ProQR Therapeutics N.V. — FY2023 Form 20-F
Reporting period: Year ended December 31, 2023; filed March 13, 2024. This is an annual report, not a standalone Q4 report. Financial statements are prepared under IFRS as issued by the IASB and presented in euros.
Business context and strategy
ProQR is a clinical-stage biotechnology company refocused on RNA-editing platforms, principally Axiomer, with Trident at an earlier stage. Its wholly owned pipeline programs AX-0810 and AX-1412 were in preclinical development at year-end. The company has no approved products and has not generated product-sale or royalty revenue.
ProQR sold sepofarsen and ultevursen to Laboratoires Théa in December 2023, exiting its late-stage ophthalmology programs. Théa paid an initial €8 million; ProQR may receive up to €165 million in development, regulatory and commercial earn-outs, plus double-digit U.S. and EU sales royalties.
Key financial metrics
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | €6.514 million | €3.594 million |
| Other income | €3.011 million | €0.765 million |
| Research and development costs | €25.148 million | €50.867 million |
| General and administrative costs | €16.236 million | €18.651 million |
| Operating loss | €31.859 million | €65.159 million |
| Net loss | €27.735 million | €64.204 million |
| Basic and diluted loss per share | €0.35 | €0.90 |
| Cash and cash equivalents at year-end | €118.925 million | €94.775 million |
| Net cash from/(used in) operating activities | €21.548 million | (€68.508 million) |
FY2023 revenue was primarily from the Lilly collaboration. R&D expense declined as the sepofarsen and ultevursen trials were wound down and following workforce reductions; spending on Axiomer increased. The operating loss narrowed substantially, but the company remained loss-making, with an accumulated deficit of €400.850 million.
Operating cash generation chiefly reflected receipt of Lilly’s €56.412 million upfront payment in February 2023 and lower operating costs. Investing activities generated €4.278 million, including net cash proceeds from the Théa transaction; financing activities used €2.275 million. The filing reports no product revenue or royalty revenue to date.
At December 31, 2023, total assets were €137.883 million, equity €41.390 million and total liabilities €96.493 million. Borrowings were €4.292 million, consisting of government Innovation Credit; lease liabilities totaled €15.442 million. A conditional waiver covers the remaining Innovation Credit balance, including accrued interest, subject to annual review of conditions. The company estimated its cash would fund planned operations into mid-2026, based on assumptions that could prove incorrect.
Changes, outlook and notable items
- Revenue rose €2.920 million year over year, reflecting additional Lilly collaboration projects; Yarrow collaboration revenue ceased after termination of that collaboration in 2022.
- Other income included a €2.931 million net gain on the Théa asset divestment. The €8 million initial payment was partly offset by €5.069 million of transaction-related costs.
- In 2022, ProQR repaid the Pontifax and Kreos debt. At year-end 2023, 679,628 warrants issued to former lenders remained outstanding.
- The Lilly collaboration covers up to ten targets, with an option to add five more for $50 million. ProQR is eligible for up to approximately $3.75 billion in milestones and potential royalties; these amounts are contingent, not assured. The company recognized €6.514 million of Lilly revenue in 2023 and reported €64.739 million of related deferred income at year-end.
- Management expected to present nonclinical proof-of-concept data for AX-0810 and AX-1412 during 2024, provide translational updates toward clinical-trial applications, and advance the programs to clinical trials in late 2024 or early 2025. These are forward-looking expectations, not guaranteed milestones.
- In January 2024, ProQR announced a Rett syndrome research partnership with the Rett Syndrome Research Trust, including an approximately $1 million initial research grant for AX-2402. The filing says further co-funding is intended but not assured.
- The financial statements disclose an immaterial correction to comparative 2022 and 2021 figures for an IAS 21 foreign-currency accounting error. The correction revised certain revenue, financial income, net loss and balance-sheet figures; comparative operating cash flows were unchanged.
- Management and the auditor reported effective internal control over financial reporting at year-end. The auditor issued unqualified opinions on the financial statements and internal controls and reported no critical audit matters.
Principal risks and contingencies
- ProQR expects significant future losses and may never become profitable. Its pipeline is early-stage, its RNA-editing approach is unproven in humans, and development, regulatory approval and commercialization are uncertain.
- The cash runway estimate depends on operating plans, development costs, collaboration receipts and other assumptions; additional financing may be needed and could dilute shareholders or require less favorable partnerships.
- Clinical, manufacturing and regulatory execution depends substantially on third parties, including Lilly, Théa, CROs and contract manufacturers. Partner decisions or delays could reduce or defer potential milestone, royalty or earn-out receipts.
- Competition, intellectual-property challenges, reimbursement and pricing pressures, foreign-exchange exposure, and changing regulation could adversely affect results. The filing also describes cybersecurity, privacy, employee-retention and market-volatility risks.
- The company believes it was a passive foreign investment company (PFIC) for U.S. tax purposes in 2023; status is determined annually and can have adverse tax consequences for U.S. investors.
- No material legal proceedings were reported as of December 31, 2023. The filing reports a conditional Innovation Credit waiver and €8.893 million of R&D commitments, of which €7.162 million was due in 2024. No dividends are planned for the foreseeable future.
Important facts for investors to verify
- Whether the disclosed 2024 data and late-2024/early-2025 clinical-trial expectations for AX-0810 and AX-1412 were achieved, and the quality and translatability of supporting data.
- Actual cash burn, remaining runway and financing needs relative to management’s mid-2026 estimate.
- Progress and economics of the Lilly and Théa agreements, including the conditions, timing and likelihood of contingent milestones, earn-outs and royalties.
- Conditions and annual review status of the government loan waiver, as well as the terms and repayment of the remaining borrowings.
- Potential dilution from equity awards and warrants: the filing estimates 97,131,201 shares if specified treasury shares, plan shares and warrants were converted or issued, versus 81,354,592 fully paid outstanding shares at year-end.
- U.S. holders should consult tax advisers regarding the company’s disclosed 2023 PFIC status and applicable reporting or election requirements.