What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-07-30 compared with 2020-04-29 · 264 added, 104 removed, 211 unchanged (64% of the section changed)

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We are a leader in the field of gene therapy, seeking to develop single treatments with potentially curative results for patients suffering from genetic and other devastating diseases.

We are advancing a focused pipeline of innovative gene therapies, including product candidates for the treatment of hemophilia and Huntington’s disease.

We are advancing a focused pipeline of innovative gene therapies, including product candidates for the treatment of hemophilia B, which we intend to license to CSL Behring pursuant to the CSL Behring Agreement (as defined below), and Huntington’s disease.

We believe our validated technology platform and manufacturing capabilities provide us distinct competitive advantages, including the potential to reduce development risk, cost and time to market.

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Below is a summary of our recent significant business developments:

CSL Behring commercialization and license agreement

On June 24, 2020, uniQure biopharma B.V., our 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, our investigational gene therapy for patients with hemophilia B (the “Product”).

Under the terms of the CSL Behring Agreement, we 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.

We 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, we 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, we will supply Product to CSL Behring at an agreed-upon price per the contract.

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

Certain provisions will not become effective until after we receive regulatory approval to close the transaction.

Clinical development and regulatory activities performed by us 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.

Other than under the CSL Behring Agreement, neither we nor CSL Behring may perform any clinical trials, with the exception of trials required to extend the label or gain marketing authorization outside the United States or the European Union, for any gene therapy product, gene-editing product, or any other product comprising an AAV vector to conduct nucleotide transfer (including DNA and RNA) for the treatment, prevention, or cure of Hemophilia B for a period commencing on June 24, 2020 and continuing for a period of four years following the first commercial sale of the Product in the United States, and neither we nor CSL Behring may commercialize such a product for a period commencing as of June 24, 2020 and continuing for a period of seven years following the first commercial sale of the Product in the United States.

This exclusivity commitment would not bind an acquirer of us that owns or controls such a product so long as certain precautions are followed to ensure that CSL Behring’s confidential information and our proprietary technology related to Product are not used or accessed by personnel of such acquirer who are developing or commercializing such competing product.

Unless earlier terminated as described below, the CSL Behring Agreement will continue on a country-by-country basis until expiration of the royalty term in a country.

The royalty term expires in a country on the later of (a) 15 years after the first commercial sale of Product in such country, (b) expiration of regulatory exclusivity for Product in such country and (c) expiration of all valid claims of specific licensed patents covering Product in such country.

Either we or CSL Behring may terminate the CSL Behring Agreement for the other party’s material breach, if such breach is not cured within a specified cure period.

In addition, if CSL Behring fails to commercialize Product in any of a group of major countries for an extended period of time following the first regulatory approval of Product in any of such group of countries (other than due to certain specified reasons) and such failure has not been cured within a specified cure period, then we may terminate the CSL Behring Agreement.

CSL Behring may also terminate the CSL Behring Agreement for convenience.

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.

We do 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 our existing license and other agreements we are contractually required to pay in total a low to high single digit percentage of any upfront payment to our licensors and financial advisor (“License Fees”).

As of June 30, 2020, we concluded we have no enforceable right to receive any of the upfront payment, the regulatory and sales milestone payments or the royalties (together “CSL License Revenue”) that we 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, we determined we will not recognize any revenue in relation to the CSL License Revenue, in accordance with ASC 606.

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

We expect to continue to incur taxable losses in the Netherlands except for the period in which we receive the $450 million upfront payment.

In the event that we recognize 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 we recognize thereafter will be subject to Dutch corporate income tax at a rate of 21.7%.

However, we do not expect that we will be required to pay any income taxes in the period in which we recognize the $450 million upfront payment as taxable revenue, as such payment is not expected to exceed the net operating losses that we have carried forward in the Netherlands.

We have historically recorded a full valuation allowance against our net deferred tax assets.

Future taxable income or losses and a potential reversal of the valuation allowance will be impacted by a variety of factors, of which some are outside of our 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 we may generate in relation to the CSL Behring Agreement, and the amount of License Fees we are required to pay.

We recognize deferred tax assets to the extent that we determine that these assets are more likely than not to be realized.

In making such a determination, we 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, we continued to record a full valuation allowance as of June 30, 2020.

Hemophilia B program – Etranacogene dezaparvovec (AMT-061)

Etranacogene dezaparvovec is our lead gene therapy candidate and includes an AAV5 vector incorporating the FIX-Padua variant.

We are currently conducting a pivotal study in patients with severe and moderately-severe hemophilia B.

Etranacogene dezaparvovec has been granted Breakthrough Therapy Designation by the United States Food and Drug Administration (“FDA”) and access to the PRIME initiative by the European Medicines Agency (“EMA”).

In June 2018, we initiated our Phase III HOPE-B pivotal trial of etranacogene dezaparvovec.

The trial is a multinational, multi-center, open-label, single-arm study to evaluate the safety and efficacy of etranacogene dezaparvovec.

In June 2018, we initiated our Phase III HOPE-B pivotal trial of etranacogene dezaparvovec (the “HOPE-B trial”).

The HOPE-B trial is a multinational, multi-center, open-label, single-arm study to evaluate the safety and efficacy of etranacogene dezaparvovec.

After a six-month lead-in period, patients received a single intravenous administration of etranacogene dezaparvovec.

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The second and third patients had previously screen-failed and were excluded from another gene therapy study due to pre-existing neutralizing antibodies to a different AAV vector.

Huntington’s disease program (AMT-130)

AMT-130 is our novel gene therapy candidate for the treatment of Huntington’s disease.

