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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, 2019
EPFL Innovation Park
| As of September 30, | As of December 31, | |||||||
| Note | 2019 | 2018 | ||||||
| (in CHF thousands) | ||||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 6 | 3,702 | 3,324 | |||||
| Right-of-use assets | 7 | 1,893 | - | |||||
| Long-term financial assets | 9 | 304 | 304 | |||||
| Total non-current assets | 5,899 | 3,628 | ||||||
| Current assets | ||||||||
| Prepaid expenses | 8 | 2,997 | 2,364 | |||||
| Accrued income | 3 | 939 | 3,667 | |||||
| Finance receivable | 10 | 100 | 199 | |||||
| Other current receivables | 3 | 2,957 | 236 | |||||
| Short-term financial assets | 9 | 90,000 | 30,000 | |||||
| Cash and cash equivalents | 9 | 212,457 | 156,462 | |||||
| Total current assets | 309,450 | 192,928 | ||||||
| Total assets | 315,349 | 196,556 | ||||||
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||||||||
| Shareholders' equity | ||||||||
| Share capital | 1,436 | 1,351 | ||||||
| Share premium | 346,479 | 298,149 | ||||||
| Accumulated losses | (55,532 | ) | (121,877 | ) | ||||
| Total shareholders' equity | 292,383 | 177,623 | ||||||
| Non-current liabilities | ||||||||
| Long-term financing obligation | 10 | 297 | 186 | |||||
| Long-term lease liabilities | 7 | 1,467 | - | |||||
| Long-term deferred income | 3 | 1,092 | - | |||||
| Net employee defined benefit liabilities | 6,098 | 5,665 | ||||||
| Total non-current liabilities | 8,954 | 5,851 | ||||||
| Current liabilities | ||||||||
| Trade and other payables | - | 1,979 | ||||||
| Accrued expenses | 8,551 | 10,420 | ||||||
| Short-term deferred income | 3 | 4,701 | 351 | |||||
| Short-term financing obligation | 10 | 334 | 332 | |||||
| Short-term lease liabilities | 7 | 426 | - | |||||
| Total current liabilities | 14,012 | 13,082 | ||||||
| Total liabilities | 22,966 | 18,933 | ||||||
| Total shareholders' equity and liabilities | 315,349 | 196,556 |
accompanying 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, | |||||||||||||
| Note | 2019 | 2018 | 2019 | 2018 | ||||||||||
| (in CHF thousands except for per share data) | ||||||||||||||
| Revenue | ||||||||||||||
| Contract revenue | 3 | 33,411 | 2,305 | 109,964 | 5,791 | |||||||||
| Total revenue | 33,411 | 2,305 | 109,964 | 5,791 | ||||||||||
| Operating expenses | ||||||||||||||
| Research & development expenses | (11,478 | ) | (11,546 | ) | (35,770 | ) | (32,150 | ) | ||||||
| General & administrative expenses | (3,956 | ) | (2,930 | ) | (10,835 | ) | (8,703 | ) | ||||||
| Total operating expenses | (15,434 | ) | (14,476 | ) | (46,605 | ) | (40,853 | ) | ||||||
| Operating income/(loss) | 17,977 | (12,171 | ) | 63,359 | (35,062 | ) | ||||||||
| Finance income/(expense), net | 249 | (1,314 | ) | (1,564 | ) | (1,149 | ) | |||||||
| Change in fair value of conversion feature | - | - | 4,542 | - | ||||||||||
| Interest income | 73 | - | 237 | 3 | ||||||||||
| Interest expense | (86 | ) | (31 | ) | (1,686 | ) | (66 | ) | ||||||
| Finance result, net | 11 | 236 | (1,345 | ) | 1,529 | (1,212 | ) | |||||||
| Income/(loss) before tax | 18,213 | (13,516 | ) | 64,888 | (36,274 | ) | ||||||||
| Income tax expense | - | - | - | - | ||||||||||
| Income/(loss) for the period | 18,213 | (13,516 | ) | 64,888 | (36,274 | ) | ||||||||
| Earnings/(loss) per share (EPS): | 5 | |||||||||||||
| Basic income/(loss) for the period attributable to equity holders | 0.25 | (0.21 | ) | 0.92 | (0.61 | ) | ||||||||
| Diluted income/(loss) for the period attributable to equity holders | 0.25 | (0.21 | ) | 0.92 | (0.61 | ) |
Statements of Comprehensive Income/(Loss)
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| (in CHF thousands) | ||||||||||||
| Income/(loss) for the period | 18,213 | (13,516 | ) | 64,888 | (36,274 | ) | ||||||
| Other comprehensive income/(loss) not to be reclassified to income or loss in subsequent periods (net of tax): | ||||||||||||
| Re-measurement losses on defined benefit plans | - | - | - | - | ||||||||
| Total comprehensive income/(loss), net of tax | 18,213 | (13,516 | ) | 64,888 | (36,274 | ) |
accompanying notes form an integral part of these Interim Condensed Financial Statements (Unaudited).
