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Index to Unaudited Condensed Consolidated Financial Statements
| PAGE | ||||
| Unaudited Condensed Statement of Financial Position as of December 31, 2013 and September 30, 2014 | F-2 | |||
| Unaudited Condensed Statements of Comprehensive Loss for the Three Months Ended September 30, 2013 and 2014 and the Nine Months Ended September 30, 2013 and 2014 | F-3 | |||
| Unaudited Condensed Statements of Changes in Equity for the Nine Months Ended September 30, 2013 and 2014 | F-4 | |||
| Unaudited Condensed Statements of Cash Flow for the Three Months Ended September 30, 2013 and the Nine Months Ended September 30, 2014 | F-5 | |||
| Notes to Unaudited Condensed Consolidated Financial Statements | F-6 |
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PROQR THERAPEUTICS N.V.
Unaudited Condensed Statement of Financial Position
| December 31, 2013 | September 30, 2014 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | 4,129 | 115,257 | ||||||
| Other Receivables | 59 | 192 | ||||||
| Social securities and other taxes | 73 | 408 | ||||||
| Total current assets | 4,261 | 115,857 | ||||||
| Property, plant and equipment | 204 | 732 | ||||||
| Intangible assets | 39 | 39 | ||||||
| Total assets | 4,504 | 116,628 | ||||||
| Liabilities and stockholders equity | ||||||||
| Current liabilities | ||||||||
| Deferred revenues | 293 | |||||||
| Convertible loan | 2,514 | |||||||
| Finance lease liabilities | 35 | 15 | ||||||
| Trade payables | 745 | 1,103 | ||||||
| Social securities and other taxes | 29 | 31 | ||||||
| Pension premiums | 17 | 77 | ||||||
| Other current liabilities | 262 | 1,115 | ||||||
| Total current liabilities | 3,602 | 2,634 | ||||||
| Finance lease liabilities | 48 | 41 | ||||||
| Borrowings | 943 | 2,751 | ||||||
| Total liabilities | 4,593 | 5,426 | ||||||
| Stockholders equity | ||||||||
| Shareholders equity | (89 | ) | 111,202 | |||||
| Total liabilities and stockholders equity | 4,504 | 116,628 |
The notes are an integral part of these condensed financial statements.
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PROQR THERAPEUTICS N.V.
Unaudited Condensed Statement of Comprehensive Loss
( in thousands, except share and per share data)
| THREE MONTHS ENDED SEPTEMBER 30, | NINE MONTHS ENDED SEPTEMBER 30, | |||||||||||||||
| 2013 | 2014 | 2013 | 2014 | |||||||||||||
| Other income | 116 | 4 | ||||||||||||||
| Research and development costs | (686 | ) | (2,457 | ) | (1,300 | ) | (6,994 | ) | ||||||||
| General and administrative costs | (196 | ) | (2,380 | ) | (440 | ) | (4,510 | ) | ||||||||
| Total operating costs | (882 | ) | (4,837 | ) | (1,740 | ) | (11,504 | ) | ||||||||
| Operating result | (882 | ) | (4,837 | ) | (1,624 | ) | (11,500 | ) | ||||||||
| Finance income and expense | 6 | 1,462 | 5 | 1,410 | ||||||||||||
| Result before corporate income taxes | (876 | ) | (3,375 | ) | (1,619 | ) | (10,090 | ) | ||||||||
| Income taxes | ||||||||||||||||
| Net loss (attributable to equity holders of the Company | (876 | ) | (3,375 | ) | (1,619 | ) | (10,090 | ) | ||||||||
| Other comprehensive income | ||||||||||||||||
| Total comprehensive loss (attributable to equity holders of the Company) | (876 | ) | (3,375 | ) | (1,619 | ) | (10,090 | ) | ||||||||
| Share information | ||||||||||||||||
| Weighted average number of shares outstanding 1,2 | 6,108,152 | 7,916,686 | 5,318,716 | 6,952,792 | ||||||||||||
| Earnings per share attributable to the equity holders of the Company (expressed in Euro per share) | (0.14 | ) | (0.43 | ) | (0.30 | ) | (1.45 | ) | ||||||||
| Basic and diluted loss per share 1 | (0.14 | ) | (0.43 | ) | (0.30 | ) | (1.45 | ) |
The notes are an integral part of these condensed financial statements.