AMT-130 utilizes our miQURE TM proprietary, gene-silencing platform and incorporates an AAV vector carrying a miRNA specifically designed to silence the huntingtin gene and the potentially highly toxic exon 1 protein fragment.

AMT-130 utilizes our miQURE proprietary, gene-silencing platform and incorporates an AAV vector carrying a miRNA specifically designed to silence the huntingtin gene and the potentially highly toxic exon 1 protein fragment.

AMT-130 has received orphan drug and fast track designations from the FDA and Orphan Medicinal Product Designation from the EMA.

In January 2019, our IND application for AMT-130 was cleared by the FDA.

In June 2020, we announced the completion of the first two patient procedures in the Phase I/II clinical trial of AMT-130 for the treatment of Huntington’s disease.

These procedures occurred after a postponement that resulted from the COVID-19 pandemic and the associated states of emergency declarations in the United States.

The Phase I/II protocol is a randomized, imitation surgery-controlled, double-blinded study conducted at three surgical sites, and multiple referring, non-surgical sites in the U.S.

The primary objective of the study is to evaluate the safety, tolerability, and efficacy of AMT-130 at two doses.

In the fourth quarter of 2019, we initiated patient screening.

Additionally, cGMP clinical material has been manufactured at our Lexington facility and has been released for shipment.

In March 2020, we announced the enrollment of the first two patients in our Phase I/II clinical study after both patients had successfully met all screening and eligibility criteria.

These patients were scheduled to have their procedures at the end of March 2020.

Due to the expanding impact of COVID-19, these procedures have been temporarily postponed.

The decision to postpone treatment in the trial follows the COVID-19 related state of emergency declarations in the United States, where the trial is taking place.

We are following all federal and local regulations including the FDA guidance on clinical trial conduct during the COVID-19 pandemic.

We will continue our work to resume treatment in the Phase I/II trial as soon as it is clinically appropriate.

AMT-150 for Spinocerebellar Ataxia type 3 (SCA3)

In May 2020, we presented preclinical data at the American Society of Gene and Cell Therapy (“ASGCT”) Annual Meeting, on our gene therapy candidate SCA3.

In an in vivo preclinical study, six non-human primates (NHP) received a one-time injection of AMT-150 via the cisterna magna to assess expression and distribution.

Samples taken after eight weeks showed widespread transduction of the brain and spinal cord, with the highest genome copies found in the posterior fossa and cortical regions.

In other preclinical studies, researchers evaluated AMT-150 in SCA3 mouse models, as well as human induced pluripotent stem cell (“iPSC”)-derived neurons and astrocytes, to investigate potential off-target effects of AAV5-miATXN3.

The iPSC-derived cell cultures, which were derived from two SCA3 patients, represent the most disease-relevant cell type for therapeutic targeting of AMT-150.

A clear dose-dependent expression of miATXN3 was observed in the iPSC-derived neurons and astrocytes transduced with AMT-150.

Mature miATXN3 molecules were also associated with extracellular vesicles that strongly correlated with the dose and miATXN3 expression, suggesting the potential therapeutic spread of the engineered miATXN3.

Additionally, AMT-150 demonstrated ATXN3 knockdown in human neurons and various SCA3 mouse models with subsequent neuropathology improvement.

AMT-190 for Fabry disease

In May 2020, we presented preclinical data at the ASGCT Annual Meeting on our gene therapy candidate AMT-190 for Fabry disease.

In vivo studies in wild-type NHPs were conducted to assess expression of a proprietary, exclusively licensed modified NAGA (“ModNAGA”) upon AAV-injection.

These studies demonstrated that a single administration of AMT-190 resulted in ModNAGA expression in the liver and significant increases of GLA activity levels in the NHP plasma.

AMT-180 for Hemophilia A

In June 2020, we announced that we plan to de-prioritize our research program of AMT-180 for patients with hemophilia A, as part of our effort to focus on those gene therapy programs that have the greatest potential to improve patients’ lives and generate long-term value for shareholders.

COVID-19 measures

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We adapted to operate our laboratories at our Amsterdam site to comply with social distancing rules and to ensure the health and wellbeing of our employees under the current circumstances.

We have discouraged our employees from using public transport and are accommodating them by arranging for alternative means of transport.

We conduct daily status video-meetings of local management at our two sites as well as daily leadership-team video meetings to implement these measures and to monitor the evolving situation.

In addition, we are informing our employees through daily newsletter and have organized virtual local and global townhalls to share information and provide direction and support to our employees.

We had discouraged our employees from using public transport and are accommodating them by arranging for alternative means of transport until June 1, 2020 in line with policies advised by the relevant Dutch authorities.

We conduct frequent status video-meetings of local management at our two sites as well as leadership-team video meetings to implement these measures and to monitor the evolving situation.

In addition, we inform our employees through periodic newsletters and have organized virtual local and global townhalls to share information and provide direction and support to our employees.

We have adapted our ongoing clinical research activities based on the directions and flexibility provided by the “FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Pandemic” issued on March 18, 2020 in an attempt to minimize any risk, disruption or delay in either patient dosing or follow-up visits.

We are starting to reopen the Amsterdam and Lexington facilities in phases, in line with the reopening plans that are prescribed by the local government.

Starting June 1, 2020, we encouraged our Amsterdam employees to work a minimum of two days per week from the office and approximately 50% of local staff has been working on site since then.

Our employees that cannot perform their duties outside of our Lexington facility continue to work at our Lexington facility.

Other employees have returned to our Lexington facility on a limited basis, and all employees are encouraged to work from home to the extent possible.

