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Interim Condensed Financial Statements (Unaudited)
Interim Condensed Financial
Statements (Unaudited) (IFRS) as of and for the three and nine months ended September 30, 2017
EPFL Innovation Park
| Notes | As of September 30, 2017 | As of December 31, 2016 | ||||||||
| in CHF thousands | ||||||||||
| ASSETS | ||||||||||
| Non-current assets | ||||||||||
| Property, plant and equipment | 5 | 2,534 | 1,120 | |||||||
| Financial assets | 126 | 86 | ||||||||
| Total non-current assets | 2,660 | 1,206 | ||||||||
| Current assets | ||||||||||
| Prepaid expenses | 6 | 1,984 | 1,278 | |||||||
| Accrued income | 829 | 889 | ||||||||
| Finance receivable | 7 | 98 | - | |||||||
| Other current receivables | 8 | 2,660 | 517 | |||||||
| Cash and cash equivalents | 117,210 | 152,210 | ||||||||
| Total current assets | 122,781 | 154,894 | ||||||||
| Total assets | 125,441 | 156,100 | ||||||||
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||||||||
| Shareholders' equity | ||||||||||
| Share capital | 1,143 | 1,135 | ||||||||
| Share premium | 188,215 | 188,166 | ||||||||
| Accumulated losses | (76,686 | ) | (46,921 | ) | ||||||
| Total shareholders' equity | 112,672 | 142,380 | ||||||||
| Non-current liabilities | ||||||||||
| Accrued interest - long-term | 7 | 86 | - | |||||||
| Long-term financing obligation | 7 | 392 | - | |||||||
| Net employee defined benefit liabilities | 4,065 | 3,798 | ||||||||
| Total non-current liabilities | 4,543 | 3,798 | ||||||||
| Current liabilities | ||||||||||
| Trade payables and other payables | 1,361 | 4,035 | ||||||||
| Accrued expenses | 6,825 | 5,366 | ||||||||
| Deferred income | 40 | 521 | ||||||||
| Total current liabilities | 8,226 | 9,922 | ||||||||
| Total liabilities | 12,769 | 13,720 | ||||||||
| Total shareholders' equity and liabilities | 125,441 | 156,100 |
notes form an integral part of these Interim Condensed Financial Statements (Unaudited).
Statements of Income / (Loss)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||
| Notes | 2017 | 2016 | 2017 | 2016 | ||||||||||||||
| in CHF thousands except for share and per share data | ||||||||||||||||||
| Revenue | ||||||||||||||||||
| Contract revenue | 3 | 1,074 | 1,333 | 3,834 | 21,784 | |||||||||||||
| Total revenue | 1,074 | 1,333 | 3,834 | 21,784 | ||||||||||||||
| Operating expenses | ||||||||||||||||||
| Research & development expenses | (8,195 | ) | (7,696 | ) | (22,508 | ) | (18,714 | ) | ||||||||||
| General & administrative expenses | (2,519 | ) | (1,713 | ) | (7,053 | ) | (4,464 | ) | ||||||||||
| Total operating expenses | (10,714 | ) | (9,409 | ) | (29,561 | ) | (23,178 | ) | ||||||||||
| Operating loss | (9,640 | ) | (8,076 | ) | (25,727 | ) | (1,394 | ) | ||||||||||
| Interest expense | (11 | ) | - | (86 | ) | - | ||||||||||||
| Finance income/(expense), net | 858 | (1,026 | ) | (4,762 | ) | (935 | ) | |||||||||||
| Finance result, net | 9 | 847 | (1,026 | ) | (4,848 | ) | (935 | ) | ||||||||||
| Income/(loss) before tax | (8,793 | ) | (9,102 | ) | (30,575 | ) | (2,329 | ) | ||||||||||
| Income tax expense | - | - | - | - | ||||||||||||||
| Income/(loss) for the period | (8,793 | ) | (9,102 | ) | (30,575 | ) | (2,329 | ) | ||||||||||
| Earnings/(loss) per share (EPS): | 4 | |||||||||||||||||
| Basic and diluted income/(loss) for the period attributable to equity holders | (0.15 | ) | (0.18 | ) | (0.54 | ) | (0.05 | ) | ||||||||||
| Weighted-average number of shares used to compute EPS basic and diluted | 57,164,145 | 49,543,058 | 57,023,032 | 47,993,347 |
| Statements of Comprehensive Income / (Loss) | For the Three months ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| in CHF thousands | ||||||||||||||||
| Income/(Loss) for the period | (8,793 | ) | (9,102 | ) | (30,575 | ) | (2,329 | ) | ||||||||
| Other comprehensive loss not to be reclassified to income or loss in subsequent periods (net of tax): | ||||||||||||||||
| Re-measurement losses on defined benefit plans | - | (184 | ) | - | (552 | ) | ||||||||||
| Total comprehensive income/(loss), net of tax | (8,793 | ) | (9,286 | ) | (30,575 | ) | (2,881 | ) |
The accompanying notes form an integral
part of these Interim Condensed Financial Statements (Unaudited).
Statements of Changes in Equity
| Notes | Share capital | Share premium | Accumulated losses | Total | ||||||||||||||
| in CHF thousands | ||||||||||||||||||
| Balance as of January 1, 2016 | 928 | 110,496 | (40,381 | ) | 71,043 | |||||||||||||
| Net income for the period | - | - | (2,329 | ) | (2,329 | ) | ||||||||||||
| Other comprehensive (loss) | - | - | (552 | ) | (552 | ) | ||||||||||||
| Total comprehensive income | - | - | (2,881 | ) | (2,881 | ) | ||||||||||||
| Share-based payments | - | - | 350 | 350 | ||||||||||||||
| Issuance of shares: | ||||||||||||||||||
| preferred Series E extension shares | 28 | 13,177 | - | 13,205 | ||||||||||||||
| exercise of options | 32 | 200 | - | 232 | ||||||||||||||
| Net proceeds from IPO before transaction costs | 138 | 69,144 | - | 69,282 | ||||||||||||||
| Transaction costs | - | (5,022 | ) | - | (5,022 | ) | ||||||||||||
| Balance as of September 30, 2016 | 1,126 | 187,995 | (42,912 | ) | 146,209 |
| Share capital | Share premium | Accumulated losses | Total | |||||||||||||||
| in CHF thousands | ||||||||||||||||||
| Balance as of January 1, 2017 | 1,135 | 188,166 | (46,921 | ) | 142,380 | |||||||||||||
| Net loss for the period | - | - | (30,575 | ) | (30,575 | ) | ||||||||||||
| Other comprehensive loss | - | - | - | - | ||||||||||||||
| Total comprehensive loss | - | - | (30,575 | ) | (30,575 | ) | ||||||||||||
| Share-based payments | - | - | 824 | 824 | ||||||||||||||
| Issuance of shares: | ||||||||||||||||||
| restricted share awards | - | 14 | (14 | ) | - | |||||||||||||
| exercise of options | 8 | 35 | - | 43 | ||||||||||||||
| Balance as of September 30, 2017 | 1,143 | 188,215 | (76,686 | ) | 112,672 |
The accompanying notes form an integral
part of these Interim Condensed Financial Statements (Unaudited).
Statements of Cash Flows
| For the Nine Months Ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| in CHF thousands | ||||||||
| Operating activities | ||||||||
| Net income/(loss) for the period | (30,575 | ) | (2,329 | ) | ||||
| Adjustments to reconcile net loss for the period to net cash flows: | ||||||||
| Depreciation of property, plant and equipment | 400 | 198 | ||||||
| Finance result, net | 4,776 | 935 | ||||||
| Share-based compensation expense | 824 | 350 | ||||||
| Changes in pensions | 267 | 123 | ||||||
| Accrued interest on long-term debt | 86 | - | ||||||
| Changes in working capital: | ||||||||
| Prepaid expenses | (706 | ) | (493 | ) | ||||
| Accrued income | 60 | (340 | ) | |||||
| Other current receivables | (2,143 | ) | (603 | ) | ||||
| Other current liabilities | 1,459 | 1,144 | ||||||
| Deferral of unearned revenue (current) | (481 | ) | 1,261 | |||||
| Accounts payable | (2,601 | ) | 1,113 | |||||
| Long-term financing obligation | 189 | - | ||||||
| Cash used in operating activities | (28,445 | ) | 1,359 | |||||
| Financial costs | (8 | ) | (87 | ) | ||||
| Net cash flows used in operating activities | (28,453 | ) | 1,272 | |||||
| Investing activities | ||||||||
| Purchases of property, plant and equipment | (1,795 | ) | (613 | ) | ||||
| Rent deposit | (40 | ) | - | |||||
| Net cash flows used in investing activities | (1,835 | ) | (613 | ) | ||||
| Financing activities | ||||||||
| Proceeds from issuance of preferred Series E shares | - | 13,205 | ||||||
| Proceeds from issuance of shares | - | 69,388 | ||||||
| Transaction costs of issue of shares | - | (1,548 | ) | |||||
| Proceeds from issuance of common shares - option plan | 43 | 232 | ||||||
| Cost on issue of shares - option plan | - | (18 | ) | |||||
| Proceeds from long-term financing | 100 | - | ||||||
| Net cash flows provided by financing activities | 143 | 81,259 | ||||||
| Net increase/(decrease) in cash and cash equivalents | (30,145 | ) | 81,918 | |||||
| Cash and cash equivalents at January 1 | 152,210 | 76,522 | ||||||
| Exchange gain/(loss) on cash and cash equivalents | (4,855 | ) | (848 | ) | ||||
| Cash and cash equivalents at September 30 | 117,210 | 157,592 | ||||||
| Net decrease/(increase) in cash and cash equivalents | (30,145 | ) | 81,918 |
Additional Information:
A non-cash increase to long-term financing
obligation totaling CHF 98 thousand was recognized in the Balance Sheet with a corresponding increase to finance receivable. Please
see Note 7 for further discussion.
The accompanying notes form an integral
part of these Interim Condensed Financial Statements (unaudited).
Notes to the Interim Condensed Financial Statements (Unaudited)
(in CHF thousands, except share and per share amounts)
AC Immune SA (the "Company,"
or "AC Immune," "ACI," "we," "our," "ours," "us") is a
clinical stage biopharmaceutical company leveraging our two proprietary technology platforms to discover, design and develop novel,
proprietary medicines for prevention, diagnosis and treatment of neurodegenerative diseases associated with protein misfolding.
Misfolded proteins are generally recognized as the leading cause of neurodegenerative diseases, such as Alzheimer's disease,
or AD, and Parkinson's disease, or PD, with common mechanisms and drug targets, such as Abeta, tau and alpha-synuclein. Our
corporate strategy is founded upon a three-pillar approach that targets Alzheimer's Disease, non-Alzheimer's neurodegenerative
diseases including neuro-orphan indications and diagnostics. Our lead product candidate is crenezumab, a humanized, monoclonal,
conformation-specific anti-Abeta antibody that we developed using our proprietary SupraAntigen platform. The two Phase 3 clinical
studies for crenezumab were commenced in early 2016 and in February 2017, respectively. We use our two unique proprietary platform
technologies, SupraAntigen (conformation-specific biologics) and Morphomer (conformation-specific small molecules), to discover,
design and develop medicines and diagnostics to target misfolded proteins.
The Interim Condensed Financial Statements
of AC Immune SA as of and for the three and nine months ended September 30, 2017 were authorized for issuance by the Company's
Audit Committee on November 6, 2017.
Statement of compliance
These Interim Condensed Financial Statements
as of and for the three and nine months ended September 30, 2017 have been prepared in accordance with International Accounting
Standard 34 (IAS 34), Interim Financial Reporting, and such financial information should be read in conjunction with the
audited financial statements in the Company's Annual Report on Form 20-F for the year ended December 31, 2016.
Basis of measurement
The financial statements have been prepared
under the historical cost convention.
We estimate the fair value of non-vested
stock awards (restricted stock and restricted stock units) as being equal to the market value of the common stock on the date of
the award. We classify our share-based payments as equity-classified awards as they are settled in shares of our common stock.
We measure equity-classified awards at their grant date fair value and do not subsequently remeasure them. Compensation costs related
to equity-classified awards are equal to the fair value of the award at grant-date amortized over the vesting period of the award
using the graded method. We reclassify that portion of vested awards to share premium as the awards vest.
Critical judgments and accounting estimates
The preparation of the Company's
interim condensed financial statements in conformity with IAS 34 requires management to make judgments, estimates and assumptions
that affect the amounts reported in the interim condensed financial statements and accompanying notes and the related application
of accounting policies as it relates to the reported amounts of assets, liabilities, income and expenses.
The areas where AC Immune has had to make
judgments, estimates and assumptions relate to (i) revenue recognition on licensing and collaboration agreements, (ii) clinical
development accruals, (iii) net employee defined benefit liability, (iv) income taxes, and, (v) share-based compensation. Actual
results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised.
The Company has tax losses that can generally
be carried forward for a period of 7 years from the period the loss was incurred. These tax losses represent potential value to
the Company to the extent that the Company is able to create taxable profits before the expiry period of these tax losses. Consistent
with prior years, the Company has not recognized any deferred tax assets relating to tax losses available as the recognition criteria
have not been met at the balance sheet date.
The estimated tax expense for the three
and nine months ended September 30, 2017 is zero. The estimated tax expense is based on the best estimate of the weighted average
annual income tax rate expected for the full financial year to December 31, 2017. As we expect to incur a loss for the full year,
we do not anticipate any income tax expense.
Accounting policies, new standards, interpretations and
amendments adopted by the Company
The accounting policies adopted in the
preparation of the interim condensed financial statements are consistent with those followed in the preparation of the Company's
annual financial statements for the year ended December 31, 2016, except for the adoption of new standards and interpretations
effective as of January 1, 2017. The Company has not adopted any other standard, interpretation or amendment that has been issued
but is not yet effective.
Recent Accounting Pronouncements
The following pronouncements from the IASB
will become effective for future financial reporting periods and have not yet been adopted by AC Immune.
IFRS 9 Financial Instruments will
supersede IAS 39 Financial Instruments: Recognition and Measurement and is effective for annual periods beginning on or
after January 1, 2018. IFRS 9 covers classification and measurement of financial assets and financial liabilities, impairment
of financial assets and hedge accounting. The Company expects to adopt this standard on January 1, 2018, and while its assessment
is currently ongoing, AC Immune does not anticipate IFRS 9 to have a material impact on the financial statements.
IFRS 16 Leases provides a new model
for lessee accounting in which all leases, other than short-term and small-ticket-item leases, will be accounted for by the recognition
on the balance sheet of a right-to-use asset and a lease liability, and the subsequent amortization of the right-to-use asset over
the lease term. IFRS 16 will be effective for annual periods beginning on or after January 1, 2019 with early adoption permitted.
AC Immune is currently assessing the impact of this standard on its financial statements.
The Company is currently
analyzing the impact of IFRS 15 Revenue from Contracts with Customers, which amends revenue recognition requirements
and establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows
arising from contracts with customers. The standard replaces IAS 18 Revenue and IAS 11 Construction Contracts
and Related Interpretations. The new standard, as amended, becomes effective for the Company in the first quarter of fiscal
year 2018, but allows the Company to adopt early. The Company plans to adopt this accounting standard in the first quarter of fiscal