UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from _______ to _______ | |
Commission file number: |
(Exact name of Registrant as specified in its charter)
The (State or other jurisdiction of incorporation or organization) | Not applicable (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
+
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer” “accelerated filer” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ◻ | |
Non-accelerated filer ◻ | Smaller reporting company Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes
As of October 22, 2020, the registrant had
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 20 | |||
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SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” as defined under federal securities laws. Forward-looking statements are based on our current expectations of future events and many of these statements can be identified using terminology such as “believes,” “expects,” “anticipates,” “plans,” “may,” “will,” “projects,” “continues,” “estimates,” “potential,” “opportunity” and similar expressions. These forward-looking statements, which include statements related to the COVID-19 coronavirus pandemic, may be found in Part II, Item 1A “Risk Factors,” Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this Quarterly Report on Form 10-Q.
Forward-looking statements are only predictions based on management’s current views and assumptions and involve risks and uncertainties, and actual results could differ materially from those projected or implied. The most significant factors known to us that could materially adversely affect our business, operations, industry, financial position or future financial performance include those discussed in Part II, Item 1A “Risk Factors,” as well as those discussed in Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q, as well as other factors which may be identified from time to time in our other filings with the Securities and Exchange Commission (“SEC”), including our most recent Annual Report on Form 10-K filed with the SEC on March 2, 2020, or in the documents where such forward-looking statements appear. You should carefully consider that information before you make an investment decision.
You should not place undue reliance on these forward-looking statements, which speak only as of the date that they were made. Our actual results or experience could differ significantly from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, and in our Annual Report on Form 10-K for the year ended December 31, 2019, including in “Part I, Item 1A. Risk Factors,” as well as others that we may consider immaterial or do not anticipate at this time. These cautionary statements should be considered in connection with any written or oral forward-looking statements that we may make in the future or may file or furnish with the SEC. We do not undertake any obligation to release publicly any revisions to these forward-looking statements after completion of the filing of this Quarterly Report on Form 10-Q to reflect later events or circumstances or to reflect the occurrence of unanticipated events. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements.
In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
1
Part I – FINANCIAL INFORMATION
Item 1.Financial Statements
uniQure N.V.
UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30, | December 31, | |||||
| 2020 |
| 2019 | |||
(in thousands, except share and per share amounts) | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | | $ | | ||
Accounts receivable and accrued income from related party | | | ||||
Prepaid expenses | | | ||||
Other current assets and receivables | | | ||||
Total current assets | | | ||||
Non-current assets | ||||||
Property, plant and equipment, net of accumulated depreciation of $ | | | ||||
Operating lease right-of-use assets | | | ||||
Intangible assets, net | | | ||||
Goodwill | | | ||||
Restricted cash | | | ||||
Total non-current assets | | | ||||
Total assets | $ | | $ | | ||
Current liabilities | ||||||
Accounts payable | $ | | $ | | ||
Accrued expenses and other current liabilities | | | ||||
Current portion of operating lease liabilities | | | ||||
Current portion of deferred revenue | | | ||||
Total current liabilities | | | ||||
Non-current liabilities | ||||||
Long-term debt | | | ||||
Operating lease liabilities, net of current portion | | | ||||
Deferred revenue, net of current portion | | | ||||
Derivative financial instruments related party | | | ||||
Other non-current liabilities | | | ||||
Total non-current liabilities | | | ||||
Total liabilities | | | ||||
Commitments and contingencies | ||||||
Shareholders' equity | ||||||
Ordinary shares, € | | | ||||
Additional paid-in-capital | | | ||||
Accumulated other comprehensive loss | | ( | ||||
Accumulated deficit | ( | ( | ||||
Total shareholders' equity | | | ||||
Total liabilities and shareholders' equity | $ | | $ | | ||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
2
uniQure N.V.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
(in thousands, except share and per share amounts) | (in thousands, except share and per share amounts) | |||||||||||
License revenues from related party | | | | | ||||||||
Collaboration revenues from related party | | | | | ||||||||
Total revenues | | | | | ||||||||
Operating expenses: | ||||||||||||
Research and development expenses | ( | ( | ( | ( | ||||||||
Selling, general and administrative expenses | ( | ( | ( | ( | ||||||||
Total operating expenses | ( | ( | ( | ( | ||||||||
Other income | | | | | ||||||||
Other expense | ( | ( | ( | ( | ||||||||
Loss from operations | ( | ( | ( | ( | ||||||||
Interest income | | | | | ||||||||
Interest expense | ( | ( | ( | ( | ||||||||
Foreign currency (losses) / gains, net | ( | | ( | | ||||||||
Other non-operating gains / (losses), net | | | | ( | ||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive income / (loss): | ||||||||||||
Foreign currency translation adjustments | | ( | | ( | ||||||||
Total comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Basic and diluted net loss per ordinary share | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Weighted average shares used in computing basic and diluted net loss per ordinary share | | | | | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
uniQure N.V.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE THREE-MONTH PERIOD ENDED SEPTEMBER 30
Accumulated | ||||||||||||||||
Additional | other | Total | ||||||||||||||
Ordinary shares | paid-in | comprehensive | Accumulated | shareholders’ | ||||||||||||
No. of shares |
| Amount |
| capital |
| (loss)/income |
| deficit |
| equity | ||||||
(in thousands, except share and per share amounts) | ||||||||||||||||
Balance at June 30, 2019 | | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Loss for the period | — | — | — | — | ( | ( | ||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | ||||||||||
Follow-on public offering | | | | — | — | | ||||||||||
Exercise of share options | | | | — | — | | ||||||||||
Restricted and performance share units distributed during the period | | | ( | — | — | — | ||||||||||
Share-based compensation expense | — | — | | — | — | | ||||||||||
Issuance of ordinary shares relating to employee stock purchase plan | | — | | — | — | | ||||||||||
Balance at September 30, 2019 | | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Balance at June 30, 2020 | | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Loss for the period | — | — | — | — | ( | ( | ||||||||||
Other comprehensive income | — | — | — | | — | | ||||||||||
Exercise of share options | | — | | — | — | | ||||||||||
Restricted and performance share units distributed during the period | | | ( | — | — | — | ||||||||||
Share-based compensation expense | — | — | | — | — | | ||||||||||
Issuance of ordinary shares relating to employee stock purchase plan | | — | — | — | — | — | ||||||||||
Balance at September 30, 2020 | | $ | | $ | | $ | | $ | ( | $ | | |||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
uniQure N.V.
UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30
Accumulated | ||||||||||||||||
Additional | other | Total | ||||||||||||||
Ordinary shares | paid-in | comprehensive | Accumulated | shareholders’ | ||||||||||||
No. of shares |
| Amount |
| capital |
| (loss)/income |
| deficit |
| equity | ||||||
(in thousands, except share and per share amounts) | ||||||||||||||||
Balance at December 31, 2018 | | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Loss for the period | — | — | — | — | ( | ( | ||||||||||
Other comprehensive loss | — | — | — | ( | — | ( | ||||||||||
Follow-on public offering | | | | — | — | | ||||||||||
Hercules warrants exercise | | | | — | — | | ||||||||||
Exercise of share options | | | | — | — | | ||||||||||
Restricted and performance share units distributed during the period | | | ( | — | — | — | ||||||||||
Share-based compensation expense | — | — | | — | — | | ||||||||||
Issuance of ordinary shares relating to employee stock purchase plan | | — | | — | — | | ||||||||||
Balance at September 30, 2019 | | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Balance at December 31, 2019 | | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Loss for the period | — | — | — | — | ( | ( | ||||||||||
Other comprehensive income | — | — | — | | — | | ||||||||||
Exercise of share options | | | | — | — | | ||||||||||
Restricted and performance share units distributed during the period | | | ( | — | — | — | ||||||||||
Share-based compensation expense | — | — | | — | — | | ||||||||||
Issuance of ordinary shares relating to employee stock purchase plan | | — | | — | — | | ||||||||||
Balance at September 30, 2020 | | $ | | $ | | $ | | $ | ( | $ | | |||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5
uniQure N.V.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, | |||||||
| 2020 |
| 2019 | ||||
(in thousands) | |||||||
Cash flows from operating activities | |||||||
Net loss | $ | ( | $ | ( | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
Depreciation and amortization | | | |||||
Share-based compensation expense | | | |||||
Change in fair value of derivative financial instruments | ( | | |||||
Unrealized foreign exchange losses / (gains) | | ( | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable and accrued income, prepaid expenses and other current assets and receivables | ( | ( | |||||
Accounts payable | ( | ( | |||||
Accrued expenses, other liabilities and operating leases | | | |||||
Deferred revenue | ( | ( | |||||
Net cash used in operating activities | ( | ( | |||||
Cash flows from investing activities | |||||||
Purchases of intangible assets | ( | ( | |||||
Purchases of property, plant and equipment | ( | ( | |||||
Net cash used in investing activities | ( | ( | |||||
Cash flows from financing activities | |||||||
Proceeds from issuance of shares related to employee stock option and purchase plans | | | |||||
Proceeds from public offering of shares, net of issuance costs | - | | |||||
Proceeds from exercise of warrants | - | | |||||
Net cash generated from financing activities | | | |||||
Currency effect on cash, cash equivalents and restricted cash | | ( | |||||
Net (decrease) / increase in cash, cash equivalents and restricted cash | ( | | |||||
Cash, cash equivalents and restricted cash at beginning of period | | | |||||
Cash, cash equivalents and restricted cash at the end of period | $ | | $ | | |||
Cash and cash equivalents | $ | | $ | | |||
Restricted cash related to leasehold and other deposits | | | |||||
Total cash, cash equivalents and restricted cash | $ | | $ | | |||
Supplemental cash flow disclosures: | |||||||
Cash paid for interest | $ | ( | $ | ( | |||
Non-cash increases in accounts payables and accrued expenses and other current liabilities related to purchases of intangible assets and property, plant and equipment | $ | | $ | | |||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
6
1General business information
uniQure (the “Company”) was incorporated on January 9, 2012 as a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) under the laws of the Netherlands. The Company is a leader in the field of gene therapy and seeks to deliver to patients suffering from rare and other devastating diseases single treatments with potentially curative results. The Company’s business was founded in 1998 and was initially operated through its predecessor company, Amsterdam Molecular Therapeutics (AMT) Holding N.V (“AMT”). In 2012, AMT undertook a corporate reorganization, pursuant to which uniQure B.V. acquired the entire business and assets of AMT and completed a share-for-share exchange with the shareholders of AMT. Effective February 10, 2014, in connection with its initial public offering, the Company converted into a public company with limited liability (naamloze vennootschap) and changed its legal name from uniQure B.V. to uniQure N.V.
The Company is registered in the trade register of the Chamber of Commerce (Kamer van Koophandel) in Amsterdam, the Netherlands under number 54385229. The Company’s headquarters are in Amsterdam, the Netherlands, and its registered office is located at Paasheuvelweg 25, Amsterdam 1105 BP, the Netherlands and its telephone number is +31 20 240 6000.
The Company’s ordinary shares are listed on the Nasdaq Global Select Market and trade under the symbol “QURE”.
2Summary of significant accounting policies
2.1Basis of preparation
The Company prepared these unaudited consolidated financial statements in compliance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting. Any reference in these notes to applicable guidance is meant to refer to authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).
The unaudited consolidated financial statements are presented in U.S. dollars, except where otherwise indicated. Transactions denominated in currencies other than U.S. dollars are presented in the transaction currency with the U.S. dollar amount included in parenthesis, converted at the foreign exchange rate as of the transaction date.
2.2Unaudited interim financial information
The interim financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the financial position, results of operations and changes in financial position for the period presented.
Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. The results of operations for the nine months ended September 30, 2020, are not necessarily indicative of the results to be expected for the full year ending December 31, 2020 or for any other future year or interim period. The accompanying financial statements should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020.
2.3Use of estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
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2.4Accounting policies
The principal accounting policies applied in the preparation of these unaudited consolidated financial statements are described in the Company’s audited financial statements as of and for the year ended December 31, 2019, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020. There have been no material changes in the Company’s significant accounting policies during the nine months ended September 30, 2020.
2.5Recent accounting pronouncements
There have been no new accounting pronouncements or changes to accounting pronouncements during the nine months ended September 30, 2020, as compared to the recent accounting pronouncements described in Note 2.3.23 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which could be expected to materially impact the Company’s unaudited consolidated financial statements. The Company has adopted ASU 2018-13, Fair Value Measurement (Topic 820) and additional disclosures related to significant unobservable inputs have been included within footnote 4 Fair value measurement.
3 | Collaboration arrangements and concentration of credit risk |
CSL Behring collaboration
On June 24, 2020, uniQure biopharma B.V., a wholly-owned subsidiary of uniQure N.V., entered into a commercialization and license agreement (the “CSL Behring Agreement”) with CSL Behring LLC (“CSL Behring”) pursuant to which CSL Behring will receive exclusive global rights to etranacogene dezaparvovec, the Company’s investigational gene therapy for patients with hemophilia B (the “Product”).
Under the terms of the CSL Behring Agreement, the Company will receive a $
Pursuant to the CSL Behring Agreement, the Company will be responsible for the completion of the HOPE-B clinical trial, manufacturing process validation, and the manufacturing supply of the Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization. Concurrently with the execution of the CSL Behring Agreement, the Company and CSL Behring entered into a development and commercial supply agreement, pursuant to which, among other things, the Company will supply the Product to CSL Behring at an agreed-upon price. Clinical development and regulatory activities performed by the Company pursuant to the CSL Behring Agreement will be reimbursed by CSL Behring. CSL Behring will be responsible for global regulatory submissions and commercialization requirements for the Product.
Closing of the CSL Behring Agreement is contingent on the successful completion of reviews under antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date. Closing of the transaction is dependent on the timing, extent, and result of the regulatory review process. The Company does not believe that the consummation of the transaction will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge on antitrust grounds will not be made, or if such a challenge is made, what the result would be.
In accordance with its existing license and other agreements, the Company is contractually required to pay in total a low to high single digit percentage of any upfront payment to its licensors and financial advisor (“License Fees”).
As of September 30, 2020, the Company concluded it has no enforceable right to receive any of the upfront payment, the regulatory and sales milestone payments or the royalties (together “CSL License Revenue”) that it may receive in accordance with the CSL Behring Agreement, as all payments are contingent upon the successful completion of reviews under antitrust laws in the United States, Australia and the United Kingdom. Therefore, the Company determined it will not recognize any revenue in relation to the CSL License Revenue, in accordance with ASC 606.
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The Company determined that in accordance with Dutch tax law it will recognize the CSL Behring License Revenue as well as the License Fees as taxable results as of the date on which the Company is contractually entitled to receive (or obligated to make) a payment under the CSL Behring Agreement. The Company expects to continue to incur taxable losses in the Netherlands except for the period in which it receives the $
Future taxable income or losses of the Company and a potential reversal of the valuation allowance will be impacted by a variety of factors, of which some are outside of the Company’s control. Such factors include the outcome and timing of the reviews under antitrust laws in the United States, Australia, and the United Kingdom, additional net operating losses the Company may generate in relation to the CSL Behring Agreement, and the amount of License Fees the Company is required to pay.
The Company recognizes deferred tax assets to the extent that it determines that these assets are more likely than not to be realized. In making such a determination, the Company weighed all available positive and negative evidence, including future income projections from the CSL Behring Agreement, and concluded that it is more likely than not that the deferred tax assets will not be realized. Accordingly, the Company continued to record a full valuation allowance as of September 30, 2020.
Bristol-Myers Squibb collaboration
In May 2015, the Company entered into a collaboration and license agreement (the “BMS CLA”) and various related agreements with Bristol-Myers Squibb Company (“BMS”) that provide BMS with exclusive access to the Company’s gene therapy technology platform for the research, development and commercialization of therapeutics aimed at multiple targets in cardiovascular and other diseases (“Collaboration Targets”). The initial
The Company has agreed to certain restrictions on its ability to work independently of the collaboration, either directly or indirectly through any affiliate or third party, on certain programs that would be competitive with the collaboration programs. The Company is currently in discussions with BMS potentially to amend the BMS CLA and other related agreements following the expiration of the research term. It is currently uncertain whether a change to the BMS CLA will be agreed and, if agreed, what the specific terms of any such change may be. As a consequence, the Company has not taken into account the impact of such change, if any, on the timing of recognition of the prepaid License Revenue if and when the BMS CLA and other related agreements have been restructured or amended. The final resolution of these discussions may or may not result in material changes to the Company’s collaboration with BMS. The Company agreed, subject to certain conditions, to continue providing limited support of the pre-clinical Collaboration Targets, and any related costs will be reimbursed by BMS during these discussions.