To ensure adequate social distancing in our Lexington facility, our COVID-19 protocols currently limit occupancy to numbers below those allowed by the Massachusetts COVID-19 guidelines.

Our occupancy at the Lexington facility has been less than approximately 20% of our permitted occupancy during all phases of the Massachusetts reopening plan.

The broader implications of COVID-19 on our results of operations and overall financial performance remain uncertain.

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However, we may experience more pronounced disruptions in our operations in the future.

We believe our cash and cash equivalents as of March 31, 2020 will enable us to fund our operating expenses including our debt repayment obligations as they become due and capital expenditure requirements into 2022.

We expect to continue to incur losses and to generate negative cash flows.

We believe our cash and cash equivalents as of June 30, 2020, will enable us to fund our operating expenses including our debt repayment obligations as they become due and capital expenditure requirements into 2022.

Upon the receipt of the $450 million payment due on the closing of the CSL Behring Agreement, we expect that our cash and cash equivalents will be sufficient to fund operations into the second half of 2024.

The closing of the transactions contemplated by 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.

The transactions contemplated by the CSL Behring Agreement are expected to materially impact our profitability and cash flows.

We expect to generate positive cash flows in the period of closing and to recognize material revenue related to the CSL Behring Agreement.

However, we expect to continue to incur losses and to generate negative cash flows outside the fiscal year in which we close the transactions contemplated by the CSL Behring Agreement.

We have no firm sources of additional funding.

Until such time, if ever, as we can generate substantial cash flows from successfully commercializing our product candidates, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution and licensing arrangements.

Until such time, if ever, as we can generate substantial cash flows from successfully commercializing our proprietary product candidates, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution and licensing arrangements.

Similar to the other risk factors pertinent to our business, COVID-19 might unfavorably impact our ability to generate such additional funding.

BMS collaboration

We entered into a collaboration and license agreement with BMS in May 2015.

We have been supporting BMS in the discovery, non-clinical, analytical and process development efforts of Collaboration Targets.

We entered into a collaboration and license agreement with Bristol-Myers Squibb (“BMS”) in May 2015.

We have been supporting BMS in the discovery, non-clinical, analytical and process development efforts of our gene therapy technology platform for the research, development and commercialization of therapeutics aimed at multiple targets in cardiovascular and other diseases (“Collaboration Targets”).

For any Collaboration Targets that are advanced, we will be responsible for manufacturing of clinical and commercial supplies using our vector technologies and industrial, proprietary insect-cell based manufacturing platform.

BMS has been reimbursing us for all our research and development costs in support of the collaboration during the initial research term.

BMS has reimbursed us for all our research and development costs in support of the collaboration during the initial research term.

BMS will lead the development, regulatory and commercial activities for all four currently active Collaboration Targets as well as additional Collaboration Targets that may be advanced.

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

We are currently in discussions with BMS potentially to restructure or amend the collaboration and license agreement and other related agreements following the expiration of the research term.

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.

We are currently in discussions with BMS potentially to amend the collaboration and license agreement and other related agreements following the expiration of the research term.

The final resolution of these discussions may or may not result in material changes to our collaboration with BMS.

On June 17, 2020, our shareholders voted to approve the appointment of Leonard E.

as a non-executive director of the Board of Directors.

Post replaced Dr.

David Schaffer, whose term as a non-executive director of the Board of Directors ended on the same date.

Intellectual Property

On January 4, 2020, a petition seeking Inter Partes Review of U.S.

9,249,405 (the “’405 Patent”) was filed by Pfizer, Inc.

The petition sought to invalidate claims 6 and 9-15 of the ‘405 Patent.

On April 17, 2020, we filed our preliminary response to the petition, disclaiming claims 6 and 9-13 of the ‘405 patent and otherwise requesting the denial of the petition.

On July 13, 2020, the United States Patent and Trademark Office issued its decision to institute the Inter Partes Review .

We are in the process of preparing our response to the petition, which is due October 5, 2020 under the schedule set for the proceeding.

Financial Overview

Key components of our results of operations include the following:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Total revenues

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Selling, general and administrative expenses

As of March 31, 2020, and December 31, 2019, we had cash and cash equivalents of $342.0 million and $377.8 million, respectively.

We had a net loss of $28.0 million in the three months ended March 31, 2020, compared to $27.8 million for the same period in 2019.

As of March 31, 2020, and December 31, 2019, we had accumulated deficits of $687.7 million and $659.7 million, respectively.

We anticipate that our loss from operations will increase in the future as we:

● Build-out our commercial infrastructure and seek marketing approval for any product candidates (including etranacogene dezaparvovec) that successfully complete clinical trials;

As of June 30, 2020, and December 31, 2019, we had cash and cash equivalents of $314.3 million and $377.8 million, respectively.

We had a net loss of $42.6 million and $70.6 million in the three and six months ended June 30, 2020, compared to $31.4 million and $59.2 million for the same period in 2019.

As of June 30, 2020, and December 31, 2019, we had accumulated deficits of $730.3 million and $659.7 million, respectively.

Our losses will be materially impacted by the amount of license revenue that we will recognize in accordance with ASC 606 following the potential closing of our collaboration and license agreement with CSL Behring.

