What changed in this filing

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Item 1. Financial Statements

2021-07-26 compared with 2021-05-10 · 218 added, 121 removed, 277 unchanged (55% of the section changed)

4 unchanged sentences

Cash and cash equivalents

Accounts receivables

Accounts receivable

Prepaid expenses

Other current assets

Other current assets and receivables

Total current assets

Non-current assets

Property, plant and equipment, net of accumulated depreciation of $ 35.9 million as of March 31, 2021 and $ 35.2 million as of December 31, 2020, respectively

Property, plant and equipment, net of accumulated depreciation of $ 37.3 million as of June 30, 2021 and $ 35.2 million as of December 31, 2020, respectively

Operating lease right-of-use assets

Intangible assets, net

Restricted cash

Deferred tax asset

Deferred tax assets

Other non-current assets

Total non-current assets

13 unchanged sentences

Ordinary shares, € 0.05 par value:

60,000,000 shares authorized as of March 31, 2021 and December 31, 2020 and 45,924,729 and 44,777,799 ordinary shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively

80,000,000 shares authorized as of June 30, 2021 and 60,000,000 shares authorized as of December 31, 2020 and 46,050,250 and 44,777,799 ordinary shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in-capital

Accumulated other comprehensive income

Accumulated other comprehensive (loss) / income

Accumulated deficit

3 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

Three months ended March 31,

COMPREHENSIVE INCOME (LOSS)

Three months ended June 30,

Six months ended June 30,

(in thousands, except share and per share amounts)

License revenues

License revenues from related party

3 unchanged sentences

Operating expenses:

Cost of contract revenues

Research and development expenses

2 unchanged sentences

Other expense

Loss from operations

Income / (loss) from operations

Interest income

Interest expense

Foreign currency gains, net

Foreign currency gains / (losses), net

Other non-operating gains, net

Loss before income tax expense

Income / (loss) before income tax expense

Income tax expense

Other comprehensive loss:

Net income / (loss)

Other comprehensive (loss) / gain:

Foreign currency translation adjustments

Total comprehensive loss

Basic and diluted net loss per ordinary share

Weighted average shares used in computing basic and diluted net loss per ordinary share

Total comprehensive gain / (loss)

Earnings per ordinary share - basic

Basic net income / (loss) per ordinary share

Earnings per ordinary share - diluted

Diluted net income / (loss) per ordinary share

Weighted average shares - basic

Weighted average shares - diluted

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

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE-MONTH PERIOD ENDED MARCH 31

FOR THE THREE-MONTH PERIOD ENDED JUNE 30

Ordinary shares

1 unchanged sentence

shareholders’

(loss)/income

(in thousands, except share and per share amounts)

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

Balance at March 31, 2021

Income for the period

Other comprehensive loss

Issuance of ordinary shares

Tax benefit past share issuance cost

Exercise of share options

Restricted share units distributed during the period

Share-based compensation expense

Balance at June 30, 2021

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’

(in thousands, except share data)

6 unchanged sentences

Issuance of ordinary shares relating to employee stock purchase plan

Balance at March 31, 2020

Balance at June 30, 2020

Balance at December 31, 2020

Loss for the period

Income for the period

Other comprehensive loss

Issuance of ordinary shares

Tax benefit past share issuance cost

Exercise of share options

2 unchanged sentences

Issuance of ordinary shares relating to employee stock purchase plan

Balance at March 31, 2021

Balance at June 30, 2021

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)

Cash flows from operating activities

Adjustments to reconcile net loss to net cash used in operating activities:

Net income / (loss)

Adjustments to reconcile net income / (loss) to net cash generated from / used in operating activities:

Depreciation and amortization

1 unchanged sentence

Change in fair value of derivative financial instruments

Unrealized foreign exchange gains

Deferred tax expense

Change in deferred revenue

Unrealized foreign exchange gains, net

Other non-cash items, net

Changes in operating assets and liabilities:

Accounts receivable, prepaid expenses, and other current assets

Accounts receivable, prepaid expenses, and other current assets and receivables

Accounts payable

Accrued expenses, other liabilities, and operating leases

Net cash used in operating activities

Net cash generated from / (used) in operating activities

Cash flows from investing activities

6 unchanged sentences

Share issuance costs from issuance of ordinary shares

Proceeds from issuance of shares related to employee stock option and purchase plans

Proceeds from issuance of ordinary shares related to employee stock option and purchase plans

Net cash generated from financing activities

8 unchanged sentences

Cash paid for interest

Non-cash increase 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, 2021, are not necessarily indicative of the results to be expected for the full year ending December 31, 2021 or for any other future year or interim period.