9
The Company evaluated the BMS CLA and determined that its performance obligations are as follows:
| (i) | Providing access to its technology and know-how in the field of gene therapy as well as actively contributing to the target selection, the collaboration as a whole, the development during the target selection, the pre-clinical and the clinical phase through participating in joint steering committee and other governing bodies (“License Revenue”); |
| (ii) | Providing pre-clinical Collaboration Target specific, non-clinical, analytical and process development services during the initial research term, which ended on May 21, 2019 (“Collaboration Revenue”); and |
| (iii) | Providing clinical and commercial manufacturing services for Collaboration Targets (“Manufacturing Revenue”). To date the Company has not generated any Manufacturing Revenue. |
Amounts owed by BMS in relation the collaboration services are as follows:
September 30, | December 31, | |||||
| 2020 |
| 2019 | |||
(in thousands) | ||||||
Bristol Myers Squibb | $ | | $ | | ||
Total | $ | | $ | | ||
License Revenue
The Company recognized $
The Company would be entitled to an aggregate $
Additionally, the Company is eligible to receive net sales-based milestone payments and tiered mid-single to low double-digit royalties on product sales. The royalty term is determined on a licensed-product-by-licensed-product and country-by-country basis and begins on the first commercial sale of a licensed product in a country and ends on the expiration of the last to expire of specified patents or regulatory exclusivity covering such licensed product in such country or, with a customary royalty reduction,
The Company recognizes License Revenue over the expected performance period based on its measure of progress towards the completion of certain activities related to its services. The Company determines such progress by comparing activities performed at the end of each reporting period with total activities expected to be performed. The Company estimates total expected activities using a number of unobservable inputs, such as the probability of BMS designating additional targets, the probability of successfully completing each phase and estimated time required to provide services during the various development stages. If available, the Company uses product candidate-specific research and development plans. Alternatively, the Company assumes that completion of the pre-clinical phase requires an average of
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4 | Fair value measurement |
The Company measures certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. U.S. GAAP requires disclosure of methodologies used in determining the reported fair values, and establishes a hierarchy of inputs used when available. The three levels of the fair value hierarchy are described below:
| ● | Level 1 - Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company can access at the measurement date. |
| ● | Level 2 - Valuations based on quoted prices for similar assets or liabilities in markets that are not active or models for which the inputs are observable, either directly or indirectly. |
| ● | Level 3 - Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and are unobservable. |
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The carrying amount of cash and cash equivalents, accrued income from the related party, prepaid expenses, other assets, accounts payable, accrued expenses and other current liabilities reflected in the Consolidated balance sheets approximate their fair values due to their short-term maturities.
The following table sets forth the Company’s assets and liabilities that are required to be measured at fair value on a recurring basis as of September 30, 2020, and December 31, 2019:
| Quoted prices |
| Significant |
| Significant |
| Total |
| Classification in Consolidated | |||||
(in thousands) | ||||||||||||||
At December 31, 2019 | ||||||||||||||
Assets: | ||||||||||||||
Cash, cash equivalents and restricted cash | $ | | $ | — | $ | — | $ | | Cash and cash equivalents; restricted cash | |||||
Total assets | $ | | $ | — | $ | — | $ | | ||||||
Liabilities: | ||||||||||||||
Derivative financial instruments - related party | — | — | | | ||||||||||
Total liabilities | $ | — | $ | — | $ | | $ | | ||||||
At September 30, 2020 | ||||||||||||||
Assets: | ||||||||||||||
Cash, cash equivalents and restricted cash | $ | | $ | — | $ | — | $ | | Cash and cash equivalents; restricted cash | |||||
Total assets | $ | | $ | — | $ | — | $ | | ||||||
Liabilities: | ||||||||||||||
Derivative financial instruments - related party | $ | — | $ | — | $ | | $ | | ||||||
Total liabilities | $ | — | $ | — | $ | | $ | | ||||||
Changes in Level 3 items during the nine months ended September 30, 2020, are as follows:
Derivative | |||
financial | |||
| instruments | ||
(in thousands) | |||
Balance at December 31, 2019 | $ | | |
Net gains recognized in profit or loss | ( | ||
Currency translation effects | | ||
Balance at September 30, 2020 | $ | | |
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BMS warrants
The Company issued derivative financial instruments related to its collaboration with BMS. The fair value of the BMS derivative financial instruments (“BMS warrants”) as of September 30, 2020, was $
The Company granted BMS
| ● | A warrant allowing BMS to purchase a specific number of the Company’s unregistered ordinary shares such that its ownership will equal |
| ● | A warrant allowing BMS to purchase a specific number of the Company’s unregistered ordinary shares such that its ownership will equal |
Pursuant to the terms of the BMS CLA, the exercise price in respect of each warrant is equal to the greater of (i) the product of (A) $
As of September 30, 2020, BMS had designated a total of
The significant unobservable inputs that the Company uses to develop Level 3 fair value measurements include the number of ordinary shares outstanding at the time of BMS’s warrant exercises. The number of such ordinary shares outstanding at the time of exercise determines the number of unregistered ordinary shares to be issued in connection with the BMS warrants.
The warrants can only be exercised following the occurrence of events contractually defined in the warrant agreements. The probability of the occurrence of these events represent another significant unobservable input used in the calculation of the fair value of the warrants. The Company estimates that the probability of the occurrence of events allowing BMS to exercise the 1st warrant is within a range of
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5 | Right-of-use assets and lease liabilities |
The Company’s most significant leases relate to office and laboratory space under the following operating lease agreements:
Lexington, Massachusetts / United States
In July 2013, the Company entered into a lease for a facility in Lexington, Massachusetts, United States. In November 2018, the term was expanded by
Amsterdam / The Netherlands
In March 2016, the Company entered into a
On December 1, 2017, the Company entered into an agreement to sub-lease
The table below presents the components of the Company’s lease costs for the periods indicated:
Three months ended September 30, |
| Nine months ended September 30, | ||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
(in thousands) | (in thousands) | |||||||||||
Operating lease cost | $ | | $ | | $ | | $ | | ||||
Variable lease cost | | | | | ||||||||
Sublease income | ( | ( | ( | ( | ||||||||
Total lease cost | $ | | $ | | $ | | $ | | ||||
The table below presents the lease-related assets and liabilities recorded on the Consolidated balance sheets for the periods indicated.
| September 30, | December 31, | ||||
2020 | 2019 | |||||
(in thousands) | ||||||
Assets | ||||||
Operating lease right-of-use assets | $ | | | |||
Liabilities | ||||||
Current | ||||||
Current operating lease liabilities | | | ||||
Non-current | ||||||
Non-current operating lease liabilities | | | ||||
Total lease liabilities | $ | | | |||
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Other information
The weighted-average remaining lease term as of September 30, 2020 is
Cash paid for amounts included in the measurement of lease liabilities for the periods indicated below was as follows:
Three months ended September 30, |
| Nine months ended September 30, | |||||||||
2020 |
| 2019 |
| 2020 |
| 2019 | |||||
(in thousands) | (in thousands) | ||||||||||
Operating cash flows for operating leases 1) | $ | | $ | | $ | | $ | | |||
(1) The Company has received $
The Company did not obtain any right-of-use assets in exchange for lease obligations in the three and nine months ended September 30, 2020. Besides the initial recognition of operating right-of-use assets of $
Undiscounted cash flows
The table below reconciles the undiscounted cash flows as of September 30, 2020, for each of the first five years and the total of the remaining years to the operating lease liabilities recorded on the Consolidated balance sheet as of September 30, 2020.
Lexington | Amsterdam1) | Other1) | Total | ||||||||
(in thousands) | |||||||||||
2020 (three months remaining) | $ | | $ | | $ | — | $ | | |||
2021 | | | | | |||||||
2022 | | | — | | |||||||
2023 | | | — | | |||||||
2024 | | | — | | |||||||
Thereafter | | | — | | |||||||
Total lease payments | $ | | $ | | $ | | $ | | |||
Less: amount of lease payments representing interest payments | ( | ( | ( | ( | |||||||
Present value of lease payments | | | | | |||||||
Less: current operating lease liabilities | ( | ( | ( | ( | |||||||
Non-current operating lease liabilities | $ | | $ | | $ | — | $ | | |||
(1) Payments are due in EUR and have been translated at the foreign exchange rate as of September 30, 2020, of $
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6 | Accrued expenses and other current liabilities |
Accrued expenses and other current liabilities include the following items:
September 30, | December 31, | |||||
| 2020 |
| 2019 | |||
(in thousands) | ||||||
Accruals for services provided by vendors-not yet billed | $ | | $ | | ||
Personnel related accruals and liabilities | | | ||||
Total | $ | | $ | | ||
7 | Long-term debt |
On June 14, 2013, the Company entered into a venture debt loan facility with Hercules Growth Capital, Inc. (“Hercules”), which was amended and restated on June 26, 2014, and again on May 6, 2016 (“2016 Amended Facility”). On December 6, 2018, the Company signed an amendment to the Second Amended and Restated Loan and Security Agreement that both refinanced the then-existing $
Under the 2018 Amended Facility, the Company paid a facility fee of
The amortized cost (including interest due presented as part of accrued expenses and other current liabilities) of the 2018 Amended Facility was $
Interest expense associated with the 2018 Amended Facility during the three and nine months ended September 30, 2020 was $
As a covenant in the 2018 Amended Facility, the Company has periodic reporting requirements and is required to keep a minimum cash balance deposited in bank accounts in the United States, equivalent to the lesser of (i)
The 2018 Amended Facility contains provisions that include the occurrence of a material adverse effect, as defined therein, which would entitle Hercules to declare all principal, interest and other amounts owed by the Company immediately due and payable. As of September 30, 2020, the Company was in compliance with all covenants and provisions.
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8Share-based compensation
The Company’s share-based compensation plans include the 2014 Amended and Restated Share Option Plan (the “2014 Plan”) and inducement grants under Rule 5653(c)(4) of the Nasdaq Global Select Market with terms similar to the 2014 Plan (together the “2014 Plans”). At the annual general meeting of shareholders in June 2018, the Company’s shareholders approved amendments of the 2014 Plan, increasing the shares authorized for issuance by
| a) | 2014 Plans |
Share-based compensation expense recognized by classification included in the Consolidated statements of operations and comprehensive loss in relation to the 2014 Plans for the periods indicated below was as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||
| 2020 |
| 2019 | 2020 | 2019 | |||||||
(in thousands) | (in thousands) | |||||||||||
Research and development | $ | | $ | | $ | | $ | | ||||
Selling, general and administrative | | | | | ||||||||
Total | $ | | $ | | $ | | $ | | ||||
Share-based compensation expense recognized by award type for the periods indicated below was as follows:
Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2020 |
| 2019 | 2020 | 2019 | |||||||
(in thousands) | (in thousands) | |||||||||||
Award type | ||||||||||||
Share options | $ | | $ | | $ | | $ | | ||||
Restricted share units (“RSUs”) | | | | | ||||||||
Performance share units (“PSUs”) | | | | | ||||||||
Total | $ | | $ | | $ | | $ | | ||||
As of September 30, 2020, the unrecognized share-based compensation expense related to unvested awards under the 2014 Plans were:
| Unrecognized |
| Weighted average | ||
| share-based |
| remaining | ||
compensation | period for | ||||
expense | recognition | ||||
(in thousands) | (in years) | ||||
Award type | |||||
Share options | $ | | |||
Restricted share units | | ||||
Performance share units | | ||||
Total | $ | | |||
The Company satisfies the exercise of share options and vesting of RSUs and PSUs through newly issued ordinary shares.
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Share options
The following table summarizes option activity for the nine months ended September 30, 2020:
Options | |||||
Number of | Weighted average | ||||
| ordinary shares |
| exercise price | ||
Outstanding at December 31, 2019 | | $ | | ||
Granted | | $ | | ||
Forfeited | ( | $ | | ||
Expired | ( | $ | | ||
Exercised | ( | $ | | ||
Outstanding at September 30, 2020 | | $ | | ||
Thereof, fully vested and exercisable at September 30, 2020 | | $ | | ||
Thereof, outstanding and expected to vest after September 30, 2020 | | $ | | ||
Total weighted average grant date fair value of options issued during the period (in $ millions) | $ | | |||
Proceeds from option sales during the period (in $ millions) | $ | |
Share options are priced on the date of grant and, except for certain grants made to non-executive directors, vest over a period of
The fair value of each option issued is estimated at the respective grant date using the Hull & White option pricing model with the following weighted-average assumptions:
Three months ended September 30, |
| Nine months ended September 30, | ||||||
Assumptions |
| 2020 |
| 2019 |
| 2020 |
| 2019 |
Expected volatility | ||||||||
Expected terms | ||||||||
Risk free interest rate | ||||||||
Expected dividend yield | ||||||||
Restricted share units (“RSUs”)
The following table summarizes the RSUs activity for the nine months ended September 30, 2020:
RSU | |||||
|
| Weighted average | |||
Number of | grant-date fair | ||||
ordinary shares | value | ||||
Non-vested at December 31, 2019 | | $ | | ||
Granted | | $ | | ||
Vested | ( | $ | | ||
Forfeited | ( | $ | | ||
Non-vested at September 30, 2020 | | $ | | ||
Total weighted average grant date fair value of RSUs granted during the period (in $ millions) | $ | | |||
RSUs vest over to
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Performance share units (“PSUs”)
The following table summarizes the PSUs activity for the nine months ended September 30, 2020:
PSU | |||||
|
| Weighted average | |||
Number of | grant-date fair | ||||
ordinary shares | value | ||||
Non-vested at December 31, 2019 | | $ | | ||
Granted | | $ | | ||
Vested | ( | $ | | ||
Forfeited | ( | $ | | ||
Non-vested at September 30, 2020 | | $ | | ||
Total weighted average grant date fair value of PSUs granted during the period (in $ millions) | $ | | |||
In January 2019, the Company awarded PSUs to its executives and certain other members of senior management. These PSUs were earned as of January 2020 based on an assessment by the Company’s board of directors of the level of achievement of agreed upon performance targets through December 31, 2019. PSUs vest after
| b) | Employee Share Purchase Plan (“ESPP”) |
In June 2018, the Company’s shareholders adopted and approved an ESPP allowing the Company to issue up to
9 | Income taxes |
Deferred tax assets and deferred tax liabilities are recognized based on the expected future tax consequences of temporary differences between the financial statement carrying amounts and the income tax basis of assets and liabilities, using current statutory rates. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all the deferred tax assets will not be realized. The Company reassessed the need for a full valuation allowance in conjunction with entering into the CSL Behring Agreement. Closing of the CSL Behring Agreement is contingent on the successful completion of reviews under the antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date. Closing of the transaction is dependent on the timing, extent and result of the regulatory review process. In its assessment of whether or not it was more likely than not that the Company’s deferred tax assets will be realized, the Company considered all relevant facts and circumstances, including in particular similar regulatory reviews as well as the three-year cumulative losses reported by the Company. The Company concluded that it should continue to record a full valuation allowance as of September 30, 2020. As of December 31, 2019, the Company’s valuation allowance amounted to $
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10Basic and diluted earnings per share
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding, assuming conversion of all potentially dilutive ordinary shares. As the Company has incurred a loss, all potentially dilutive ordinary shares would have an antidilutive effect, if converted, and thus have been excluded from the computation of loss per share. The shares are presented without giving effect to the application of the treasury method or exercise prices that would be above the share price as of September 30, 2020 and September 30, 2019, respectively. In addition, the BMS warrants were not exercisable as of these dates since this would have required the prior designation of Collaboration Targets by BMS. This would generally result in a lower number of potentially dilutive ordinary shares as some stock option grants as well as the BMS warrants would have been excluded.
The potentially dilutive ordinary shares are summarized below:
September 30, | ||||
| 2020 |
| 2019 | |
(ordinary shares) | ||||
BMS warrants | | | ||
Stock options under 2014 Plans | | | ||
Non-vested RSUs and earned PSUs | | | ||
Stock options under previous option plan | | | ||
Employee share purchase plan | | | ||
Total potential dilutive ordinary shares | | | ||
11Subsequent events
None.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand our results of operations and financial condition. This MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and the accompanying notes thereto and other disclosures included in this Quarterly Report on Form 10-Q, including the disclosures under Part II, Item 1A “Risk Factors,” and our audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission ( the “SEC”) on March 2, 2020. Our unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”) and unless otherwise indicated are presented in U.S. dollars.
Overview
We are a leader in the field of gene therapy, seeking to develop single treatments with potentially curative results for patients suffering from genetic and other devastating diseases. We are advancing a focused pipeline of innovative gene therapies, including product candidates for the treatment of hemophilia B, which we intend to license to CSL Behring pursuant to the CSL Behring Agreement (as defined below), and Huntington’s disease. We believe our validated technology platform and manufacturing capabilities provide us distinct competitive advantages, including the potential to reduce development risk, cost and time to market. We produce our AAV-based gene therapies in our own facilities with a proprietary, commercial-scale, current good manufacturing practices (“cGMP”)-compliant, manufacturing process. We believe our Lexington, Massachusetts-based facility is one of the world's most versatile gene therapy manufacturing facilities.
Business Developments
Below is a summary of our recent significant business developments:
CSL Behring commercialization and license agreement
On June 24, 2020, uniQure biopharma B.V., a wholly-owned subsidiary of uniQure N.V., entered into a commercialization and license agreement (the “CSL Behring Agreement”) with CSL Behring LLC (“CSL Behring”) pursuant to which CSL Behring will receive exclusive global rights to etranacogene dezaparvovec, our investigational gene therapy for patients with hemophilia B (the “Product”).
Under the terms of the CSL Behring Agreement, we will receive a $450 million upfront cash payment upon the closing of the CSL Behring Agreement and be eligible to receive up to $1.6 billion in additional payments based on regulatory and commercial milestones. The CSL Behring agreement also provides that we will be eligible to receive tiered double-digit royalties in a range of up to a low-twenties percent of net sales of the Product based on sales thresholds.
Pursuant to the CSL Behring Agreement, we will be responsible for the completion of the HOPE-B clinical trial, manufacturing process validation, and the manufacturing supply of the Product until such time that these capabilities may be transferred to CSL Behring or its designated contract manufacturing organization. Concurrently with the execution of the CSL Behring Agreement we and CSL Behring entered into a development and commercial supply agreement, pursuant to which, among other things, we will supply the Product to CSL Behring at an agreed-upon price. Clinical development and regulatory activities performed by us pursuant to the CSL Behring Agreement will be reimbursed by CSL Behring. CSL Behring will be responsible for global regulatory submissions and commercialization requirements for the Product.
The effectiveness of the transactions contemplated by the CSL Behring Agreement is contingent on completion of review under antitrust laws in the United States, Australia, and the United Kingdom and certain provisions of the CSL Behring Agreement will not become effective until after we receive such regulatory approvals.