We anticipate that our expenses will increase substantially as we:

● Advance the clinical development of AMT-130 for our Huntington’s disease gene therapy program;

● continue to build-out our clinical, medical and regulatory capabilities;

● Build-out our commercial and medical affairs infrastructure and seek marketing approval for any product candidates (including etranacogene dezaparvovec in case our collaboration and license agreement with CSL Behring would not close) that successfully complete clinical trials;

● Advance multiple research programs related to gene therapy candidates targeting liver-directed and central nervous system (“CNS”) diseases;

● Continue to expand, enhance and optimize our technology platform, including our manufacturing capabilities, next-generation viral vectors and promoters, and other enabling technologies;

● Continue to expand our employee base to support research and development, as well as general and administrative functions;

● Acquire or in-license rights to new therapeutic targets or product candidates;

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In preparing our consolidated financial statements in accordance with U.S.

GAAP and pursuant to the rules and regulations promulgated by the Securities and Exchange Commission (“SEC”) we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures.

GAAP and pursuant to the rules and regulations promulgated by the SEC we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures.

On an ongoing basis, we evaluate our estimates and judgments, including those related to the implementation of ASC 842 Leases, recognition of License Revenue in accordance with ASC 606, BMS warrants, share-based payments and corporate income taxes related to valuation allowance.

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In making estimates and judgments, management employs critical accounting policies.

During the three months ended March 31, 2020, there were no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 2, 2020 .

During the six months ended June 30, 2020, there were no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 2, 2020 .

We believe that the assumptions, judgments and estimates involved in the recognition of License Revenue in accordance with ASC 606, BMS warrants, share-based payments, corporate income taxes related to valuation allowance and accounting for operating leases under ASC 842 to be our critical accounting policies.

We recognize Collaboration Revenues associated with pre-clinical Collaboration Target specific, non-clinical, analytical and process development activities that are reimbursable by BMS under our collaboration agreement during the initial research term (that ended on May 21, 2019).

We are currently in discussions with BMS potentially to restructure the collaboration and license agreement and other related agreements following the expiration of the research term.

The preparation of our consolidated financial statements for the three- and six-month period ended June 30, 2020, required us to analyze the accounting treatment of the CSL Behring Agreement.

This analysis required us to exercise judgement regarding the timing and the likelihood of closing the transaction.

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

We do 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.

As of June 30, 2020, we concluded we have no enforceable right to receive any of CSL License Revenue that we 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, we determined we will not recognize any revenue in relation to the CSL License Revenue, in accordance with ASC 606.

We recognize deferred tax assets to the extent that we determine that these assets are more likely than not to be realized.

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

We recognize Collaboration Revenues associated with pre-clinical Collaboration Target specific, non-clinical, analytical and process development activities that are reimbursable by BMS under our collaboration and license agreement during the initial research term, which ended on May 21, 2019.

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

During these discussions, which may be terminated by us or BMS at any time, we have agreed, subject to certain conditions, to continue providing limited support of the pre-clinical Collaboration Targets, and any related costs will be reimbursed by BMS.

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Research and development expenses

We expense research and development costs (“R&D”) as incurred.

We expense research and development (“R&D”) expenses as incurred.

Our R&D expenses generally consist of costs incurred for the development of our target candidates, which include:

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● Facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies.

Our research and development expenses primarily consist of costs incurred for the research and development of our product candidates, which include:

● Etranacogene dezaparvovec (hemophilia B) .

We have incurred costs related to the research, development and production of etranacogene dezaparvovec for the treatment of hemophilia B.

In June 2018, we initiated a pivotal trial.

We completed enrollment of this pivotal trial in September 2019 and in March 2020 we achieved our target patient dosing;

● AMT-130 (Huntington’s disease).

We have incurred costs related to preclinical and nonclinical studies of AMT-130 and started incurring costs related to our Phase I/II trial in February 2019;

● Preclinical research programs .

We incur costs related to the research of multiple preclinical gene therapy product candidates with the potential to treat certain rare and other serious medical conditions;

● Technology platform development and other related research .

We incur significant research and development costs related to manufacturing and other enabling technologies that are applicable across all our programs.

Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, including manufacturing campaigns, regulatory submissions and enrollment of patients in clinical trials.

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● our ability to agree to ongoing development budgets with collaborators who share the costs of our development programs.

A change in the outcome of any of these variables with respect to our product candidates that we may develop could mean a significant change in the expenses and timing associated with the development of such product candidate.

A change in the outcome of any of these variables with respect to our product candidates that we may develop, including as a result of the COVID-19 pandemic, could mean a significant change in the expenses and timing associated with the development of such product candidate.

Selling, general and administrative expenses

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Results of Operations

Comparison of the three months ended March 31, 2020 and 2019

The following table presents a comparison of the three months ended March 31, 2020 and 2019.

Three months ended March 31,

Comparison of the three months ended June 30, 2020 and 2019

The following table presents a comparison of the three months ended June 30, 2020 and 2019.

Three months ended June 30,

(in thousands)

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Other non-operating items, net

Our revenue for the three months ended March 31, 2020 and 2019 was as follows:

Three months ended March 31,

Our revenue for the three months ended June 30, 2020 and 2019 was as follows:

Three months ended June 30,

(in thousands)

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We recognize License Revenue related to upfront payments and target designation fees received from BMS in 2015.

We recognized $0.0 million License Revenue in the three months ended March 31, 2020, compared to $0.6 million for the same period in 2019.

The reduction in License Revenue is primarily a result of delays in development timelines due to our ongoing discussions surrounding the potential restructuring or amendment of the BMS CLA as well as COVID-19.

We recognized $0.1 million Collaboration Revenue in the three months ended March 31, 2020, compared to $0.6 million for the same period in 2019.

We recognized $1.5 million License Revenue in the three months ended June 30, 2020, compared to $2.1 million for the same period in 2019.

