Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements and the accompanying notes thereto and other disclosures included in this Annual Report on Form 10-K, including the disclosures under “Risk Factors.” Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) and unless otherwise indicated are presented in U.S. dollars.
Except for the historical information contained herein, the matters discussed in this MD&A may be deemed to be forward-looking statements. Forward-looking statement are only predictions based on management’s current views and assumptions and involve risks and uncertainties, and actual results could differ materially from those projected or implied. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Words such as “may,” “expect,” “anticipate,” “estimate,” “intend,” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements.
Overview
We are a leader in the field of gene therapy, seeking to deliver to patients suffering from rare and other devasting diseases single treatments with potentially curative results. We are advancing a focused pipeline of innovative gene therapies, including our clinical candidates for the treatment of Huntington’s disease, ALS, refractory MTLE and Fabry disease. Our internally developed HEMGENIX®, a gene therapy for the treatment of hemophilia B, was approved for commercialization by the FDA in November 2022 and by the EMA in February 2023. In June 2020, we entered into the Commercialization and License Agreement to license HEMGENIX® to CSL Behring, which is responsible for its commercialization. We are manufacturing HEMGENIX® for CSL Behring and are entitled to specific milestone payments and royalties on net sales under the Commercialization and License Agreement. In May 2023, we entered into the Royalty Purchase Agreement for the sale of a portion of the royalty rights due to us from CSL Behring under the Commercialization and License Agreement. On October 5, 2023, we announced a Reorganization (see definition below) of our research and technology programs.
Business Developments
Below is a summary of our recent significant business developments:
Huntington’s disease program (AMT-130)
We are currently conducting a multi-center randomized, controlled, and blinded Phase I/II clinical trial for AMT-130 in the U.S. in which 26 patients with early-manifest Huntington’s disease have been enrolled. The low-dose cohort of this trial includes 10 patients, of which six patients received treatment with AMT-130 and four patients received imitation surgery. The high-dose cohort includes 16 patients, of which 10 patients received treatment with AMT-130 and six patients received imitation surgery. Patients in the high-dose cohort that received imitation surgery had the option to cross over after 12 months if they met the inclusion criteria for the study. In July 2022, we began crossing over patients in the high-dose cohort who received the imitation surgical procedure. Four of the six control patients in the high-dose cohort have been crossed over to treatment (three patients received the high dose and one patient received the low dose). The remaining two control patients in the high-dose cohort did not meet all the inclusion criteria for the study and were not eligible for crossover. All four crossover patients received a short course of immunosuppression therapy concurrent with the administration of AMT-130.
84
Table of Contents
We are also conducting an open-label Phase Ib/II study in the EU and the United Kingdom, which has enrolled 13 patients with the same early-manifest criteria for Huntington’s disease as the U.S. study. Six patients were treated with AMT-130 in the initial low-dose cohort and seven patients were treated in the subsequent high-dose cohort.
In November 2023, we began enrolling patients in a third cohort to further investigate both doses in combination with perioperative immune suppression with a focus on evaluating near-term safety. Up to 12 patients will be treated in this cohort, all of whom will receive AMT-130 using the current, established stereotactic neurosurgical delivery procedure.
In June 2023, we announced interim data, including up to 24-month follow-up, from 26 patients enrolled in the ongoing U.S. Phase I/II clinical trial of AMT-130. In December 2023 we announced updated interim data, including up to 30-month follow-up from the 26 patients enrolled in the ongoing U.S. Phase I/II clinical trial of AMT-130 as well as the 13 patients enrolled in the European Phase Ib/II trial. See “ Business —Our Development of AMT-130 for Huntington’s Disease ” for further information on these interim data and the ongoing clinical trials of AMT-130.
Amyotrophic lateral sclerosis program (AMT-162)
On January 31, 2023, we announced that we had entered into a global licensing agreement with Apic Bio for a one-time, intrathecally administered investigational gene therapy for ALS caused by mutations in SOD1.
We made an initial cash payment in February 2023 of $10.0 million to Apic Bio that was recognized as a research and development expense. We owe up to $43.0 million in milestone payments to Apic Bio if AMT-162 is approved for commercialization in the U.S. and Europe.
Temporal lobe epilepsy program (AMT-260)
AMT-260 is our gene therapy candidate for refractory MTLE. We acquired AMT-260 through our acquisition of uniQure France SAS in July 2021. In September 2023, following the clearance of an IND for AMT-260 in August 2023, we paid EUR 10.0 million ($10.6 million) to the former shareholders of uniQure France SAS, to settle a milestone payment owed in relation to our 2021 acquisition.
85
Table of Contents
Reorganization
On October 5, 2023, we announced that we are implementing a Reorganization. As a result of the Reorganization, we discontinued investments in more than half of our research programs, including AMT-210 for the treatment of Parkinson’s disease and certain technology projects. Following the Reorganization, we are prioritizing advancing our clinical-stage programs to clinical proof of concept.
As a result of the Reorganization, we eliminated approximately 20% of our total workforce and closed our research laboratory in Lexington, Massachusetts. We completed the Reorganization by the end of fiscal year 2023 and incurred costs of approximately $2.5 million for cash expenditures related to employee severance costs. We also incurred costs associated with the closure of a research laboratory in Lexington and associated fixed assets of which the carrying values were determined to not be recoverable as of the cease-use date in November 2023. As part of the Reorganization, we also consolidated all GMP manufacturing into our Lexington manufacturing facility and consolidated process and analytical development into our Amsterdam, Netherlands facility.
As a result of the significant reduction in research activities, Ricardo Dolmetsch, Ph.D., departed as Chief Scientific Officer, effective October 4, 2023. Dr. Dolmetsch served as a scientific consultant through the end of the year. In connection with Dr. Dolmetsch’s transition, the Board of Directors of the Company have appointed Richard Porter, Ph.D., our current Chief Business Officer, to serve as the Company’s Chief Business and Scientific Officer, effective as of October 5, 2023.
Financing
Royalty Financing Agreement
On May 12, 2023, we entered into the Royalty Financing Agreement with the Purchaser. Under the terms of the Royalty Financing Agreement, we received an upfront payment of $375.0 million in exchange for the Purchaser’s rights to the lowest royalty tier on CSL Behring’s worldwide net sales of HEMGENIX® for certain current and future royalties due to us. We are also eligible to receive an additional $25.0 million milestone payment under the Royalty Financing Agreement if 2024 net sales of HEMGENIX® exceed a pre-specified threshold. The Purchaser will receive 1.85 times the upfront payment (or $693.8 million) and 1.85 times the $25.0 million milestone payment (if paid) prior to the First Hard Cap Date or, if such cap is not met, up to 2.25 times the upfront and milestone payment (if paid) through December 31, 2038. If 2024 net sales do not exceed a pre-specified threshold, we will be obligated to pay $25.0 million to the Purchaser but only to the extent that we achieve a future sales milestone under the CSL Behring Agreement. If such milestone payment is not due from CSL Behring, we are not obligated to pay any amounts to the Purchaser.
We retained the rights to all other royalties, as well as contractual milestones totaling up to $1.3 billion, under the terms of the CSL Behring Agreement.
Hercules amendment
Upon entering into the Royalty Financing Agreement, we and Hercules amended the 2021 Restated Facility on May 12, 2023. The 2023 Amended Facility extends the maturity date and interest-only period from December 1, 2025 to January 5, 2027.