Statements of Changes in Equity
| Note | Share capital | Share premium | Accumulated losses | Total | ||||||||||
| (in CHF thousands) | ||||||||||||||
| Balance as of January 1, 2018 | 1,147 | 188,299 | (72,607 | ) | 116,839 | |||||||||
| Net income for the period | - | - | (36,274 | ) | (36,274 | ) | ||||||||
| Other comprehensive loss | - | - | - | - | ||||||||||
| Total comprehensive loss | - | - | (36,274 | ) | (36,274 | ) | ||||||||
| Proceeds from public offerings, net of underwriting fees | 200 | 111,329 | - | 111,529 | ||||||||||
| Transaction offering costs | - | (2,016 | ) | - | (2,016 | ) | ||||||||
| Share-based payments | - | - | 1,897 | 1,897 | ||||||||||
| Issuance of shares: | ||||||||||||||
| restricted share awards | 1 | 468 | (468 | ) | 1 | |||||||||
| exercise of options | 3 | 18 | - | 21 | ||||||||||
| transaction costs | - | (21 | ) | - | (21 | ) | ||||||||
| Balance as of September 30, 2018 | 1,351 | 298,077 | (107,452 | ) | 191,976 |
| Note | Share capital | Share premium | Accumulated losses | Total | ||||||||||
| (in CHF thousands) | ||||||||||||||
| Balance as of January 1, 2019 | 1,351 | 298,149 | (121,877 | ) | 177,623 | |||||||||
| Net income for the period | - | - | 64,888 | 64,888 | ||||||||||
| Other comprehensive income | - | - | - | - | ||||||||||
| Total comprehensive income | - | - | 64,888 | 64,888 | ||||||||||
| Share-based payments | - | - | 2,027 | 2,027 | ||||||||||
| Issuance of shares: | ||||||||||||||
| conversion of note agreement, net of transaction costs | 73 | 47,705 | - | 47,778 | ||||||||||
| restricted share awards | - | 570 | (570 | ) | - | |||||||||
| exercise of options, net of transaction costs | 12 | 55 | - | 67 | ||||||||||
| Balance as of September 30, 2019 | 1,436 | 346,479 | (55,532 | ) | 292,383 |
accompanying notes form an integral part of these Interim Condensed Financial Statements (Unaudited).
Statements of Cash Flows
| For the Nine Months Ended September 30, | ||||||||
| Notes | 2019 | 2018 | ||||||
| (in CHF thousands) | ||||||||
| Operating activities | ||||||||
| Net income/(loss) for the period | 64,888 | (36,274 | ) | |||||
| Adjustments to reconcile net income/(loss) for the period to net cash flows: | ||||||||
| Depreciation of property, plant and equipment | 6 | 911 | 695 | |||||
| Depreciation of right-of-use assets | 7 | 312 | - | |||||
| Finance expense, net | 11 | 1,320 | 1,212 | |||||
| Share-based compensation expense | 2,027 | 1,897 | ||||||
| Changes in net employee defined benefit liability | 433 | 413 | ||||||
| Change in fair value of conversion feature | 11 | (4,542 | ) | - | ||||
| Interest expense | 11 | 1,686 | 37 | |||||
| Changes in working capital: | ||||||||
| (Increase) in prepaid expenses | 8 | (633 | ) | (1,245 | ) | |||
| Decrease in accrued income | 2,728 | 196 | ||||||
| (Increase)/decrease in other current receivables | (2,734 | ) | 171 | |||||
| (Decrease)/increase in accrued expenses | (1,941 | ) | 1,595 | |||||
| (Decrease)/increase in deferred income | 3 | 5,437 | (321 | ) | ||||
| (Decrease) in trade and other payables | (2,016 | ) | (600 | ) | ||||
| Cash provided by/(used in) operating activities | 67,876 | (32,224 | ) | |||||
| Interest income | 237 | 3 | ||||||
| Interest paid | (138 | ) | - | |||||
| Financial costs | (11 | ) | (101 | ) | ||||
| Net cash flows provided by/(used in) operating activities | 67,964 | (32,322 | ) | |||||
| Investing activities | ||||||||
| Short-term financial assets | 9 | (60,000 | ) | - | ||||
| Purchases of property, plant and equipment | 6 | (1,307 | ) | (1,625 | ) | |||
| Rent deposit | - | (84 | ) | |||||
| Net cash flows used in investing activities | (61,307 | ) | (1,709 | ) | ||||
| Financing activities | ||||||||
| Proceeds from issuance of convertible loan | 4 | 50,278 | - | |||||
| Principal payments of lease obligations | 7 | (312 | ) | - | ||||
| Proceeds from public offering of common shares, net of underwriting fees | - | 111,529 | ||||||
| Transaction costs on public offerings of common shares | - | (1,801 | ) | |||||
| Proceeds from issuance of common shares - option plan | 67 | 21 | ||||||
| Transaction costs on issuance of shares | (510 | ) | (21 | ) | ||||
| Proceeds from restricted shares | - | 1 | ||||||
| Proceeds from long-term financing obligation | 10 | 101 | 148 | |||||
| Net cash flows provided by financing activities | 49,624 | 109,877 | ||||||
| Net increase in cash and cash equivalents | 56,281 | 75,846 | ||||||
| Cash and cash equivalents at January 1 | 156,462 | 124,377 | ||||||
| Exchange gain/(loss) on cash and cash equivalents | (286 | ) | (1,101 | ) | ||||
| Cash and cash equivalents at September 30 | 212,457 | 199,122 | ||||||
| Net increase in cash and cash equivalents | 56,281 | 75,846 |
Additional Information:
The Company settled its convertible loan
via equity for CHF 48.3 million, gross of CHF 510 thousand for transaction costs.