The reduction in License Revenue is primarily a result of delays in development timelines due to our ongoing discussions surrounding the potential amendment of the BMS CLA.

Continuing these discussions to some extent was impacted by the parties’ focus to adjust their operations to COVID-19.

We recognized $0.0 million Collaboration Revenue in the three months ended June 30, 2020, compared to $0.4 million for the same period in 2019.

The decrease in Collaboration Revenue was primarily related to the reduction of activities following the termination of the initial Research Term under the BMS CLA in May 2019.

Research and development expenses

Research and development expenses for the three months ended March 31, 2020 were $26.0 million, compared to $20.5 million for the same period in 2019.

Research and development expenses for the three months ended June 30, 2020 were $28.4 million, compared to $24.2 million for the same period in 2019.

Other research and development expenses are separately classified in the table below.

These are not allocated as they are deployed across multiple projects under development.

Three months ended March 31,

Three months ended June 30,

(in thousands)

Hemophilia B (AMT-060/061)

Etranacogene dezaparvovec (AMT-060/061)

Huntington's disease (AMT-130)

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Direct research and development expenses

Etranacogene dezaparvovec (AMT-060/061)

In the three months ended June 30, 2020 and 2019, the external costs for our hemophilia B program were primarily related to the execution of our Phase III clinical trial.

We enrolled patients into a six-month lead in phase between January 2018 and September 2019 and dosed a total of 54 patients between January 2019 and March 2020.

Our expenses related to etranacogene dezaparvovec were largely unaffected by the COVID-19 pandemic as we completed enrollment immediately prior to the lockdowns in those countries in which we enroll patients.

We have implemented additional measures to minimize any risk, disruption or delay on follow-up visits.

In addition, we continue to incur costs for the long-term follow-up of patients in our Phase I/II clinical trial of AMT-060 and our Phase IIb clinical trial of etranacogene dezaparvovec.

Huntington disease (AMT-130)

In the three months ended June 30, 2020 and 2019, our external costs for the development of Huntington’s disease were primarily related to the execution of our Phase I/II clinical trial as well as expenses related to the procedures of the first two patients in June 2020.

The procedure-related expenses were delayed as a result of the temporary postponement of the procedures due to the COVID-19 related state of emergency declarations in the United States.

Preclinical programs & platform development

In the three months ended June 30, 2020, we incurred $1.8 million of costs primarily related to our preclinical activities primarily associated with product candidates for Hemophilia A (AMT-180), SCA3 (AMT-150) and Fabry disease (AMT-190), as well as various other research programs and technology innovation projects, compared to $1.5 million in the same period in 2019.

Other research & development expenses

● We incurred $10.0 million in personnel and contractor related expenses in the three months ended June 30, 2020, compared to $8.2 million for the same period in 2019.

Our costs during the three months ended June 30, 2020 increased by $1.8 million as a result of the recruitment of personnel to support the development of our product candidates;

● We incurred $2.9 million in share-based compensation expenses in the three months ended June 30, 2020, compared to $2.1 million for the same period in 2019;

● We incurred $4.2 million in operating expenses and depreciation expenses related to our rented facilities in the three months ended June 30, 2020, compared to $3.6 million in the same period in 2019.

Our costs during the three months ended June 30, 2020, primarily increased as a result of extending and expanding (as from June 2019) the lease of our Lexington facility.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended June 30, 2020 were $11.5 million, compared to $7.9 million for the same period in 2019.

● We incurred $2.9 million in personnel and contractor related expenses in the three months ended June 30, 2020, compared to $2.4 million in the same period in 2019;

● We incurred $2.8 million in share-based compensation expenses in the three months ended June 30, 2020, compared to $2.4 million in the same period in 2019;

● We incurred $3.0 million in professional fees in the three months ended June 30, 2020, compared to $1.3 million in the same period in 2019.

The increase was primarily driven by corporate initiatives.

Our selling, general and administrative expenses were largely unaffected by the COVID-19 pandemic.

Other items, net

We recognized $0.3 million in income from payments received from European authorities to subsidize our research and development efforts in the Netherlands in the three months ended June 30, 2020, compared to $0.3 million for the same period in 2019.

Other non-operating items, net

We recognize interest income associated with our cash and cash equivalents.

We hold monetary items and enter into transactions in foreign currencies, predominantly in euros and U.S.

We recognize foreign exchange results related to changes in these foreign currencies.

We issued warrants to BMS in 2015.

We recognize changes in the fair value of these warrants within other non-operating (expense) / income.

Our other non-operating items, net, for the three months ended June 30, 2020 and 2019 were as follows:

Three months ended June 30,

(in thousands)

Interest income

Interest expense - Hercules long-term debt

Foreign currency losses, net

Other non-operating gains / (losses)

Total other non-operating loss, net

We recognized a net foreign currency loss related to our borrowings from Hercules and our cash and cash equivalents of $3.6 million during the three months ended June 30, 2020, compared to a net loss of $1.3 million during the same period in 2019.

In the three months ended June 30, 2020, we recognized income of $0.2 million related to changes in the fair value of the BMS warrants compared to a loss of $0.6 million related to changes in the fair value of the BMS warrants for the same period in 2019.

Comparison of the six months ended June 30, 2020 and 2019

The following table presents a comparison of the six months ended June 30, 2020 and 2019.

Six months ended June 30,

(in thousands)

Total revenues

Operating expenses:

Research and development expenses

Selling, general and administrative expenses

Total operating expenses

Other expense

Loss from operations

Non-operating items, net

Our revenue for the six months ended June 30, 2020 and 2019 was as follows:

Six months ended June 30,

License revenue

Collaboration revenue

Total revenues

We recognize License Revenue related to upfront payments and target designation fees received from BMS in 2015.

We recognized $1.6 million License Revenue in the six months ended June 30, 2020, compared to $2.7 million for the same period in 2019.

The reduction in License Revenue is primarily a result of delays in development timelines due to our ongoing discussions surrounding the potential amendment of the BMS CLA as well as COVID-19.

Continuing these discussions to some extent was impacted by the parties’ focus to adjust their operations to COVID-19.

We recognized $0.1 million Collaboration Revenue in the six months ended June 30, 2020, compared to $0.9 million for the same period in 2019.

The decrease in Collaboration Revenue was primarily related to the reduction of activities following the termination of the initial Research Term under the BMS CLA in May 2019.

Research and development expenses

Research and development expenses for the six months ended June 30, 2020 were $54.4 million, compared to $44.7 million for the same period in 2019.

Other research and development expenses are separately classified in the table below.

These are not allocated as they are deployed across multiple projects under development.

Six months ended June 30,

(in thousands)

Etranacogene dezaparvovec (AMT-060/061)

Huntington's disease (AMT-130)

Programs in preclinical development and platform related expenses

Total direct research and development expenses

Employee and contractor-related expenses

Share-based compensation expense

Facility expenses

Other expenses

Total other research and development expenses

Total research and development expenses

Direct research and development expenses

Hemophilia B (AMT-060/061)

In the three months ended March 31, 2020 and 2019, the external costs for our hemophilia B program were primarily related to the execution of our Phase III clinical trial.

In the six months ended June 30, 2020 and 2019, the external costs for our hemophilia B program were primarily related to the execution of our Phase III clinical trial.

We enrolled patients into a six-month lead in phase between January 2018 and September 2019 and dosed a total of 54 patients between January 2019 and March 2020.

We have implemented additional measures to minimize any risk, disruption or delay on follow-up visits.

In addition, we continue to incur costs for the long-term follow-up of patients in our Phase I/II clinical trial of AMT-060 and our Phase IIb clinical trial of etranacogene dezaparvovec.

Huntington disease (AMT-130)

In the three months ended March 31, 2020 and 2019, our external costs for the development of Huntington’s disease were primarily related to the preparation of our Phase I/II clinical trial.

In the six months ended June 30, 2020 and 2019, our external costs for the development of Huntington’s disease were primarily related to the execution of our Phase I/II clinical trial as well as expenses related to the procedures of the first two patients in June 2020.

The procedure-related expenses were delayed as a result of the temporary postponement of the procedures due to the COVID-19 related state of emergency declarations in the United States.

Preclinical programs & platform development

In the three months ended March 31, 2020, we incurred $1.5 million of costs primarily related to our preclinical activities associated with product candidates for Hemophilia A (AMT-180), SCA3 (AMT-150) and Fabry disease (AMT-190) and various technology innovation projects, compared to $0.9 million in the same period in 2019.

In the six months ended June 30, 2020, we incurred $3.2 million of costs primarily related to our preclinical activities associated with product candidates for Hemophilia A (AMT-180), SCA3 (AMT-150) and Fabry disease (AMT-190), as well as various other research programs and technology innovation projects, compared to $2.4 million in the same period in 2019.

Other research & development expenses

● We incurred $9.3 million in personnel and contractor related expenses in the three months ended March 31, 2020, compared to $8.2 million for the same period in 2019.

Our costs during the three months ended March 31, 2020 increased by $1.1 million as a result of the recruitment of personnel to support the development of our product candidates;

● We incurred $2.4 million in share-based compensation expenses in the three months ended March 31, 2020, compared to $2.0 million for the same period in 2019;

● We incurred $4.0 million in operating expenses and depreciation expenses related to our rented facilities in the three months ended March 31, 2020, compared to $3.3 million in the same period in 2019.

Our costs during the three months ended March 31, 2020 increased as a result of extending and expanding (as from June 2019) the lease of our Lexington facility.

● We incurred $19.3 million in personnel and contractor related expenses in the six months ended June 30, 2020, compared to $16.5 million for the same period in 2019.

Our costs during the six months ended June 30, 2020 increased by $2.8 million as a result of the recruitment of personnel to support the development of our product candidates;

● We incurred $5.3 million in share-based compensation expenses in the six months ended June 30, 2020, compared to $4.1 million for the same period in 2019;

● We incurred $8.2 million in operating expenses and depreciation expenses related to our rented facilities in the six months ended June 30, 2020, compared to $6.9 million in the same period in 2019.

Our costs during the six months ended June 30, 2020 primarily increased as a result of extending and expanding (as from June 2019) the lease of our Lexington facility.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended March 31, 2020 were $9.1 million, compared to $8.1 million for the same period in 2019.

● We incurred $3.2 million in personnel and contractor related expenses in the three months ended March 31, 2020, compared to $2.7 million in the same period in 2019;

● We incurred $1.9 million in share-based compensation expenses in the three months ended March 31, 2020, compared to $2.3 million in the same period in 2019;

● We incurred $1.2 million in professional fees in the three months ended March 31, 2020, compared to $1.6 million in the same period in 2019.

Selling, general and administrative expenses for the six months ended June 30, 2020 were $20.6 million, compared to $15.9 million for the same period in 2019.

