What changed in this filing

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Item 1. Financial Statements

2021-10-25 compared with 2021-07-26 · 234 added, 120 removed, 375 unchanged (49% of the section changed)

1 unchanged sentence

UNAUDITED CONSOLIDATED BALANCE SHEETS

September 30,

(in thousands, except share and per share amounts)

6 unchanged sentences

Non-current assets

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

Property, plant and equipment, net of accumulated depreciation of $ 35.9 million as of September 30, 2021 and $ 35.2 million as of December 31, 2020, respectively

Operating lease right-of-use assets

Intangible assets, net

Deferred tax assets

Deferred tax assets, net

Other non-current assets

8 unchanged sentences

Operating lease liabilities, net of current portion

Contingent consideration

Deferred tax liabilities, net

Other non-current liabilities

4 unchanged sentences

Ordinary shares, € 0.05 par value:

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

80,000,000 shares authorized as of September 30, 2021 and 60,000,000 shares authorized as of December 31, 2020 and 46,207,776 and 44,777,799 ordinary shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in-capital

6 unchanged sentences

COMPREHENSIVE INCOME (LOSS)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands, except share and per share amounts)

11 unchanged sentences

Other expense

Income / (loss) from operations

(Loss) / income from operations

Interest income

2 unchanged sentences

Other non-operating gains, net

Income / (loss) before income tax expense

(Loss) / income before income tax expense

Income tax expense

Net income / (loss)

Net (loss) / income

Other comprehensive (loss) / gain:

Foreign currency translation adjustments

Total comprehensive gain / (loss)

Total comprehensive (loss) / gain

Earnings per ordinary share - basic

Basic net income / (loss) per ordinary share

Basic net (loss) / income per ordinary share

Earnings per ordinary share - diluted

Diluted net income / (loss) per ordinary share

Diluted net (loss) / income per ordinary share

Weighted average shares - basic

2 unchanged sentences

UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE THREE-MONTH PERIOD ENDED JUNE 30

FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30

Ordinary shares

2 unchanged sentences

(in thousands, except share and per share amounts)

Balance at March 31, 2020

Balance at June 30, 2020

Loss for the period

1 unchanged sentence

Exercise of share options

Restricted and performance share units distributed during the period

Restricted share units distributed during the period

Share-based compensation expense

Issuance of ordinary shares relating to employee stock purchase plan

Balance at September 30, 2020

Balance at June 30, 2021

Balance at March 31, 2021

Income for the period

Loss for the period

Other comprehensive loss

Issuance of ordinary shares

Tax benefit past share issuance cost

Exercise of share options

1 unchanged sentence

Share-based compensation expense

Balance at June 30, 2021

Issuance of ordinary shares relating to employee stock purchase plan

Balance at September 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

FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30

Ordinary shares

4 unchanged sentences

Loss for the period

Other comprehensive loss

Other comprehensive income

Exercise of share options

2 unchanged sentences

Issuance of ordinary shares relating to employee stock purchase plan

Balance at June 30, 2020

Balance at September 30, 2020

Balance at December 31, 2020

7 unchanged sentences

Issuance of ordinary shares relating to employee stock purchase plan

Balance at June 30, 2021

Balance at September 30, 2021

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

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months ended June 30,

Nine months ended September 30,

(in thousands)

2 unchanged sentences

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

Depreciation and amortization

Depreciation and amortization expense

Share-based compensation expense

Change in fair value of derivative financial instruments

Unrealized foreign exchange gains, net

Deferred tax expense

Changes in fair value of contingent consideration and derivative financial instruments

Unrealized foreign exchange (gains) / loss, net

Other non-cash items, net

5 unchanged sentences

Cash flows from investing activities

Acquisition of Corlieve, net of cash acquired

Purchases of intangible assets

6 unchanged sentences

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

Repayment of debt acquired through acquisition of Corlieve

Net cash generated from financing activities

36 unchanged sentences

GAAP have been omitted.

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 results of operations for the nine months ended September 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 six months ended June 30, 2021 except as noted below.

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

Revenue recognition – CSL Behring Agreement

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 4 “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.

Earnings per ordinary share

The Company recognized net income for the first time in 2021.

The Company had a net loss for the three months ended September 30, 2021.

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

Refer to Note 13 “Basic and diluted earnings per share” for further detail.

Corlieve transaction

The Company acquired Corlieve Therapeutics SAS (“Corlieve”) on July 30, 2021.

The Company determined the accounting for this transaction in accordance with ASC 805, Business Combination.

Refer to Note 3 “Corlieve transaction” for further detail.

2.5 Recent accounting pronouncements

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.

There have been no new accounting pronouncements or changes to accounting pronouncements during the nine months ended September 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.

3 Corlieve transaction

On July 30, 2021 (“Acquisition Date”), the Company acquired Corlieve.

Following Corlieve’s formation in November 2019, Corlieve obtained exclusive licenses to certain patents from two French research institutions that continue to collaborate with the Company.

At the same time Corlieve also obtained an exclusive license from Regenxbio Inc.

to use AAV9 to deliver any sequence that affects the expression of the Glutamate inotropic receptor kainate type subunit 2 (“GRIK 2”) gene sequence in humans.

Corlieve and Regenxbio Inc.

simultaneously entered into a collaboration plan related to agreed joint preclinical research and development activities.

At the Acquisition Date, Corlieve and its Swiss subsidiary, Corlieve Therapeutics AG, employed seven employees.

The Company evaluated the Corlieve transaction as to whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

Based on the provisional fair values of the gross assets acquired, the Company determined the screen test was not met.

The Company further analyzed whether or not the acquired inputs and processes that have the ability to create outputs would meet the definition of a business.

Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets.

Identifiable assets and liabilities of Corlieve, including identifiable intangible assets, were recorded at their fair values as of the Acquisition Date, when the Company obtained control.

The excess of the fair value of the consideration transferred over the fair value of the net assets acquired was recorded as goodwill.

The following table summarizes the provisional fair values assigned to assets acquired and the liabilities assumed by the Company, along with the resulting goodwill, as of the Acquisition Date:

(in thousands)

Consideration

Contingent consideration

Liability related to mandatorily redeemable shares

Fair value of total consideration

Recognized amounts of identifiable assets acquired and liabilities assumed

Current assets including € 2.8 million of cash

Property, plant and equipment

Identifiable intangible asset

Current liabilities

Deferred tax liability, net

Other non-current liabilities

Fair value of net assets acquired

Consideration

On the Acquisition Date, the Company acquired 97.7 % of the outstanding ordinary shares of Corlieve for EUR 44.9 million ($ 53.3 million).

The Company is contractually required to acquire the remaining outstanding ordinary shares in February 2022 following the expiration of a minimum holding period.

The Company recorded a liability related to these mandatorily redeemable shares for an amount of EUR 0.7 million ($ 0.9 million) as of the Acquisition Date.

The Company financed the transaction from its cash on hand.

In addition, Corlieve’s former shareholders are eligible to receive up to EUR 35.8 million ($ 42.5 million) upon achievement of certain development milestones through Phase I/II and EUR 143.1 million ($ 169.9 million) upon achievement of certain milestones associated with Phase III development and obtaining approval to commercialize Corlieve’s target candidate for the treatment of temporal lobe epilepsy (“AMT-260” or “TLE”) in the United States of America and the European Union.

The Company may elect to pay up to 25 % of such milestone payments through the issuance of the Company’s ordinary shares.

As of the Acquisition Date, the Company recorded EUR 20.2 million ($ 24.0 million) as a contingent liability (presented as “Non-current liability”) for the fair value of these milestone payments.

The fair value of the liability for the contingent consideration was determined using unobservable inputs with respect to (i) the probability of achieving the relevant milestones, or probability of success (“POS”), (ii) the estimated timing of achieving such milestones, and (iii) the interest rate used to discount the payments.

The Company determined the fair market value of the contingent consideration by calculating the probability-adjusted payments based on each milestone’s probability of achievement.

The probability-adjusted payments were then discounted to present value using a discount rate representing the Company’s credit risk based on the estimated timing of achieving the milestones.

The unobservable inputs were estimated within a range of inputs.

Varying the inputs within the range of inputs considered by the Company would not result in a material change of the fair value of contingent consideration as of the Acquisition Date.

Increasing the POS of AMT-260 advancing into clinical development by 5 % would increase the fair value of contingent consideration by $ 1.9 million to $ 25.9 million as of the Acquisition Date.

Similarly reducing the estimated timing of achieving such milestones by six months would reduce the fair value of contingent consideration by $ 1.3 million to $ 25.3 million as of the Acquisition Date.

The Company subsequently measures the contingent liability at its fair value.

The fair value of the contingent liability as of September 30, 2021 amounted to EUR 20.5 million ($ 23.8 million).

Changes in fair value of the contingent liability are recognized within research and development expenses in the consolidated statements of operations.

Identified intangible assets

The Company identified various licenses that combined with the results of the research and development activities conducted in relation to AMT-260 since incorporation of Corlieve in 2019 constitute an In-process research and development intangible asset (“IPR&D intangible asset”).

The Company determined the fair value of the IPR&D intangible asset using a present value model based on expected cash flows.

Estimating the amounts and timing of cash flows required to complete the development of AMT-260 as well as net sales, cost of goods sold, and sales and marketing costs involved considerable judgment and uncertainty.

The expected cash flows are materially impacted by the probability of successfully completing the various stages of development (i.e., dosing of first patient in clinical trial, advancing into late-stage clinical development and obtaining approval to commercialize a product candidate) as well as the weighted average cost of capital of 10.4 % used to discount the expected cash flows.

Based on all such information and its judgment the Company estimated the fair value of the IPR&D intangible asset at EUR 53.3 million ($ 63.3 million) as of the Acquisition Date.

The IPR&D intangible asset is considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts and is not amortized.

If and when development is completed, which generally occurs when regulatory approval to market a product is obtained, the associated asset would be deemed finite-lived and would then be amortized based on its respective useful life at that point in time.

In case of abandonment, the IPR&D intangible asset will be written-off.

In accordance with ASC 350, Intangibles – Goodwill and Other, the Company tests indefinite-lived intangible assets for impairment on an annual basis and between annual tests if the Company becomes aware of any events occurring or changes in circumstances that would indicate the fair value of the IPR&D intangible asset is below its carrying amount.

Deferred tax liability, net

Corlieve’s deferred tax assets at the time of acquisition amounted to EUR 1.8 million ($ 2.2 million).

Recognition of the IPR&D intangible asset gave rise to a deferred tax liability of EUR 13.3 million ($ 15.8 million) at the enacted French corporate income tax rate of 25.0 %.

The Company consequently recorded a net deferred tax liability of EUR 11.5 million ($ 13.6 million) as of the Acquisition Date.

Changes in the net deferred tax liability after the Acquisition Date will be recorded in income tax expense in the consolidated statements of operations.

Goodwill represents the excess of total consideration over the estimated fair value of net assets acquired.

The Company recorded EUR 23.8 million ($ 28.2 million) of goodwill in the consolidated balance sheet as of the Acquisition Date.

The Company allocated the goodwill to its only reporting unit.

The Company does not expect any portion of this goodwill to be deductible for tax purposes.

Goodwill is not amortized but is evaluated for impairment on an annual basis and between annual tests, in accordance with ASC 350, Intangibles – Goodwill and Other, if the Company becomes aware of any events occurring or changes in circumstances that would more likely than not reduce the fair value of the corporate reporting unit below its carrying amount.

Provisional fair values

The provisional determination of the fair value for the IPR&D intangible asset required considerable judgment.

As of September 30, 2021, the valuation of this item has not yet been finalized.