Investment in debt securities
In July and September 2023, we invested $272.0 million and EUR 87.0 million (or a total of $366.4 million as of the investment dates) of our cash and cash equivalents into short-term U.S. and European government bonds that are U.S. dollar and euro denominated, respectively. Our investment policy requires us to invest in bonds with the highest investment grade credit rating. As of December 31, 2023, the bonds have remaining maturities ranging from less than one month to seven months. We classify these bonds as held-to-maturity.
86
Table of Contents
CSL Behring collaboration
In June 2023, the first sale of HEMGENIX ® in the U.S. occurred, and in July 2023 we collected the $100.0 million owed to us under the CSL Behring Agreement.
Financial Highlights
Key components of our results of operations include the following:
Year ended December 31,
2023
2022
2021
(in thousands)
Total revenues
$
15,843
$
106,483
$
524,002
Cost of license revenues
(65)
(1,254)
(24,976)
Cost of contract manufacturing revenues
(13,563)
(2,089)
—
Research and development expenses
(214,864)
(197,591)
(143,548)
Selling, general and administrative expenses
(74,591)
(55,059)
(56,290)
Net (loss) / income
(308,478)
(126,789)
329,589
As of December 31, 2023, we had $617.9 million in cash and cash equivalents and investment securities (December 31, 2022: $392.8 million cash and cash equivalents and investment securities). We had a net loss of $308.5 million in 2023, a net loss of $126.8 million in 2022 and net income of $329.6 million in 2021. As of December 31, 2023, we had an accumulated deficit of $890.4 million (December 31, 2022: $581.9 million).
Compared to the year ended December 31, 2023, we expect that our research and development expenses will decline following the Reorganization, until such time we decide to advance one of our gene therapy product candidates into late-stage clinical development.
See “Results of Operations” below for a discussion of the detailed components and analysis of the amounts above.
Critical Accounting Policies and Estimates
In preparing our consolidated financial statements in accordance with U.S. GAAP and pursuant to the rules and regulations promulgated by the SEC we make assumptions, judgments and estimates that can have a significant impact on our net loss/income and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, we evaluate our assumptions, estimates and judgments, including those related to what we believe to be our critical accounting policies. Refer to Note 2 “Summary of significant accounting policies” for a summary of our significant accounting policies.
We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not clear from other sources. Actual results may differ from these estimates under different assumptions, judgments or estimates. We also discuss our critical accounting estimates with the Audit Committee of our Board of Directors.
We consider the following to be our critical accounting estimate:
● Contingent consideration recorded in relation to the uniQure France SAS business combination;
Contingent consideration
On the Acquisition Date of uniQure France SAS we recorded contingent consideration related to amounts potentially payable to uniQure France SAS’s former shareholders. The amounts payable in accordance with the SPA are contingent upon realization of certain milestones associated with the TLE research program. Contingent consideration was measured at fair value at the Acquisition Date with changes in fair value recognized in the consolidated statements of operations in research and development expenses.
Changes in contingent consideration can result from changes in the assumed achievement and timing of estimated milestones and the discount rate used to estimate the fair value of the liability:
87
Table of Contents
● We had used discount rates ranging from 14.0% to 14.4% to calculate the contingent consideration as of December 31, 2022. As of December 31, 2023 we increased the interest rates to a range of 15.3% to 15.6% to reflect increases in market interest rates. An increase in the discount rate reduces the fair value of the contingent consideration liability whereas a decrease in the discount rate increases the fair market value of the contingent consideration liability.
● We need to develop an estimate of when a milestone is expected to be achieved. An achievement of a milestone at a later than currently expected date reduces the fair value of the contingent consideration liability whereas an achievement at an earlier than currently expected date increases the fair value of the contingent consideration liability.
● We initially recorded the contingent consideration liability on the Acquisition Date assuming a 40% probability of advancing the TLE research program into clinical development. We developed this estimate using data from an external study regarding the average likelihood of advancing into clinical development at a certain stage or preclinical development. For the year ended December 31, 2022, we had increased the probability to 66.0% following the commencement of toxicology studies for the TLE program. During the year ended December 31, 2023 we increased the probability to 100.0% following the clearance of the IND application for AMT-260 in August 2023. The increase in probabilities resulted in a $14.2 million expense in the year ended December 31, 2023 and a $4.4 million expense in the year ended December 31, 2022. This also resulted in an increase of the probability that AMT-260 may advance to late-stage development and commercialization.
The fair value of the contingent consideration liability as of December 31, 2023 was $43.0 million and as of December 31, 2022 was $35.3 million. The increase was primarily driven by the increase in the probability of TLE advancing into clinical development to 100% following the clearance of the IND application for AMT-260 in August 2023. If as of December 31, 2023 we had assumed TLE was certain (i.e., 100% probability) to advance into late-stage development and commercialization, then the fair value of the contingent consideration liability would have increased from $43.0 million to $75.9 million. If as of December 31, 2023 we had assumed that we would discontinue development of the TLE program, then we could have released the contingent consideration liability to income.
In prior periods, we have considered the following to be critical accounting estimates but have determined that these are no longer considered critical for the current year:
● Valuation allowance related to Dutch deferred tax assets; and
● Revenue recognition related to CSL Behring milestones
Valuation allowance related to Dutch deferred tax assets
We are subject to corporate taxes in the Netherlands. We have been incurring net operating losses in accordance with the corporate tax laws in almost all years since we founded our business.
As of December 31, 2022, the total amount of net operating losses carried forward under the Dutch tax regime was $264.0 million (December 31, 2021: $228.5 million). We have historically recorded a full valuation allowance. We evaluate all positive and negative evidence including future income from the CSL Behring Agreement in assessing the need for such a full valuation allowance. We concluded that as of December 31, 2022 it is more likely than not that the remaining deferred tax assets will not be realized. If we would have released the full valuation allowance as of December 31, 2022, then we would have recorded up to $74.5 million of deferred tax income during the year ended December 31, 2022. This is no longer considered a critical accounting estimate as future income from the CSL Behring Agreement is not expected to result in a taxable profit.
Revenue recognition related to CSL Behring milestones
On June 24, 2020 (“ Signing Date”), we entered into the CSL Behring Agreement. The transaction became effective on Closing.
As of Closing, we identified two material performance obligations related to the CSL Behring Agreement:
88
Table of Contents
(i) Sale of the exclusive global rights to the Product (“License Sale”); and
(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”).
We determined that the fixed upfront payment of $450.0 million and the $12.4 million that we received in relation to the certain reimbursable activities to fulfill the transfer of global rights (“Additional Covenants”) in the year ended December 31, 2021 should be allocated to the License Sale. In addition, we concluded that $255.0 million of variable milestone payments, sales milestone payments and royalties should be allocated to the License Sale performance obligation as well. We determined that the License Sale was completed on May 6, 2021, when we transferred the license and CSL Behring assumed full responsibility for the development and commercialization of the Product. Upon the Closing, we evaluated the amounts of potential payments and the likelihood that the payments will be received. We utilized the most likely amount method to estimate the variable consideration to be included in the transaction price. Since we cannot control the achievement of regulatory and first commercial sales milestones, we concluded that all potential payments were constrained as of Closing. We determined that we 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. We will include payments related to sales milestones in the transaction price when their achievement becomes probable, and we will include royalties on the sale of Product once these have been earned.