● We incurred $6.1 million in personnel and contractor related expenses in the six months ended June 30, 2020, compared to $5.1 million in the same period in 2019;

● We incurred $4.8 million in share-based compensation expenses in the six months ended June 30, 2020, compared to $4.8 million in the same period in 2019;

● We incurred $4.2 million in professional fees in the six months ended June 30, 2020, compared to $2.9 million in the same period in 2019.

The decrease was primarily driven by timing of various corporate initiatives.

Our selling, general and administrative expenses were largely unaffected by the COVID-19 pandemic.

Other items, net

We recognized $0.2 million in income from payments received from European authorities to subsidize our research and development efforts in the Netherlands in the three months ended March 31, 2020, compared to $0.0 million for the same period in 2019.

We recognized $0.5 million in income from payments received from European authorities to subsidize our research and development efforts in the Netherlands in the six months ended June 30, 2020, compared to $0.3 million for the same period in 2019.

Other non-operating items, net

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Following the exercise of the warrants by Hercules in February 2019 we no longer recognize changes in the fair value of these warrants within other non-operating (expense) / income.

Our other non-operating items, net, for the three months ended March 31, 2020 and 2019 were as follows:

Three months ended March 31,

Our other non-operating items, net, for the six months ended June 30, 2020 and 2019 were as follows:

Six months ended June 30,

(in thousands)

Interest income

Interest expense - Hercules long-term debt

Interest expense

Foreign currency gains, net

Other non-operating gains / (losses)

Total other non-operating income / (loss), net

We recognized a net foreign currency gain related to our borrowings from Hercules and our cash and cash equivalents of $4.6 million during the three months ended March 31, 2020, compared to a net gain of $2.3 million during the same period in 2019.

In the three months ended March 31, 2020, we recognized income of $2.0 million related to changes in the fair value of the BMS warrants compared to a loss of $2.0 million related to changes in the fair value of the Hercules and BMS warrants for the same period in 2019.

Other non-operating gains / (losses), net

Total non-operating income / (loss), net

We recognized a net foreign currency gain related to our borrowings from Hercules and our cash and cash equivalents of $1.0 million during the six months ended June 30, 2020, compared to a net gain of $1.0 million during the same period in 2019.

In the six months ended June 30, 2020, we recognized income of $2.2 million related to changes in the fair value of the Hercules and BMS warrants compared to a loss of $2.6 million for the same period in 2019.

Changes in the fair value of the Hercules and BMS warrants are primarily impacted by changes in our share price, whereby a decrease in share price generally results in a decrease of the fair value.

Financial Position, Liquidity and Capital Resources

As of March 31, 2020, we had cash, cash equivalents and restricted cash of $345.0 million.

As of June 30, 2020, we had cash, cash equivalents and restricted cash of $316.9 million.

We currently expect that our cash and cash equivalents will be sufficient to fund operations into 2022.

The table below summarizes our consolidated cash flow data for the three months ended March 31, 2020, and 2019.

Three months ended March 31,

The table below summarizes our consolidated cash flow data for the six months ended June 30, 2020, and 2019.

Six months ended June 30,

(in thousands)

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We have incurred losses and cumulative negative cash flows from operations since our business was founded by our predecessor entity AMT Therapeutics (“AMT”) Holding N.V.

We had a net loss of $28.0 million during the three months ended March 31, 2020, compared to a net loss of $27.8 million during the same period in 2019.

As of March 31, 2020, we had an accumulated deficit of $687.7 million.

We had a net loss of $42.6 million and $70.6 million during the three and six months ended June 30, 2020, compared to a net loss of $31.4 million and $59.2 million during the same periods in 2019.

As of June 30, 2020, we had an accumulated deficit of $730.3 million.

Sources of liquidity

From our first institutional venture capital financing in 2006 through March 31, 2020, we funded our operations primarily through private and public placements of equity securities and convertible and other debt securities as well as payments from our collaboration partners.

From our first institutional venture capital financing in 2006 through June 30, 2020, we funded our operations primarily through private and public placements of equity securities and convertible and other debt securities as well as payments from our collaboration partners.

On September 10, 2019, we completed a follow-on public offering of 4,891,305 ordinary shares at a public offering price of $46.00 per ordinary share, and on September 13, 2019, we completed the sale of an additional 733,695 ordinary shares at a public offering price of $46.00 per ordinary share pursuant to the exercise by the underwriters of the option to purchase additional ordinary shares, resulting in total gross proceeds to us of $258.8 million.

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We deducted $0.6 million of expenses incurred related to this offering from additional paid-in capital in the accompanying consolidated balance sheets and reflected this within the proceeds from public offering of shares, net of issuance costs within the cash flows from financing activities.

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

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

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

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

As of March 31, 2020, $35 million was outstanding under the 2018 Amended Facility (December 31, 2019:

As of June 30, 2020, $35 million was outstanding under the 2018 Amended Facility (December 31, 2019:

$35 million).

2 unchanged sentences

Under the 2018 Amended Facility, we paid a facility fee equal to 0.50% of the $35,000,000 loan outstanding and will owe a back-end fee of 4.95% of the outstanding debt.

We expect to continue to incur losses and to generate negative cash flows.

The $450 million upfront payment we expect to receive on the closing of the CSL Behring Agreement is expected to fund operations into the second half of 2024.

Closing of the transaction is expected to materially impact our profitability and cash flows.

We expect to generate positive cash flows in the period of closing and to recognize material revenue related to the CSL Behring Agreement.

However, we expect to continue to incur losses and to generate negative cash flows outside the fiscal year in which we close the transaction.

We have no firm sources of additional funding.

We are subject to covenants under our 2018 Amended Facility and may become subject to covenants under any future indebtedness that could limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business.

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Net Cash used in operating activities

Net cash used in operating activities was $33.0 million for the three months ended March 31, 2020, and

consisted of a net loss of $28.0 million adjusted for non-cash items, including depreciation and amortization expense of $1.7 million, share-based compensation expense of $4.4 million, fair value gains on derivative financial instruments of $2.0 million, unrealized foreign exchange gain of $4.8 million, and an increase in unamortized deferred revenue of $0.3 million.

Net cash used in operating activities was $62.9 million for the six months ended June 30, 2020, and consisted of a net loss of $70.6 million adjusted for non-cash items, including depreciation and amortization expense of $3.5 million, share-based compensation expense of $10.1 million, fair value gains on derivative financial instruments of $2.2 million, unrealized foreign exchange gain of $0.9 million, and an decrease in unamortized deferred revenue of $1.6 million.

Net cash used in operating activities also included unfavorable changes in operating assets and liabilities of $1.3 million.

These changes primarily related to a net increase in accounts receivable and accrued income, prepaid expenses and other current assets of $1.3 million primarily as a result of increase in prepayments for the year and a net decrease in accounts payable, accrued expenses and other liabilities of $3.2 million primarily related to pay-out of employee bonuses.

Net cash used in operating activities was $26.4 million for the three months ended March 31, 2019, and

consisted of a net loss of $27.8 million adjusted for non-cash items, including depreciation and amortization expense of $1.6 million, share-based compensation expense of $4.3 million, fair value losses on derivative financial instruments of $2.0 million, unrealized foreign exchange gain of $1.8 million, and a decrease in unamortized deferred revenue of $0.5 million.

These changes primarily related to a net decrease in accounts receivable and accrued income, prepaid expenses and other current assets of $1.1 million and a net decrease in accounts payable, accrued expenses and other liabilities of $2.3 million.

Net cash used in operating activities was $50.7 million for the six months ended June 30, 2019, and consisted of a net loss of $59.2 million adjusted for non-cash items, including depreciation and amortization expense of $3.2 million, share-based compensation expense of $8.9 million, fair value losses on derivative financial instruments of $2.6 million, unrealized foreign exchange gain of $0.4 million, and a decrease in unamortized deferred revenue of $2.7 million.

Net cash used in operating activities also included unfavorable changes in operating assets and liabilities of $3.1 million.

These changes primarily related to a net increase in accounts receivable and accrued income, prepaid expenses and other current assets of $2.8 million primarily related to our etranacogene dezaparvovec clinical trials and a net decrease in accounts payable, accrued expenses and other liabilities of $1.4 million primarily related to pay-out of employee bonuses.

These changes primarily related to a net increase in accounts receivable and accrued income, prepaid expenses and other current assets of $2.8 million primarily driven by an increase in prepaid expenses related to our etranacogene dezaparvovec and AMT-130 trials.

Net cash used in investing activities

In the three months ended March 31, 2020, we used $2.9 million in our investing activities compared to $1.2 million for the same period in 2019.

Three months ended March 31,

In the six months ended June 30, 2020, we used $4.6 million in our investing activities compared to $2.4 million for the same period in 2019.

Six months ended June 30,

(in thousands)

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Net cash generated from financing activities

During the three months ended March 31, 2020, we received $1.0 million from the exercise of options to purchase ordinary shares in relation to our share incentive plans compared to $2.2 million in the same period 2019.

During the six months ended June 30, 2020, we received $3.5 million from the exercise of options to purchase ordinary shares in relation to our share incentive plans compared to $2.7 million in the same period 2019.

Funding requirements

We believe our cash and cash equivalents as of June 30, 2020 will enable us to fund our operating expenses including our debt repayment obligations as they become due and capital expenditure requirements into 2022.

The $450 million upfront payment we expect to receive on the closing of the CSL Behring Agreement would provide us with additional funding into the second half of 2024.

Our future capital requirements will depend on many factors, including but not limited to:

● the closing of our collaboration and license transaction with CSL Behring as well as achieving milestones and royalties as defined in the CSL Behring Agreement;

● the cost and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution of any of our product candidates for which we receive marketing approval in the future;

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● the costs associated with increasing the scale and capacity of our manufacturing capabilities;

● the costs associated in preparing for the Biologics License Application (“BLA”) submission of etranacogene dezaparvovec, including process validation, inspection, readiness and other regulatory expenses.

● the costs associated in preparing for the Biologics License Application (“BLA”) submission of etranacogene dezaparvovec, including process validation, inspection readiness and other regulatory expenses in the event that our collaboration and license agreement with CSL Behring would not close.

Contractual obligations and commitments

The table below sets forth our contractual obligations and commercial commitments as of March 31, 2020, that are expected to have an impact on liquidity and cash flows in future periods.

The table below sets forth our contractual obligations and commercial commitments as of June 30, 2020, that are expected to have an impact on liquidity and cash flows in future periods.

(in thousands)

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We have not included these commitments on our balance sheet or in the table above because the achievement and timing of these milestones is not fixed and determinable.

We will also have obligations to make future payments that become due and payable if we collect the upfront payment or milestone payments from CSL Behring.

We have not included these commitments on our balance sheet or in the table above because these payments only become due and payable upon the closing of the transaction with CSL Behring.

We enter into contracts in the normal course of business with clinical research organizations (“CROs”) for preclinical research studies and clinical trials, research supplies and other services and products for operating purposes.

1 unchanged sentence

Off-Balance Sheet Arrangements

As of March 31, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

As of June 30, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

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 2. Management’s Discussion and Analysis