The Company will adjust the provisional valuation of identifiable assets and assumed liabilities for any material additional information regarding the fair values that becomes available until it finalized its valuation.

Any such adjustments might also impact the deferred tax liability as well as goodwill.

The finalization of the valuation might change the outcome of the screen test requiring the Company to treat the transaction as an asset acquisition.

In accordance with ASC 805, the Company in this case, among others, would not record any goodwill and expense all identifiable intangible assets without alternative future use.

As of the Acquisition Date, Corlieve held a loan with outstanding amount equal to EUR 1.0 million ($ 1.2 million), which loan was repaid in its entirety in September 2021.

Collaboration arrangements and concentration of credit risk

CSL Behring collaboration

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.

On June 24, 2020, (the “Signing Date”), 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, a day after the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the CSL Behring Agreement became fully effective (“Closing”).

Pursuant to the CSL Behring Agreement, the Company received a $ 450.0 million upfront cash payment and $ 12.4 million in other payments related to the Closing and the transfer of the license.

The Company is eligible to receive up to $ 1.6 billion in additional payments based on the achievement of 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.

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”).

On the Signing Date, 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.

2 unchanged sentences

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.

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

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

2 unchanged sentences

(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”).

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 obligations are separately identifiable from other performance obligations in the CSL Behring Agreement.

The Company continued to develop the Product between the Signing Date 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.

2 unchanged sentences

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.

At Closing, the Company evaluated the amounts 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 determined that it would 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.

Similarly, the Company will record expenses related to its existing license and other agreements as well as its financial advisor for a high single digit percentage of any such revenue recognized associated to meeting a milestone.

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 Company recognized nil and $ 462.4 million of revenues related to the License Sale in the three and nine months ended September 30, 2021, respectively, compared to nil in the same periods in the prior year.

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 ”.

6 unchanged sentences

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 did not recognize any revenue related to Manufacturing Development during the three and nine months ended September 30, 2021.

The Company recognized $ 0.5 million and $ 0.9 million of collaboration revenue in the three and nine months ended September 30, 2021, respectively, 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.

CSL Behring may request additional development services or 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.

As of September 30, 2021, the Company has accounts receivable of $ 1.9 million from CSL Behring.

Following the Closing, 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 six months ended June 30, 2021.

5 Intangible assets, net and Goodwill

The following table presents the Company’s acquired licenses and acquired IPR&D intangible asset:

September 30,

(in thousands)

Acquired licenses

Less accumulated amortization

Acquired licenses, net

Acquired in-process research and development intangible asset

Intangibles, net

As part of its acquisition of Corlieve as of July 30, 2021, the Company identified certain intangible assets related to an IPR&D intangible asset.

Refer to Note 3 “Corlieve transaction.”

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 June 30, 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 September 30, 2021, and December 31, 2020:

Quoted prices

9 unchanged sentences

Total liabilities

At June 30, 2021

At September 30, 2021

Cash, cash equivalents and restricted cash

1 unchanged sentence

other non-current assets

Contingent consideration

Derivative financial instruments

Other non-current liabilities

Consideration for post-acquisition services

Other non-current liabilities

Total liabilities

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 June 30, 2021 that would obligate it to make a CoC-payment.

The Company has not consummated any change of control transaction as of September 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 June 30, 2021 and December 31, 2020.

The Company estimated this unobservable input using the best information available as of September 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 June 30, 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 September 30, 2021 and December 31, 2020 was $ 2.6 million.

Contingent consideration

The Company is required to pay up to EUR 178.8 million ($ 212.4 million) to the former shareholders of Corlieve upon the achievement of contractually defined milestones in connection with the Company’s acquisition of Corlieve (refer to Note 3 “Corlieve transaction” ).

The Company recorded a liability for the fair market value of the contingent consideration of EUR 20.2 million ($ 24.0 million).

The fair market value was determined using unobservable initial inputs with respect to (i) the probability of achieving the relevant milestones, or POS, (ii) the estimated timing of achieving such milestones, and (iii) the interest rate used to discount the payments.

The Company determined the fair market value of the contingent consideration by calculating the probability-adjusted payments based on each milestone’s probability of achievement.

The probability-adjusted payments were then discounted to present value using a discount rate representing the Company’s credit risk.

The unobservable inputs were estimated within a range of inputs.

Varying the inputs within the range of inputs considered by the Company would not result in a material change of the fair value of contingent consideration as of September 30, 2021.

Increasing the POS of AMT-260 advancing into clinical development by 5 % would increase the fair value of contingent consideration by $ 1.9 million to $ 25.7 million as of September 30, 2021.

Similarly reducing the estimated timing of achieving such milestones by six months would reduce would increase the fair value of contingent consideration by $ 1.3 million to $ 25.1 million as of September 30, 2021.

The following table presents the changes in fair value of contingent consideration between the July 30, 2021 Acquisition Date and September 30, 2021:

consideration

(in thousands)

Amount recorded on Acquisition Date

Change in fair value (included within research and development expenses)

Currency translation effects

Balance at September 30, 2021

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities include the following items:

September 30,

(in thousands)

18 unchanged sentences

The principal balance and all accrued but unpaid interest on advances under Tranche B is due on June 1, 2023, which date may be extended by the Company by up to two twelve-month periods.

Advances under Tranche B may not be prepaid prior to July 29, 2021, following which the Company may prepay all such advances without charge.

Advances under Tranche B may now be prepaid without charge as six months have passed since the Company drew down the $ 35.0 million of Tranche B.

The Company owes a back-end fee of 4.85 % of amounts outstanding under Tranche B.

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 $ 71.3 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.

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 $ 71.6 million as of September 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 loss on the facilities in the three months ended September 30, 2021, was $ 1.8 million and the foreign currency loss on the facilities in the nine months ended September 30, 2021, was $ 4.0 million, compared to a foreign currency gain of $ 1.5 million and $ 1.5 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 nine months ended September 30, 2021, was $ 1.9 million and $ 5.2 million, compared to $ 0.9 million and $ 2.7 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 June 30, 2021, the Company was in material compliance with all covenants and provisions.

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

9 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.

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.

In March and April 2021, the Company issued an aggregate of 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.

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.

During the three and nine months ended September 30, 2021, nil and $ 1.3 million, respectively, of direct, incremental costs were deducted from additional paid-in capital.

Following the Closing of the CSL Behring transaction, the Company released and consumed its prior year net operating tax losses carry forward for the years 2011 to 2018.

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

This resulted in an increase of additional paid-in capital of nil and $ 3.0 million in the three and nine months ended September 30, 2021, respectively.

10 Share-based compensation

The Company’s share-based compensation plans include the 2014 Amended and Restated Share Option Plan (the “2014 Plan”) and inducement grants under Rule 5653(c)(4) of the Nasdaq Global Select Market with terms similar to the 2014 Plan (together the “2014 Plans”).

At the annual general meeting of shareholders in June 2021, the Company’s shareholders approved amendments of the 2014 Plan, increasing the shares authorized for issuance by 4,000,000 to a total of 12,601,471 .

At the annual general meeting of shareholders in June 2021, the Company’s shareholders approved an increase in the number of shares authorized for issuance under the 2014 Plan from 8,601,471 to 12,601,471 .

a) 2014 Plans

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

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

3 unchanged sentences

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

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

3 unchanged sentences

Performance share units

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

As of September 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 six months ended June 30, 2021:

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

Weighted average

2 unchanged sentences

Outstanding at December 31, 2020

Outstanding at June 30, 2021

Thereof, fully vested and exercisable at June 30, 2021

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

Outstanding at September 30, 2021

Thereof, fully vested and exercisable at September 30, 2021

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

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Expected volatility

3 unchanged sentences

0.76 % - 1.44 %

1.21 % - 1.85 %

0.76 % - 1.44%

Expected dividend yield

Restricted share units (“RSUs”)

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

The following table summarizes the RSUs activity for the nine months ended September 30, 2021:

Weighted average

2 unchanged sentences

Non-vested at December 31, 2020

Non-vested at June 30, 2021

Non-vested at September 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 six months ended June 30, 2021:

The following table summarizes the PSUs activity for the nine months ended September 30, 2021:

Weighted average

2 unchanged sentences

Non-vested at December 31, 2020

Non-vested at June 30, 2021

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

Non-vested at September 30, 2021

The PSUs granted in 2019 vest on the third anniversary of the grant, subject to the grantee’s continued employment.

The Company granted shares to certain employees in September 2021 that will be earned upon the later of one year of service period or the achievement of certain defined milestones, subject to the grantee’s continued employment.

The Company recognized the compensation cost related to these grants to the extent it considers achievement of the milestones to be probable.

b) Employee share purchase plan (“ESPP”)

3 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 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.

During the nine months ended September 30, 2021, 4,724 ordinary shares were issued under the ESPP compared to 3,282 during the same period in 2020.

As of September 30, 2021, a total of 127,302 ordinary shares remain available for issuance under the ESPP plan compared to a total of 134,925 as of September 30, 2020.

Other income during the three and nine months ended September 30, 2021, was $ 1.7 million and $ 9.6 million, respectively, compared to $ 1.0 million and $ 2.6 million 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.

In addition, other income includes $ 1.3 million and $ 2.6 million of employee retention credits received under the U.S.

Coronavirus Aid, Relief, and Economic Security Act, during the three and nine months ended September 30, 2021, respectively.

Additionally, $ 3.0 million related to the acquisition by the Company of 69,899 shares of VectorY B.V.

in conjunction with a settlement agreement that the Company and VectorY B.V.

entered into in April 2021.

This $ 3.0 million was recorded in other income for the nine months ended September 30, 2021 ( nil for three months ended September 30, 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 $ 0.1 million in income tax expense in the three months ended September 30, 2021, and $ 3.6 million in the nine months ended September 30, 2021.

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

7 unchanged sentences

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.

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

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

1 unchanged sentence

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 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.

The Company recorded $ 0.2 million and $ 0.7 million deferred tax expense in relation to its operations in the United States during the three and nine months ended September 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 September 30, 2020.

In connection with the Corlieve acquisition, the Company recognized a deferred tax liability related to acquired identifiable intangible assets net of net operating tax losses carried forward of EUR 11.5 million ($ 13.6 million) as of the Acquisition Date.

The Company recorded deferred tax income of $ 0.2 million related to reduction of the net deferred tax liability between the Acquisition Date and September 30, 2021 as a result of incurring net operating losses in France.

The effective income tax rates of 0.2 % and - 1.1 % during the three and nine months ended September 30, 2021, respectively, are substantially lower than the enacted rate of 25 % in the Netherlands.

This is a result of the Company recording a valuation allowance against its remaining net deferred tax assets in the Netherlands as of December 31, 2020 and September 30, 2021.

13 Basic and diluted earnings per share

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.

Basic net (loss) / income per ordinary share is computed by dividing net (loss) / income 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.

For the three months and nine months ended September 30, 2021, dilutive net (loss) / 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,

Three months ended September 30,

Nine months ended September 30,

(in thousands)

Net income / (loss) attributable to ordinary shares

Net (loss) / income attributable to ordinary shares

Weighted-average number of ordinary shares outstanding - basic

3 unchanged sentences

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,

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

Three months ended September 30,

Nine months ended September 30,

(in thousands)

4 unchanged sentences

Employee share purchase plan

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

BMS warrants (derecognized as of December 1, 2020 - refer to Note 6, "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.

In addition, the BMS warrants were not exercisable as of September 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.

14 Subsequent events

On October 21, 2021, the Company held an Extraordinary General Meeting of its shareholders and Rachelle Jacques was appointed to the Board of Directors (the “Board”).

Jacques will also serve as a member of the Audit Committee of the Board effective as of October 21, 2021.

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