uniQure N.V. — Q3 2020 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2020. Unaudited U.S. GAAP financial statements; amounts below are U.S. dollars. uniQure is a clinical-stage gene therapy company with no product sales reported.
Financial performance
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | $1.8 million | $1.0 million | $3.4 million | $4.7 million |
| Research and development expense | $36.3 million | $23.6 million | $90.7 million | $68.2 million |
| Selling, general and administrative expense | $10.8 million | $8.9 million | $31.4 million | $24.9 million |
| Operating loss | $44.5 million | $31.3 million | $117.2 million | $88.2 million |
| Net loss | $53.8 million | $23.6 million | $124.3 million | $82.8 million |
| Net loss per share | $1.21 | $0.58 | $2.80 | $2.14 |
Revenue was primarily amortization of payments under the BMS collaboration. Q3 revenue rose year over year as license revenue increased, while nine-month revenue fell mainly because reimbursable collaboration activity declined after the BMS research term ended in May 2019. No revenue was recognized for the CSL Behring agreement because its closing conditions remained outstanding. Gross margin is not presented as a meaningful measure in the filing.
- Cash and liquidity: Cash and cash equivalents were $279.5 million at September 30, 2020, down from $377.8 million at December 31, 2019. Cash, cash equivalents and restricted cash totaled $282.2 million. Current assets were $287.4 million and current liabilities $33.4 million.
- Cash flow: Nine-month operating cash use was $97.7 million, investing cash use $6.8 million, and financing cash provided $3.7 million. Cash, cash equivalents and restricted cash decreased by $98.5 million, after a $2.2 million favorable currency effect.
- Debt: $35.0 million principal was outstanding under the Hercules facility; reported long-term debt was $35.5 million. The facility matures June 2023, with principal repayments scheduled to begin January 2022. The company reported covenant compliance.
- Equity and losses: Accumulated deficit was $784.0 million; shareholders’ equity was $227.9 million. Shares outstanding were 44.5 million at September 30, 2020.
Material changes versus prior periods
- Nine-month net loss widened by $41.6 million year over year as operating expenses increased and non-operating results shifted from income to loss.
- R&D expense increased $22.5 million for the nine months, reflecting higher program, personnel, share-based compensation, facility and other costs. SG&A rose $6.5 million, including costs associated with the CSL transaction.
- Foreign currency results were a $7.7 million loss for the first nine months of 2020, versus a $7.1 million gain in the prior-year period. Q3 included an $8.7 million currency loss versus a $6.0 million gain in Q3 2019.
- Cash burn increased: operating cash use was $97.7 million versus $72.7 million for the first nine months of 2019. The prior-year period included $243.0 million in net proceeds from a public offering; no comparable offering proceeds were reported in 2020.
Outlook, developments and risks
- CSL Behring transaction: The June 2020 agreement grants CSL exclusive global rights to investigational hemophilia B therapy etranacogene dezaparvovec. uniQure is eligible for a $450 million upfront payment at closing, up to $1.6 billion in additional regulatory and commercial milestones, and tiered royalties up to the low twenties percent. Closing remained contingent on antitrust reviews in the United States, Australia and the United Kingdom. The filing says cash on hand was expected to fund operations into 2022; receipt of the upfront payment was expected to extend runway into the second half of 2024. Both estimates depend on assumptions, and the transaction had not closed by the filing date.
- Management expected expenses to increase as it advances clinical and preclinical programs, manufacturing capabilities and commercial readiness. It expected continuing losses and negative cash flows outside the fiscal year in which the CSL transaction closes, and reported no firm additional funding sources.
- Pipeline: The Phase III HOPE-B hemophilia B study had dosed 54 patients by March 2020; nearly all planned follow-up visits were reported completed by September. The Huntington’s disease AMT-130 Phase I/II trial resumed procedures after COVID-related postponement; the DSMB reported no safety concern preventing further dosing after review of the first two patients. AMT-150 entered non-human-primate safety and toxicology testing, and AMT-190 was selected for Fabry disease IND-enabling studies. AMT-180 for hemophilia A was deprioritized.
- COVID-19: Management reported operational adaptations and some trial disruption, including delayed AMT-130 procedures, while stating that hemophilia B follow-up was largely on plan. Further effects on operations, trials, suppliers, regulators and financing remained uncertain.
- Other risks and unusual items: BMS amendment discussions remained unresolved and could change obligations or economics. Pfizer’s inter partes review of uniQure’s U.S. Patent No. 9,249,405 was instituted; uniQure filed a motion to amend claims in October 2020. The company reported no legal proceedings and no subsequent events. It maintained a full valuation allowance against deferred tax assets.
Key facts for investors to verify
- Status and timing of the CSL Behring antitrust reviews, closing, upfront payment, and any related license-fee obligations.
- Cash runway assumptions, quarterly cash burn, and the availability and terms of any future financing if the CSL transaction is delayed or does not close.
- HOPE-B efficacy and safety results, regulatory plans, and the continued progress and safety monitoring of AMT-130.
- R&D spending trajectory, foreign-exchange exposure, debt repayment schedule and compliance with Hercules covenants.
- Outcome of BMS restructuring discussions and the patent review proceeding involving the ’405 patent.