In March and April 2022, we collected the $55.0 million of variable milestone payments related to the submissions of a BLA and MAA which we had recorded as license revenue in the year ended December 31, 2021. During the year ended December 31, 2022, we recorded $100.0 million of variable milestone revenue related to a first sale of HEMGENIX™ and collected this payment in July 2023. We no longer consider this a critical accounting estimate because we currently do not expect to recognize any regulatory milestone payments within the next two years. The recognition of license revenue related to sales milestone payments and royalties does not require significant judgement as we recognize these as sales of HEMGENIX™ occur.
Recently Adopted Accounting Pronouncements
None.
Results of Operations
The following table presents a comparison of the years ended December 31, 2023, 2022 and 2021.
Year ended December 31,
2023
2022
2021
2023 vs 2022
2022 vs 2021
(in thousands)
Total revenues
$
15,843
$
106,483
$
524,002
$
(90,640)
$
(417,519)
Operating expenses:
Cost of revenues
(13,628)
(3,343)
(24,976)
(10,285)
21,633
Research and development expenses
(214,864)
(197,591)
(143,548)
(17,273)
(54,043)
Selling, general and administrative expenses
(74,591)
(55,059)
(56,290)
(19,532)
1,231
Total operating expenses
(303,083)
(255,993)
(224,814)
(47,090)
(31,179)
Other income
6,059
7,171
12,306
(1,112)
(5,135)
Other expense
(1,690)
(820)
(876)
(870)
56
(Loss) / income from operations
(282,871)
(143,159)
310,618
(139,712)
(453,777)
Non-operating (expense) / income, net
(23,686)
14,900
22,188
(38,586)
(7,288)
(Loss) / income before income tax benefit
$
(306,557)
$
(128,259)
$
332,806
(178,298)
(461,065)
Income tax (expense) / benefit
(1,921)
1,470
(3,217)
(3,391)
4,687
Net (loss) / income
$
(308,478)
$
(126,789)
$
329,589
$
(181,689)
$
(456,378)
89
Table of Contents
Revenues and cost of revenues
Our revenues and associated costs for the years ended December 31, 2023, 2022 and 2021 were as follows:
Year ended December 31,
2023
2022
2021
2023 vs 2022
2022 vs 2021
(in thousands)
License revenues
$
2,758
$
100,000
$
517,400
$
(97,242)
$
(417,400)
Contract manufacturing revenues
10,835
1,717
—
9,118
1,717
Collaboration revenues
2,250
4,766
6,602
(2,516)
(1,836)
Total revenues
$
15,843
$
106,483
$
524,002
$
(90,640)
$
(417,519)
Cost of license revenues
(65)
(1,254)
(24,976)
1,189
23,722
Cost of contract manufacturing revenues
(13,563)
(2,089)
—
(11,474)
(2,089)
Total cost
$
(13,628)
$
(3,343)
$
(24,976)
$
(10,285)
$
21,633
CSL Behring
Effective on Closing of the CSL Behring Agreement we sold the exclusive global rights to the Product (“License Sale”). We recognize license revenue in relation to the License Sale when it becomes probable that regulatory and sales milestone events will be achieved as well as when royalties on sales of Product have been earned. We recognized $2.8 million, $100.0 million and $517.4 million of license revenue for the years ended December 31, 2023, 2022 and 2021, respectively. We recognized $2.8 million of license revenue in 2023 related to royalty payments owed on HEMGENIX® sales, when earned. We recognized $100.0 million of license revenue in 2022 related to a milestone payment following the first sale of HEMGENIX ® in the U.S. in 2023, which we considered probable as of December 31, 2022. We recognized $517.4 million license revenue in 2021 related to the fixed upfront payment of $450.0 million and an additional payment of $12.4 million we received after the Closing as well as a total of $55.0 million of payments related to milestone payments owed on submission of the MAA in March 2022 and the BLA in April 2022, which we had considered probable as of December 31, 2021.
We expense contract fulfillment costs associated with license revenue we receive from CSL Behring, which are recognized as costs of license revenues. These expenses primarily consist of payments we owe to our licensors in relation to license payments we receive from CSL Behring. We incurred $0.1 million, $1.3 million and $25.0 million of such cost in the years ended December 31, 2023, 2022 and 2021, respectively.
We recognize collaboration revenues associated with services to CSL Behring in accordance with the CSL Behring Agreement. Collaboration revenue related to these contracted services is recognized when the performance obligations are satisfied. We recognized $2.3 million, $3.0 million and $2.4 million of collaboration revenue for the years ended December 31, 2023, 2022 and 2021, respectively. The decrease in collaboration revenue in 2023 of $0.7 million compared to 2022 was primarily related to a reduction in services requested by CSL Behring following the submissions of the BLA and MAA for HEMGENIX ®. The increase in collaboration revenue in 2022 of $0.6 million compared to 2021 was primarily related to revenues related to full-time-employee (“FTE”) recharges of $3.0 million recognized from the CSL Behring Agreement as a result of additional development services that CSL Behring requested from us.
We recognize contract manufacturing revenues related to contract manufacturing HEMGENIX ® for CSL Behring. Contract manufacturing revenues are realized when earned upon sales of HEMGENIX ® to CSL Behring. We recognized $10.8 million and $1.7 million contract manufacturing revenues in the year ended December 31, 2023 and 2022, respectively. We did not recognize such revenues in 2021 as we started contract manufacturing activities to supply CSL Behring with HEMGENIX ® following their submission of a BLA and MAA in the spring of 2022.
90
Table of Contents
We incurred $13.6 million and $2.1 million of cost of contract manufacturing revenues related to the manufacture of HEMGENIX® in the years ended December 31, 2023 and 2022 respectively, compared to nil cost of contract manufacturing revenues in the year ended December 31, 2021. Costs of contract manufacturing revenues has increased in the year ended December 31, 2023 compared to the year ended December 31, 2022 due to the increase in sales of HEMGENIX® and a write-down of inventory that has a cost basis in excess of its expected net realizable value.
BMS
We recognized collaboration revenues associated with certain pre-clinical analytical development and process development activities that were reimbursable to us by Bristol-Myers Squibb (“BMS”) under the initial collaboration, research and license agreements (“BMS CLA”) and the amended agreements (“amended BMS CLA”) as well as other related agreements. Collaboration revenue related to these contracted services were recognized when performance obligations were satisfied. We recognized nil, $1.8 million and $4.2 million of collaboration revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
Following the termination of the amended BMS CLA on February 22, 2023 we did not recognize any further revenue for services rendered in accordance with the BMS CLA.
Res e arch and development expenses
We expense research and development (“R&D”) expenses as incurred. R&D expenses include costs which relate to our primary activities of biopharmaceutical research and development. Our R&D expenses generally consist of costs incurred for the development of our target candidates, which include:
● employee-related expenses, including salaries, benefits, travel and share-based compensation expense;
● costs incurred for laboratory research, preclinical and nonclinical studies, clinical trials, statistical analysis and report writing, and regulatory compliance costs incurred with clinical research organizations and other third-party vendors;
● costs incurred to conduct consistency and comparability studies;
● costs incurred for the development and improvement of our manufacturing processes and methods;
● costs associated with research activities for enabling technology platforms, such as next-generation vectors, promoters and re-administration of gene therapies;
● costs associated with the rendering of collaboration services;
● payments related to identifiable intangible assets without an alternative future use;
● payments to our licensors for milestones that have been achieved related to our product candidates, including approval of the MAA and BLA for HEMGENIX ® ;
● facilities, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies; and
● changes in the fair value of liabilities recorded in relation to our acquisition of uniQure France SAS.