The results of operations for the six months ended June 30, 2021, are not necessarily indicative of the results to be expected for the full year ending December 31, 2021 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, 2020, filed with the SEC on March 1, 2021 .

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, 2020, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 1, 2021 .

There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2021.

There have been no material changes in the Company’s significant accounting policies during the six months ended June 30, 2021 except as noted below.

The Company determined its revenue recognition policies related to the CSL Behring Agreement (defined below) when the CSL Behring Agreement became fully effective on May 6, 2021.

Refer to Note 3 (“Collaboration arrangements and concentration of credit risk”) for further detail.

The Company for the first time recognized net income in the three and six months ended June 30, 2021.

Net income / (loss) per ordinary share was calculated in accordance with ASC 260, Earnings Per Share.

Refer to Note 11 (“Basic and diluted earnings per share”) for further detail.

2.5 Recent accounting pronouncements

There have been no new accounting pronouncements or changes to accounting pronouncements during the three months ended March 31, 2021, as compared to the recent accounting pronouncements described in Note 2.3.22 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 , 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, 2021, as compared to the recent accounting pronouncements described in Note 2.3.22 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 , which could be expected to materially impact the Company’s unaudited consolidated financial statements.

Collaboration arrangements and concentration of credit risk

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”), pursuant to which CSL Behring will receive 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 is entitled to receive a $ 450.0 million upfront cash payment upon the closing of the transaction contemplated by the CSL Behring Agreement and will be eligible to receive up to $ 1.6 billion in additional payments based on regulatory and commercial milestones.

On June 24, 2020, (“Signing”), 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”), pursuant to which CSL Behring received exclusive global rights to etranacogene dezaparvovec, the Company’s investigational gene therapy for patients with hemophilia B, (the “Product”).

On May 6, 2021, the CSL Behring Agreement became fully effective (“Closing”) upon the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 on May 5, 2021.

Pursuant to the CSL Behring Agreement, the Company has received a $ 450.0 million upfront cash payment and $ 12.4 million in other payments related to the transfer of the license, during the three and six months ended June 30, 2021.

The Company is eligible to receive up to $ 1.6 billion in additional payments based on regulatory and commercial milestones.

The CSL Behring Agreement also provides that the Company will 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 the Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization.

Concurrently with the execution of the CSL Behring Agreement, the Company and CSL Behring entered into a development and commercial supply agreement, pursuant to which, among other things, the Company will supply the Product to CSL Behring at an agreed-upon price.

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 the Product.

The effectiveness of the transaction contemplated by the CSL Behring Agreement was contingent on completion of review under antitrust laws in the United States, Australia, and the United Kingdom.

As of March 31, 2021, such regulatory approvals had not been received in the United States.

On May 5, 2021 the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) expired, and as such the CSL Behring Agreement became fully effective on May 6, 2021.

As of March 31, 2021, the Company concluded it has no enforceable right to the upfront payment, the regulatory and sale milestone payments, or the royalties (together “CSL Behring License Revenue”) that the Company will receive in accordance with the CSL Behring Agreement, as all payments were contingent upon the successful completion of reviews, or the expiration of the waiting period, under the HSR Act, which had not occurred as of March 31, 2021.

Therefore, the Company determined to not recognize any revenue in relation to the CSL Behring License Revenue, in accordance with ASC 606 during the three-month period ended March 31, 2021.

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”) following the closing of the transaction.

The Company did no t record any License Fees for the three-month period ended March 31, 2021, as the Company had no t recognized the upfront payment as of this date.