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,"
"AC Immune," "ACIU," "we," "our," "ours," or "us") is a
clinical stage biopharmaceutical company leveraging our two proprietary technology platforms to discover, design and develop novel,
proprietary medicines and diagnostics for prevention 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 NeuroOrphan indications and diagnostics. We use our two unique proprietary platform technologies, SupraAntigen
(conformation-specific biologics) and Morphomer (conformation-specific small molecules), to discover, design and develop
novel medicines and diagnostics to target misfolded proteins.
These interim condensed financial statements
of AC Immune SA as of and for the three and nine months ended September 30, 2019 were authorized for issuance by the Company's
Audit Committee on November 11, 2019.
Statement of compliance
These interim condensed financial statements
as of and for the three and nine months ended September 30, 2019 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, 2018, and any public
announcements made by the Company during the interim reporting period.
Basis of measurement
The financial statements have been prepared
under the historical cost convention.
The Company enters into licensing and collaboration
agreements which are within the scope of IFRS 15, under which it licenses certain proprietary rights to its product candidates
and intellectual property ("IP") to third parties. The terms of these arrangements typically include payment to the
Company of one or more of the following: non-refundable, up-front license fees; development, regulatory and/or commercial milestone
payments; payments for research and clinical services the Company provides through either its full-time employees or third-party
vendors; and royalties on net sales of licensed commercialized products depending on the Company's IP. Each of these payments
results in license, collaboration and other revenues, which are classified as contract revenue on the statements of income/(loss),
except for revenues from royalties on net sales of commercialized products depending on the Company's IP, which are classified
as royalty revenues.
Licenses on intellectual property:
If the license to the Company's intellectual property is determined to be distinct from the other performance obligations
identified in the arrangement, the Company recognizes revenues from non-refundable, up-front fees allocated to the license when
the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are
sold in conjunction with a related service, the Company uses judgment to assess the nature of the combined performance obligation
to determine whether the combined performance obligation is satisfied over time or at a point in time. If the performance obligation
is settled over time, the Company determines the appropriate method of measuring progress for purposes of recognizing revenue from
non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the
measure of performance and related revenue recognition.
Milestone payments: At the inception
of each arrangement that includes development, regulatory and/or commercial milestone payments, the Company evaluates whether the
milestones are considered highly probable of being reached and estimates the amount to be included in the transaction price using
the most likely amount method. If it is highly probable that a significant revenue reversal would not occur in future periods,
the associated milestone value is included in the transaction price. These amounts for the performance obligations under the contract
are recognized as they are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability
of achievement of such milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction
price. Any such adjustments recorded would affect contract revenues and earnings in the period of adjustment.
Research and development services:
The Company has certain arrangements with our collaboration partners that include contracting our full-time employees for research
and development programs. The Company assesses if these services are considered distinct in the context of each contract and, if
so, they are accounted for as separate performance obligations. These revenues are recorded in contract revenue as the services
Sublicense revenues: The Company
has certain arrangements with our collaboration partners that include provisions for sublicensing. The Company recognizes any sublicense
revenues at the point in time it is highly probable to obtain and not subject to reversal in the future.
Royalties: For arrangements that
include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant
item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when
the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
To date, the Company has not recognized any royalty revenue resulting from any of its licensing and collaboration agreements.
Contract balances: The Company receives
payments and determines credit terms from its licensees for its various performance obligations based on billing schedules established
in each contract. The timing of revenue recognition, billings and cash collections results in billed other current receivables,
accrued income (contract assets), and deferred income (contract liabilities) on the balance sheet. Amounts are recorded as other
current receivables when the Company's right to consideration is unconditional. The Company does not assess whether a contract
has a significant financing component if the expectation at contract inception is such that the period between payment by the licensees
and the transfer of the promised goods or services to the licensees will be one year or less.
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, (v) share-based compensation and (vi) right-of-use
assets and lease liabilities. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed