uniQure N.V. — Q2 2020 Form 10-Q
Reporting period: Three and six months ended June 30, 2020. Amounts are in U.S. dollars; financial statement figures below are in millions unless stated otherwise. uniQure is a clinical-stage gene-therapy company with no approved products or significant product-sale revenue.
Financial performance and position
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Revenue | $1.535 | $2.474 | $1.639 | $3.610 |
| Research and development expense | $28.401 | $24.154 | $54.414 | $44.691 |
| Selling, general and administrative expense | $11.511 | $7.870 | $20.583 | $15.937 |
| Operating loss | $38.208 | $29.331 | $72.671 | $56.835 |
| Net loss | $42.551 | $31.399 | $70.550 | $59.171 |
| Net loss per ordinary share | $0.96 | $0.83 | $1.59 | $1.57 |
- Revenue was primarily license revenue amortized from the 2015 Bristol Myers Squibb (BMS) collaboration; collaboration revenue was minimal. No CSL Behring revenue was recognized in the period.
- Margins are not meaningfully comparable because the company had no significant product sales and reported operating losses.
- At June 30, cash and cash equivalents were $314.3; including restricted cash, total cash was $316.9, down from $380.7 at year-end 2019. Total assets were $385.3, liabilities $119.8, and shareholders’ equity $265.5. Accumulated deficit was $730.3.
- Six-month operating cash use was $62.9, investing cash use $4.6, and financing cash inflow $3.5. Total cash, cash equivalents and restricted cash declined by $63.8.
- Long-term debt was $35.4 on the balance sheet; outstanding principal under the Hercules facility was $35.0. The facility matures June 2023, with principal repayments scheduled to begin January 2022. The company reported compliance with its covenants.
Changes versus prior comparable periods
- Q2 revenue declined $0.9 year over year; six-month revenue declined $2.0, reflecting lower BMS license amortization and reduced collaboration activity after the BMS research term ended in May 2019. Management also cited development-timeline delays and COVID-19-related impacts on BMS discussions.
- Q2 net loss widened by $11.2; six-month net loss widened by $11.4. Higher R&D and SG&A spending drove the larger operating loss. Q2 also included a $3.6 foreign-currency loss, compared with a $1.3 loss a year earlier.
- Six-month operating cash use increased to $62.9 from $50.7. Cash and cash equivalents were substantially higher than a year earlier, when they were $184.1.
Outlook, developments and risks
- On June 24, 2020, uniQure signed an agreement granting CSL Behring exclusive global rights to investigational hemophilia B therapy etranacogene dezaparvovec. Terms include a $450 upfront payment at closing, up to $1.6 billion in regulatory and commercial milestones, and tiered double-digit royalties up to the low twenties. Closing remained subject to antitrust reviews in the United States, Australia and the United Kingdom. The company stated it had no enforceable right to the payments before closing and therefore recognized no related revenue.
- Management estimated existing cash would fund operations, debt obligations and capital needs into 2022; receipt of the CSL upfront payment was expected to extend runway into the second half of 2024. The filing cautions that the transaction may be delayed or fail to close. The company had no firm additional funding sources and expected to continue incurring losses and negative cash flows outside the fiscal year of any closing.
- In March, the company completed dosing 54 patients in the Phase III HOPE-B hemophilia B trial. It reported that two Huntington’s disease trial procedures, postponed amid COVID-19, were completed in June. Management said COVID-19’s broader impact remained uncertain and could affect trials, operations, manufacturing, regulators and access to capital.
- Management expects expenses to rise as it advances clinical programs, expands manufacturing and prepares for potential commercialization. In June, uniQure said it would deprioritize its AMT-180 hemophilia A research program.
- The BMS collaboration remained under discussion for potential amendment after its research term expired. The outcome could affect obligations and economic rights, including future revenue recognition; no change was reflected in the reported results.
- The USPTO instituted inter partes review of certain claims in uniQure’s U.S. Patent No. 9,249,405 on July 13, 2020; the company said its response was due October 5, 2020. The filing reported no legal proceedings, while identifying this patent matter as an intellectual-property risk.
- Other key risks include clinical-trial safety and efficacy uncertainty, gene-therapy manufacturing and regulatory requirements, competition, reimbursement and pricing, patent challenges, and the company’s continuing need for capital. The company maintained a full valuation allowance against deferred tax assets.
Investor verification points
- Confirm whether and when the CSL Behring transaction closed, whether the $450 million payment was received, and what fees, taxes and revenue-recognition effects followed.
- Review subsequent HOPE-B trial data, regulatory plans and the operational impact of COVID-19 on trial follow-up, AMT-130 and manufacturing.
- Track cash burn, updated runway assumptions, financing needs and Hercules debt repayment obligations.
- Monitor the BMS agreement discussions and any resulting changes to collaboration rights, obligations, warrants or revenue recognition.
- Check the outcome of the patent review and any material developments in other intellectual-property or regulatory matters.