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Other than under the CSL Behring Agreement, neither we nor CSL Behring may perform any clinical trials, with the exception of trials required to extend the label or gain marketing authorization outside the United States or the European Union, for any gene therapy product, gene-editing product, or any other product comprising an AAV vector to conduct nucleotide transfer (including DNA and RNA) for the treatment, prevention, or cure of hemophilia B for a period commencing on June 24, 2020 and continuing for a period of four years following the first commercial sale of the Product in the United States, and neither we nor CSL Behring may commercialize such a product for a period commencing as of June 24, 2020 and continuing for a period of seven years following the first commercial sale of the Product in the United States. This exclusivity commitment would not bind an acquirer of us that owns or controls such a product so long as certain precautions are followed to ensure that CSL Behring’s confidential information and our proprietary technology related to the Product are not used or accessed by personnel of such acquirer who are developing or commercializing such competing product.
Unless earlier terminated as described below, the CSL Behring Agreement will continue on a country-by-country basis until expiration of the royalty term in a country. The royalty term expires in a country on the later of (a) 15 years after the first commercial sale of the Product in such country, (b) expiration of regulatory exclusivity for the Product in such country and (c) expiration of all valid claims of specific licensed patents covering the Product in such country. Either we or CSL Behring may terminate the CSL Behring Agreement for the other party’s material breach, if such breach is not cured within a specified cure period. In addition, if CSL Behring fails to commercialize the Product in any of a group of major countries for an extended period of time following the first regulatory approval of the Product in any of such group of countries (other than due to certain specified reasons) and such failure has not been cured within a specified cure period, then we may terminate the CSL Behring Agreement. CSL Behring may also terminate the CSL Behring Agreement for convenience.
Closing of the CSL Behring Agreement is contingent on the successful completion of reviews under antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date. Closing of the transaction is dependent on the timing, extent, and result of the regulatory review process. We do not believe that the consummation of the transaction will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge on antitrust grounds will not be made, or if such a challenge is made, what the result would be. In accordance with our existing license and other agreements, we are contractually required to pay in total a low to high single digit percentage of any upfront payment to our licensors and financial advisor (“License Fees”).
As of September 30, 2020, we concluded that we have no enforceable right to receive any of the upfront payment, the regulatory and sales milestone payments or the royalties (together “CSL License Revenue”) that we may receive in accordance with the CSL Behring Agreement, as all payments are contingent upon the successful completion of reviews under antitrust laws in the United States, Australia and the United Kingdom. Therefore, we determined we will not recognize any revenue in relation to the CSL License Revenue, in accordance with ASC 606.
We determined that in accordance with Dutch tax law we will recognize the CSL Behring License Revenue as well as the License Fees as taxable results as of the date on which we are contractually entitled to receive (or obligated to make) a payment under the CSL Behring Agreement. We expect to continue to incur taxable losses in the Netherlands except for the period in which we receive the $450 million upfront payment under the CSL Behring Agreement. In the event that we recognize the $450 million upfront payment in 2020, such payment is expected to be subject to Dutch corporate income tax at a rate of 25.0%. However, we do not expect that we will be required to pay any income taxes in the period in which we recognize the $450 million upfront payment as taxable revenue, as such payment is not expected to exceed the net operating losses that we have carried forward in the Netherlands. We have historically recorded a full valuation allowance against our net deferred tax assets.
Future taxable income or losses and a potential reversal of the valuation allowance will be impacted by a variety of factors, of which some are outside of our control. Such factors include the outcome and timing of the reviews under antitrust laws in the United States, Australia, and the United Kingdom, additional net operating losses we may generate in relation to the CSL Behring Agreement, and the amount of License Fees we are required to pay.
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We recognize deferred tax assets to the extent that we determine that these assets are more likely than not to be realized. In making such a determination, we weighed all available positive and negative evidence, including future income projections from the CSL Behring Agreement, and concluded that it is more likely than not that the deferred tax assets will not be realized. Accordingly, we continued to record a full valuation allowance as of September 30, 2020.
Hemophilia B program – Etranacogene dezaparvovec (AMT-061)
Etranacogene dezaparvovec is our lead gene therapy candidate and includes an AAV5 vector incorporating the FIX-Padua variant. We are currently conducting a pivotal study in patients with severe and moderately-severe hemophilia B. Etranacogene dezaparvovec has been granted Breakthrough Therapy Designation by the United States FDA and access to the PRIME initiative by the EMA.
In June 2018, we initiated our Phase III HOPE-B pivotal trial of etranacogene dezaparvovec (the “HOPE-B trial”). The HOPE-B trial is a multinational, multi-center, open-label, single-arm study to evaluate the safety and efficacy of etranacogene dezaparvovec. After a six-month lead-in period, patients received a single intravenous administration of etranacogene dezaparvovec. The primary endpoint of the study is based on the FIX activity level achieved following the administration of etranacogene dezaparvovec, and the secondary endpoints are measuring annualized FIX replacement therapy usage, annualized bleed rates and safety. Patients enrolled in the HOPE-B trial were tested for the presence of pre-existing neutralizing antibodies to AAV5 but not excluded from the trial based on their titers.
In March 2020, we completed dosing of 54 patients in the HOPE-B trial. The targeted number of patients to be dosed per the clinical trial protocol was 50. As set forth below, we have implemented and continue to implement various measures to allow us to closely monitor the trial within the guidance provided by the FDA regarding the impact of the COVID-19 coronavirus pandemic (“COVID-19”) in order to minimize any risk or disruption in patient follow-up visits.
In August 2018, we initiated a Phase IIb dose-confirmation study of etranacogene dezaparvovec. In December 2019, we presented 52-week follow-up data from the study showing that all three patients had stabilized and sustained FIX activity at therapeutic levels after a one-time administration of etranacogene dezaparvovec. Mean FIX activity for the three patients at 52 weeks after administration was 41% of normal, with the first patient achieving FIX activity of 50% of normal, the second patient achieving FIX activity of 31% of normal and the third patient achieving FIX activity of 41% of normal. The second and third patients had previously screen-failed and were excluded from another gene therapy study due to pre-existing neutralizing antibodies to a different AAV vector.
Etranacogene dezaparvovec has been granted Breakthrough Therapy Designation by the United States Food and Drug Administration (“FDA”) and access to the PRIME initiative by the European Medicines Agency (“EMA”).
Huntington’s disease program (AMT-130)
AMT-130 is our novel gene therapy candidate for the treatment of Huntington’s disease. AMT-130 utilizes our miQURE proprietary, gene-silencing platform and incorporates an AAV vector carrying a miRNA specifically designed to silence the huntingtin gene and the potentially highly toxic exon 1 protein fragment. AMT-130 has received orphan drug and fast track designations from the FDA and Orphan Medicinal Product Designation from the EMA.
In June 2020, we announced the completion of the first two patient procedures in the Phase I/II clinical trial of AMT-130 for the treatment of Huntington’s disease. These procedures occurred after a postponement that resulted from the COVID-19 pandemic and the associated states of emergency declarations in the United States. The Phase I/II protocol is a randomized, imitation surgery-controlled, double-blinded study conducted at three surgical sites, and multiple referring, non-surgical sites in the U.S. The primary objective of the study is to evaluate the safety, tolerability, and efficacy of AMT-130 at two doses.
On September 25, 2020, we announced that the independent Data Safety Monitoring Board (DSMB) overseeing the Phase I/II clinical trial of AMT-130 for the treatment of Huntington’s disease has met and reviewed 90-day safety data from the first two patients enrolled in the trial. No significant safety concerns were noted to prevent further dosing.
On October 13, 2020, we announced the completion of the third and fourth patient procedures in the Phase I/II clinical trial. In accordance with the study protocol, patient enrollment is expected to continue after a DSMB meeting to review 90-day follow-up data on these two new patients and 6-month data on the first two patients.
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AMT-150 for Spinocerebellar Ataxia type 3 (SCA3)
AMT-150 is our novel gene therapy candidate for the treatment of SCA3, also known as Machado-Joseph disease, which is caused by a CAG-repeat expansion in the ATXN3 gene that results in an abnormal form of the protein ataxin-3.
In May 2020, we presented preclinical data at the American Society of Gene and Cell Therapy (“ASGCT”) Annual Meeting, on our gene therapy candidate SCA3. In an in vivo preclinical study, six non-human primates (NHP) received a one-time injection of AMT-150 via the cisterna magna to assess expression and distribution. Samples taken after eight weeks showed widespread transduction of the brain and spinal cord, with the highest genome copies found in the posterior fossa and cortical regions. In other preclinical studies, researchers evaluated AMT-150 in SCA3 mouse models, as well as human induced pluripotent stem cell (“iPSC”)-derived neurons and astrocytes, to investigate potential off-target effects of AAV5-miATXN3. The iPSC-derived cell cultures, which were derived from two SCA3 patients, represent the most disease-relevant cell type for therapeutic targeting of AMT-150. A clear dose-dependent expression of miATXN3 was observed in the iPSC-derived neurons and astrocytes transduced with AMT-150. Mature miATXN3 molecules were also associated with extracellular vesicles that strongly correlated with the dose and miATXN3 expression, suggesting the potential therapeutic spread of the engineered miATXN3. Additionally, AMT-150 demonstrated ATXN3 knockdown in human neurons and various SCA3 mouse models with subsequent neuropathology improvement.
In September 2020, we initiated an IND-enabling safety and toxicology study of AMT-150 in non-human primates.
AMT-190 for Fabry disease
In September 2020, we selected a lead gene therapy candidate (AMT-190) for the treatment of
Fabry disease to advance into IND-enabling studies. The lead candidate is a one-time administered AAV5 gene therapy incorporating the α-galactosidase A (GLA) transgene. In preclinical studies comparing multiple product candidates, including constructs incorporating a modified alpha-N-acetylgalactosaminidase transgene (modNAGA), AMT-190 demonstrated the most robust and sustained increases in GLA activity.
AMT-180 for Hemophilia A
In June 2020, we announced that we plan to de-prioritize our research program of AMT-180 for patients with hemophilia A, as part of our effort to focus on those gene therapy programs that have the greatest potential to improve patients’ lives and generate long-term value for shareholders.
COVID-19 measures
In December 2019, COVID-19, a novel coronavirus disease, was reported and on March 11, 2020, the WHO characterized COVID-19 as a pandemic.
Starting March 2020, we implemented measures to address the impact of COVID-19 on our business. We mandated a work-from-home policy for all non-essential employees at our Amsterdam and Lexington facilities when the pandemic began. We supported our employees in setting up a healthy and efficient remote working environment. In conjunction with implementing this policy, we accelerated the roll-out of a number of information technology security measures such as dual factor authentication, to address the increased risks that we might be exposed to in conjunction with our employees working remotely. In addition, we conducted awareness training around cybersecurity for critical functions involved in making payments to vendors such as finance and supply chain. We continue to monitor local government rules and recommendations.
We conduct frequent status video-meetings of local management at our two sites as well as leadership-team video meetings to implement these measures and to monitor the evolving situation. In addition, we inform our employees through periodic newsletters and have organized virtual local and global townhalls to share information and provide direction and support to our employees.
We started to reopen the Amsterdam and Lexington facilities in phases, in line with the reopening plans that are prescribed by the local government. Starting June 1, 2020, we encouraged our Amsterdam employees to work a minimum of two days per week from the office and approximately 50% of local staff was working on site since then. As of September 29, 2020, we reinstated the mandatory work-from-home policy that was initiated in March in Amsterdam to align with the updated Dutch government’s measures. Employees based in Amsterdam who cannot perform their duties outside of our Amsterdam facility will continue to work at our Amsterdam facility. We adapted to operate our laboratories at our Amsterdam site to comply with social distancing rules and to ensure the health and wellbeing of our employees under the current circumstances. All other employees in Amsterdam will work from home.
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As a biopharma research and development company, we are deemed to provide essential services under the “stay at home” advisory that was issued by the Governor of Massachusetts on March 23, 2020 and we are therefore maintaining our manufacturing operations at our Lexington site. Our employees that cannot perform their duties outside of our Lexington facility continue to work at our Lexington facility. Other employees have returned to our Lexington facility on a limited basis, and all employees are encouraged to work from home to the extent possible. To ensure adequate social distancing in our Lexington facility, our COVID-19 protocols currently limit occupancy to numbers below those allowed by the Massachusetts COVID-19 guidelines. Our occupancy at the Lexington facility has been less than approximately 25% of our permitted occupancy during all phases of the Massachusetts reopening plan.
We have adapted our ongoing clinical research activities based on the directions and flexibility provided by the “FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Pandemic” issued on March 18, 2020 in an attempt to minimize any risk, disruption or delay in either patient dosing or follow-up visits.
The broader implications of COVID-19 on our results of operations and overall financial performance remain uncertain. The COVID-19 pandemic and its adverse effects have become more prevalent in the locations where we, and our third-party business partners conduct business. While we have experienced disruptions in our operations as a result of COVID-19, we are adapting to the current environment to minimize the effect to our business. However, we may experience more pronounced disruptions in our operations in the future.
We believe our cash and cash equivalents as of September 30, 2020, will enable us to fund our operating expenses, including our debt repayment obligations, as they become due and capital expenditure requirements into 2022. Upon the receipt of the $450 million payment due on the closing of the CSL Behring Agreement, we expect that our cash and cash equivalents will be sufficient to fund operations into the second half of 2024. The closing of the transactions contemplated by the CSL Behring agreement is contingent on the successful completion of reviews under antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date. The transactions contemplated by the CSL Behring Agreement are expected to materially impact our profitability and cash flows. We expect to generate positive cash flows in the period of closing and to recognize material revenue related to the CSL Behring Agreement. However, we expect to continue to incur losses and to generate negative cash flows outside the fiscal year in which we close the transactions contemplated by the CSL Behring Agreement. We have no firm sources of additional funding. Until such time, if ever, as we can generate substantial cash flows from successfully commercializing our proprietary product candidates, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution and licensing arrangements. Similar to the other risk factors pertinent to our business, COVID-19 might unfavorably impact our ability to generate such additional funding.
BMS collaboration
We entered into a collaboration and license agreement with Bristol-Myers Squibb (“BMS”) in May 2015. We have been supporting BMS in the discovery, non-clinical, analytical and process development efforts of our gene therapy technology platform for the research, development and commercialization of therapeutics aimed at multiple targets in cardiovascular and other diseases (“Collaboration Targets”). For any Collaboration Targets that are advanced, we will be responsible for manufacturing of clinical and commercial supplies using our vector technologies and industrial, proprietary insect-cell based manufacturing platform. BMS has reimbursed us for all our research and development costs in support of the collaboration during the initial research term. BMS will lead the development, regulatory and commercial activities for all four currently active Collaboration Targets as well as additional Collaboration Targets that may be advanced.
In February 2019, BMS requested a one-year extension of the research term. In April 2019, following an assessment of the progress of this collaboration and our expanding proprietary programs, we notified BMS that we did not intend to agree to an extension of the research term. Accordingly, the initial four-year research term under the collaboration terminated on May 21, 2019. The Company has agreed to certain restrictions on its ability to work independently of the collaboration, either directly or indirectly through any affiliate or third party, on certain programs that would be competitive with the collaboration programs. We are currently in discussions with BMS potentially to amend the collaboration and license agreement and other related agreements following the expiration of the research term. The final resolution of these discussions may or may not result in material changes to our collaboration with BMS.
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Organization
On August 26, 2020, we announced the appointment of Ricardo Dolmetsch, Ph.D. as President, Research and Development, effective September 14, 2020. Dr. Dolmetsch succeeded Sander van Deventer, M.D., Ph.D., our former Executive Vice President, Research and Product Development. At the same time we announced that Robert Gut, M.D., Ph.D., will transition from his role as Chief Medical Officer on October 14, 2020, and we plan for Dr. Gut to continue to serve on our Board of Directors by nominating him to serve as a non-executive director.
On June 17, 2020, our shareholders voted to approve the appointment of Leonard E. Post, Ph.D. as a non-executive director of the Board of Directors. Dr. Post replaced Dr. David Schaffer, whose term as a non-executive director of the Board of Directors ended on the same date.
Intellectual Property
On January 4, 2020, a petition seeking Inter Partes Review of U.S. Patent No. 9,249,405 (the “’405 Patent”) was filed by Pfizer, Inc. The petition sought to invalidate claims 6 and 9-15 of the ‘405 Patent. On April 17, 2020, we filed our preliminary response to the petition, disclaiming claims 6 and 9-13 of the ‘405 patent and otherwise requesting the denial of the petition. On July 13, 2020, the United States Patent and Trademark Office issued its decision to institute the Inter Partes Review. On October 13, 2020, we filed a motion to amend the patent claims at issue in the proceeding. We expect that Pfizer will file a response to our motion in January 2021 pursuant to the current schedule for the proceeding.
Financial Overview
Key components of our results of operations include the following:
Three months ended September 30, | Nine months ended September 30, | |||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
(in thousands) | (in thousands) | |||||||||||
Total revenues | $ | 1,789 | $ | 1,046 | $ | 3,428 | $ | 4,656 | ||||
Research and development expenses | (36,302) | (23,554) | (90,716) | (68,245) | ||||||||
Selling, general and administrative expenses | (10,789) | (8,929) | (31,372) | (24,866) | ||||||||
Net loss | (53,775) | (23,604) | (124,325) | (82,775) | ||||||||
As of September 30, 2020, and December 31, 2019, we had cash and cash equivalents of $279.5 million and $377.8 million, respectively. We had a net loss of $53.8 million and $124.3 million in the three and nine months ended September 30, 2020, compared to $23.6 million and $82.8 million for the same period in 2019. As of September 30, 2020, and December 31, 2019, we had accumulated deficits of $784.0 million and $659.7 million, respectively. Our losses will be materially impacted by the amount of license revenue that we will recognize in accordance with ASC 606 in the event of closing of the transactions contemplated by the CSL Behring Agreement.