Our research and development expenses primarily consist of costs incurred for the research and development of our product candidates, which include:
● AMT-130 (Huntington’s disease). We have incurred costs related to preclinical and nonclinical studies of AMT-130 and have been incurring costs related to our U.S. Phase I/II clinical trial since February 2019. Since 2021, we have also incurred costs related to our Phase Ib/II clinical trial in Europe;
● AMT-260 (Temporal lobe epilepsy) . We have incurred costs related to the preclinical development of AMT-260. We acquired this program on July 30, 2021;
● AMT-191 (Fabry disease) . We have incurred costs related to the preclinical development of AMT-191 for the treatment of Fabry disease;
● AMT-162 ( Amyotrophic Lateral Sclerosis caused by mutations in SOD1 ) We have incurred costs related to the acquisition in addition to costs incurred to initiate a Phase I/II clinical trial;
91
Table of Contents
● Etranacogene dezaparvovec (hemophilia B) . We have incurred costs related to the research, development, and production of etranacogene dezaparvovec for the treatment of hemophilia B. Up to the Closing of the CSL Behring Agreement, we incurred costs related to the preparation of a BLA and MAA and for commercialization of the Product. We also incurred costs for manufacturing development. After the Closing, CSL Behring is responsible for the clinical and regulatory development and commercialization of the Product;
● Preclinical research programs . We incurred costs related to the research of multiple preclinical gene therapy product candidates with the potential to treat certain rare and other serious medical conditions; and
● Technology platform development and other related research . We incurred significant research and development costs related to manufacturing and other enabling technologies that are applicable across all our programs.
Our R&D expenses may vary substantially from period to period based on the timing of our research and development activities, including manufacturing campaigns, regulatory submissions, and enrollment of patients in clinical trials. The successful development of our product candidates is highly uncertain. Estimating the nature, timing, or cost of the development of any of our product candidates involves considerable judgement due to numerous risks and uncertainties associated with developing gene therapies, including the uncertainty of:
● the scope, rate of progress and expense of our research and development activities;
● our ability to successfully manufacture and scale-up production;
● clinical trial protocols, speed of enrollment and resulting data;
● the effectiveness and safety of our product candidates; and
● the timing of regulatory approvals.
A change in the outcome of any of these variables with respect to our product candidates that we may develop could mean a significant change in the expenses and timing associated with the development of such product candidate.
Research and development expenses for the year ended December 31, 2023 were $214.9 million, compared to $197.6 million and $143.5 million for the years ended December 31, 2022 and 2021, respectively. Other research and development expenses are separately classified in the table below. These are not allocated as they are deployed across multiple projects under development.
Year ended December 31,
2023
2022
2021
2023 vs 2022
2022 vs 2021
(in thousands)
Amyotrophic lateral sclerosis (AMT-162)
$
16,039
$
—
$
—
$
16,039
$
—
Temporal lobe epilepsy (AMT-260)
13,037
16,199
913
(3,162)
15,286
Huntington's disease (AMT-130)
12,991
19,846
10,529
(6,855)
9,317
Fabry disease (AMT-191)
2,659
2,862
859
(203)
2,003
Etranacogene dezaparvovec (AMT-060/061)
(1,336)
2,474
8,738
(3,810)
(6,264)
Programs in preclinical development and platform related expenses
11,005
7,157
7,986
3,848
(829)
Total direct research and development expenses
$
54,395
$
48,538
$
29,025
$
5,857
$
19,513
Employee and contractor-related expenses
76,702
64,935
55,725
11,767
9,210
Facility expenses
29,490
23,582
18,796
5,908
4,786
Disposables
13,232
17,830
14,679
(4,598)
3,151
Share-based compensation expense
16,881
18,402
12,822
(1,521)
5,580
Fair value changes related to contingent consideration
15,895
7,081
6,683
8,814
398
Other expenses
6,831
17,223
5,818
(10,392)
11,405
Impairment related to the Reorganization
1,438
—
—
1,438
—
Total other research and development expenses
$
160,469
$
149,053
$
114,523
$
11,416
$
34,530
Total research and development expenses
$
214,864
$
197,591
$
143,548
$
17,273
$
54,043
92
Table of Contents
Direct research and development expenses
Amyotrophic Lateral Sclerosis caused by mutations in SOD1 (AMT-162)
On January 31, 2023, we entered into a global licensing agreement with Apic Bio for AMT-162. We have incurred $10.0 million of expenses related to the acquisition. In addition, we have incurred $6.0 million of costs to initiate a Phase I/II clinical trial in 2024.
Temporal lobe epilepsy (AMT-260)
In the years ended December 31, 2023, December 31, 2022 and December 31, 2021, we incurred $13.0 million, $16.2 million and $0.9 million, respectively, expenses for the preclinical development of AMT-260, which we acquired on July 30, 2021. In August 2023, the FDA cleared our IND application, and we started incurring costs for the preparation of a Phase I clinical trial. The decrease in development costs in the year ended December 31, 2023 compared to 2022, results from completing the IND enabling studies, initiated during the year ended December 31, 2022, in the first half of 2023. The increase in development cost in the year ended December 31, 2022, compared to 2021, related to costs incurred in relation to the toxicology study we initiated during the year as well as the manufacturing of supplies for clinical development.
Huntington disease (AMT-130)
We incurred $13.0 million, $19.8 million and $10.5 million expenses in the years ended December 31, 2023, 2022 and 2021 respectively. Our external costs for the development of AMT-130 were primarily related to the execution of our Phase I/II(b) clinical trials in the U.S. and in Europe. We enrolled 26 patients into our U.S. clinical trial between June 19, 2020 and March 21, 2022 and enrolled 13 patients into our European clinical trial between June 23, 2022 and June 21, 2023. The decrease of $6.8 million in external cost in the year ended December 31, 2023 compared to 2022 is a result of enrolling less patients into the clinical trial during 2023, following completion of U.S. enrollment in March 2022. The increase of $9.3 million in external cost in the year ended December 31, 2022 compared to 2021 is a result of increased enrolling activities in 2022, including cross-over patients from our U.S. trial and starting to enroll patients into our European trial in 2022, as well as follow-up activities related to patients enrolled in prior periods.
Fabry disease (AMT-191)
In the years ended December 31, 2023, December 31, 2022 and December 31, 2021, we incurred $2.7 million, $2.9 million and $0.9 million expenses, respectively, primarily related to our preclinical activities. In November 2023, the FDA cleared the IND application, and we started incurring additional costs for Phase I/II clinical trial preparation. The decrease of $0.2 million in external costs in the year ended December 31, 2023 compared to 2022 is a result of completing the IND enabling studies by November 2023. The increase of $2.0 million external costs in the year ended December 31, 2022 compared to 2021 is a result of initiating IND-enabling toxicology studies in August 2022.
Etranacogene dezaparvovec (AMT-060/061)
In the years ended December 31, 2023, December 31, 2022 and December 31, 2021, we incurred $1.4 million income, $2.5 million expenses and $8.7 million expenses, respectively which were primarily related to the Phase II development of the hemophilia B program. After the Closing of the CSL Behring Agreement in May 2021, CSL Behring was responsible for the clinical and regulatory activities and commercialization of the Product. We managed the existing trials on behalf of CSL Behring until such responsibilities were transitioned to CSL Behring in December 2022. Direct research and development expenses related to clinical development incurred in the year ended December 31, 2022 and 2021 are presented net of reimbursements due from CSL Behring. In the same periods , we also incurred costs related to the long-term follow-up of patients in our Phase I/II clinical trial of AMT-060 and our Phase IIb clinical trial of etranacogene dezaparvovec. These costs are also presented net of reimbursements due from CSL Behring.
The decrease of $3.8 million in externals cost in the year ended December 31, 2023 compared to 2022 is a result of transitioning the activities to CSL Behring in December 2022 and winding down the support in early 2023. The decrease of $6.3 million external cost in the year ended December 31, 2022 compared to 2021 is a result of CSL Behring being responsible from May 2021 onwards.
93
Table of Contents
Preclinical programs & platform development
In the years ended December 31, 2023, 2022 and 2021 we incurred $11.0 million, $7.2 million and $8.0 million, respectively, of costs related to our preclinical activities associated with product candidates for various other research programs and technology innovation projects.
Other research & development expenses
● We incurred $76.7 million in employee and contractor expenses in the year ended December 31, 2023 compared to $64.9 million in 2022 and $55.7 million in 2021. The increase in 2023 of $11.8 million, compared to 2022, primarily related to the hiring of new personnel and contractors to support our clinical-stage programs and manufacturing operations as well as incurring $2.2 million in severance costs related to the Reorganization with no such cost incurred in 2022. Our cost increased in 2022 by $9.2 million compared to 2021 primarily as a result of an increase in personnel and contractor related expenses to support the preclinical and clinical trial development of our product candidates;
● We incurred $29.4 million in operating expenses and depreciation expenses related to our rented facilities in the year ended December 31, 2023 compared to $23.6 million in 2022 and $18.8 million in 2021. Our costs increased by $5.9 million in 2023 compared to 2022 as a result of incurring additional operating and depreciation expenses in both our Lexington and Amsterdam facilities. The increase in 2022 compared to 2021 of $4.8 million primarily related to operating expenses and depreciation expense incurred from additional sites in Lexington and increased depreciation expense related to the expansion of the Amsterdam facility in 2021;
● We incurred $13.2 million in disposables costs in the year ended December 31, 2023 compared to $17.8 million in the year ended December 31, 2022 and $14.7 million in the year ended December 31, 2021. The decrease in 2023 related to the reduction in activities in the second half of 2023 due to our Reorganization. The increase in 2022 related to the expansion of our activities to support the development of our product candidates;
● We incurred $16.9 million in share-based compensation expenses in the year ended December 31, 2023 compared to $18.4 million in 2022 and $12.8 million in 2021. The decrease in 2023 of $1.5 million, compared to 2022, is primarily due to forfeitures as a result of the Reorganization and other severance, and a decrease in the fair value of awards granted. This was partially offset by recognizing compensation cost related to performance share units granted in 2021, for which achievement of related performance conditions was deemed probable during the year ended December 31, 2023. The increase in 2022 compared to 2021 of $5.6 million was primarily driven by the increase in awards granted, including those to newly recruited personnel as well as an increase in expense related to performance share units that were deemed probable;
● We incurred $15.9 million of expenses for the year ended December 31, 2023 related to an increase in the fair value of contingent consideration associated with the acquisition of uniQure France SAS, compared to $7.1 million and $6.7 million for the same periods in 2022 and 2021. The increase in 2023 was primarily due to an increase in the probability of making future milestone payments following the dosing of the first patient in Phase I/II clinical trial of AMT-260 after receiving IND acceptance in August 2023;
● We incurred $1.4 million of costs related to the impairment of the Lexington, MA facility right-of-use asset and related leasehold improvements for the year ended December 31, 2023 compared to nil in prior periods; and
● We incurred $6.8 million in other expenses in the year ended December 31, 2023 compared to $17.2 million in 2022 and $5.8 million in 2021. The decrease in costs in 2023 of $10.4 million, compared to 2022, is due to a decrease in contractual license expenses and a reduction in consultant-related expenses. For the year ended December 31, 2023 we incurred $3.1 million in contractual license expenses upon the EMA approval of HEMGENIX® in February 2023 while for the year ended December 31, 2022, we incurred $7.0 million of contractual license expense upon FDA approval of HEMGENIX ® and $1.1 million contractual license expense for a valid patent claim granted within the EU. The increase in 2022 compared to 2021 is primarily related to the contractual license expenses incurred in 2022.
94
Table of Contents
Selling, general and administrative expenses
Our general and administrative expenses consist principally of employee, office, consulting, legal and other professional and administrative expenses. We incurred expenses associated with operating as a public company, including expenses for personnel, legal, accounting and audit fees, board of directors’ costs, directors' and officers' liability insurance premiums, Nasdaq listing fees, expenses related to investor relations and fees related to business development and maintaining our patent and license portfolio. Our selling costs include employee expenses as well as professional fees related to the preparation of a commercial launch of HEMGENIX® and advisory fees related to obtaining the CSL Behring Agreement.
Selling, general and administrative expenses for the year ended December 31, 2023 were $74.6 million, compared to $55.1 million and $56.3 million for the years ended December 31, 2022 and 2021, respectively.
● We incurred $24.8 million in personnel and contractor expenses in 2023 compared to $21.1 million in 2022 and $16.0 million in 2021. The increase in 2023 of $3.7 million, compared to 2022, and the increase in 2022 of $5.1 million, compared to 2021 was primarily related to the hiring of personnel and contractors to support our business operations. In 2023, we also incurred $0.4 million in severance expense related to the Reorganization;
● We incurred $17.4 million of share-based compensation expenses in 2023 compared to $15.5 million in 2022 and $12.8 million in 2021. The increase in 2023 compared to 2022 of $1.8 million was primarily related to an increase in awards granted and from recognizing compensation cost for performance share units granted in December 2021 that were deemed probable in the year ended December 31, 2023 offset by a decrease in expense related to a decrease in the fair value of awards granted. The increase in 2022 compared to 2021 of $2.7 million was primarily related to the increase in awards granted, including those to newly recruited personnel as well as an increase in expense related to performance share units that were deemed probable;
● We incurred $11.7 million in professional fees in 2023 compared to $7.1 million in 2022 and $9.4 million in 2021. We regularly incur accounting, audit and legal fees associated with operating as a public company. In the year ended December 31, 2023, we incurred additional costs in professional fees related to our global licensing agreement with Apic Bio, entering into the Royalty Purchase Agreement, and other corporate initiatives. Additionally, in the year ended December 31, 2021 we incurred professional fees in relation to our licensing transaction with CSL Behring and our acquisition of uniQure France SAS;
● We incurred $3.8 million, $1.0 million and $5.1 million in financial advisory fees in relation to our licensing transaction with CSL Behring in the years ended December 31, 2023, December 31, 2022 and December 31, 2021;
● We incurred $3.8 million in intellectual property fees including registration and professional fees in the year ended December 31, 2023 compared to $1.5 million in 2022 and $2.4 million in 2021. The increase in 2023 compared to 2022 of $2.3 million is mainly related to an increase in professional fees. The decrease in 2022 compared to 2021 of $0.9 million related to a decrease in intellectual property license fees and registration costs; and
● We incurred $11.6 million in other operating expenses in 2023 compared to $7.9 million in 2022 and $8.2 million in 2021. The increase in 2023 compared 2022 of $3.7 million was primarily a result of an increase in information technology expenses.
Other items, net
In the year ended December 31, 2023, we recognized $0.8 million in other expense in relation to a reduction in the fair market value of our equity stake in VectorY B.V. following an October 2023 financing round. We recognized other income of $0.3 million and $3.0 million related to the equity stake for the years ended December 31, 2022 and 2021, respectively. We received the equity stake in VectorY B.V. in conjunction with a settlement agreement that the Company and VectorY B.V. entered into in April 2021.
We recognized nil in other income of employee retention credit under the U.S. CARES Act in the year ended December 31, 2023, compared to nil and $2.6 million of such income for the same periods in 2022 and 2021, respectively.
In 2023, we recognized $5.0 million in income related to payments received from European authorities to subsidize our research and development efforts in the Netherlands compared to $5.6 million in 2022 and $5.3 million in 2021.
95
Table of Contents
Other income for the years ended December 31, 2023, 2022, and 2021 also includes income from the subleasing of a portion of our Amsterdam facility. We present expenses related to such income as other expense.
Other non-operating items, net
Our non-operating items, net, for the years ended December 31, 2023, 2022 and 2021 were as follows:
Year ended December 31,
2023
2022
2021
2023 vs 2022
2022 vs 2021
(in thousands)
Interest income
$
19,562
$
609
$
162
$
18,953
$
447
Interest expense
(41,557)
(11,704)
(7,474)
(29,853)
(4,230)
Foreign currency (losses) / gains, net
(1,691)
23,235
29,660
(24,926)
(6,425)
Other non-operating gains / (losses)
—
2,760
(160)
(2,760)
2,920
Total non-operating (expense) / income, net
$
(23,686)
$
14,900
$
22,188
$
(38,586)
$
(7,288)
We recognize interest income associated with our cash and cash equivalents and investment securities. We recognized $19.6 million interest income in 2023, $0.6 million in 2022 and $0.2 million in 2021. Interest income increased by $19.0 million in 2023 compared to 2022 as a result of earning interest income from investing the proceeds of our May 2023 Royalty Financing Agreement as well as the $100.0 million milestone payment collected from CSL Behring in July 2023 into debt securities. In addition, our interest income in 2023 and 2022 compared to 2021 benefited from an increase in interest rates on cash on hand. Our interest income increased in 2022 by $0.4 million compared to 2021 primarily due to the interest income earned on investment securities.
We recognized $41.6 million interest expense in 2023, $11.7 million in 2022 and $7.5 million in 2021. Interest expense increased by $29.9 million in 2023 compared to 2022 due to an increase in market interest rates related to the Hercules debt as well as the recognition of $26.9 million of accrued interest expense related to the Royalty Financing Agreement that we entered into in May 2023. Our interest expense in 2022 primarily increased by $4.2 million compared to 2021 due to an increase in market interest rates in 2022.
We hold monetary items and enter into transactions in foreign currencies, predominantly in euros and U.S. dollars. We recognize foreign exchange results related to changes in these foreign currencies. In 2023, we recognized a net foreign currency loss of $1.7 million related to our borrowings from Hercules, the Royalty Financing Agreement and our cash and cash equivalents and investment securities as well as loans between entities within the uniQure group, compared to a net gain of $23.2 million in 2022 and a net gain of $29.7 million in 2021.
In 2023, we recognized nil within Other non-operating gains /(losses). In 2022, we recognized a $2.8 million net gain within Other non-operating gains / (losses) related to a decrease in the fair value market value of a derivative financial liability related to the change of control payment (“CoC-payment”) compared to a net loss of $0.2 million in 2021. We recorded a net gain in 2022 as no change of control event had occurred as of the February 22, 2023 Termination Date of the amended BMS CLA. We had recorded a net loss of $0.2 million in 2021 for the increase in the fair market value of the derivative financial liability related to the CoC-payment.
Income tax
We recognized $1.9 million of deferred tax expense in 2023, compared to $1.5 million of deferred tax income in 2022 and $3.2 million of deferred tax expense in 2021. In 2023, deferred tax expense recorded in the U.S., related to the consumption of net operating losses, more than offset the deferred tax income recorded as a result of the buildup of net operating losses by the French entity.
Deferred tax income recorded in 2022 results from deferred tax benefits recorded related to the buildup of net operating losses by the French entity which are partially offset by deferred tax expense recorded in the U.S. as a result of the consumption of net operating losses. In addition, we recorded deferred tax expense resulting from the release of valuation allowance for the tax benefit of share issuance costs within the Netherlands in 2022.
96
Table of Contents
Deferred tax expense recorded in 2021 results from the consumption of net operating tax losses by our U.S. entity as well as deferred tax expense resulting from the release of valuation allowance for the tax benefit of share issuance costs within the Netherlands.
97
Table of Contents
Financial Position, Liquidity and Capital Resources
As of December 31, 2023, we had cash and cash equivalents, restricted cash and investment securities of $621.1 million. Until such time, if ever, as we can generate substantial cash flows from successfully commercializing our proprietary product candidates, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution, and licensing arrangements. Based on our current operating plan, research and development plans and our timing expectations related to the progress of our programs and following the Reorganization, we believe that our cash and cash equivalents and investment securities will fund our operations into second quarter of 2027. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. We expect that we will require additional funding if we decide to advance AMT-130 for our Huntington’s disease gene therapy program or any of our other product candidates into late-stage clinical development. Our material cash requirements include the following contractual and other obligations:
Debt
As of December 31, 2023, we had an outstanding loan amount owed to Hercules for an aggregate principal amount of $100.0 million. Future interest payments and financing fees associated with the loan total $47.6 million, with $13.4 million payable within 12 months. We are contractually required to repay the $100.0 million in full in January 2027.
Leases
We entered into lease arrangements for facilities, including corporate, manufacturing and office space. As of December 31, 2023, we had fixed lease payment obligations of $53.1 million, with $8.3 million payable within 12 months.
Commitments related to acquisition of uniQure France SAS (nominal amounts)
In relation to our acquisition of uniQure France SAS, we entered into commitments to make payments to the former shareholders upon the achievement of certain contractual milestones. The commitments include payments related to post-acquisition services that we agreed to as part of the transaction. In September 2023, we made a payment of EUR 10.0 million ($10.6 million) to the former shareholders of uniQure France SAS following the FDA’s clearance of the IND application for AMT-260. As of December 31, 2023, our remaining commitment amounts include a EUR 30.0 million ($33.1 million) milestone payment due upon treating the first patient in a Phase I/II clinical trial for AMT-260 and EUR 160.0 million ($176.6 million) in potential milestone payments associated with Phase III development and the approvals of AMT-260 in the U.S. and European Union. The timing of achieving these milestones and consequently the timing of payments, as well as whether the milestone will be achieved at all, is generally uncertain. These payments are owed in euro and have been translated at the foreign exchange rate as of December 31, 2023, of $1.10/€1.00. As of December 31, 2023, we expect these obligations will become payable between the first half of 2024 and 2031. If and when due, up to 25% of the milestone payments can be settled with our ordinary shares.
Commitments related to licensors and financial advisors
We have obligations to make future payments to third parties that become due and payable on the achievement of certain development, regulatory and commercial milestones (such as the start of a clinical trial, filing of a BLA, approval by the FDA or product launch) or as a result of collecting payments related to our License Sale to CSL Behring. We also owe payments to a financial advisor related to certain payments we will collect under the CSL Behring Agreement.
The table below summarizes our consolidated cash flow data for the years ended December 31:
Year ended December 31,
2023
2022
2021
(in thousands)
Cash, cash equivalents and restricted cash at the beginning of the period
$
231,173
$
559,353
$
247,680
Net cash used in operating activities
(145,929)
(145,060)
287,959
Net cash used in investing activities
(205,686)
(182,734)
(67,387)
Net cash generated from financing activities
362,721
1,445
94,858
Foreign exchange impact
2,265
(1,831)
(3,757)
Cash, cash equivalents and restricted cash at the end of period
$
244,544
$
231,173
$
559,353
98
Table of Contents
We had previously incurred losses and cumulative negative cash flows from operations since our business was founded by our predecessor entity AMT Holding N.V. in 1998, with the exception of generating income in 2021 after receiving the upfront payment upon Closing of the CSL Behring Agreement. We continue to incur losses in the current period. We recorded a net loss of $308.5 million for the year ended December 31, 2023, and net loss of $126.8 million in 2022, and a net income of $329.6 million in 2021. As of December 31, 2023, we had an accumulated deficit of $890.4 million.
Sources of liquidity
From our first institutional venture capital financing in 2006 through the current period, we funded our operations primarily through private and public placements of equity securities, debt securities, payments from our collaboration partners as well as from selling a portion of royalties due from our collaboration partner CSL Behring. In May 2021, we received a $462.4 million cash payment due from CSL Behring. We have collected $55.0 million related to CSL Behring’s global regulatory submissions for etranacogene dezaparvovec in March and April 2022, and $100.0 million in July 2023 related to the first sale milestone of HEMGENIX® in the U.S., and are eligible to receive additional milestone payments, as well as royalties (to the extent not owed to settle the liability from the Royalty Financing Transaction) on net sales of HEMGENIX®.
On March 1, 2021, we entered into a Sales Agreement with SVB Leerink LLC (“SVB Leerink”) with respect to an at-the-market (“ATM”) offering program, under which we, from time to time in our sole discretion, could offer and sell through SVB Leerink, acting as agent, our ordinary shares, up to an aggregate offering price of $200.0 million. In the year ended December 31, 2021, we received net proceeds of $29.6 million from the issuance of 921,730 ordinary shares under the Sales Agreement that took place during March and April of that year. We paid SVB Leerink a commission equal to 3% of the gross proceeds of the sales price of all ordinary shares sold through it as a sales agent under the Sales Agreement. We did not issue any ordinary shares under the Sales Agreement for the 12-month periods ended December 31, 2023 and December 31, 2022.
On January 29, 2021, we drew down $35 million under a facility agreement with Hercules. We drew down a further $30 million under our 2021 Restated Facility with Hercules in December 2021.
We and Hercules amended the 2021 Restated Facility on May 12, 2023. The 2023 Amended Facility extends the maturity date and interest-only period from December 1, 2025 to January 5, 2027.
We are required to repay the entire principal balance of $100.0 million on the maturity date. The interest rate is adjustable and is the greater of (i) 7.95% and (ii) 7.95% plus the prime rate less 3.25% per annum. Under the 2023 Amended Facility, we owe a back-end fee of $4.9 million on December 1, 2025 and a back-end fee of $1.3 million on January 5, 2027.
We are subject to certain covenants under the 2023 Amended Facility and may become subject to covenants under any future indebtedness that could limit our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends, which could adversely impact our ability to conduct our business. In addition, our pledge of assets as collateral to secure our obligations under the 2023 Amended Facility may limit our ability to obtain debt financing. The 2023 Amended Facility permits us to issue up to $500.0 million of convertible debt.
To the extent we need to finance our cash needs through equity offerings or debt financings, such financing may be subject to unfavorable terms including without limitation, the negotiation and execution of definitive documentation, as well as credit and debt market conditions, and we may not be able to obtain such financing on terms acceptable to us or at all. If financing is not available when needed, including through debt or equity financings, or is available only on unfavorable terms, we may be unable to meet our cash needs. If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, which could have a material adverse effect on our business, financial conditions, results of operations and cash flows.
99
Table of Contents
Net Cash used in / generated from operating activities
Year ended December 31,
2023
2022
2021
(in thousands)
Cash flows from operating activities
Net (loss) / income
$
(308,478)
$
(126,789)
$
329,589
Adjustments to reconcile net (loss) /income to net cash (used in) / generated from operating activities:
Depreciation, amortization and impairment
11,900
8,537
7,299
Amortization of premium/discount on investment securities
(10,917)
—
—
Share-based compensation expense
35,093
34,204
25,635
Royalty financing agreement interest expense
26,933
—
Deferred tax expense / (income)
1,921
(1,470)
3,210
Change in fair value of contingent consideration and derivative financial instrument, net
15,895
4,320
6,843
Unrealized foreign exchange (gains) / losses, net
(2,206)
(22,083)
(31,335)
Other items, net
4,721
1,605
(2,800)
Changes in operating assets and liabilities:
Accounts receivable, prepaid expenses, and other current assets and receivables
(1,323)
(4,083)
(3,959)
Contract asset related to CSL Behring milestone payments
100,000
(45,000)
(55,000)
Inventories
(6,740)
(6,924)
-
Accounts payable
(4,169)
9,238
(727)
Accrued expenses, other liabilities, and operating leases
(6,645)
3,385
9,204
Contingent consideration milestone payment
(1,914)
—
-
Net cash (used in) / generated from operating activities
$
(145,929)
$
(145,060)
$
287,959
Net cash used in operating activities was $145.9 million for the year ended December 31, 2023, and consisted of a net loss of $308.5 million adjusted for non-cash items, including depreciation, amortization and impairment expense of $11.9 million, amortization of the premium/discount on investment securities of $10.9 million, share-based compensation expense of $35.1 million, $26.9 million of interest expense related to the royalty financing agreement, a change in deferred taxes of $1.9 million, $15.9 million change in the fair value of contingent consideration and unrealized foreign exchange gains of $2.2 million. Net cash generated from operating activities also included favorable changes in operating assets and liabilities of $81.1 million. There was a net increase in accounts receivable, prepaid expenses, and other current assets and receivables of $1.3 million. There was a net decrease in contract assets of $100.0 million related to the collection of the $100.0 million milestone due from CSL Behring in July 2023 . There was an increase in inventory balances of $6.7 million. There was a net decrease in accounts payable, accrued expenses, other liabilities, and operating leases of $10.8 million, primarily related to a decrease of $4.2 million in accounts payable and a decrease of $6.6 million related to various accruals. Net cash used in operating activities also includes a payment for a contingent consideration milestone of $1.9 million.
Net cash used in operating activities was $145.1 million for the year ended December 31, 2022, and consisted of a net loss of $126.8 million adjusted for non-cash items, including depreciation and amortization expense of $8.5 million, share-based compensation expense of $34.2 million, changes in the fair value of contingent consideration and the derivative financial liability of $4.3 million, unrealized foreign exchange gains of $22.1 million and a change in deferred taxes of $1.5 million. Net cash generated from operating activities also included unfavorable changes in operating assets and liabilities of $43.4 million. There was a net increase in accounts receivable, prepaid expenses, and other current assets and receivables of $4.1 million. There was a net increase in contract assets related to CSL Behring milestone payments of $45.0 million. The net increase related to $100.0 million recognized as a contract asset in the current period and collection of $55.0 million of the contract asset related to the CSL milestones of $55.0 million in March 2022 and April 2022. There was an increase in inventories of $6.9 million related to the production of HEMGENIX ® under the CSL Behring Agreement. These changes also relate to a net increase in accounts payable, accrued expenses, other liabilities, and operating leases of $12.6 million, primarily related to an increase in accounts payable.
100
Table of Contents
Net cash generated from operating activities was $288.0 million for the year ended December 31, 2021, and consisted of net income of $329.6 million adjusted for non-cash items, including depreciation and amortization expense of $7.3 million, share-based compensation expense of $25.6 million, a change in fair value of contingent consideration of $6.8 million, unrealized foreign exchange gains of $31.3 million, a change in deferred taxes of $3.2 million and other non-cash items, net, of $2.8 million. Net cash generated from operating activities also included unfavorable changes in operating assets and liabilities of $50.3 million, which includes $55.0 million recognized as a contract asset related to probable CSL Behring milestone payments. Additionally, these changes also related to a net increase in accounts receivable, prepaid expenses, and other current assets and receivables of $4.0 million primarily related to an increase in various prepaids, including those related to clinical trials, partially offset by decrease in receivables as a result of collection of the BMS milestone that was recorded as of December 31, 2020 and collection of the CSL Behring receivables recorded as of December 31, 2020 for expenses for which we had a right of reimbursement and a net increase in accounts payable, accrued expenses, other liabilities, and operating leases of $8.5 million primarily related to an increase in various accruals for goods received from and services provided by vendors and an increase in personnel accrual s. Net income primarily consisted of $462.4 million license revenue recognized on Closing and $55.0 million license revenue related to CSL Behring’s global regulatory submissions for etranacogene dezaparvovec that occurred in March and April 2022 and were considered probable on December 31, 2021.
Net cash used in investing activities
In 2023, we used $205.7 million in our investing activities compared to $182.7 million in 2022 and $67.4 million in 2021.
Year ended December 31,
2023
2022
2021
(in thousands)
Investment in investment securities
$
(366,439)
$
(163,146)
$
—
Proceeds from maturity of investment securities
167,907
—
—
Build out of Amsterdam site
(3,389)
(11,904)
(12,412)
Build out of Lexington site
(3,765)
(5,784)
(5,026)
Acquisition of uniQure France SAS, net of cash acquired
—
(1,900)
(49,949)
Net cash used in investing activities
$
(205,686)
$
(182,734)
$
(67,387)
In the years ended December 31, 2023 and 2022, we invested $366.4 million and $163.1 million, respectively, of our cash on hand into euro and dollar denominated government bonds. We made no such investments in 2021. In the year ended December 31, 2023 we received $167.9 million in proceeds from the maturing of investments securities.
In 2023, we invested $3.4 million in the build out of our Amsterdam site compared to $11.9 million in 2022 and $12.4 million in 2021. Our investments in 2023 and 2022 related to investments into equipment while in 2021 investments primarily related to the construction of additional laboratories to support the expansion of our research and development activities as well as the construction of a cleanroom designed to be capable of manufacturing cGMP materials at a 500-liter scale.
In 2023, we invested $3.8 million in our facility in Lexington compared to $5.8 million in 2022 and $5.0 million in 2021. Our investments in 2023 are a result of improvements made to the lease facility and investment in office and laboratory equipment.
We paid EUR 1.8 million ($1.9 million) to acquire the remaining outstanding shares of uniQure France SAS in February, July and September 2022. We paid EUR 42.1 million ($49.9 million), net of EUR 2.8 million ($3.3 million) of cash acquired, during the year ended December 31, 2021 to acquire 97.7% of the outstanding ordinary shares of uniQure France SAS on July 30, 2021.
101
Table of Contents
Net cash generated from financing activities
Year ended December 31,
2023
2022
2021
(in thousands)
Cash flows from financing activities
Proceeds from Royalty Financing Agreement, net of debt issuance costs
$
370,062
$
-
$
-
Contingent consideration milestone payment
(7,649)
-
-
Proceeds from issuance of shares related to employee stock option and purchase plans
308
1,445
2,798
Proceeds from loan increment, net of debt issuance costs
-
-
64,067
Proceeds from issuance of ordinary shares, net of issuance costs
-
-
29,565
Repayment of debt assumed through the acquisition of uniQure France SAS
-
-
(1,572)
Net cash generated from financing activities
$
362,721
$
1,445
$
94,858
In June 2023, we received $370.1 million net proceeds from the Royalty Financing Agreement.
In September 2023, following the FDA’s clearance of the IND application for AMT-260, we made a payment of $10.6 million to the former shareholders of uniQure France SAS based on contractually defined milestones. $9.6 million of this payment related to a contingent consideration of which $7.6 million was classified as cash flows from financing activities and $1.9 million was classified as a net cash flow used in operating activities.
In 2023, we received $0.3 million from the exercise of options to purchase ordinary shares issued in accordance with our share incentive plans, compared to $1.4 million in 2022 and $2.8 million in 2021.
In January 2021, we received $34.6 million net proceeds from the 2021 Amended Facility and in December 2021 we received $29.5 million net proceeds from the 2021 Restated Facility for combined net proceeds of $64.1 million (nil in 2023 and 2022).
We received net proceeds of $29.6 million associated with our ATM offering in March and April 2021. No such proceeds were received in 2023 or 2022.
Upon the acquisition of uniQure France SAS, uniQure France SAS held loans with an outstanding amount equal to EUR 1.4 million ($1.6 million). During the year ended December 31, 2021, the loans were repaid in their entirety.
Funding requirements
Our future capital requirements will depend on many factors, including but not limited to:
● contractual milestone payments and royalties we might be owed in accordance with the CSL Behring Agreement;
● earnout payments we might owe the former shareholders of uniQure France SAS, which are subject to the achievement of specific development and regulatory milestones;
● the scope, timing, results, and costs of our current and planned clinical trials, including those for AMT-130 in Huntington’s disease;
● the scope, obligations and restrictions on our business related to our existing equity, debt or royalty monetization financings and underlying agreements;
● the extent to which we acquire or in-license other businesses, products, product candidates or technologies;
● the amount and timing of revenue, if any, we receive from manufacturing products for CSL Behring;
● the scope, timing, results and costs of preclinical development and laboratory testing of our additional product candidates;
● the need for additional resources and related recruitment costs to support the preclinical and clinical development of our product candidates;
● the need for any additional tests, studies, or trials beyond those originally anticipated to confirm the safety or efficacy of our product candidates and technologies;
● the cost, timing and outcome of regulatory reviews associated with our product candidates;
102
Table of Contents
● our ability to enter into collaboration arrangements in the future;
● the costs and timing of preparing, filing, expanding, acquiring, licensing, maintaining, enforcing, and prosecuting patents and patent applications, as well as defending any intellectual property-related claims; and
● the costs associated with maintaining quality compliance and optimizing our manufacturing processes, including the operating costs associated with our Lexington, Massachusetts manufacturing facility.