanged sentences

The carrying amount of cash and cash equivalents, accrued income from the related party, prepaid expenses, other assets, accounts payable, accrued expenses and other current liabilities reflected in the Consolidated balance sheets approximate their fair values due to their short-term maturities.

The following table sets forth the Company’s assets and liabilities that are required to be measured at fair value on a recurring basis as of March 31, 2020, and December 31, 2019:

The following table sets forth the Company’s assets and liabilities that are required to be measured at fair value on a recurring basis as of June 30, 2020, and December 31, 2019:

Quoted prices

8 unchanged sentences

Total liabilities

At March 31, 2020

At June 30, 2020

Cash, cash equivalents and restricted cash

3 unchanged sentences

Total liabilities

Changes in Level 3 items during the three months ended March 31, 2020, are as follows

Changes in Level 3 items during the six months ended June 30, 2020, are as follows:

(in thousands)

2 unchanged sentences

Currency translation effects

Balance at March 31, 2020

Balance at June 30, 2020

The Company issued derivative financial instruments related to its collaboration with BMS.

The fair value of the BMS derivative financial instruments (“BMS warrants”) as of March 31, 2020, was $ 1.0 million compared to a fair value of $ 3.1 million as of December 31, 2019.

The fair value of the BMS derivative financial instruments (“BMS warrants”) as of June 30, 2020, was $ 0.8 million compared to a fair value of $ 3.1 million as of December 31, 2019.

Changes in the fair value of the BMS warrants are primarily impacted by changes in the Company’s share price, whereby a decrease in share price generally results in a decrease of the fair value.

In addition, the Company revised certain unobservable inputs as well as valuation techniques which resulted in a further decrease in fair value of $ 0.7 million as of March 31, 2020.

In addition, the Company revised certain unobservable inputs as well as valuation techniques in March 2020 which resulted in a further decrease in fair value of $ 0.7 million when compared to December 31, 2019.

These BMS warrants are described in more detail below.

6 unchanged sentences

and (ii) the date on which BMS designates the ninth new target (the tenth Collaboration Target).

Pursuant to the terms of the BMS CLA, the exercise price in respect of each warrant is equal to the greater of (i) the product of (A) $ 33.84 , multiplied by (B) a compounded annual growth rate of 10 % (or approximately $ 53.65 as of March 31, 2020) and (ii) the product of (A) 1.10 and (B) the VWAP for the 20 trading days ending on the date that is five trading days prior to the date of a notice of exercise delivered by BMS.

As of March 31, 2020, BMS had designated a total of four Collaboration Targets, and as such, the warrants were not exercisable.

The Company estimated the exercise of warrants to occur within four and six years after the balance sheet date.

Pursuant to the terms of the BMS CLA, the exercise price in respect of each warrant is equal to the greater of (i) the product of (A) $ 33.84 and (B) a compounded annual growth rate of 10 % (or approximately $ 55.07 as of June 30, 2020) and (ii) the product of (A) 1.10 and (B) the VWAP for the 20 trading days ending on the date that is five trading days prior to the date of a notice of exercise delivered by BMS.

As of June 30, 2020, BMS had designated a total of four Collaboration Targets, and as such, the warrants were not exercisable.

The Company estimated the exercise of warrants to occur within four and five years after the balance sheet date.

The significant unobservable inputs that the Company uses to develop Level 3 fair value measurements include the number of ordinary shares outstanding at the time of BMS’s warrant exercises.

The number of such shares outstanding at the time of exercise determines the number of unregistered shares to be issued in connection with the BMS warrants.

The number of such ordinary shares outstanding at the time of exercise determines the number of unregistered ordinary shares to be issued in connection with the BMS warrants.

The warrants can only be exercised following the occurrence of events contractually defined in the warrant agreements.

2 unchanged sentences

The arithmetic averages related to these ranges are 24 % and 5 % for the 1 st and 2 nd warrant, respectively.

Right-of-use asset and lease liabilities

Right-of-use assets and lease liabilities

The Company’s most significant leases relate to office and laboratory space under the following operating lease agreements:

10 unchanged sentences

On December 1, 2017, the Company entered into an agreement to sub-lease three of the seven floors of its Amsterdam facility for a ten-year term ending on December 31, 2027, with an option for the sub-lessee to extend until December 31, 2031.

In February 2020, the Company amended the agreement to take back one of the three floors effective March 1, 2020.

The fixed lease payments to be received during the remaining term amount to $ 6.5 million (EUR 5.9 million) as of March 31, 2020.

The components of lease cost were as follows:

Three months ended March 31,

In February 2020, the Company amended the agreement to sub-lease to take back one of the three floors effective March 1, 2020.

The fixed lease payments to be received during the remaining term under the agreement to sub-lease amount to $ 6.4 million (EUR 5.7 million) as of June 30, 2020.

The table below presents the components of the Company’s lease costs for the periods indicated:

Three months ended June 30,

Six months ended June 30,

(in thousands)

Operating lease cost

2 unchanged sentences

Total lease cost

The table below presents the lease-related assets and liabilities recorded on the Consolidated balance sheets.

The table below presents the lease-related assets and liabilities recorded on the Consolidated balance sheets for the periods indicated.

(in thousands)

4 unchanged sentences

Other information

The weighted-average remaining lease term as of March 31, 2020 is 10.1 years, compared to 10.3 years as of December 31, 2019 and the weighted-average discount rate as of March 31, 2020 is 11.33 %, compared to 11.33 % as of December 31, 2019.

The Company derived the discount rate, adjusted for differences such as in the term and payment patterns, from the Company’s loan from Hercules Capital which was refinanced immediately prior to the January 1, 2019 adoption date in December 2018.

The table below presents supplemental cash flow and non-cash information related to leases.

Three months ended March 31,

The weighted-average remaining lease term as of June 30, 2020 is 9.8 years, compared to 10.3 years as of December 31, 2019 and the weighted-average discount rate as of June 30, 2020 is 11.33 %, compared to 11.33 % as of December 31, 2019.

The Company derived the weighted-average discount rate, adjusted for differences such as in the term and payment patterns, from the Company’s loan from Hercules Capital which was refinanced immediately prior to the January 1, 2019 adoption date in December 2018.

Cash paid for amounts included in the measurement of lease liabilities for the periods indicated below was as follows:

Three months ended June 30,

Six months ended June 30,

(in thousands)

Cash paid for amounts included in the measurement of lease liabilities

(in thousands)

Operating cash flows for operating leases

Besides the initial recognition of operating right-of-use assets of $ 19.0 million upon adoption of the new lease standards on January 1, 2019, the Company did not obtain any additional right-of-use assets in exchange for lease obligations in the three months ended March 31, 2020 and March 31, 2019.

The Company did not obtain any right-of-use assets in exchange for lease obligations in the three and six months ended June 30, 2020.

Besides the initial recognition of operating right-of-use assets of $ 19.0 million upon adoption of the new lease standards on January 1, 2019, the Company obtained $ 8.6 million of additional right-of-use assets in exchange for lease obligations in the three and six months ended June 30, 2019.

Undiscounted cash flows

The table below reconciles the undiscounted cash flows as of March 31, 2020, for each of the first five years and the total of the remaining years to the operating lease liabilities recorded on the Consolidated balance sheet as of March 31, 2020.

The table below reconciles the undiscounted cash flows as of June 30, 2020, for each of the first five years and the total of the remaining years to the operating lease liabilities recorded on the Consolidated balance sheet as of June 30, 2020.

(in thousands)

2020 (nine months remaining)

2020 (six months remaining)

Total lease payments

3 unchanged sentences

Non-current operating lease liabilities

( 1) Payments are due in EUR and have been translated at the foreign exchange rate as of March 31, 2020, of $ 1.10 / €1.00).

( 1) Payments are due in EUR and have been translated at the foreign exchange rate as of June 30, 2020, of $ 1.12 / €1.00).

Accrued expenses and other current liabilities

4 unchanged sentences

Long-term debt

On June 14, 2013, the Company entered into a venture debt loan facility with Hercules, which was amended and restated on June 26, 2014, and again on May 6, 2016 (“2016 Amended Facility”).

On December 6, 2018, the Company signed an amendment to the Second Amended and Restated Loan and Security Agreement that both refinanced the existing $ 20 million 2016 Amended Facility and provided an additional commitment of $ 30 million (of which $ 15 million is subject to the discretion of Hercules) (the “2018 Amended Facility”).

At signing, the Company drew down an additional $ 15 million for a total of $ 35 million outstanding.

The Company has the right to draw another $ 15 million through June 30, 2020 subject to the terms of the 2018 Amended Facility.

On June 14, 2013, the Company entered into a venture debt loan facility with Hercules Growth Capital, Inc.

(“Hercules”), which was amended and restated on June 26, 2014, and again on May 6, 2016 (“2016 Amended Facility”).

On December 6, 2018, the Company signed an amendment to the Second Amended and Restated Loan and Security Agreement that both refinanced the then-existing $ 20 million 2016 Amended Facility and provided an additional unconditional commitment of $ 15 million as well as a conditional commitment of $ 15 million that expired on June 30, 2020 (the “2018 Amended Facility”).

At signing of the 2018 Amended Facility, the Company drew down an additional $ 15 million for a total of $ 35 million outstanding.

The 2018 Amended Facility extended the loan’s maturity date from May 1, 2020 until June 1, 2023.

The interest-only period was initially extended from November 2018 to January 1, 2021.

The interest-only period was further extended to January 1, 2022 as a result of meeting the provision in the 2018 Amended Facility of raising more than $ 90.0 million in equity financing in September 2019.

The interest-only period was initially extended from November 2018 to January 1, 2021 and was further extended to January 1, 2022 as a result of meeting the provision in the 2018 Amended Facility of raising more than $ 90.0 million in equity financing in September 2019.

The Company is required to repay the facility in equal monthly installments of principal and interest between the end of the interest-only period and the maturity date.

The interest rate continues to be adjustable and is the greater of (i) 8.85 % or (ii) 8.85 % plus the prime rate less 5.50 % per annum.

The interest rate continues to be adjustable and is the greater of (i) 8.85 % and (ii) 8.85 % plus the prime rate less 5.50 % per annum.

Under the 2018 Amended Facility, the Company paid a facility fee of 0.50 % of the $ 35 million outstanding as of signing and owes a back-end fee of 4.95 % of the outstanding debt.

In addition, in May 2020 the Company owes a back-end fee of 4.85 % of $ 20 million, which is the amount of debt raised under the 2016 Amended Facility.

The amortized cost (including interest due presented as part of accrued expenses and other current liabilities) of the 2018 Amended Facility was $ 36.5 million as of March 31, 2020, compared to $ 36.3 million as of December 31, 2019, and is recorded net of discount and debt issuance costs.

The foreign currency loss on the loan in the three months ended March 31, 2020, was $ 0.7 million compared to a foreign currency loss of $ 0.7 million during the same period in 2019.

Interest expense associated with the 2018 Amended Facility during the three months ended March 31, 2020 was $ 0.9 million compared to $ 0.9 million during the same period in 2019.

As a covenant in the 2018 Amended Facility, the Company has periodic reporting requirements and is required to keep a minimum cash balance deposited in bank accounts in the United States, equivalent to the lesser of 65 % of the outstanding balance of principal due or 100% of worldwide cash and cash equivalents.

In addition, in May 2020 the Company paid a back-end fee of $ 1.0 million in relation to the 2016 Amended Facility.

The amortized cost (including interest due presented as part of accrued expenses and other current liabilities) of the 2018 Amended Facility was $ 35.6 million as of June 30, 2020, compared to $ 36.3 million as of December 31, 2019, and is recorded net of discount and debt issuance costs.

The foreign currency gain on the loan in the three and six months ended June 30, 2020, was $ 0.7 million and $ 0.0 million compared to a foreign currency gain of $ 0.5 million during the three months ended June 30, 2019, and a foreign currency loss of $ 0.2 million during the six months ended June 30, 2019.

Interest expense associated with the 2018 Amended Facility during the three and six months ended June 30, 2020 was $ 0.9 million and $ 1.8 million, respectively, compared to $ 0.9 million and $ 1.9 million during the same periods in 2019.

As a covenant in the 2018 Amended Facility, the Company has periodic reporting requirements and is required to keep a minimum cash balance deposited in bank accounts in the United States, equivalent to the lesser of (i) 65 % of the outstanding balance of principal due or (ii) 100% of worldwide cash and cash equivalents.

This restriction on cash and cash equivalents only relates to the location of the cash and cash equivalents, and such cash and cash equivalents can be used at the discretion of the Company.

2 unchanged sentences

The 2018 Amended Facility contains provisions that include the occurrence of a material adverse effect, as defined therein, which would entitle Hercules to declare all principal, interest and other amounts owed by the Company immediately due and payable.

As of March 31, 2020, the Company was in compliance with all covenants and provisions.

As of June 30, 2020, the Company was in compliance with all covenants and provisions.

8 Share-based compensation

2 unchanged sentences

a) 2014 Plans

Share-based compensation expense recognized by classification included in the Consolidated statements of operations and comprehensive loss in relation to the 2014 Plans was as follows:

Three months ended March 31,

Share-based compensation expense recognized by classification included in the Consolidated statements of operations and comprehensive loss in relation to the 2014 Plans for the periods indicated below was as follows:

Three months ended June 30,

Six months ended June 30,

(in thousands)

Research and development

Selling, general and administrative

Share-based compensation expense recognized by award type was as follows:

Three months ended March 31,

Share-based compensation expense recognized by award type for the periods indicated below was as follows:

Three months ended June 30,

Six months ended June 30,

(in thousands)

Share options

1 unchanged sentence

Performance share units (“PSUs”)

As of March 31, 2020, the unrecognized share-based compensation expense related to unvested awards under the 2014 Plans were:

As of June 30, 2020, the unrecognized share-based compensation expense related to unvested awards under the 2014 Plans were:

Weighted average

5 unchanged sentences

Share options

The following table summarizes option activity for the three months ended March 31, 2020:

The following table summarizes option activity for the six months ended June 30, 2020:

Weighted average

2 unchanged sentences

Outstanding at December 31, 2019

Outstanding at March 31, 2020

Thereof, fully vested and exercisable at March 31, 2020

Thereof, outstanding and expected to vest at March 31, 2020

Outstanding at June 30, 2020

Thereof, fully vested and exercisable at June 30, 2020

Thereof, outstanding and expected to vest after June 30, 2020

Total weighted average grant date fair value of options issued during the period (in $ millions)

3 unchanged sentences

The fair value of each option issued is estimated at the respective grant date using the Hull & White option pricing model with the following weighted-average assumptions:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Expected volatility

2 unchanged sentences

0.76 % - 0.83 %

2.17 % - 2.63 %

0.76 % - 1.44 %

2.17 % - 2.87 %

Expected dividend yield

Restricted share units (“RSUs”)

The following table summarizes the RSUs activity for the three months ended March 31, 2020:

The following table summarizes the RSUs activity for the six months ended June 30, 2020:

Weighted average

2 unchanged sentences

Non-vested at December 31, 2019

Non-vested at March 31, 2020

Non-vested at June 30, 2020

Total weighted average grant date fair value of RSUs granted during the period (in $ millions)

RSUs vest over one to three years .

RSUs granted to non-executive directors will vest one year from the date of grant.

RSUs granted to non-executive directors vest one year from the date of grant.

Performance share units (“PSUs”)

The following table summarizes the PSUs activity for the three months ended March 31, 2020:

The following table summarizes the PSUs activity for the six months ended June 30, 2020:

Weighted average

2 unchanged sentences

Non-vested at December 31, 2019

Non-vested at March 31, 2020

Non-vested at June 30, 2020

Total weighted average grant date fair value of PSUs granted during the period (in $ millions)

In January 2019, the Company awarded PSUs to its executives and other members of senior management.

These PSUs were earned as of January 2020 based on the Board’s assessment of the level of achievement of agreed upon performance targets through December 31, 2019.

In January 2019, the Company awarded PSUs to its executives and certain other members of senior management.

These PSUs were earned as of January 2020 based on an assessment by the Company’s board of directors of the level of achievement of agreed upon performance targets through December 31, 2019.

PSUs vest after three years .

3 unchanged sentences

Under the ESPP, employees are eligible to purchase ordinary shares through payroll deductions, subject to any plan limitations.

The purchase price of the ordinary shares on each purchase date is equal to 85 % of the lower of the closing market price on the offering date or the closing market price on the purchase date of each three-month offering period.

During the three months ended March 31, 2020, 1,801 ordinary shares were issued under the ESPP compared to 3,126 during the same period in 2019.

As of March 31, 2020, a total of 136,406 ordinary shares remains available for issuance under the ESPP plan compared to a total of 144,283 as of March 31, 2019.

The purchase price of the ordinary shares on each purchase date is equal to 85 % of the lower of the closing market price on the offering date and the closing market price on the purchase date of each three-month offering period.

During the six months ended June 30, 2020, 3,005 ordinary shares were issued under the ESPP compared to 4,870 during the same period in 2019.

As of June 30, 2020, a total of 135,202 ordinary shares remains available for issuance under the ESPP plan compared to a total of 142,539 as of June 30, 2019.

Deferred tax assets and deferred tax liabilities are recognized based on the expected future tax consequences of temporary differences between the financial statement carrying amounts and the income tax basis of assets and liabilities, using current statutory rates.

A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all the deferred tax assets will not be realized.

Due to the uncertainty surrounding the realization of the favorable tax attributes in future tax returns, the Company has recorded a full valuation allowance against the Company’s otherwise recognizable net deferred tax assets.

The Company reassessed the need for a full valuation allowance in conjunction with entering into the CSL Behring Agreement.

Closing of the CSL Behring Agreement is contingent on the successful completion of reviews under the antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date.

Closing of the transaction is dependent on the timing, extent and result of the regulatory review process.

In its assessment of whether or not it was more likely than not that the Company’s deferred tax assets will be realized, the Company considered all relevant facts and circumstances, including in particular similar regulatory reviews as well as the three-year cumulative losses reported by the Company.

The Company concluded that it should continue to record a full valuation allowance as of June 30, 2020.

As of December 31, 2019, the Company’s valuation allowance amounted to $ 109.9 million.

10 Basic and diluted earnings per share

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As the Company has incurred a loss, all potentially dilutive ordinary shares would have an antidilutive effect, if converted, and thus have been excluded from the computation of loss per share.

The shares are presented without giving effect to the application of the treasury method or exercise prices that would be above the share price as of June 30, 2020 and June 30, 2019, respectively.

In addition, the BMS warrants were not exercisable as of these dates since this would have required the prior designation of Collaboration Targets by BMS.

This would generally result in a lower number of potentially dilutive ordinary shares as some stock option grants as well as the BMS warrants would have been excluded.

The potentially dilutive ordinary shares are summarized below:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements