ProQR Therapeutics N.V. — FY2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022; filed March 29, 2023. Financial statements are audited under IFRS as issued by the IASB and presented in euros. This is an annual filing, not a standalone Q4 report.
Business context
ProQR is a clinical-stage biotechnology company developing RNA therapies. In 2022 it shifted its focus exclusively to its Axiomer RNA-editing platform, winding down its ophthalmology programs and seeking partners for those assets. Its lead internal programs, AX-0810 and AX-1412, remained preclinical. Lilly’s expanded collaboration covers up to ten targets, with an option to add five more.
Financial performance and position
| Metric (€ millions, unless noted) | 2022 | 2021 |
|---|---|---|
| Revenue | 4.037 | 1.354 |
| Other income | 0.765 | 1.043 |
| Research and development expense | 50.867 | 42.220 |
| General and administrative expense | 18.651 | 17.368 |
| Operating loss | (64.716) | (57.191) |
| Net loss | (64.891) | (61.680) |
| Basic and diluted loss per share | (€0.91) | (€0.96) |
| Net cash used in operating activities | (68.508) | (26.012) |
| Cash and cash equivalents at year-end | 94.775 | 187.524 |
| Total assets / total equity | 171.321 / 65.113 | 209.579 / 113.229 |
| Total borrowings, including accrued interest | 6.771 | 44.090 |
Revenue came from collaboration and research services, not product sales or royalties. There is no marketed product, so commercial revenue and product margins are not applicable. Operating costs rose 16.7% to €69.518 million; R&D spending increased, while the company reported that winding down the ophthalmology trials and expanding Axiomer work affected spending. Net loss widened 5.2% year over year.
Cash declined by €92.749 million to €94.775 million after operating and investing outflows and net financing outflows. The company used €43.372 million to repay Pontifax and Kreos debt in September 2022 and received €14.122 million from issuing shares to Lilly. Management estimated year-end cash would fund operations into 2026, subject to assumptions and execution. Year-end current assets were €154.460 million and current liabilities €21.112 million; current assets included a €56.254 million Lilly upfront receivable. Equity was €65.113 million and liabilities €106.208 million.
Material changes and unusual items
- In February 2022, sepofarsen’s Phase 2/3 pivotal trial failed to meet its primary endpoint. During 2022 ProQR ended clinical development of sepofarsen and ultevursen and wound down its wider ophthalmology portfolio.
- R&D costs increased €8.647 million year over year; total operating costs increased €9.930 million. Costs included the ultevursen trial and wind-down activity, reorganization and employee-retention costs, and Axiomer and Lilly collaboration work.
- Financial results included a €3.627 million foreign-exchange gain, primarily on U.S.-dollar cash, and a €2.713 million gain from fair-value changes in derivative liabilities. Debt extinguishment generated a €2.534 million loss, partly offset by a €1.144 million gain from Amylon lender waivers.
- In December 2022, Lilly received 9,381,586 shares for gross proceeds of €14.122 million. The expanded agreement also provided a $60 million upfront payment, received in February 2023 and reported at year-end as a €56.254 million receivable. Lilly may pay a further $50 million to exercise an option to add five targets.
- The company reduced its workforce by approximately 50% through restructuring announced in April and August 2022; the actions were completed in March 2023.
Outlook, risks and contingencies
- ProQR planned to present nonclinical proof-of-concept data for AX-0810 and AX-1412 within 12 months, provide translational-data updates within 18 months, and target clinical trials in late 2024 or early 2025. These are forward-looking plans, not assured milestones.
- The Lilly collaboration provides eligibility for up to approximately $3.75 billion in milestone payments and potential sales royalties; these are contingent and depend on Lilly’s development and commercialization decisions and success.
- ProQR expects continued losses and no product revenue for the foreseeable future. Management’s cash runway estimate is subject to uncertain R&D costs, timelines, financing needs and collaboration receipts. Additional financing could dilute shareholders or require unfavorable partnering terms.
- Key risks include the early, unproven nature of RNA editing; technical, clinical and regulatory failure or delay; reliance on third-party research organizations and manufacturers; dependence on collaborators; intellectual-property disputes; and competition. ProQR disclosed patent oppositions involving Axiomer patents in Europe and Japan.
- Potential FFB obligations include up to $33.8 million tied to ultevursen’s first commercial sale; a $13.5 million payment may apply if the program is transferred, sold, licensed or subject to a change of control, and may be credited against the commercial-sale obligation.
- The company believes it was a passive foreign investment company (PFIC) for U.S. tax purposes in 2022, but PFIC status is determined annually. It also reported no material litigation at year-end. The auditor issued unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Confirm the timing and evidence for AX-0810 and AX-1412 milestones, including whether the planned late-2024/early-2025 clinical start remains achievable.
- Track cash burn against the stated runway into 2026, including the impact of the €56.254 million Lilly receivable received in February 2023 and future collaboration spending.
- Review Lilly’s progress, any exercise of the five-target option, and the conditions and timing attached to contingent milestones and royalties.
- Assess partner interest and any FFB, grant-repayment, licensing or other obligations related to the discontinued ophthalmology assets.
- Check actual dilution and potential overhang from equity awards and warrants. The filing identified 80,817,079 fully paid shares outstanding at year-end and 12,122,562 shares authorized for future employee-plan grants.
- For U.S. holders, verify annual PFIC status and consult tax advisers regarding elections and reporting obligations.