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PROQR THERAPEUTICS N.V.
Unaudited Condensed Statement of Changes in Equity
| Number of shares | Total Share Capital | Share Premium | Equity Settled Employee Benefit Reserve | Accumulated Deficit | Total Equity | |||||||||||||||||||||||
| Ordinary | Preferred | |||||||||||||||||||||||||||
| Balance at January 1, 2013 | 3,413,292 | 33 | 484 | (418 | ) | 99 | ||||||||||||||||||||||
| Net loss | (1,619 | ) | (1,619 | ) | ||||||||||||||||||||||||
| Recognition of share-based payments | 2 | 2 | ||||||||||||||||||||||||||
| Shares issued in the period | 3,592,773 | 35 | 2,998 | 3,033 | ||||||||||||||||||||||||
| Treasury shares issued | (897,913 | ) | (9 | ) | (9 | ) | ||||||||||||||||||||||
| Balance at September 30, 2013 | 6,108,152 | 59 | 3,482 | 2 | (2,037 | ) | 2,506 | |||||||||||||||||||||
| Balance at January 1, 2014 | 6,108,152 | 59 | 3,482 | 41 | (3,671 | ) | (89 | ) | ||||||||||||||||||||
| Net loss | (10,090 | ) | (10,090 | ) | ||||||||||||||||||||||||
| Recognition of share-based payments | 406 | 406 | ||||||||||||||||||||||||||
| Shares issued in the period | 9,490,336 | 8,265,179 | 880 | 122,291 | 123,171 | |||||||||||||||||||||||
| Conversion of preferred shares | 8,265,179 | (8,265,179 | ) | |||||||||||||||||||||||||
| Treasury shares issued | (525,513 | ) | (5 | ) | (2,191 | ) | (2,196 | ) | ||||||||||||||||||||
| Balance at September 30, 2014 | 23,338,154 | 934 | 123,582 | 447 | (13,761 | ) | 111,202 |
The notes are an integral part of these condensed financial statements.
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PROQR THERAPEUTICS B.V.
Unaudited Condensed Statement of Cash Flows
| THREE MONTHS ENDED SEPTEMBER 30 | NINE MONTHS ENDED SEPTEMBER 30, | |||||||||||||||
| 2013 | 2014 | 2013 | 2014 | |||||||||||||
| Cash flows from operating activities | ||||||||||||||||
| Net loss | (876 | ) | (3,375 | ) | (1,619 | ) | (10,090 | ) | ||||||||
| Adjustments for: | ||||||||||||||||
| Depreciation | 8 | 26 | 11 | 65 | ||||||||||||
| Share-based payment expenses | 2 | 178 | 2 | 406 | ||||||||||||
| Financial income and expense | (4 | ) | (1,462 | ) | (5 | ) | (1,410 | ) | ||||||||
| - Changes in other receivables | 2 | (145 | ) | (93 | ) | (468 | ) | |||||||||
| - Changes in trade and other payables | 89 | 350 | 294 | 1,873 | ||||||||||||
| Corporate income tax paid | ||||||||||||||||
| Interest received | 4 | 129 | 5 | 148 | ||||||||||||
| Net cash used in operating activities | (775 | ) | (4,299 | ) | (1,405 | ) | (9,476 | ) | ||||||||
| Cash flow from investing activities | ||||||||||||||||
| Purchases of property, plant and equipment | (171 | ) | (344 | ) | (258 | ) | (594 | ) | ||||||||
| Purchases of intangible assets | ||||||||||||||||
| Net cash used in investing activities | (171 | ) | (344 | ) | (258 | ) | (594 | ) | ||||||||
| Cash flow from financing activities | ||||||||||||||||
| Proceeds from issuance of shares, net of transaction costs | 80,258 | 3,023 | 118,100 | 1 | ||||||||||||
| Proceeds from borrowings | 142 | 1 | 246 | 1,667 | ||||||||||||
| Redemption of financial lease | (10 | ) | (27 | ) | ||||||||||||
| Net cash generated by financing activities | 142 | 80,249 | 3,269 | 119,740 | ||||||||||||
| Net increase in cash and cash equivalents | (804 | ) | 75,606 | 1,606 | 109,670 | |||||||||||
| Currency effect cash and cash equivalents | 1,458 | 1,458 | ||||||||||||||
| Cash and cash equivalents, at beginning of the period | 2,659 | 38,193 | 249 | 4,129 | ||||||||||||
| Cash and cash equivalents at the end of the period | 1,855 | 115,257 | 1,855 | 115,257 |
The notes are an integral part of these
condensed financial statements.
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PROQR THERAPEUTICS B.V.
Notes to Unaudited Condensed Financial Statements
1. General information
ProQR Therapeutics N.V., or ProQR
or the Company is a development stage company that primarily focuses on the development and commercialization of novel therapeutic medicines.
September 18, 2014, the Company s ordinary shares are listed on the Nasdaq Global Market under ticker symbol PRQR.
The Company was incorporated
in the Netherlands, on February 21, 2012 and has been reorganized from a private company with limited liability to a public company with limited liability on September 15, 2014. The Company has its statutory seat in Leiden, the
Netherlands. The address of its headquarters and registered office is Darwinweg 24, 2333 CR Leiden, the Netherlands.
As used in these condensed interim
financial statements, unless the context indicates otherwise, all references to ProQR or the Company refer to ProQR Therapeutics N.V.
2. Significant Accounting Policies
interim condensed financial statements have been prepared in accordance with International Accounting Standard 34, or IAS 34, Interim Financial Reporting . Certain information and disclosures normally included in financial statements
prepared in accordance with IFRS have been condensed or omitted. Accordingly, these condensed financial statements should be read in conjunction with the Company s annual financial statements for the year ended December 31, 2013. In the
opinion of management, all adjustments, consisting of normal recurring nature, considered necessary for a fair presentation have been included in the condensed financial statements.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to
exercise its judgment in the process of applying the Company s accounting policies. The areas involving a higher degree of judgment or complexity or areas where assumptions and estimates are significant to these unaudited interim condensed
financials are disclosed in Note 4. The results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the results of operations to be expected for the full fiscal year ending December 31, 2014.
The Company s financial results have varied substantially, and are expected to continue to vary, from period to period, The Company believes that
its ordinary activities are not linked to any particular seasonal factors.
The Company operates in one reportable segment, which comprises the discovery
and development of innovative, RNA based therapeutics.
3. Adoption of new and revised International Financial Reporting Standards
The accounting policies adopted in the preparation of the condensed Interim financial statements are consistent with those applied in the preparation of the
Company s annual financial statements for the year ended December 31, 2013. New Standards and Interpretations, which became effective as of January 1, 2014, did not have a material impact on our condensed interim financial statements.
4. Critical Accounting Estimates and Judgments
the application of the Company s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the
estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
(a) Share-based payments
Share options granted to
employees and consultants are measured at the fair value of the equity instruments granted. Fair value is determined through the use of the Black-Scholes option-pricing model, which is considered the most appropriate model for this purpose by
Initially, the Company s ordinary shares were not publicly traded and consequently the Company needed to estimate the fair value of its
share and the expected volatility of that value. Please refer to Note 8 of the Company s annual financial statements for the year ended December 31, 2013 for the assumptions used in those estimates. The value of the underlying shares was
determined on the basis of the prior sale of company stock method. As such, the Company has benchmarked the value per share to external transactions of Company shares and external financing rounds.
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For options granted on September 17, 2014, the Company used the opening price of the Company s stock on
September 18, 2014, the first day of trading of the Company s stock on the Nasdaq Global Market, which amounted to US$13.00 ( 10.03) as the value of its ordinary shares.
The result of the share option valuations and the related compensation expense is dependent on the model and input parameters used. Even though Management
considers the fair values reasonable and defensible based on the methodologies applied and the information available, others might derive a different fair value for the Company s share options.
(b) Corporate income taxes
The Company recognizes deferred tax assets arising from unused tax losses or tax credits only to the extent that the Company has sufficient taxable temporary
differences or there is convincing evidence that sufficient taxable profit will be available against which the unused tax losses or unused tax credits can be utilized by the Company. Management s judgment is that such convincing evidence is
currently not sufficiently available.
5. Cash and Cash Equivalents
The cash balance as of September 30, 2014 includes the receipt of the net proceeds from the Company s September 2014 Initial Public Offering of
shares on the Nasdaq Global Market. At September 30, 2014, a significant portion of the cash balance is denominated in US dollars. The cash balances are held at banks with investment grade credit ratings.
6. Current liabilities
As of September 30, 2014 and
at December 31, 2013, the other current liabilities consisted principally of accruals for services provided by vendors not yet billed and other miscellaneous liabilities. The accrued liabilities as of September 30, 2014 increased compared
to December 31, 2013 as a result of the increased level of research and development activities and as a result of increased staffing related accruals, as well as a result of deferral of received grant revenues. The majority of the
Company s current liabilities are denominated in euros.
December 2013 Convertible Loan
On November 15, 2013 the Company issued a convertible loan equaling 2,500,000 to certain existing shareholders. The loan had an interest of
6% per annum and was converted into preferred shares in the April 2014 financing. The participants in the convertible loan received an agreed-upon discount to the per share purchase price of newly issued preferred shares.
| December 31, 2013 | September 30, 2014 | |||||||
| ( in thousands) | ||||||||
| Innovation credit | 922 | 2,588 | ||||||
| Accrued interest on innovation credit | 21 | 163 | ||||||
| 943 | 2,751 |
Innovation credit ( Innovatiekrediet )
On June 1, 2012, ProQR was awarded an Innovation credit by the Dutch government, via its agency RVO (previously: AgentschapNL ) of the
Ministery of Economic Affairs, for the Company s Cystic Fibrosis program The credit was increased during calendar year 2013. The credit covers 35% of the costs incurred in respect of the program up to a maximum of 5.0 million
through November 30, 2015.
The credit is interest-bearing at a rate of 10% per annum. The credit, including accrued interest is repayable in
three instalments on January 31, 2017, January 31, 2018 and January 31, 2019, depending on the technical success of the program.
assets of the Company that are co-financed with the granted innovation credit are subject to a right of pledge for the benefit of RVO.
The paid-in capital at September 30, 2014, amounting to 934,000 consists of 23,338,154 ordinary shares with a
nominal value of 0.04 per share. All issued shares have been fully paid in cash.
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On September 18, 2014, the Company was listed at the Nasdaq Global Market under ticker symbol PRQR. In
connection with this listing, the Company issued a total 8,625,000 ordinary shares against the initial public offering price of US$13.00, resulting in gross proceeds of US$112,125,000 ( 87,202,000). The number of shares issued includes the
exercise of the overallotment option granted to the underwriters. The net increase in equity from the offering amounted to 80,376,000, net of 6,826,000 of underwriting discounts and offering expenses processed through share premium.
Offering expenses of 1,763,000 were included in the statement of comprehensive loss as general and administrative costs.
2014, we effected a capital reorganization which had the effect of a 101.804232-for-1 forward split of ordinary and preferred shares and conversion of the preferred shares into ordinary shares. As a result of this, the Company has only class of
shares left, i.e. ordinary shares. All share, per-share and related information presented in these unaudited condensed financial statements and accompanying footnotes have been retroactively adjusted, where applicable, to reflect the impact of the
presented in the statement of changes in equity relate to ordinary shares that have legally been issued, but that are within control of the Company. Therefore, these shares are presented as treasury shares.