We anticipate that our expenses will increase substantially as we:
| ● | Advance the clinical development of AMT-130 for our Huntington’s disease gene therapy program; |
| ● | Build-out our commercial and medical affairs infrastructure and seek marketing approval for any product candidates (including etranacogene dezaparvovec in the event that the transactions contemplated by the CSL Behring Agreement do not close) that successfully complete clinical trials; |
| ● | Advance multiple research programs related to gene therapy candidates targeting liver-directed and central nervous system (“CNS”) diseases; |
| ● | Continue to expand, enhance and optimize our technology platform, including our manufacturing capabilities, next-generation viral vectors and promoters, and other enabling technologies; |
| ● | Continue to expand our employee base to support research and development, as well as general and administrative functions; |
| ● | Acquire or in-license rights to new therapeutic targets or product candidates; and |
| ● | Maintain, expand and protect our intellectual property portfolio, including in-licensing additional intellectual property rights from third parties. |
See “Results of Operations” below for a discussion of the detailed components and analysis of the amounts above.
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Critical Accounting Policies and Estimates
In preparing our consolidated financial statements in accordance with U.S. GAAP and pursuant to the rules and regulations promulgated by the SEC we make assumptions, judgments and estimates that can have a significant impact on our net income/loss and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and judgments, including those related to the implementation of ASC 842 Leases, recognition of License Revenue in accordance with ASC 606, BMS warrants, share-based payments and corporate income taxes related to valuation allowance. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not clear from other sources. Actual results may differ from these estimates under different assumptions or conditions. In making estimates and judgments, management employs critical accounting policies. During the nine months ended September 30, 2020, there were no material changes to our critical accounting policies as reported in our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 2, 2020.
We believe that the assumptions, judgments and estimates involved in the recognition of License Revenue in accordance with ASC 606, BMS warrants, share-based payments, corporate income taxes related to valuation allowance and accounting for operating leases under ASC 842 to be our critical accounting policies.
The preparation of our consolidated financial statements for the three- and nine-month period ended September 30, 2020, required us to analyze the accounting treatment of the CSL Behring Agreement. This analysis required us to exercise judgement regarding the timing and the likelihood of closing the transaction.
Closing of the CSL Behring Agreement is contingent on the successful completion of reviews under antitrust laws in the United States, Australia, and the United Kingdom, which has not occurred to date. Closing of the transaction is dependent on the timing, extent and result of the regulatory review process. We do not believe that the consummation of the transaction will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge on antitrust grounds will not be made, or if such a challenge is made, what the result would be.
As of September 30, 2020, we concluded that we have no enforceable right to receive any of CSL License Revenue that we may receive in accordance with the CSL Behring Agreement, as all payments are contingent upon the successful completion of reviews under antitrust laws in the United States, Australia and the United Kingdom. Therefore, we determined we will not recognize any revenue in relation to the CSL License Revenue, in accordance with ASC 606.
We recognize deferred tax assets to the extent that we determine that these assets are more likely than not to be realized. In making such a determination, we weighed all available positive and negative evidence, including future income projections from the CSL Behring Agreement, and concluded that it is more likely than not that the deferred tax assets will not be realized. Accordingly, we continued to record a full valuation allowance as of September 30, 2020.
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Revenues
We recognize Collaboration Revenues associated with pre-clinical Collaboration Target specific, non-clinical, analytical and process development activities that are reimbursable by BMS under our collaboration and license agreement during the initial research term, which ended on May 21, 2019. We are currently in discussions with BMS potentially to amend the BMS CLA and other related agreements following the expiration of the research term. During these discussions, which may be terminated by us or BMS at any time, we have agreed, subject to certain conditions, to continue providing limited support of the pre-clinical Collaboration Targets, and any related costs will be reimbursed by BMS.
We recognize License Revenues associated with the amortization of the non-refundable upfront payment, target designation fees and research and development milestone payments we received or might receive from BMS. The timing of these cash payments may differ from the recognition of revenue, as revenue is deferred and recognized over the duration of the performance period. We recognize other revenue, such as sales milestone payments, when earned.
Research and development expenses
We expense research and development (“R&D”) expenses as incurred. Our R&D expenses generally consist of costs incurred for the development of our target candidates, which include:
| ● | Employee-related expenses, including salaries, benefits, travel and share-based compensation expense; |
| ● | Costs incurred for laboratory research, preclinical and nonclinical studies, clinical trials, statistical analysis and report writing, and regulatory compliance costs incurred with clinical research organizations and other third-party vendors; |
| ● | Costs incurred to conduct consistency and comparability studies; |
| ● | Costs incurred for the development and improvement of our manufacturing processes and methods; |
| ● | Costs associated with our research activities for our next-generation vector and promoter platform; and |
| ● | Facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies. |
Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, including manufacturing campaigns, regulatory submissions and enrollment of patients in clinical trials. The successful development of our product candidates is highly uncertain. Estimating the nature, timing or cost of the development of any of our product candidates involves considerable judgement due to numerous risks and uncertainties associated with developing gene therapies, including the uncertainty of:
| ● | the scope, rate of progress and expense of our research and development activities; |
| ● | our ability to successfully manufacture and scale-up production; |
| ● | clinical trial protocols, speed of enrollment and resulting data; |
| ● | the effectiveness and safety of our product candidates; |
| ● | the timing of regulatory approvals; and |
| ● | our ability to agree to ongoing development budgets with collaborators who share the costs of our development programs. |
A change in the outcome of any of these variables with respect to our product candidates that we may develop, including as a result of the COVID-19 pandemic, could mean a significant change in the expenses and timing associated with the development of such product candidate.
Selling, general and administrative expenses
Our general and administrative expenses consist principally of employee, office, consulting, legal and other professional and administrative expenses. We incur expenses associated with operating as a public company, including expenses for personnel, legal, accounting and audit fees, board of directors’ costs, directors' and officers' liability insurance premiums, Nasdaq listing fees, expenses related to investor relations and fees related to business development and maintaining our patent and license portfolio. Our selling costs include employee expenses as well as professional fees related to the preparation of a commercial launch of etranacogene dezaparvovec.
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Other items, net
Our other income primarily consists of payments to subsidize our research and development efforts as well as income from the subleasing of our Amsterdam facility.
Our other expense primarily consists of expenses we incur in relation to our subleasing income.
Results of Operations
Comparison of the three months ended September 30, 2020 and 2019
The following table presents a comparison of our results of operations for the three months ended September 30, 2020 and 2019.
Three months ended September 30, | |||||||||
| 2020 |
| 2019 |
| 2020 vs 2019 | ||||
(in thousands) | |||||||||
Total revenues | $ | 1,789 | $ | 1,046 | $ | 743 | |||
Operating expenses: | |||||||||
Research and development expenses | (36,302) | (23,554) | (12,748) | ||||||
Selling, general and administrative expenses | (10,789) | (8,929) | (1,860) | ||||||
Total operating expenses | (47,091) | (32,483) | (14,608) | ||||||
Other income | 1,032 | 453 | 579 | ||||||
Other expense | (220) | (342) | 122 | ||||||
Loss from operations | (44,490) | (31,326) | (13,164) | ||||||
Other non-operating items, net | (9,285) | 7,722 | (17,007) | ||||||
Net loss | $ | (53,775) | $ | (23,604) | $ | (30,171) | |||
Revenue
Our revenue for the three months ended September 30, 2020 and 2019 was as follows:
Three months ended September 30, | |||||||||
(in thousands) | |||||||||
License Revenue | $ | 1,776 | $ | 842 | $ | 934 | |||
Collaboration Revenue | 13 | 204 | (191) | ||||||
Total revenues | $ | 1,789 | $ | 1,046 | $ | 743 | |||
We recognize License Revenue related to upfront payments and target designation fees received from BMS in 2015. We recognized $1.8 million License Revenue in the three months ended September 30, 2020, compared to $0.8 million for the same period in 2019. We recorded lower License Revenue in the three months ended September 30, 2019 as we had adjusted our estimates regarding the preclinical development timelines during the three months ended September 30, 2019.
We recognized $0.0 million Collaboration Revenue in the three months ended September 30, 2020, compared to $0.2 million for the same period in 2019. The decrease in Collaboration Revenue was primarily related to the reduction of activities following the termination of the initial Research Term under the BMS CLA in May 2019.
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Research and development expenses
Research and development expenses for the three months ended September 30, 2020 were $36.3 million, compared to $23.6 million for the same period in 2019. Other research and development expenses are separately classified in the table below. These are not allocated as they are deployed across multiple projects under development.
Three months ended September 30, | |||||||||
2020 | 2019 | 2020 vs 2019 | |||||||
(in thousands) | |||||||||
Etranacogene dezaparvovec (AMT-060/061) | $ | 5,711 | $ | 4,125 | $ | 1,586 | |||
Huntington's disease (AMT-130) | 2,140 | 1,225 | 915 | ||||||
Programs in preclinical development and platform related expenses | 1,862 | 777 | 1,085 | ||||||
Total direct research and development expenses | $ | 9,713 | $ | 6,127 | $ | 3,586 | |||
Employee and contractor-related expenses | 11,782 | 8,654 | 3,128 | ||||||
Share-based compensation expense | 3,912 | 1,958 | 1,954 | ||||||
Facility expenses | 4,407 | 4,022 | 385 | ||||||
Disposables | 2,794 | 1,865 | 929 | ||||||
Other expenses | 3,694 | 928 | 2,766 | ||||||
Total other research and development expenses | $ | 26,589 | $ | 17,427 | $ | 9,162 | |||
Total research and development expenses | $ | 36,302 | $ | 23,554 | $ | 12,748 | |||
Direct research and development expenses
Etranacogene dezaparvovec (AMT-060/061)
In the three months ended September 30, 2020 and 2019, the external costs for our hemophilia B program were primarily related to the execution of our Phase III clinical trial. We enrolled patients into a six-month lead in phase between January 2018 and September 2019 and dosed a total of 54 patients between January 2019 and March 2020. Our expenses related to etranacogene dezaparvovec were largely unaffected by the COVID-19 pandemic as we completed enrollment immediately prior to the lockdowns in those countries in which we enroll patients. We implemented additional measures to minimize any risk, disruption or delay on follow-up visits, and as of September 30, 2020, we completed almost all follow-up visits according to our initial plan.
In addition, we continue to incur costs for the long-term follow-up of patients in our Phase I/II clinical trial of AMT-060 and our Phase IIb clinical trial of etranacogene dezaparvovec.
Huntington disease (AMT-130)
In the three months ended September 30, 2020 and 2019, our external costs for the development of Huntington’s disease were primarily related to the execution of our Phase I/II clinical trial.
Preclinical programs & platform development
In the three months ended September 30, 2020, we incurred $1.9 million of costs primarily related to our preclinical activities primarily associated with product candidates, SCA3 (AMT-150) and Fabry disease (AMT-190), as well as various other research programs and technology innovation projects, compared to costs of $0.8 million in the same period in 2019, which in addition included costs related to our product candidate for Hemophilia A (AMT-180).
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Other research & development expenses
| ● | We incurred $11.8 million in personnel and contractor related expenses in the three months ended September 30, 2020, compared to $8.7 million for the same period in 2019. Our costs during the three months ended September 30, 2020 increased by $3.1 million as a result of the recruitment of personnel to support the development of our product candidates; |
| ● | We incurred $3.9 million in share-based compensation expenses in the three months ended September 30, 2020, compared to $1.9 million for the same period in 2019 primarily driven by grants to newly recruited personnel as well as share-based compensation expenses recorded in relation to the termination of one of our executives; |
| ● | We incurred $4.4 million in operating expenses and depreciation expenses related to our rented facilities in the three months ended September 30, 2020, compared to $4.0 million in the same period in 2019; and |
| ● | We incurred $3.0 million of expenses related to license payments that have no alternative future use in the three months ended September 30, 2020, compared to nil for the same period in 2019. |
Selling, general and administrative expenses
Selling, general and administrative expenses for the three months ended September 30, 2020 were $10.8 million, compared to $8.9 million for the same period in 2019.
| ● | We incurred $3.6 million in personnel and contractor related expenses in the three months ended September 30, 2020, compared to $2.5 million in the same period in 2019. The increase in the three months ended September 30, 2020, relates to the recruitment of executives as well as the recruitment of personnel; |
| ● | We incurred $2.5 million in share-based compensation expenses in the three months ended September 30, 2020, compared to $1.9 million in the same period in 2019 primarily driven by newly recruited personnel; and |
| ● | We incurred $2.0 million in professional fees in the three months ended September 30, 2020, compared to $2.2 million in the same period in 2019. |
Our selling, general and administrative expenses were largely unaffected by the COVID-19 pandemic.
Other items, net
We recognized $0.5 million in income from payments received from European authorities to subsidize our research and development efforts in the Netherlands in the three months ended September 30, 2020, compared to $0.1 million for the same period in 2019.
Other non-operating items, net
We recognize interest income associated with our cash and cash equivalents.
We hold monetary items and enter into transactions in foreign currencies, predominantly in euros and U.S. dollars. We recognize foreign exchange results related to changes in these foreign currencies.
We issued warrants to BMS in 2015. We recognize changes in the fair value of these warrants within other non-operating (expense) / income.
Our other non-operating items, net, for the three months ended September 30, 2020 and 2019 were as follows:
Three months ended September 30, | |||||||||
| 2020 |
| 2019 |
| 2020 vs 2019 | ||||
(in thousands) | |||||||||
Interest income | $ | 13 | $ | 868 | $ | (855) | |||
Interest expense - Hercules long-term debt | (942) | (960) | 18 | ||||||
Foreign currency (losses) / gains, net | (8,681) | 6,041 | (14,722) | ||||||
Other non-operating gains | 325 | 1,773 | (1,448) | ||||||
Total other non-operating loss, net | $ | (9,285) | $ | 7,722 | $ | (17,007) | |||
We recognized a net foreign currency loss, related to our borrowings from Hercules and our cash and cash equivalents as well as loans between entities within the uniQure group, of $8.7 million during the three months ended September 30, 2020, compared to a net gain of $6.0 million during the same period in 2019.
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In the three months ended September 30, 2020, we recognized income of $0.3 million related to changes in the fair value of the BMS warrants compared to income of $1.8 million related to changes in the fair value of the BMS warrants for the same period in 2019.
Comparison of the nine months ended September 30, 2020 and 2019
The following table presents a comparison of our results of operations for the nine months ended September 30, 2020 and 2019.
Nine months ended September 30, | |||||||||
2020 | 2019 | 2020 vs 2019 | |||||||
(in thousands) | |||||||||
Total revenues | $ | 3,428 | $ | 4,656 | $ | (1,228) | |||
Operating expenses: | |||||||||
Research and development expenses | (90,716) | (68,245) | (22,471) | ||||||
Selling, general and administrative expenses | (31,372) | (24,866) | (6,506) | ||||||
Total operating expenses | (122,088) | (93,111) | (28,977) | ||||||
Other income | 2,558 | 1,332 | 1,226 | ||||||
Other expense | (1,059) | (1,038) | (21) | ||||||
Loss from operations | (117,161) | (88,161) | (29,000) | ||||||
Non-operating items, net | (7,164) | 5,386 | (12,550) | ||||||
Net loss | $ | (124,325) | $ | (82,775) | $ | (41,550) | |||
Revenue
Our revenue for the nine months ended September 30, 2020 and 2019 was as follows:
Nine months ended September 30, | ||||||||
2020 | 2019 | 2020 vs 2019 | ||||||
in thousands | ||||||||
License revenue | $ | 3,353 | $ | 3,507 | $ | (154) | ||
Collaboration revenue | 75 | 1,149 | (1,074) | |||||
Total revenues | $ | 3,428 | $ | 4,656 | $ | (1,228) | ||
We recognize License Revenue related to upfront payments and target designation fees received from BMS in 2015. We recognized $3.4 million License Revenue in the nine months ended September 30, 2020, compared to $3.5 million for the same period in 2019.
We recognized $0.1 million Collaboration Revenue in the nine months ended September 30, 2020, compared to $1.1 million for the same period in 2019. The decrease in Collaboration Revenue was primarily related to the reduction of activities following the termination of the initial Research Term under the BMS CLA in May 2019.
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Research and development expenses
Research and development expenses for the nine months ended September 30, 2020 were $90.7 million, compared to $68.2 million for the same period in 2019. Other research and development expenses are separately classified in the table below. These are not allocated as they are deployed across multiple projects under development.
Nine months ended September 30, | |||||||||
2020 | 2019 | 2020 vs 2019 | |||||||
(in thousands) | |||||||||
Etranacogene dezaparvovec (AMT-060/061) | $ | 15,220 | $ | 11,795 | $ | 3,425 | |||
Huntington's disease (AMT-130) | 5,295 | 2,852 | 2,443 | ||||||
Programs in preclinical development and platform related expenses | 4,744 | 3,212 | 1,532 | ||||||
Total direct research and development expenses | $ | 25,259 | $ | 17,859 | $ | 7,400 | |||
Employee and contractor-related expenses | 31,120 | 25,141 | 5,979 | ||||||
Share-based compensation expense | 9,201 | 6,057 | 3,144 | ||||||
Facility expenses | 12,609 | 10,941 | 1,668 | ||||||
Disposables | 7,705 | 6,435 | 1,270 | ||||||
Other expenses | 4,822 | 1,812 | 3,010 | ||||||
Total other research and development expenses | $ | 65,457 | $ | 50,386 | $ | 15,071 | |||
Total research and development expenses | $ | 90,716 | $ | 68,245 | $ | 22,471 | |||
Direct research and development expenses
Hemophilia B (AMT-060/061)
In the nine months ended September 30, 2020 and 2019, the external costs for our hemophilia B program were primarily related to the execution of our Phase III clinical trial. We enrolled patients into a six-month lead in phase between January 2018 and September 2019 and dosed a total of 54 patients between January 2019 and March 2020. Our expenses related to etranacogene dezaparvovec were largely unaffected by the COVID-19 pandemic as we completed enrollment immediately prior to the lockdowns in those countries that we enroll patients. We implemented additional measures to minimize any risk, disruption or delay on follow-up visits, and as of September 30, 2020, we completed almost all follow-up visits according to our initial plan.
In addition, we continue to incur costs for the long-term follow-up of patients in our Phase I/II clinical trial of AMT-060 and our Phase IIb clinical trial of etranacogene dezaparvovec.
Huntington disease (AMT-130)
In the nine months ended September 30, 2020 and 2019, our external costs for the development of Huntington’s disease were primarily related to the execution of our Phase I/II clinical trial as well as expenses related to the procedures of the first two patients in June 2020.
Preclinical programs & platform development
In the nine months ended September 30, 2020, we incurred $4.7 million of costs primarily related to our preclinical activities associated with product candidates for Hemophilia A (AMT-180), SCA3 (AMT-150) and Fabry disease (AMT-190), as well as various other research programs and technology innovation projects, compared to costs of $3.2 million in the same period in 2019.
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Other research & development expenses
| ● | We incurred $31.1 million in personnel and contractor related expenses in the nine months ended September 30, 2020, compared to $25.1 million for the same period in 2019. Our costs during the nine months ended September 30, 2020 increased by $6.0 million as a result of the recruitment of personnel to support the development of our product candidates; |
| ● | We incurred $9.2 million in share-based compensation expenses in the nine months ended September 30, 2020, compared to $6.1 million for the same period in 2019. Our costs during the nine months ended September 30, 2020, increased by $3.1 million primarily as a result of the recruitment of personnel during the last 12 months as well as share-based compensation expenses recorded in relation to the termination of one of our executives in September 2020; |
| ● | We incurred $12.6 million in operating expenses and depreciation expenses related to our rented facilities in the nine months ended September 30, 2020, compared to $10.9 million in the same period in 2019. Our costs during the nine months ended September 30, 2020 primarily increased as a result of extending and expanding (as from June 2019) the lease of our Lexington facility; and |
| ● | We incurred $3.0 million of expenses related to license payments that have no alternative future use in the nine months ended September 30, 2020, compared to nil for the same period in 2019. |
Selling, general and administrative expenses
Selling, general and administrative expenses for the nine months ended September 30, 2020 were $31.4 million, compared to $24.9 million for the same period in 2019.
| ● | We incurred $9.7 million in personnel and contractor related expenses in the nine months ended September 30, 2020, compared to $7.6 million in the same period in 2019. Our costs during the nine months ended September 30, 2020, increased by $2.1 million primarily as a result of the recruitment of personnel; |
| ● | We incurred $7.2 million in share-based compensation expenses in the nine months ended September 30, 2020, compared to $6.7 million in the same period in 2019; and |
| ● | We incurred $6.2 million in professional fees in the nine months ended September 30, 2020, compared to $5.1 million in the same period in 2019. Our professional fees in the nine months ended September 30, 2020, increased by $1.1 million primarily as we incurred significant professional fees in relation to our licensing transaction with CSL Behring. |
Our selling, general and administrative expenses were largely unaffected by the COVID-19 pandemic.
Other items, net
We recognized $1.0 million in income from payments received from European authorities to subsidize our research and development efforts in the Netherlands in the nine months ended September 30, 2020, compared to $0.4 million for the same period in 2019.
Other non-operating items, net
We recognize interest income associated with our cash and cash equivalents.
We hold monetary items and enter into transactions in foreign currencies, predominantly in euros and U.S. dollars. We recognize foreign exchange results related to changes in these foreign currencies.
We issued warrants to Hercules in 2013 and to BMS in 2015. We recognize changes in the fair value of these warrants within other non-operating (expense) / income. Following the exercise of the warrants by Hercules in February 2019 we no longer recognize changes in the fair value of these warrants within other non-operating (expense) / income.
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Our other non-operating items, net, for the nine months ended September 30, 2020 and 2019 were as follows:
Nine months ended September 30, | |||||||||
2020 | 2019 | 2020 vs 2019 | |||||||
(in thousands) | |||||||||
Interest income |
| $ | 916 |
| $ | 2,038 |
| $ | (1,122) |
Interest expense | (2,887) | (2,854) | (33) | ||||||
Foreign currency (losses) / gains, net | (7,724) | 7,063 | (14,787) | ||||||
Other non-operating gains / (losses), net | 2,531 | (861) | 3,392 | ||||||
Total non-operating income / (loss), net | $ | (7,164) | $ | 5,386 | $ | (12,550) | |||
We recognized a net foreign currency loss, related to our borrowings from Hercules and our cash and cash equivalents as well as loans between entities within the uniQure group, of $7.7 million during the nine months ended September 30, 2020, compared to a net gain of $7.1 million during the same period in 2019.
In the nine months ended September 30, 2020, we recognized income of $2.5 million related to changes in the fair value of the Hercules and BMS warrants compared to a loss of $0.9 million for the same period in 2019. Changes in the fair value of the Hercules and BMS warrants are primarily impacted by changes in our share price, whereby a decrease in share price generally results in a decrease of the fair value.
Financial Position, Liquidity and Capital Resources
As of September 30, 2020, we had cash, cash equivalents and restricted cash of $282.2 million. We currently expect that our cash and cash equivalents will be sufficient to fund operations into 2022. Upon the receipt of the $450 million payment due on the closing of the CSL Behring Agreement, we expect that our cash and cash equivalents will be sufficient to fund operations into the second half of 2024. The table below summarizes our consolidated cash flow data for the nine months ended September 30, 2020, and 2019.
Nine months ended September 30, | ||||||
| 2020 |
| 2019 | |||
(in thousands) | ||||||
Cash, cash equivalents and restricted cash at the beginning of the period | $ | 380,726 | $ | 237,342 | ||
Net cash used in operating activities | (97,653) | (72,677) | ||||
Net cash used in investing activities | (6,789) | (4,684) | ||||
Net cash generated from financing activities | 3,688 | 247,511 | ||||
Foreign exchange impact | 2,235 | (1,415) | ||||
Cash, cash equivalents and restricted cash at the end of period | $ | 282,207 | $ | 406,077 | ||
We have incurred losses and cumulative negative cash flows from operations since our business was founded by our predecessor entity AMT Therapeutics (“AMT”) Holding N.V. in 1998. We had a net loss of $53.8 million and $124.3 million during the three and nine months ended September 30, 2020, compared to a net loss of $23.6 million and $82.8 million during the same periods in 2019. As of September 30, 2020, we had an accumulated deficit of $784.0 million.
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Sources of liquidity
From our first institutional venture capital financing in 2006 through September 30, 2020, we funded our operations primarily through private and public placements of equity securities and convertible and other debt securities as well as payments from our collaboration partners.
On September 10, 2019, we completed a follow-on public offering of 4,891,305 ordinary shares at a public offering price of $46.00 per ordinary share, and on September 13, 2019, we completed the sale of an additional 733,695 ordinary shares at a public offering price of $46.00 per ordinary share pursuant to the exercise by the underwriters of the option to purchase additional ordinary shares, resulting in total gross proceeds to us of $258.8 million. The net proceeds from this offering were $242.7 million, after deducting underwriting discounts and commissions and other offering expenses payable by us. We deducted $0.6 million of expenses incurred related to this offering from additional paid-in capital in the accompanying consolidated balance sheets and reflected this within the proceeds from public offering of shares, net of issuance costs within the cash flows from financing activities.
On December 6, 2018, we signed an amendment to the Second Amended and Restated Loan and Security Agreement (the “2018 Amended Facility”) with Hercules that both refinanced our then-existing $20 million credit facility and provided us with an additional unconditional commitment of $15 million as well as a conditional commitment of $15 million that expired on June 30, 2020. At signing, we drew down an additional $15 million, for a total outstanding amount of $35 million.
The 2018 Amended Facility extended the loan’s maturity date until June 1, 2023. The interest-only period was initially extended from November 2018 to January 1, 2021. The interest-only period was further extended to January 1, 2022 as a result of raising more than $90.0 million in equity financing in September 2019. As of September 30, 2020, $35 million was outstanding under the 2018 Amended Facility (December 31, 2019: $35 million). We are required to repay the facility in equal monthly installments of principal and interest between the end of the interest-only period and the maturity date. The variable interest rate is equal to the greater of (i) 8.85% or (ii) 8.85% plus the prime rate less 5.50%. Under the 2018 Amended Facility, we paid a facility fee equal to 0.50% of the $35,000,000 loan outstanding and will owe a back-end fee of 4.95% of the outstanding debt.
The $450 million upfront payment we expect to receive on the closing of the CSL Behring Agreement is expected to fund operations into the second half of 2024. The closing of the transaction is expected to materially impact our profitability and cash flows. We expect to generate positive cash flows in the period of closing and to recognize material revenue related to the CSL Behring Agreement. However, we expect to continue to incur losses and to generate negative cash flows outside the fiscal year in which we close the transaction. We have no firm sources of additional funding. Until such time, if ever, as we can generate substantial cash flows from successfully commercializing our proprietary product candidates, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution and licensing arrangements.
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We are subject to covenants under our 2018 Amended Facility and may become subject to covenants under any future indebtedness that could limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, which could adversely impact our ability to conduct our business. In addition, our pledge of assets as collateral to secure our obligations under the 2018 Amended Facility may limit our ability to obtain debt financing. To the extent we need to finance our cash needs through equity offerings or debt financings, such financing may be subject to unfavorable terms including without limitation, the negotiation and execution of definitive documentation, as well as credit and debt market conditions, and we may not be able to obtain such financing on terms acceptable to us or at all. If financing is not available when needed, including through debt or equity financings, or is available only on unfavorable terms, we may be unable to meet our cash needs. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, which could have a material adverse effect on our business, financial conditions, results of operations and cash flows.
Net Cash used in operating activities
Net cash used in operating activities was $97.7 million for the nine months ended September 30, 2020, and consisted of a net loss of $124.3 million adjusted for non-cash items, including depreciation and amortization expense of $8.4 million, share-based compensation expense of $16.5 million, fair value gains on derivative financial instruments of $2.5 million, unrealized foreign exchange losses of $7.8 million, and a decrease in unamortized deferred revenue of $2.1 million. Net cash used in operating activities also included changes in operating assets and liabilities of $1.3 million. These changes primarily related to a net increase in accounts receivable and accrued income, prepaid expenses, and other current assets and receivables of $1.2 million and a net decrease in accounts payable, accrued expenses, other liabilities and operating leases of $0.1 million.
Net cash used in operating activities was $72.7 million for the nine months ended September 30, 2019, and consisted of a net loss of $82.8 million adjusted for non-cash items, including depreciation and amortization expense of $4.9 million, share-based compensation expense of $12.8 million, fair value losses on derivative financial instruments of $0.9 million, unrealized foreign exchange gain of $6.7 million, and a decrease in unamortized deferred revenue of $3.4 million. Net cash used in operating activities also included changes in operating assets and liabilities of $1.6 million. These changes primarily related to a net increase in accounts receivable and accrued income, prepaid expenses, and other current assets of $2.9 million and a net increase in accounts payable, accrued expenses, other liabilities and operating leases of $4.5 million primarily related to our etranacogene dezaparvovec and AMT-130 trials.
Net cash used in investing activities
In the nine months ended September 30, 2020, we used $6.8 million in our investing activities compared to $4.7 million for the same period in 2019.
Nine months ended September 30, | ||||||
| 2020 |
| 2019 | |||
(in thousands) | ||||||
Build out of Lexington site | $ | (1,065) | $ | (2,754) | ||
Build out of Amsterdam site | (3,410) | (934) | ||||
Acquisition of licenses, patents and other rights | (2,314) | (996) | ||||
Total investments | $ | (6,789) | $ | (4,684) | ||
Net cash generated from financing activities
During the nine months ended September 30, 2020, we received $3.7 million from the exercise of options to purchase ordinary shares in relation to our share incentive plans compared to $4.0 million for the same period in 2019.
We received net proceeds of $243.0 million associated with our follow-on public offering in September 2019.
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Funding requirements
We believe our cash and cash equivalents as of September 30, 2020 will enable us to fund our operating expenses including our debt repayment obligations as they become due and capital expenditure requirements into 2022. The $450 million upfront payment we expect to receive on the closing of the CSL Behring Agreement would provide us with additional funding into the second half of 2024. Our future capital requirements will depend on many factors, including but not limited to:
| ● | the closing of the transaction contemplated by the CSL Behring Agreement as well as achieving the milestones and royalties as defined therein; |
| ● | the cost and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution of any of our product candidates for which we receive marketing approval in the future; |
| ● | the amount and timing of revenue, if any, we receive from commercial sales of any product candidates for which we, or our collaboration partner, receives marketing approval in the future; |
| ● | the scope, timing, results and costs of our current and planned clinical trials, including those for etranacogene dezaparvovec in hemophilia B and AMT-130 in Huntington’s disease; |
| ● | the scope, timing, results and costs of preclinical development and laboratory testing of our additional product candidates; |
| ● | the need for additional resources and related recruitment costs to support the preclinical and clinical development of our product candidates; |
| ● | the need for any additional tests, studies, or trials beyond those originally anticipated to confirm the safety or efficacy of our product candidates and technologies; |
| ● | the cost, timing and outcome of regulatory reviews associated with our product candidates; |
| ● | our ability to enter into collaboration arrangements in the future; |
| ● | the costs and timing of preparing, filing, expanding, acquiring, licensing, maintaining, enforcing and prosecuting patents and patent applications, as well as defending any intellectual property-related claims; |
| ● | the repayments of the principal amount of our venture debt loan with Hercules, which will contractually start in January 2022 and will run through June 2023, and the back-end fee due thereunder; |
| ● | the extent to which we acquire or in-license other businesses, products, product candidates or technologies; |
| ● | the costs associated with maintaining quality compliance and optimizing our manufacturing processes, including the operating costs associated with our Lexington, Massachusetts manufacturing facility; |
| ● | the costs associated with increasing the scale and capacity of our manufacturing capabilities; and |
| ● | the costs associated in preparing for the Biologics License Application (“BLA”) submission of etranacogene dezaparvovec, including process validation, inspection readiness and other regulatory expenses in the event that our collaboration and license agreement with CSL Behring does not close. |
Contractual obligations and commitments
The table below sets forth our contractual obligations and commercial commitments as of September 30, 2020, that are expected to have an impact on liquidity and cash flows in future periods.
Less than 1 | Between 1 | Between 2 | |||||||||||||
| year |
| and 2 years |
| and 5 years |
| Over 5 years |
| Total | ||||||
(in thousands) | |||||||||||||||
Debt obligations (including $8.2 million interest payments) | $ | 3,141 | $ | 19,535 | $ | 20,520 | $ | — | $ | 43,196 | |||||
Operating lease obligations | 5,648 | 5,597 | 18,238 | 30,168 | 59,651 | ||||||||||
Total | $ | 8,789 | $ | 25,132 | $ | 38,758 | $ | 30,168 | $ | 102,847 | |||||
We also have obligations to make future payments to third parties that become due and payable on the achievement of certain development, regulatory and commercial milestones (such as the start of a clinical trial, filing of a BLA, approval by the FDA or product launch). We have not included these commitments on our balance sheet or in the table above because the achievement and timing of these milestones is not fixed and determinable. We will also have obligations to make future payments that become due and payable if we collect the upfront payment or milestone payments from CSL Behring. We have not included these commitments on our balance sheet or in the table above because these payments only become due and payable upon the closing of the transaction with CSL Behring.
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We enter into contracts in the normal course of business with clinical research organizations (“CROs”) for preclinical research studies and clinical trials, research supplies and other services and products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts and not included in the table of contractual obligations and commitments.
Off-Balance Sheet Arrangements
As of September 30, 2020, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.
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Item 3.Quantitative and Qualitative Disclosures about Market Risk
We are exposed to a variety of financial risks in the normal course of our business, including market risk (including currency, price and interest rate risk), credit risk and liquidity risk. Our overall risk management program focuses on preservation of capital and the unpredictability of financial markets and has sought to minimize potential adverse effects on our financial performance and position.
Our market risks and exposures to such market risks during the nine months ended September 30, 2020, have not materially changed from our market risks and our exposure to market risk discussed in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 2, 2020.
Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive and chief financial officer (“CEO”), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2020. Based on such evaluation, our CEO has concluded that as of September 30, 2020, our disclosure controls and procedures were effective to ensure that information required to be disclosed by it in reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such material information is accumulated and communicated to the Company’s management, including its Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure. Because of the inherent limitations in all control systems, any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Furthermore, the Company’s controls and procedures can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of such control, and misstatements due to error or fraud may occur and not be detected on a timely basis.
Changes in Internal Control over Financial Reporting
During the third quarter of 2020, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal controls over financial reporting despite the fact that a large group of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the impact the COVID-19 situation has on the operating effectiveness of our internal controls.
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Part II – OTHER INFORMATION
Item 1.Legal Proceedings
None.
Item 1A.Risk Factors
An investment in our ordinary shares involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this Quarterly Report on Form 10-Q, including our financial statements and related notes thereto, and the risk factors discussed in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020, before deciding to invest in our ordinary shares. We operate in a dynamic and rapidly changing industry that involves numerous risks and uncertainties. The risks and uncertainties described below are not the only ones we face. Other risks and uncertainties, including those that we do not currently consider material, may impair our business. If any of the risks discussed below actually occur, our business, financial condition, operating results or cash flows could be materially adversely affected. This could cause the value of our securities to decline, and you may lose all or part of your investment.
Risks Related to the CSL Behring Collaboration and License Transaction
In June 2020, uniQure biopharma BV, our wholly-owned subsidiary, entered into a commercialization and license agreement (the “CSL Behring Agreement”) with CSL Behring LLC (“CSL Behring”) providing CSL Behring exclusive global rights to etranacogene dezaparvovec, our investigational gene therapy for patients with hemophilia B.
We and CSL Behring may be unable to close the transaction, and any delay in completing the transaction could diminish the anticipated benefits of the transaction or result in increased costs. Failure to close the transaction could adversely impact the market price of our shares as well as our business and operating results, cash flows and results of operations.
The closing of the transaction contemplated by the CSL Behring Agreement is contingent on completion of the successful reviews under antitrust laws in the United States, Australia, and the United Kingdom, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. We cannot make any assurances that the transaction will be closed at all, or that, as part of the regulatory review process, that additional conditions or terms may be required.
The requirement to receive these clearances before the closing of the transaction could delay the transaction or result in an inability to complete the transaction. Any delay in the completion of the transaction could diminish anticipated benefits of the transaction, including realization of expected benefits of partnering, result in additional transaction costs, loss of revenue or other effects associated with uncertainty about the transaction. Any such delay could also delay the timelines associated with our commercialization of etranacogene dezaparvovec, including the filing of a biologics licensing application with the FDA, and such delays could cause us to bring etranacogene dezaparvovec to market after a competitive product in the United States, Europe or in other markets.
We will need to fund the investments into the development and preparation of the commercial launch of etranacogene dezaparvovec for as long as the regulatory reviews continue. The completions of these reviews could require significant time and/or might result in modifications or even denial of the transactions. These factors could adversely impact the cash flows and results that we are able to generate in relation to etranacogene dezaparvovec.
To the extent that the market price of our ordinary shares reflects positive market assumptions that the transaction will close or that the transaction is advantageous to us, the price of such shares may decline if the transaction does not close for any reason or in a timely manner.
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The announcement and pendency of the transaction with CSL Behring could adversely affect our business and operations.
Whether the transaction is ultimately closed or not, its announcement and pendency could have a number of negative effects on our current business, including potentially disrupting our regular operations, diverting the attention of our workforce and management team, or increasing workforce turnover. The completion of the transaction, including, for example, efforts to obtain regulatory clearances, may require significant time and attention from our management and divert attention from the day-to-day operations of our business. Any uncertainty over the ability of us and CSL Behring to complete the transaction could make it more difficult for us to retain certain key employees or attract new talent or to pursue business strategies.
Parties with which we have business relationships related to etranacogene dezaparvovec, either contractual or operational, may experience uncertainty as to the future or desirability of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties or seek to alter their present business relationships with us. Parties with whom we otherwise may have sought to establish business relationships may be reluctant to enter into agreements with us.
Risks Related to the Current COVID-19 Pandemic
A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, may materially and adversely affect our business and operations.
The recent outbreak of COVID-19 originated in Wuhan, China, in December 2019 and has since spread to multiple countries, including the United States and the Netherlands. On March 11, 2020, the WHO declared the outbreak a pandemic. The COVID-19 pandemic is affecting the United States and global economies and has affected and may continue to affect our operations and those of third parties on which we rely. The COVID-19 pandemic may cause disruptions in our raw material supply, our commercial-scale manufacturing capabilities for AAV-based gene therapies, the commercialization of our product candidates, and the conduct of current and future clinical trials.
In addition, the COVID-19 pandemic has affected and may continue to affect the operations of the FDA, EMA and other health authorities, which could result in delays of reviews and approvals, including with respect to our product candidates. As evidenced by the postponement of procedures for two patients in our Phase I/II clinical study of AMT-130, the evolving COVID-19 pandemic has impacted the pace of enrollment and procedures in our clinical trials, as well as caused challenges in scheduling follow-up visits and managing other aspects of our clinical trials. We may be affected by similar delays as patients may avoid or may not be able to travel to healthcare facilities and physicians’ offices unless due to a health emergency and clinical trial staff can no longer get to the clinic. Such facilities and offices have been and may continue to be required to focus limited resources on non-clinical trial matters, including treatment of COVID-19 patients, thereby decreasing availability, in whole or in part, for clinical trial services. In addition, employee disruptions and remote working environments related to the COVID-19 pandemic and the federal, state and local responses to such virus, has impacted and could continue to impact the efficiency and pace with which we work and develop our product candidates and our manufacturing capabilities. Further, while the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity. The ultimate impact of the COVID-19 pandemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, financing or clinical trial activities or on healthcare systems or the global economy as a whole. However, these effects could have a material impact on our liquidity, capital resources, operations and business and those of the third parties on which we rely.
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Risks Related to the Development of Our Product Candidates
None of our product candidates have been approved for commercial sale and they might never receive regulatory approval or become commercially viable. We have never generated any significant revenue from product sales and may never be profitable.
All of our product candidates are in research or development. We have not generated any significant revenues from the sale of products or manufacturing of our product for a licensee and do not expect to generate any such revenue before 2022. Our lead product candidates, etranacogene dezaparvovec (also known as AMT-061) and AMT-130, and any of our other potential product candidates will require extensive preclinical and/or clinical testing and regulatory approval prior to commercial use. Our research and development efforts may not be successful. Even if our clinical development efforts result in positive data, our product candidates may not receive regulatory approval or be successfully introduced and marketed at prices that would permit us to operate profitably.
We may encounter substantial delays in and impediments to the progress of our clinical trials or fail to demonstrate the safety and efficacy of our product candidates.
Clinical and non-clinical development is expensive, time-consuming and uncertain as to outcome. Our product candidates are in different stages of clinical or preclinical development, and there is a significant risk of failure or delay in each of these programs. We cannot guarantee that any preclinical tests or clinical trials will be completed as planned or completed on schedule, if at all. A failure of one or more preclinical tests or clinical trials can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development include, but are not limited to:
| ● | delays in reaching a consensus with regulatory agencies on study design; |
| ● | delays in reaching agreement on acceptable terms with prospective clinical research organizations (“CROs”) and clinical trial sites; |
| ● | delays in receiving regulatory authorization to conduct the clinical trials or a regulatory authority decision that the clinical trial should not proceed; |
| ● | delays in obtaining required IRB approval at each clinical trial site; |
| ● | imposition of a clinical hold by regulatory agencies after an inspection of our clinical trial operations or trial sites; |
| ● | failure by CROs, other third parties or us to adhere to clinical trial requirements or otherwise properly manage the clinical trial process, including meeting applicable timelines, properly documenting case files, including the retention of proper case files, and properly monitoring and auditing clinical sites; |
| ● | failure of sites or clinical investigators to perform in accordance with Good Clinical Practice or applicable regulatory guidelines in other countries; |
| ● | difficulty or delays in patient recruiting into clinical trials; |
| ● | the impact of the COVID-19 pandemic on the healthcare system or any clinical trial sites; |
| ● | delays or deviations in the testing, validation, manufacturing and delivery of our product candidates to the clinical sites; |
| ● | delays in having patients’ complete participation in a study or return for post-treatment follow-up; |
| ● | clinical trial sites or patients dropping out of a study; |
| ● | occurrence of serious adverse events associated with a product candidate that are viewed to outweigh its potential benefits; or |
| ● | changes in regulatory requirements and guidance that require amending or submitting new clinical protocols, undertaking additional new tests or analyses or submitting new types or amounts of clinical data. |
Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidates in humans. Such trials and regulatory review and approval take many years. It is impossible to predict when or if any of our clinical trials will demonstrate that product candidates are effective or safe in humans.
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If the results of our clinical trials are inconclusive, or fail to meet the level of statistical significance required for approval or if there are safety concerns or adverse events associated with our product candidates, we may:
| ● | be delayed in or altogether prevented from obtaining marketing approval for our product candidates; |
| ● | obtain approval for indications or patient populations that are not as broad as intended or desired; |
| ● | obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; |
| ● | be subject to changes with the way the product is administered; |
| ● | be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements; |
| ● | have regulatory authorities withdraw their approval of the product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy; |
| ● | be subject to the addition of labeling statements, such as warnings or contraindications; |
| ● | be sued; or |
| ● | experience damage to our reputation. |
Because of the nature of the gene therapies we are developing, regulators may also require us to demonstrate long-term gene expression, clinical efficacy and safety, which may require additional or longer clinical trials, and which may not be able to be demonstrated to the regulatory authorities’ standards.
Our ability to recruit patients for our trials is often reliant on third parties, such as clinical trial sites. Clinical trial sites may not have the adequate infrastructure established to handle gene therapy products or may have difficulty finding eligible patients to enroll into a trial.
In addition, we or any collaborators we may have may not be able to locate and enroll enough eligible patients to participate in these trials as required by the FDA, the EMA or similar regulatory authorities outside the United States and the European Union. This may result in our failure to initiate or continue clinical trials for our product candidates or may cause us to abandon one or more clinical trials altogether. Because our programs are focused on the treatment of patients with rare or orphan or ultra-orphan diseases, our ability to enroll eligible patients in these trials may be limited or slower than we anticipate considering the small patient populations involved and the specific age range required for treatment eligibility in some indications. In addition, our potential competitors, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions, may seek to develop competing therapies, which would further limit the small patient pool available for our studies. Also, patients may be reluctant to enroll in gene therapy trial where there are other therapeutic alternatives available or that may become available, which may be for various reasons including uncertainty about the safety or effectiveness of the therapeutic and the possibility that treatment with the therapeutic would preclude future gene therapy treatments.
Any inability to successfully initiate or complete preclinical and clinical development could result in additional costs to us or impair our ability to receive marketing approval, to generate revenues from product sales or obtain regulatory and commercialization milestones and royalties. In addition, if we make manufacturing or formulation changes to our product candidates, including changes in the vector or manufacturing process used, we may need to conduct additional studies to bridge our modified product candidates to earlier versions. Clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do, which could impair our ability to successfully commercialize our product candidates and may materially harm our business, financial conditions and results of operations.
Our progress in early-stage clinical trials may not be indicative of long-term efficacy in late-stage clinical trials, and our progress in trials for one product candidate may not be indicative of progress in trials for other product candidates.
Study designs and results from previous studies are not necessarily predictive of our future clinical study designs or results, and initial results may not be confirmed upon full analysis of the complete study data. Our product candidates may fail to show the required level of safety and efficacy in later stages of clinical development despite having successfully advanced through initial clinical studies. In 2017, we announced our plans to advance etranacogene dezaparvovec, which includes an AAV5 vector carrying the FIX-Padua transgene, into a pivotal study. While we believe etranacogene dezaparvovec and AMT-060, our product candidate that was previously studied in a Phase I/II study, have been demonstrated to be materially comparable in nonclinical studies and manufacturing quality assessments, it is possible that ongoing or future clinical studies of etranacogene dezaparvovec may show unexpected differences from AMT-060. Should these differences have an unfavorable impact on clinical outcomes, they may adversely impact our ability to achieve regulatory approval or market acceptance of etranacogene dezaparvovec.
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In our Phase I/II clinical study of AMT-060, we screened patients for pre-existing anti-AAV5 antibodies to determine their eligibility for the trial. Three of the ten patients screened for the study tested positive for anti-AAV5 antibodies on reanalysis using a more sensitive antibody assay. Since we did not observe any ill-effects or correlation between the level of anti-AAV5 antibodies and clinical outcomes, patients who have anti-AAV5 antibodies are permitted to enroll in our planned pivotal study of etranacogene dezaparvovec. Since we only have been able to test a limited number of patients and have limited clinical and pre-clinical data, it is possible that ongoing or future clinical studies may not confirm these results, and if so, negatively impact the outcome of our study.
In advance of treating patients in the pivotal study of etranacogene dezaparvovec, we conducted a short study to confirm the dose expected to be used in the pivotal trial. The dose-confirmation study enrolled three patients, who were administered a single dose of 2x1013 gc/kg. We have relied on the short-term data from this study, including FIX activity and safety outcomes during the weeks following administration of etranacogene dezaparvovec, to confirm the dose to be used in the pivotal study. Following the results of this study, our Data Monitoring Committee confirmed the dose of 2x1013 gc/kg for administration in the pivotal study. Given the limited number of patients and short follow-up period, data from this study may differ materially from the future results of our planned pivotal study of etranacogene dezaparvovec.
A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in later-stage clinical trials even after achieving promising results in early-stage clinical trials. If a larger population of patients does not experience positive results during clinical trials, if these results are not reproducible or if our products show diminishing activity over time, our product candidates may not receive approval from the FDA or EMA. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, we may encounter regulatory delays or rejections because of many factors, including changes in regulatory policy during the period of product development. Failure to confirm favorable results from earlier trials by demonstrating the safety and effectiveness of our products in later-stage clinical trials with larger patient populations could have a material adverse effect on our business, financial condition and results of operations.
Fast track product, breakthrough therapy, priority review, or Regenerative Medicine Advanced Therapy (“RMAT”) designation by the FDA, or access to the PRIME scheme by the EMA, for our product candidates may not lead to faster development or regulatory review or approval process, and it does not increase the likelihood that our product candidates will receive marketing approval.
We have obtained and may in the future seek one or more of fast track designation, breakthrough therapy designation, RMAT designation, PRIME scheme access or priority review designation for our product candidates. A fast track product designation is designed to facilitate the clinical development and expedite the review of drugs intended to treat a serious or life-threatening condition and which demonstrate the potential to address an unmet medical need. A breakthrough therapy is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, where preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. A RMAT designation is designed to accelerate approval for regenerative advanced therapies. Priority review designation is intended to speed the FDA marketing application review timeframe for drugs that treat a serious condition and, if approved, would provide a significant improvement in safety or effectiveness. PRIME is a scheme provided by the EMA, similar to the FDA’s breakthrough therapy designation, to enhance support for the development of medicines that target an unmet medical need.
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For drugs and biologics that have been designated as fast track products or breakthrough therapies, or granted access to the PRIME scheme, interaction and communication between the regulatory agency and the sponsor of the trial can help to identify the most efficient path for clinical development. Sponsors of drugs with fast track products or breakthrough therapies may also be able to submit marketing applications on a rolling basis, meaning that the FDA may review portions of a marketing application before the sponsor submits the complete application to the FDA, if the sponsor pays the user fee upon submission of the first portion of the marketing application. For products that receive a priority review designation, the FDA's marketing application review goal is shortened to six months, as opposed to ten to twelve months under standard review. RMAT designations may also expedite product candidate development and approval.
Designation as a fast track product, breakthrough therapy, RMAT, PRIME, or priority review product is within the discretion of the regulatory agency. Accordingly, even if we believe one of our product candidates meets the relevant criteria, the agency may disagree and instead determine not to make such designation. In any event, the receipt of such a designation for a product candidate may not result in a faster development process, review or approval compared to drugs considered for approval under conventional regulatory procedures and does not assure ultimate marketing approval by the agency. In addition, regarding fast track products and breakthrough therapies, the FDA may later decide that the products no longer meet the conditions for qualification as either a fast track product, RMAT, or a breakthrough therapy or, for priority review products, decide that period for FDA review or approval will not be shortened.
We may not be successful in our efforts to use our gene therapy technology platform to build a pipeline of additional product candidates.
An element of our strategy is to use our gene therapy technology platform to expand our product pipeline and to progress these candidates through preclinical and clinical development ourselves or together with collaborators. Although we currently have a pipeline of programs at various stages of development, we may not be able to identify or develop product candidates that are safe and effective. Even if we are successful in continuing to build our pipeline, the potential product candidates that we identify may not be suitable for clinical development. Research programs to identify new product candidates require substantial technical, financial and human resources. We or any collaborators may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful. If we do not continue to successfully develop and commercialize product candidates based upon our technology, we may face difficulty in obtaining product revenues in future periods, which could result in significant harm to our business, results of operations and financial position and materially adversely affect our share price.
Our strategy of obtaining rights to key technologies through in-licenses may not be successful.
We seek to expand our product pipeline from time to time in part by in-licensing the rights to key technologies, including those related to gene delivery, genes and gene cassettes. The future growth of our business will depend in significant part on our ability to in-license or otherwise acquire the rights to additional product candidates or technologies, particularly through our collaborations with academic research institutions. However, we may be unable to in-license or acquire the rights to any such product candidates or technologies from third parties on acceptable terms or at all. The in-licensing and acquisition of these technologies is a competitive area, and many more established companies are also pursuing strategies to license or acquire product candidates or technologies that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be competitors may be unwilling to license rights to us. Furthermore, we may be unable to identify suitable product candidates or technologies within our areas of focus. If we are unable to successfully obtain rights to suitable product candidates or technologies, our business, financial condition and prospects could suffer.
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Negative public opinion and increased regulatory scrutiny of gene therapy and genetic research may damage public perception of our product candidates or adversely affect our ability to conduct our business or obtain marketing approvals for our product candidates.
Public perception may be influenced by claims that gene therapy is unsafe, and gene therapy may not gain the acceptance of the public or the medical community. The risk of cancer remains a concern for gene therapy, and we cannot assure that it will not occur in any of our planned or future clinical studies. In addition, there is the potential risk of delayed adverse events following exposure to gene therapy products due to persistent biological activity of the genetic material or other components of products used to carry the genetic material.
A small number of patients have experienced serious adverse events during our clinical trials of either AMT-060 (our first-generation hemophilia B gene therapy) or etranacogene dezaparvovec. In each instance of a serious adverse event, whether or not attributed to one of our product candidates, the issues resolved without delay in the respective clinical trial. However, adverse events in our clinical trials or those conducted by other parties (even if not ultimately attributable to our product candidates), and the resulting publicity, could result in delay, a hold or termination of our clinical trials, increased governmental regulation, unfavorable public perception, failure of the medical community to accept and prescribe gene therapy treatments, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such product candidates. If any of these events should occur, it may have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Our Manufacturing
Our manufacturing facility is subject to significant government regulations and approvals. If we fail to comply with these regulations or maintain these approvals our business will be materially harmed.
Our manufacturing facility in Lexington is subject to ongoing regulation and periodic inspection by the FDA, EMA and other regulatory bodies to ensure compliance with current Good Manufacturing Practices (“cGMP”). Any failure to follow and document our adherence to such cGMP regulations or other regulatory requirements may lead to significant delays in the availability of products for commercial sale or clinical study, may result in the termination of or a hold on a clinical study, or may delay or prevent filing or approval of marketing applications for our products.
Failure to comply with applicable regulations could also result in the FDA, EMA, or other applicable authorities taking various actions, including levying fines and other civil penalties; imposing consent decrees or injunctions; requiring us to suspend or put on hold one or more of our clinical trials; suspending or withdrawing regulatory approvals; delaying or refusing to approve pending applications or supplements to approved applications; requiring us to suspend manufacturing activities or product sales, imports or exports; requiring us to communicate with physicians and other customers about concerns related to actual or potential safety, efficacy, and other issues involving our products; mandating product recalls or seizing products; imposing operating restrictions; and seeking criminal prosecutions. Any of the foregoing could materially harm our business, financial condition and results of operations.
Gene therapies are complex and difficult to manufacture. We could experience capacity, production or technology transfer problems that result in delays in our development or commercialization schedules or otherwise adversely affect our business.
The insect-cell based manufacturing process we use to produce our products and product candidates is highly complex and in the normal course is subject to variation or production difficulties. Issues with any of our manufacturing processes, even minor deviations from the normal process, could result in insufficient yield, product deficiencies or manufacturing failures that result in adverse patient reactions, lot failures, insufficient inventory, product recalls and product liability claims. Additionally, we may not be able to scale up some or all of our manufacturing processes that may results in delays in regulatory approvals or otherwise adversely affect our ability to manufacture sufficient amounts of our products.
Many factors common to the manufacturing of most biologics and drugs could also cause production interruptions, including raw materials shortages, raw material failures, growth media failures, equipment malfunctions, facility contamination, labor problems, natural disasters, disruption in utility services, terrorist activities, or cases of force majeure and acts of god (including the effects of the COVID-19 pandemic) beyond our control. We also may encounter problems in hiring and retaining the experienced specialized personnel needed to operate our manufacturing process, which could result in delays in our production or difficulties in maintaining compliance with applicable regulatory requirements.
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Any problems in our manufacturing processes or facilities could make us a less attractive collaborator for academic research institutions and other parties, which could limit our access to additional attractive development programs, result in delays in our clinical development or marketing schedules and materially harm our business.
Our use of viruses, chemicals and other hazardous materials requires us to comply with regulatory requirements and exposes us to significant potential liabilities.
Our development and manufacturing processes involve the use of viruses, chemicals, other (potentially) hazardous materials and produce waste products. Accordingly, we are subject to national, federal, state and local laws and regulations in the United States and the Netherlands governing the use, manufacture, distribution, storage, handling, treatment and disposal of these materials. In addition to ensuring the safe handling of these materials, applicable requirements require increased safeguards and security measures for many of these agents, including controlling access and screening of entities and personnel who have access to them, and establishing a comprehensive national database of registered entities. In the event of an accident or failure to comply with environmental, occupational health and safety and export control laws and regulations, we could be held liable for damages that result, and any such liability could exceed our assets and resources, and could result in material harm to our business, financial condition and results of operations.
Our resources might be adversely affected if we are unable to meet our product supply needs and obligations.
To meet our expected future production needs, we will need to complete the validation of our existing manufacturing processes as well as to develop larger scale manufacturing processes. We might be unable to successfully complete the validation or development to sufficiently meet our future production needs. As a result, we may need to dedicate more of our resources to complete the validation or development, which could adversely impact our ability to develop our other proprietary programs, to meet our production needs, to conserve our cash, or to receive financial payments pursuant to our agreement with third parties, including with CSL Behring in return for supplying etranacogene dezaparvovec following regulatory approval.
Risks Related to Regulatory Approval of Our Products
We cannot predict when or if we will obtain marketing approval to commercialize a product candidate.
The development and commercialization of our product candidates, including their design, testing, manufacture, safety, efficacy, purity, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States, the EMA and other regulatory agencies of the member states of the European Union, and similar regulatory authorities in other jurisdictions. Failure to obtain marketing approval for a product candidate in a specific jurisdiction will prevent us from commercializing the product candidate in that jurisdiction.
The process of obtaining marketing approval for our product candidates in the United States, the European Union, and other countries is expensive and may take many years, if approval is obtained at all. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application, may decide that our data are insufficient for approval, may require additional preclinical, clinical or other studies and may not complete their review in a timely manner. Further, any marketing approval we ultimately obtain may be for only limited indications or be subject to stringent labeling or other restrictions or post-approval commitments that render the approved product not commercially viable.
If we experience delays in obtaining marketing approval for any of our product candidates in the United States, the European Union, or other countries, the commercial prospects of our other product candidates may be harmed and our ability to generate revenues will be materially impaired.
The risks associated with the marketing approval process are heightened by the status of our products as gene therapies.
We believe that all our current product candidates will be viewed as gene therapy products by the applicable regulatory authorities. While there are a number of gene therapy product candidates under development, in the United States, FDA has only approved a limited number of gene therapy products, to date. Accordingly, regulators, like FDA, may have limited experience with the review and approval of marketing applications for gene therapy products.
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Both the FDA and EMA have demonstrated caution in their regulation of gene therapy treatments, and ethical and legal concerns about gene therapy and genetic testing may result in additional regulations or restrictions on the development and commercialization of our product candidates that are difficult to predict. The FDA and the EMA have issued various guidance documents pertaining to gene therapy products, with which we likely must comply to gain regulatory approval of any of our product candidates in the United States or European Union, respectively. The close regulatory scrutiny of gene therapy products may result in delays and increased costs and may ultimately lead to the failure to obtain approval for any gene therapy product.
Regulatory requirements affecting gene therapy have changed frequently and continue to evolve, and agencies at both the U.S. federal and state level, as well as congressional committees and foreign governments, have sometimes expressed interest in further regulating biotechnology. In the United States, there have been a number of recent changes relating to gene therapy development. By example, FDA issued a number of new guidance documents on human gene therapy development, one of which was specific to human gene therapy for hemophilia and another of which was specific to rare diseases. Moreover, the U.S. National Institutes of Health, which also has authority over research involving gene therapy products, issued a proposed rule in October 2018, seeking to streamline the oversight of such protocols and reduce duplicative reporting requirements that are already captured within existing regulatory frameworks. Moreover, the European Commission conducted a public consultation in early 2013 on the application of EU legislation that governs advanced therapy medicinal products, including gene therapy products, which could result in changes in the data we need to submit to the EMA for our product candidates to gain regulatory approval or change the requirements for tracking, handling and distribution of the products which may be associated with increased costs. In addition, divergent scientific opinions among the various bodies involved in the review process may result in delays, require additional resources and ultimately result in rejection. The FDA, EMA, and other regulatory authorities will likely continue to revise and further update its approach to gene therapies in the coming years. These regulatory agencies, committees and advisory groups and the new regulations and guidelines they promulgate may lengthen the regulatory review process, require us to perform additional studies, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates or lead to significant post-approval limitations or restrictions. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generate sufficient product revenues to maintain our business.
Our failure to obtain or maintain orphan product exclusivity for any of our product candidates for which we seek this status could limit our commercial opportunity, and if our competitors are able to obtain orphan product exclusivity before we do, we may not be able to obtain approval for our competing products for a significant period.
Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate drugs for relatively small patient populations as orphan drugs. Generally, if a product with an orphan drug designation subsequently receives the first marketing approval for the relevant indication, the product is entitled to a period of market exclusivity, which precludes the FDA or EMA from approving another marketing application for the same drug for the same indication for that period. The FDA and EMA, however, may subsequently approve a similar drug for the same indication during the first product's market exclusivity if the FDA or EMA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care.
Orphan drug exclusivity may be lost if the FDA or EMA determines that the request for designation was materially defective, or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition or if the incidence and prevalence of patients who are eligible to receive the drug in these markets materially increase. The inability to obtain or failure to maintain adequate product exclusivity for our product candidates could have a material adverse effect on our business prospects, results of operations and financial conditions.
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As appropriate, we intend to seek all available periods of regulatory exclusivity for our product candidates. However, there is no guarantee that we will be granted these periods of regulatory exclusivity or that we will be able to maintain these periods of exclusivity.
The FDA grants product sponsors certain periods of regulatory exclusivity, during which the agency may not approve, and in certain instances, may not accept, certain marketing applications for competing drugs. For example, biologic product sponsors may be eligible for twelve years of exclusivity from the date of approval, seven years of exclusivity for drugs that are designated to be orphan drugs, and/or a six-month period of exclusivity added to any existing exclusivity period or patent life for the submission of FDA requested pediatric data. While we intend to apply for all periods of market exclusivity that we may be eligible for, there is no guarantee that we will receive all such periods of market exclusivity. Additionally, under certain circumstances, the FDA may revoke the period of market exclusivity. Thus, there is no guarantee that we will be able to maintain a period of market exclusivity, even if granted. In the case of orphan designation, other benefits, such as tax credits and exemption from user fees may be available. If we are not able to obtain or maintain orphan drug designation or any period of market exclusivity to which we may be entitled, we will be materially harmed, as we will potentially be subject to greater market competition and may lose the benefits associated with programs.
Risks Related to Commercialization
If we are unable to successfully commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed.
Our ability to generate product revenues will depend on the successful development and eventual commercialization of our product candidates. The success of our product candidates will depend on many factors, including:
| ● | closing and successful execution of our transaction with CSL Behring for the commercialization of etranacogene dezaparvovec; |
| ● | successful completion of preclinical studies and clinical trials, and other work required by regulators; |
| ● | receipt and maintenance of marketing approvals from applicable regulatory authorities; |
| ● | our ability to timely manufacture sufficient quantities according to required quality specifications; |
| ● | obtaining and maintaining patent and trade secret protection and non-patent, orphan drug exclusivity for our product candidates; |
| ● | obtaining and maintaining regulatory approvals using our manufacturing facility in Lexington, Massachusetts; |
| ● | launch and commercialization of our products, if approved, whether alone or in collaboration with others; |
| ● | identifying and engaging effective distributors or resellers on acceptable terms in jurisdictions where we plan to utilize third parties for the marketing and sales of our product candidates; |
| ● | acceptance of our products, if approved, by patients, the medical community and third-party payers; |
| ● | effectively competing with existing therapies and gene therapies based on safety and efficacy profile; |
| ● | achieve optimal pricing based on durability of expression, safety and efficacy; |
| ● | obtaining and maintaining healthcare coverage and adequate reimbursement; |
| ● | complying with any applicable post-approval requirements and maintaining a continued acceptable overall safety profile; and |
| ● | obtaining adequate reimbursement for the total patient population and each subgroup to sustain a viable commercial business model in U.S. and EU markets. |
Failure to achieve or implement any of these elements could result in significant delays or an inability to successfully commercialize our product candidates, which could materially harm our business.
The affected populations for our gene therapies may be smaller than we or third parties currently project, which may affect the size of our addressable markets.
Our projections of the number of people who have the diseases we are seeking to treat, as well as the subset of people with these diseases who have the potential to benefit from treatment with our therapies, are estimates based on our knowledge and understanding of these diseases. The total addressable market opportunities for these therapies will ultimately depend upon many factors, including the diagnosis and treatment criteria included in the final label, if approved for sale in specified indications, acceptance by the medical community, patient consent, patient access and product pricing and reimbursement.
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Prevalence estimates are frequently based on information and assumptions that are not exact and may not be appropriate, and the methodology is forward-looking and speculative. The use of such data involves risks and uncertainties and is subject to change based on various factors. Our estimates may prove to be incorrect and new studies may change the estimated incidence or prevalence of the diseases we seek to address. The number of patients with the diseases we are targeting may turn out to be lower than expected or may not be otherwise amenable to treatment with our products, reimbursement may not be sufficient to sustain a viable business for all sub populations being studied, or new patients may become increasingly difficult to identify or access, any of which would adversely affect our results of operations and our business.
The addressable markets for AAV-based gene therapies may be impacted by the prevalence of neutralizing antibodies to the capsids, which are an integral component of our gene therapy constructs. Patients that have pre-existing antibodies to a particular capsid may not be eligible for administration of a gene therapy that includes this particular capsid. For example, etranacogene dezaparvovec, our gene therapy candidate for hemophilia B patients, incorporates an AAV5 capsid. In our Phase I/II clinical study of AMT-060, we screened patients for pre-existing anti-AAV5 antibodies to determine their eligibility for the trial. Three of the ten patients screened for the study tested positive for anti-AAV5 antibodies on reanalysis. However, we did not observe any ill-effects or correlation between the level of anti-AAV5 antibodies and clinical outcomes in these three patients, suggesting that patients who have anti-AAV5 antibodies may still be eligible for AAV5-based gene therapies. Since we only have been able to test a limited number of patients and have limited clinical and pre-clinical data, it is possible that future clinical studies may not confirm these results. This may limit the addressable market for etranacogene dezaparvovec and any future revenues derived from the sale of the product, if approved.
Any approved gene therapy we seek to offer may fail to achieve the degree of market acceptance by physicians, patients, third party payers and others in the medical community necessary for commercial success.
Doctors may be reluctant to accept a gene therapy as a treatment option or, where available, choose to continue to rely on existing treatments. The degree of market acceptance of any of our product candidates that receive marketing approval in the future will depend on many factors, including:
| ● | the efficacy and potential advantages of our therapies compared with alternative treatments; |
| ● | our ability to convince payers of the long-term cost-effectiveness of our therapies and, consequently, the availability of third-party coverage and adequate reimbursement; |
| ● | the cost of treatment with gene therapies, including ours, in comparison to traditional chemical and small-molecule treatments; |
| ● | the limitations on use and label requirements imposed by regulators; |
| ● | the convenience and ease of administration of our gene therapies compared with alternative treatments; |
| ● | the willingness of the target patient population to try new therapies, especially a gene therapy, and of physicians to administer these therapies; |
| ● | the strength of marketing and distribution support; |
| ● | the prevalence and severity of any side effects; |
| ● | limited access to site of service that can perform the product preparation and administer the infusion; and |
| ● | any restrictions by regulators on the use of our products. |
A failure to gain market acceptance for any of the above reasons, or any reasons at all, by a gene therapy for which we receive regulatory approval would likely hinder our ability to recapture our substantial investments in that and other gene therapies and could have a material adverse effect on our business, financial condition and results of operation.
If we are unable to expand our commercialization capabilities or enter into agreements with third parties to market and sell any of our product candidates for which we obtain marketing approval, we may be unable to generate any product revenue.
To successfully commercialize any products that may result from our development programs, we need to continue to expand our commercialization capabilities, either on our own or with others. The development of our own market development effort is, and will continue to be, expensive and time-consuming and could delay any product launch. Moreover, we cannot be certain that we will be able to successfully develop this capability.
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We may enter into collaborations regarding our other product candidates with other entities to utilize their established marketing and distribution capabilities, but we may be unable to enter into such agreements on favorable terms, if at all. If any current or future collaborators do not commit sufficient resources to commercialize our products, or we are unable to develop the necessary capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business. We compete with many companies that currently have extensive, experienced and well-funded medical affairs, marketing and sales operations to recruit, hire, train and retain marketing and sales personnel. We also may face competition in any search for third parties to assist us with the sales and marketing efforts of our product candidates. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.
If the market opportunities for our product candidates are smaller than we believe they are, our product revenues may be adversely affected, and our business may suffer.
We focus our research and product development on treatments for severe genetic and orphan diseases. Our understanding of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our product candidates, are based on estimates. These estimates may prove to be incorrect and new studies may reduce the estimated incidence or prevalence of these diseases. The number of patients in the United States, the EU and elsewhere may turn out to be lower than expected, may not be otherwise amenable to treatment with our products or patients may become increasingly difficult to identify and access, all of which would adversely affect our business, financial condition, results of operations and prospects.
Further, there are several factors that could contribute to making the actual number of patients who receive other potential products less than the potentially addressable market. These include the lack of widespread availability of, and limited reimbursement for, new therapies in many underdeveloped markets. Further, the severity of the progression of a disease up to the time of treatment, especially in certain degenerative conditions, could diminish the therapeutic benefit conferred by a gene therapy. Lastly, certain patients’ immune systems might prohibit the successful delivery of certain gene therapy products to the target tissue, thereby limiting the treatment outcomes.
Our gene therapy approach utilizes vectors derived from viruses, which may be perceived as unsafe or may result in unforeseen adverse events. Negative public opinion and increased regulatory scrutiny of gene therapy may damage public perception of the safety of our product and product candidates and adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates.
Gene therapy remains a novel technology. Public perception may be influenced by claims that gene therapy is unsafe, and gene therapy may not gain the acceptance of the public or the medical community. In particular, our success will depend upon physicians who specialize in the treatment of genetic diseases targeted by our product and product candidates, if approved, prescribing treatments that involve the use of our product and product candidates, if approved, in lieu of, or in addition to, existing treatments with which they are familiar and for which greater clinical data may be available. More restrictive government regulations or negative public opinion would have an adverse effect on our business, financial condition, results of operations and prospects and may delay or impair the development and commercialization of our product candidates or demand for any products we may develop. For example, earlier gene therapy trials led to several well-publicized adverse events, including cases of leukemia and death seen in other trials using other vectors. Serious adverse events in our clinical trials, or other clinical trials involving gene therapy products or our competitors’ products, even if not ultimately attributable to the relevant product candidates, and the resulting publicity, could result in increased government regulation, unfavorable public perception, potential regulatory delays in the testing or approval of our product candidates, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any products for which we obtain marketing approval.