The Company incurred $ 5.0 million of expenses related to the obligations related to the CSL Behring Agreement that had not been satisfied as of March 31, 2021.

The Company capitalized these expenses as contract fulfillment costs (presented within Other current assets).

As of March 31, 2021, the Company also recognized a $ 5.0 million receivable (presented within Accounts receivable) from CSL Behring for expenses for which the Company has a right of reimbursement.

A contract liability was also recognized for the entire amount of expenses for which the Company has a right to reimbursement (presented within Accrued expenses and other current liabilities).

In accordance with ASC 606 it cannot recognize any CSL Behring License Revenue as of this date.

On Signing, the Company and CSL Behring entered into a development and commercial supply agreement, pursuant to which, among other things, the Company will supply the Product to CSL Behring at an agreed-upon price commensurate with the stand-alone selling price (“SSP”).

The Company will be responsible for supplying development and commercial Product until such time that these capabilities may be transferred to CSL Behring or a designated contract manufacturing organization.

The Company will be completing the HOPE-B clinical trial and the validation of the manufacturing process on behalf of CSL Behring, as well as provide further development services if requested by CSL Behring.

Activities related to on-demand development services as well as activities related to the completing the HOPE-B clinical trial will be reimbursed by CSL Behring at an agreed full-time-employee rate (“FTE-rate”) and CSL Behring will also reimburse agreed third-party expenses incurred in relation to performing these activities.

The validation of the manufacturing process as well as the development and validation of a next generation manufacturing process (“Manufacturing Development Services”) will be reimbursed through a future milestone payment.

If completed after certain contractually agreed dates, the milestone payment will be reduced in accordance with a contractually agreed mechanism.

The Company concluded that CSL Behring is a customer in accordance with Topic 606.

The Company identified two material performance obligations related to the CSL Behring Agreement:

(i) Sale of the exclusive global rights to the Product (“License”);

(ii) Generate information to support the regulatory approval of the current and next generation manufacturing process of Product and to provide any such information generated to CSL Behring (“Manufacturing Development”).

These performance obligations are considered distinct from one another, as CSL Behring can benefit from the identified service either on its own or together with other resources that are readily available to CSL Behring, and as the performance obligation is separately identifiable from other performance obligations in the CSL Behring Agreement.

The Company continued to develop the Product between Signing and Closing and performed certain reimbursable activities to fulfill the transfer of the global rights (“Additional Covenants” and together with the License the “License Sale”).

The Additional Covenants are not considered distinct from the performance obligation to sell the license to CSL Behring as CSL Behring could not benefit from the Additional Covenants on their own, or have these activities be performed with readily available resources.

The Company determined that the fixed upfront payment of $ 450.0 million and the $ 12.4 million that the Company received in relation to the Additional Covenants should be allocated to the License Sale.

In addition, the Company concluded that variable milestone payments, sales milestone payments and royalties should be allocated to the License Sale performance obligation as well.

The Company determined that the sale of the License was completed on May 6, 2021, when it transferred the License and CSL Behring assumed full responsibility for the development and commercialization of the Product.

At Closing, the Company evaluated the amount of potential payments and the likelihood that the payments will be received.

The Company utilized the most likely amount method to estimate the variable consideration to be included in the transaction price.

Since the Company cannot control the achievement of regulatory and first commercial sales milestones, the Company concluded that the potential payments are constrained as of Closing.

The Company determined that it will recognize revenue related to these payments only to the extent that it becomes probable that no significant reversal of recognized cumulative revenue will occur thereafter.

The Company will include payments related to sales milestones in the transaction price when their achievement becomes probable, and it will include royalties on the sale of Product once these have been earned.

The Company recognized $ 462.4 million of revenues related to the License Sale in the three and six months ended June 30, 2021.

The costs associated with fulfilling this performance obligation are presented as “Cost of contract revenue” with the exception of the cost incurred prior to the Closing, which had been presented as “Research and development expenses ”.

The Company determined that the variable milestone payment related to Manufacturing Development Services should be allocated to the Manufacturing Development performance obligation.

The Company concluded that this milestone payment represents the SSP of the services based on the estimated cost of providing the services including a reasonable margin.

The services related to Manufacturing Development will be provided between Closing and the completion of an agreed manufacturing development plan.

The variable consideration will be reduced if the Company does not complete the development by pre-agreed dates.

The Company utilized the most likely amount method to estimate the variable consideration to be included in the transaction price.

Completion of Manufacturing Development is partially dependent on the timing of regulatory submissions by CSL Behring as well as regulatory approvals of the developed manufacturing processes.

Since the Company cannot control the timing or outcome of any regulatory decisions, the Company concluded that it would recognize revenue related to this payment when it becomes probable that the milestone has been achieved.

The Company did not recognize any revenue related to Manufacturing Development during the three and six months ended June 30, 2021.

The Company recognized $ 0.4 million of collaboration revenue in the three and six months ended June 30, 2021, compared to nil in the same periods in the prior year.

The Company generates such collaboration revenue from services rendered in relation to completing the HOPE-B clinical trial on behalf of CSL Behring.

CSL Behring may request additional development services or to request the Company to support the transfer of manufacturing to a party designated by CSL Behring.

These collaboration services will be reimbursed at the pre-agreed FTE-rate.

The Company concluded that these rights at Closing do not represent material rights.

As of June 30, 2021, the Company has an accounts receivable of $ 1.3 million from CSL Behring.

The Company collected the $ 2.1 million of accounts receivable related to reimbursable contract fulfillment costs that was outstanding as of December 31, 2020.

Bristol-Myers Squibb collaboration

15 unchanged sentences

The Company includes variable consideration related to any research, development, and regulatory milestone payments, in the transaction price once it is considered probable that including these payments in the transaction price would not result in the reversal of cumulative revenue recognized.

Due to the significant uncertainty surrounding the development of gene-therapy product candidates and the dependence on BMS’s performance and decisions, the Company does no t generally consider this probable and did not record any License Revenue during the three months ended March 31, 2021.

Fair value measurement

9 unchanged sentences

The carrying amount of cash and cash equivalents, accounts receivable, 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, 2021, and December 31, 2020:

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, 2021, and December 31, 2020:

Quoted prices

5 unchanged sentences

Cash and cash equivalents;

restricted cash

other non-current assets

Derivative financial instruments

1 unchanged sentence

Total liabilities

At March 31, 2021

At June 30, 2021

Cash, cash equivalents and restricted cash

Cash and cash equivalents;

restricted cash

other non-current assets

Derivative financial instruments

1 unchanged sentence

Total liabilities

Changes in Level 3 items during the three months ended March 31, 2021, are as follows:

(in thousands)

Balance at December 31, 2020

Net (gains) / losses recognized in profit or loss

Balance at March 31, 2021

The Company recognized no gains or losses related to changes in the fair market value of derivative financial instruments during the three and six months ended June 30, 2021.

Derivative financial instruments

2 unchanged sentences

On December 1, 2020, the Company and BMS agreed that upon the consummation of a change of control transaction of uniQure that occurs prior to December 1, 2026 or BMS’ delivery of a target cessation notice for all four Collaboration Targets, the Company (or its third party acquirer) shall pay to BMS a one-time, non-refundable, non-creditable cash payment of $ 70.0 million, provided that (x) if $ 70.0 million is greater than five percent ( 5.0 %) of the net proceeds (as contractually defined) from such change of control transaction, the payment shall be an amount equal to five percent of such net proceeds, and (y) if $ 70.0 million is less than one percent of such net proceeds, the change of control payment shall be an amount equal to one percent of such net proceeds (“CoC-payment”).

The Company has not consummated any change of control transaction as of March 31, 2021 that would obligate it to make a CoC-payment.

The Company has not consummated any change of control transaction as of June 30, 2021 that would obligate it to make a CoC-payment.

The Company determined that the CoC-payment should be recorded as a derivative financial liability as of December 1, 2020 and that subsequent changes in the fair market value of this derivative financial liability should be recorded in profit and loss.

3 unchanged sentences

The expected cash flows are materially impacted by the probability that market participants assign to the likelihood of the occurrence of a change of control transaction within the biotechnology industry.

The Company estimated this unobservable input using the best information available as of March 31, 2021 and December 31, 2020.

The Company estimated this unobservable input using the best information available as of June 30, 2021 and December 31, 2020.

The Company obtained reasonably available market information that it believed market participants would use in determining the likelihood of the occurrence of a change-of control transaction within the biotechnology industry.

Selecting and evaluating market information involves considerable judgement and uncertainty.

Based on all such information and its judgment the Company estimated that the fair market value of the derivative financial liability (presented within “Other non-current liabilities”) as of March 31, 2021 and December 31, 2020 was $ 2.6 million.

Based on all such information and its judgment the Company estimated that the fair market value of the derivative financial liability (presented within “Other non-current liabilities”) as of June 30, 2021 and December 31, 2020 was $ 2.6 million.

Accrued expenses and other current liabilities

3 unchanged sentences

Personnel related accruals and liabilities

Contract liability (see Note 3.

"Collaboration arrangements")

Contract liability

6 Long-term debt

17 unchanged sentences

The back-end fee is reduced if prepayment occurs at an earlier date.

The amortized cost (including interest due presented as part of accrued expenses and other current liabilities) of the 2018 Amended Facility and 2021 Amended Facility was $ 71.0 million as of March 31, 2021, compared to $ 35.9 million amortized cost for the 2018 Amended Facility as of December 31, 2020, and is recorded net of discount and debt issuance costs.

The foreign currency loss on the facilities in the three months ended March 31, 2021, was $ 3.2 million compared to a foreign currency loss of $ 0.7 million during the same period in 2020 for the 2018 Amended Facility.

Interest expense associated with the 2018 Amended Facility and 2021 Amended Facility during the three months ended March 31, 2021 was $ 1.5 million, compared to $ 0.9 million during the same periods in 2020 for the 2018 Amended Facility.

The amortized cost (including interest due presented as part of accrued expenses and other current liabilities) of the 2018 Amended Facility and 2021 Amended Facility was $ 71.3 million as of June 30, 2021, compared to $ 35.9 million amortized cost for the 2018 Amended Facility as of December 31, 2020, and is recorded net of discount and debt issuance costs.

The foreign currency gain on the facilities in the three months ended June 30, 2021, was $ 0.9 million and the foreign currency loss on the facilities in the six months ended June 30, 2021, was $ 2.2 million, compared to a foreign currency gain of $ 0.7 million and $ 0.0 million during the same periods in 2020 for the 2018 Amended Facility.

Interest expense associated with the 2018 Amended Facility and 2021 Amended Facility during the three and six months ended June 30, 2021, was $ 1.8 million and $ 3.4 million, compared to $ 0.9 million and $ 1.8 million, respectively, during the same periods in 2020 for the 2018 Amended Facility.

As a covenant in the 2018 Amended Facility and 2021 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.

3 unchanged sentences

The 2018 Amended Facility and 2021 Amended Facility contain 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, 2021, the Company was in material compliance with all covenants and provisions.

As of June 30, 2021, the Company was in material compliance with all covenants and provisions.

7 Shareholders’ Equity

1 unchanged sentence

The Company will pay SVB Leerink a commission equal to 3 % of the gross proceeds of the sales price of all ordinary shares sold through it as sales agent under the Sales Agreement.

Through March 31, 2021 the Company issued 859,885 ordinary shares at a weighted average price of $ 33.42 per share, with net proceeds of $ 27.6 million, after deducting underwriting discounts and net of offering expenses.

In March and April 2021, the Company issued 921,730 ordinary shares at a weighted average price of $ 33.52 per share, with net proceeds of $ 29.6 million, after deducting underwriting discounts and net of offering expenses.

The Company defers direct, incremental costs associated to this offering, except for the commission costs to SVB Leerink, which are a reduction to additional paid-in capital, and will deduct these costs from additional paid-in capital in the consolidated balance sheets proportionately to the amount of proceeds raised.

As of March 31, 2021, $ 1.0 million of direct, incremental costs were deducted from additional paid-in capital.

During the three and six months ended June 30, 2021, $ 0.3 million and $ 1.3 million of direct, incremental costs were deducted from additional paid-in capital.

Following the release of the valuation allowance related to the years 2011 to 2018, the Company recognized the tax benefits of share issuance costs incurred in 2014, 2015, 2017 and 2018.

This resulted in an increase of additional paid-in capital of $ 3.0 million in the three and six months ended June 30, 2021.

8 Share-based compensation

3 unchanged sentences

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 March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Research and development

1 unchanged sentence

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

Share options

1 unchanged sentence

Performance share units

As of March 31, 2021, the unrecognized share-based compensation expense related to unvested awards under the 2014 Plans were:

As of June 30, 2021, the unrecognized share-based compensation expense related to unvested awards under the 2014 Plans were:

Weighted average

9 unchanged sentences

Any options that vest must be exercised by the tenth anniversary of the initial grant date.

The following tables summarize option activity under the Company’s 2014 Plans for the three months ended

March 31, 2021:

The following tables summarize option activity under the Company’s 2014 Plans for the six months ended June 30, 2021:

Weighted average

2 unchanged sentences

Outstanding at December 31, 2020

Outstanding at March 31, 2021

Thereof, fully vested and exercisable at March 31, 2021

Thereof, outstanding and expected to vest after March 31, 2021

Outstanding at June 30, 2021

Thereof, fully vested and exercisable at June 30, 2021

Thereof, outstanding and expected to vest after June 30, 2021

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

1 unchanged sentence

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

1.72 % - 1.85 %

0.76 % - 0.83 %

1.21 % - 1.85 %

0.76 % - 1.44%

Expected dividend yield

Restricted share units (“RSUs”)

The following table summarizes the RSUs activity for the three months ended March 31, 2021:

The following table summarizes the RSUs activity for the six months ended June 30, 2021:

Weighted average

2 unchanged sentences

Non-vested at December 31, 2020

Non-vested at March 31, 2021

Non-vested at June 30, 2021

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

2 unchanged sentences

Performance share units (“PSUs”)

The following table summarizes the PSUs activity for the three months ended March 31, 2021:

The following table summarizes the PSUs activity for the six months ended June 30, 2021:

Weighted average

2 unchanged sentences

Non-vested at December 31, 2020

Non-vested at March 31, 2021

Non-vested at June 30, 2021

The PSUs will vest on the third anniversary of the grant, subject to the grantee’s continued employment.

4 unchanged sentences

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 three months ended March 31, 2021, 1,174 ordinary shares were issued under the ESPP compared to 1,801 during the same period in 2020.

As of March 31, 2021, a total of 130,852 ordinary shares remain available for issuance under the ESPP plan compared to a total of 136,406 as of March 31, 2020.

During the six months ended June 30, 2021, 1,174 ordinary shares were issued under the ESPP compared to 3,005 during the same period in 2020.

As of June 30, 2021, a total of 130,852 ordinary shares remain available for issuance under the ESPP plan compared to a total of 135,202 as of June 30, 2020.

Other income during the three and six months ended June 30, 2021, was $ 7.6 million and $ 7.9 million, compared to $ 0.7 million and $ 1.5 million, respectively, during the same periods in 2020.

Other income in 2020 and 2021 includes income from payments received from European authorities to subsidize the Company’s research and development efforts in the Netherlands as well as income from subleasing part of the Amsterdam facility.

In addition, other income during the three and six months ended June 30, 2021 includes $ 1.3 million of employee retention credit received under the U.S.

Coronavirus Aid, Relief, and Economic Security Act, as well as $ 3.0 million related to 69,899 shares in VectorY B.V.

received in conjunction with a settlement agreement entered into in April 2021.

No such income was recorded in 2020.

The Company recorded $ 3.3 million in income tax expense in the three months ended June 30, 2021, and $ 3.5 million in the six months ended June 30, 2021.

The Company recorded no income tax expense during the same periods in 2020.

As of December 31, 2020, the Company had recorded a full valuation allowance against its Dutch net deferred tax assets.

On May 6, 2021, the CSL Behring Agreement became effective (refer to Note 3 “Collaboration arrangements and concentration of credit risk”).

The Company recorded $ 462.4 million of license revenue related to closing the transaction.

The Company intends to record such revenue in its Dutch tax return related to the 12-month period ended December 31, 2020.

As such, the Company expects to file a return showing a taxable profit in the Netherlands in 2020, which would result in the consumption of substantially all of its Dutch net operating losses for the years 2011 to 2018.

The Company’s remaining Dutch net operating tax losses carried forward would relate to 2019.

The Dutch government on June 4, 2021 enacted legislation, whereby such net operating tax losses can be carried forward indefinitely.

The Company expects to continue incurring tax losses for the foreseeable future including 2021.

As such, the Company retained its full valuation allowance related to the net deferred assets as of June 30, 2021.

The adjustment to the Company’s 2020 filing position resulting in the release and consumption of prior year net operating tax losses carried forward was treated as a discrete event in the three months ended June 30, 2021.

The Company allocated part of the release to the tax benefit of share issuance cost incurred in 2014, 2015, 2017 and 2018.

This resulted in an increase of additional paid-in capital as well as deferred tax expenses of $ 3.0 million.

The Company released its valuation allowance against the Company’s deferred tax assets in the United States as of December 31, 2020.

The Company recorded $ 0.2 million deferred tax expense in relation to its operations in the United States during the three month period ended March 31, 2021.

The Company recorded a nil net deferred tax expense in the prior year as it had recorded a valuation allowance against its net deferred tax assets in the United States as of March 31, 2020.

The effective income tax rate of 0.5 % during the three months ended March 31, 2021 is substantially lower than the enacted rated of 25 % in the Netherlands as the Company recorded a valuation allowance against its net deferred tax assets in the Netherlands.

Refer to Note 3 “Collaboration arrangements and concentration of credit risk” for discussion on the effectiveness of the CSL Behring Agreement.

The effective income tax rate during the three months ended March 31, 2020 was 0 % as the Company had recorded a valuation allowance against all its net deferred tax assets.

The closing of the transaction contemplated by the CSL Behring agreement on May 6, 2021 is expected to materially impact the Company’s operating result as well as the taxable income for the year ended December 31, 2021 as well as in future periods.

The Company expects to utilize a material portion of its net operating loss carryforwards in the Netherlands during 2021 as a result of closing the transaction.

As of March 31, 2021 the Company expects to continue incurring tax losses in the years thereafter and expects to record a valuation allowance against all its Dutch net deferred tax assets as of December 31, 2021.

The Company determined the impact which recognition of CSL Behring License Revenue is estimated to have, with regards to the expected effective tax rate of 0 % that was applied with respect to the Company’s Dutch operations as of March 31, 2021, is immaterial.

The Company recorded $ 0.2 million and $ 0.5 million deferred tax expense in relation to its operations in the United States during the three and six months ended June 30, 2021, respectively.

The Company recorded a nil net deferred tax expense in the prior year as it had recorded a valuation allowance against its net deferred tax assets in the United States as of June 30, 2020.

The effective income tax rates of respectively - 0.8 % and - 1.0 % during the three and six months ended June 30, 2021, is substantially lower than the enacted rated of 25 % in the Netherlands as the Company recorded a valuation allowance against its remaining net deferred tax assets in the Netherlands as of December 31, 2020, and June 30, 2021.

11 Basic and diluted earnings per share

Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding, assuming conversion of all potentially dilutive ordinary shares.

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 March 31, 2021 and March 31, 2020, respectively.

In addition, the BMS warrants were not exercisable as of March 31, 2020 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:

(ordinary shares)

BMS warrants (derecognized as of December 1, 2020 - see Note 4, "Fair value measurement")

Stock options under 2014 Plans

Non-vested RSUs and earned PSUs

Stock options under previous option plan

Basic net income / (loss) per ordinary share is computed by dividing net income / (loss) for the period by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per ordinary share are calculated by adjusting the weighted average number of ordinary shares outstanding, assuming conversion of all potentially dilutive ordinary shares.

For the three months and six months ended June 30, 2021, dilutive net income per ordinary share is computed using the treasury method.

The following table provides the calculation of basic and diluted earnings per ordinary share:

Three months ended June 30,

Six months ended June 30,

(in thousands)

Net income / (loss) attributable to ordinary shares

Weighted-average number of ordinary shares outstanding - basic

Stock options under 2014 Plans and previous plan

Non-vested RSUs and PSUs

Employee share purchase plan

Total potential dilutive ordinary shares

11 Subsequent events

Appointment of Chief Operating Officer

Effective May 17, 2021, Pierre Caloz will be appointed as Chief Operating Officer and will be based out of the Amsterdam facility.

Caloz will be responsible for all Manufacturing Operations, Global Chemistry, Manufacturing and Controls development and innovation, and Supply Chain and Facilities.

As a result, Alex Kuta, Ph.D., will transition from Executive Vice President, Operations to Executive Vice President, Quality and Regulatory.

Closing of Collaboration and Licensing transaction with CSL Behring (see also note 3)

On May 5, 2021, the waiting period under the HSR Act expired, and on May 6, 2021 the CSL Behring Agreement became fully effective.

Under the CSL Behring Agreement, the upfront payment of $ 450.0 million was paid to the Company on May 7, 2021.

Additionally, the Company is eligible to receive more than $ 300 million in regulatory and first commercial sale milestones, up to an additional $ 1.3 billion in commercial milestones, and tiered double-digit royalties of up to a low-twenties percentage of net sales of the Product arising from the collaboration.

The Company contractually owes a single-digit percentage of revenue from the collaboration to its licensors.

The Company expects to utilize a material portion of its net operating loss carryforwards in the Netherlands during 2021 as a result of closing the transaction contemplated by 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 the Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization.

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 the Product.

Weighted-average number of ordinary shares outstanding - diluted

The following table presents ordinary share equivalents that were excluded from the calculation of diluted net income / (loss) per ordinary share for the three and six months ended June 30, 2021 and 2020 as the effect of their inclusion would have been anti-dilutive.

Three months ended June 30,

Six months ended June 30,

(in thousands)

Anti-dilutive ordinary share equivalents

Stock options under 2014 Plans and previous plan

Non-vested RSUs and PSUs

Employee share purchase plan

BMS warrants (derecognized as of December 1, 2020 - see Note 4, "Fair value measurement")

Total anti-dilutive ordinary share equivalents

The anti-dilutive ordinary shares are presented without giving effect to the application of the treasury method or exercise prices that exceeded the price of the Company’s ordinary shares as of June 30, 2020.

In addition, the BMS warrants were not exercisable as of June 30, 2020.

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

12 Subsequent event

Business combination

On June 22, 2021, the Company announced that it entered into a definitive transaction agreement under which the Company will acquire Corlieve Therapeutics S.A.S.

(“Corlieve”, together the “Corlieve Transaction”).

The Corlieve Transaction has been approved by the Boards of both companies and does not require the Company’s shareholder approval.

The transaction is subject to customary closing conditions as well as review by the French Ministry of Economy, Finance and Recovery (Ministère de l’Economie, des Finances et de la Relance) pursuant to articles L.151-3 and R.151-1 and seq.

of the French Code Monétaire et Financier.

Currently, the transaction is anticipated to be completed early in the third quarter of 2021.

The Corlieve Transaction strengthens the Company’s pre-clinical program pipeline.

Corlieve’s lead gene therapy program employs miRNA silencing technology to target suppression of aberrantly expressed kainate receptors in the hippocampus of patients with temporal lobe epilepsy (“TLE”) and will be known as AMT-260.

Upon closing of the Corlieve Transaction, the Company expects to pay EUR 46.3 million in cash.

The Company will fund the acquisition from its cash position.

Corlieve’s shareholders are eligible to receive the following additional payments of which up to 25 % will be payable in the Company’s ordinary shares at the Company’s election:

up to EUR 43.7 million in development milestones through Phase I/II and EUR 160.0 million in milestones associated with Phase III development and the approvals of AMT-260 in the U.S and European Union.

The Corlieve Transaction is expected to be accounted for as a business combination, which requires that assets acquired and liabilities assumed be recognized at their fair value as of the acquisition date.

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