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Ethical, legal and social issues may reduce demand for any gene therapy products for which we obtain marketing approval.
Prior to receiving certain gene therapies, patients may be required to undergo genetic testing. Genetic testing has raised concerns regarding the appropriate utilization and the confidentiality of information provided by genetic testing. Genetic tests for assessing a person’s likelihood of developing a chronic disease have focused public attention on the need to protect the privacy of genetic information. For example, concerns have been expressed that insurance carriers and employers may use these tests to discriminate on the basis of genetic information, resulting in barriers to the acceptance of genetic tests by consumers. This could lead to governmental authorities restricting genetic testing or calling for limits on or regulating the use of genetic testing, particularly for diseases for which there is no known cure. Any of these scenarios could decrease demand for any products for which we obtain marketing approval.
If we obtain approval to commercialize any of our product candidates outside of the United States, a variety of risks associated with international operations could materially adversely affect our business.
We expect that we will be subject to additional risks in commercializing any of our product candidates outside the United States, including:
| ● | different regulatory requirements for approval of drugs and biologics in foreign countries; |
| ● | reduced protection for intellectual property rights; |
| ● | unexpected changes in tariffs, trade barriers and regulatory requirements; |
| ● | economic weakness, including inflation, or political instability in particular foreign economies and markets; |
| ● | compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; |
| ● | foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; |
| ● | workforce uncertainty in countries where labor unrest is more common than in the United States; |
| ● | production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and |
| ● | business interruptions resulting from geopolitical actions, including war and terrorism or natural disasters including earthquakes, typhoons, floods and fires. |
We face substantial competition, and others may discover, develop, or commercialize competing products before or more successfully than we do.
The development and commercialization of new biotechnology and biopharmaceutical products, including gene therapies, is highly competitive. We may face intense competition with respect to our product candidates, as well as with respect to any product candidates that we may seek to develop or commercialize in the future, from large and specialty pharmaceutical companies and biotechnology companies worldwide, who currently market and sell products or are pursuing the development of products for the treatment of many of the disease indications for which we are developing our product candidates. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization. In recent years, there has been a significant increase in commercial and scientific interest and financial investment in gene therapy as a therapeutic approach, which has intensified the competition in this area.
We are aware of numerous companies focused on developing gene therapies in various indications, including Applied Genetic Technologies Corp., Abeona Therapeutics, Adverum Biotechnologies, Allergan, Ally Therapeutics, Asklepios BioPharmaceutical, Astellas, AVROBIO, Axovant Gene Therapies, Bayer, Biogen, BioMarin, bluebird bio, CRISPR Therapeutics, Editas Medicine, Expression Therapeutics, Freeline Therapeutics, Generation Bio, Genethon, GlaxoSmithKline, Homology Medicines, Intellia Therapeutics, Johnson & Johnson, Krystal Biotech, LogicBio Therapeutics, Lysogene, MeiraGTx, Milo Biotechnology, Mustang Bio, Novartis, Orchard Therapeutics, Oxford Biomedica, Pfizer, REGENXBIO, Renova Therapeutics, Roche, Rocket Pharmaceuticals, Sangamo Therapeutics, Sanofi, Selecta Biosciences, Sarepta Therapeutics, Solid Biosciences, Takeda, Ultragenyx, Vivet Therapeutics, and Voyager Therapeutics, as well as several companies addressing other methods for modifying genes and regulating gene expression. We may also face competition with respect to the treatment of some of the diseases that we are seeking to target with our gene therapies from protein, nucleic acid, antisense, RNAi and other pharmaceuticals under development or commercialized at pharmaceutical and biotechnology companies such as Alnylam Pharmaceuticals, Amgen, Bayer, Biogen, BioMarin, CSL Behring, Dicerna Pharmaceuticals, Ionis Pharmaceuticals, Novartis, Novo Nordisk, Pfizer, Translate Bio, Roche, Sanofi, Sobi, Takeda, WaVe Life Sciences, and numerous other pharmaceutical and biotechnology firms.
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Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than the products that we develop. Our competitors also may obtain FDA, EMA or other regulatory approval for their products more rapidly than we do, which could result in our competitors establishing a strong market position before we are able to enter the market. Because we expect that gene therapy patients may generally require only a single administration, we believe that the first gene therapy product to enter the market for a particular indication will likely enjoy a significant commercial advantage and may also obtain market exclusivity under applicable orphan drug regimes.
Many of the companies with which we are competing or may compete in the future have significantly greater financial resources and expertise than we do in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
If we do not achieve our projected development goals in the timeframes we announce and expect, the commercialization of our product candidates may be delayed and, as a result, our stock price may decline.
For planning purposes, we estimate the timing of the accomplishment of various scientific, clinical, regulatory and other product development goals, or development milestones. These development milestones may include the commencement or completion of scientific studies, clinical trials, the submission of regulatory filings, and approval for commercial sale. From time to time, we publicly announce the expected timing of some of these milestones. All of these milestones are based on a variety of assumptions. The actual timing of these milestones can vary dramatically compared to our estimates, in many cases for reasons beyond our control. If we do not meet these milestones, including those that are publicly announced, the commercialization of our products may be delayed and, as a result, our stock price may decline.
Risks Related to Our Dependence on Third Parties
Our ongoing discussions with BMS to restructure or amend the terms of our collaboration may not be successful or may result in material changes to these arrangements.
The research term of our collaboration and license agreement with BMS expired in May 2019, and we are currently in discussions with BMS potentially to restructure or amend that agreement and the other related agreements to eliminate, reduce or alter our obligations under the collaboration. Our discussions are ongoing and may or may not result in any restructuring or changes to our collaboration. If a restructuring of our collaboration with BMS were to be concluded, we expect it would result in a termination or amendment of existing agreements, or the execution of new agreements that collectively could include changes in the number of future collaboration targets that may be designated by BMS, the exclusivity provisions related to collaboration targets, our obligations to provide manufacturing services for collaboration targets, as well as changes in or the elimination of our economic rights on collaboration targets, milestone payments, and BMS’s warrants to purchase our ordinary shares, among other potential matters. Any such restructuring, if concluded, may include additional or different provisions from those described above, and may include economic or other terms that are less advantageous for us.
Because the outcome of these discussions is unknown, we have not taken into account the impact of such restructuring, if any, on the timing of recognizing prepaid license revenue, or any other potential financial metrics, in our consolidated financial statements. We will account for any potential changes if and when the agreements are restructured or amended.
We rely on third parties for important aspects of our development programs. If these parties do not perform successfully or if we are unable to enter into or maintain key collaboration or other contractual arrangements, our business could be adversely affected.
We have in the past entered into, and expect in the future to enter into, collaborations with other companies and academic research institutions with respect to important elements of our development programs.
Any collaboration, may pose several risks, including the following:
| ● | collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations; |
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| ● | we may have limited or no control over the design or conduct of clinical trials sponsored by collaborators; |
| ● | we may be hampered from entering into collaboration arrangements if we are unable to obtain consent from our licensors to enter into sublicensing arrangements of technology we have in-licensed; |
| ● | if any collaborator does not conduct the clinical trials they sponsor in accordance with regulatory requirements or stated protocols, we will not be able to rely on the data produced in such trials in our further development efforts; |
| ● | collaborators may not perform their obligations as expected; |
| ● | collaborators may also have relationships with other entities, some of which may be our competitors; |
| ● | collaborators may not pursue development and commercialization of any product candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators' strategic focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; |
| ● | collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing; |
| ● | collaborators could develop, independently or with third parties, products that compete directly or indirectly with our products or product candidates, if, for instance, the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; |
| ● | our collaboration arrangements may impose restrictions on our ability to undertake other development efforts that may appear to be attractive to us; |
| ● | product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates; |
| ● | a collaborator with marketing and distribution rights that achieves regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products; |
| ● | disagreements with collaborators, including over proprietary rights, contract interpretation or the preferred course of development, could cause delays or termination of the research, development or commercialization of product candidates, lead to additional responsibilities for us, delay or impede reimbursement of certain expenses or result in litigation or arbitration, any of which would be time-consuming and expensive; |
| ● | collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our rights or expose us to potential litigation; |
| ● | collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability; and |
| ● | collaborations may in some cases be terminated for the convenience of the collaborator and, if terminated, we could be required to expend additional funds to pursue further development or commercialization of the applicable product or product candidates. |
If any collaboration does not result in the successful development and commercialization of products or if a collaborator were to terminate an agreement with us, we may not receive future research funding or milestone or royalty payments under that collaboration, and we may lose access to important technologies and capabilities of the collaboration. All the risks relating to product development, regulatory approval and commercialization described herein also apply to the activities of any development collaborators.
Risks Related to Our Intellectual Property
We rely on licenses of intellectual property from third parties, and such licenses may not provide adequate rights or may not be available in the future on commercially reasonable terms or at all, and our licensors may be unable to obtain and maintain patent protection for the technology or products that we license from them.
We currently are heavily reliant upon licenses of proprietary technology from third parties that is important or necessary to the development of our technology and products, including technology related to our manufacturing process, our vector platform, our gene cassettes and the therapeutic genes of interest we are using. These and other licenses may not provide adequate rights to use such technology in all relevant fields of use. Licenses to additional third-party technology that may be required for our development programs may not be available in the future or may not be available on commercially reasonable terms, which could have a material adverse effect on our business and financial condition.
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In some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from third parties. In addition, some of our agreements with our licensors require us to obtain consent from the licensor before we can enforce patent rights, and our licensor may withhold such consent or may not provide it on a timely basis. Therefore, we cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent with the best interests of our business. In addition, if third parties who license patents to us fail to maintain such patents, or lose rights to those patents, the rights we have licensed may be reduced or eliminated.
Our intellectual property licenses with third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology or increase our financial or other obligations to our licensors.
The agreements under which we license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business and financial condition.
If we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose rights that are important to our business.
Our licensing arrangements with third parties may impose diligence, development and commercialization timelines, milestone payment, royalty, insurance and other obligations on us. If we fail to comply with these obligations, our counterparties may have the right to terminate these agreements either in part or in whole, in which case we might not be able to develop, manufacture or market any product that is covered by these agreements or may face other penalties under the agreements. Such an occurrence could materially adversely affect the value of the product candidate being developed under any such agreement. Termination of these agreements or reduction or elimination of our rights under these agreements may result in our having to negotiate new or amended agreements with less favorable terms or cause us to lose our rights under these agreements, including our rights to important intellectual property or technology.
If we are unable to obtain and maintain patent protection for our technology and products, or if the scope of the patent protection is not sufficiently broad, our ability to successfully commercialize our products may be impaired.
We rely, in part, upon a combination of forms of intellectual property, including in-licensed and owned patents to protect our intellectual property. Our success depends in a large part on our ability to obtain and maintain this protection in the United States, the European Union, and other countries, in part by filing patent applications related to our novel technologies and product candidates. Our patents may not provide us with any meaningful commercial protection, prevent competitors from competing with us or otherwise provide us with any competitive advantage. For example, patents we own currently are and may become subject to future patent opposition or similar proceedings, which may result in loss of scope of some claims or the entire patent. Our competitors may be able to circumvent our owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner.
Successful challenges to our patents may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products.
The patent prosecution process is expensive, time-consuming and uncertain, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Additionally, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.
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The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, EU patent law with respect to the patentability of methods of treatment of the human body is more limited than U.S. law. Publications of discoveries in the scientific literature often lag the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after their priority date, or in some cases at all. Therefore, we cannot know with certainty whether we were the first to make the inventions or that we were the first to file for patent protection of the inventions claimed in our owned or licensed patents or pending patent applications. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued that protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the European Union, the United States or other countries may diminish the value of our patents or narrow the scope of our patent protection. Our inability to obtain and maintain appropriate patent protection for any one of our products could have a material adverse effect on our business, financial conditions and results of operations.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, or third parties may assert their intellectual property rights against us, which could be expensive, time consuming and unsuccessful.
Competitors may infringe our owned or licensed patents or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated, maintained in more narrowly amended form or interpreted narrowly.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses, increase our operating losses, reduce available resources and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, which could have an adverse effect on the price of our ordinary shares.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business. For example, outside of the United States two of the patents we own are subject to patent opposition. If these or future oppositions are successful or if we are found to otherwise infringe a third party's intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our products and technology. We may not be able to obtain the required license on commercially reasonable terms or at all. Even if we could obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product or otherwise to cease using the relevant intellectual property. In addition, we could be found liable for monetary damages, including treble damages and attorneys' fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease or materially modify some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.
For example, we are aware of patents owned by third parties that relate to some aspects of our programs that are still in development. In some cases, because we have not determined the final methods of manufacture, the method of administration or the therapeutic compositions for these programs, we cannot determine whether rights under such third-party patents will be needed. In addition, in some cases, we believe that the claims of these patents are invalid or not infringed or will expire before commercialization. However, if such patents are needed and found to be valid and infringed, we could be required to obtain licenses, which might not be available on commercially reasonable terms, or to cease or delay commercializing certain product candidates, or to change our programs to avoid infringement.
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If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected.
In addition to seeking patent protection, we also rely on other proprietary rights, including protection of trade secrets, know-how and confidential and proprietary information. To maintain the confidentiality of our trade secrets and proprietary information, we enter into confidentiality agreements with our employees, consultants, collaborators and other third parties who have access to our trade secrets. Our agreements with employees also provide that any inventions conceived by the individual in the course of rendering services to us will be our exclusive property. However, we may not obtain these agreements in all circumstances, and individuals with whom we have these agreements may not comply with their terms. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. In addition, in the event of unauthorized use or disclosure of our trade secrets or proprietary information, these agreements, even if obtained, may not provide meaningful protection, particularly for our trade secrets or other confidential information. To the extent that our employees, consultants or contractors use technology or know-how owned by third parties in their work for us, disputes may arise between us and those third parties as to the rights in related inventions.
Adequate remedies may not exist in the event of unauthorized use or disclosure of our confidential information including a breach of our confidentiality agreements. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time consuming, and the outcome is unpredictable. In addition, some courts in and outside of the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us. The disclosure of our trade secrets or the independent development of our trade secrets by a competitor or other third party would impair our competitive position and may materially harm our business, financial condition, results of operations, stock price and prospects.
Our reliance on third parties may require us to share our trade secrets, which could increase the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.
Because we collaborate from time to time with various organizations and academic research institutions on the advancement of our gene therapy platform, we must, at times, share trade secrets with them. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, materials transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with our collaborators, advisors and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information, such as trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor's discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.
In addition, these agreements typically restrict the ability of our collaborators, advisors and consultants to publish data potentially relating to our trade secrets. Our academic collaborators typically have rights to publish data, if we are notified in advance and may delay publication for a specified time in order to secure our intellectual property rights arising from the collaboration. In other cases, publication rights are controlled exclusively by us, although in some cases we may share these rights with other parties. We also conduct joint research and development programs that may require us to share trade secrets under the terms of our research and development partnerships or similar agreements.
Some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us.
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Risks Related to Pricing and Reimbursement
We face uncertainty related to insurance coverage of, and pricing and reimbursement for product candidates for which we may receive marketing approval.
We anticipate that the cost of treatment using our product candidates will be significant. We expect that most patients and their families will not be capable of paying for our products themselves. There will be no commercially viable market for our product candidates without reimbursement from third party payers, such as government health administration authorities, private health insurers and other organizations. Even if there is a commercially viable market, if the level of third-party reimbursement is below our expectations, most patients may not be able to afford treatment with our products and our revenues and gross margins will be adversely affected, and our business will be harmed.
Government authorities and other third-party payers, such as private health insurers and health maintenance organizations, decide for which medications they will pay and, subsequently, establish reimbursement levels. Reimbursement systems vary significantly by country and by region, and reimbursement approvals must be obtained on a country-by-country basis. Government authorities and third-party payers have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications and procedures. Increasingly, third party payers require drug companies to provide them with predetermined discounts from list prices, are exerting influence on decisions regarding the use of particular treatments and are limiting covered indications. Additionally, in the United States and some foreign jurisdictions, pending or potential legislative and regulatory changes regarding the healthcare system and insurance coverage, could result in more rigorous coverage criteria and downward pressure on drug prices, and may affect our ability to profitably sell any products for which we obtain marketing approval.
The pricing review period and pricing negotiations for new medicines take considerable time and have uncertain results. Pricing review and negotiation usually begins only after the receipt of regulatory marketing approval, and some authorities require approval of the sale price of a product before it can be marketed. In some markets, particularly the countries of the European Union, prescription pharmaceutical pricing remains subject to continuing direct governmental control and to drug reimbursement programs even after initial approval is granted and price reductions may be imposed. Prices of medical products may also be subject to varying price control mechanisms or limitations as part of national health systems if products are considered not cost-effective or where a drug company's profits are deemed excessive. In addition, pricing and reimbursement decisions in certain countries can lead to mandatory price reductions or additional reimbursement restrictions in other countries. Because of these restrictions, any product candidates for which we may obtain marketing approval may be subject to price regulations that delay or prohibit our or our partners' commercial launch of the product in a particular jurisdiction. In addition, we or any collaborator may elect to reduce the price of our products to increase the likelihood of obtaining reimbursement approvals. If countries impose prices, which are not sufficient to allow us or any collaborator to generate a profit, we or any collaborator may refuse to launch the product in such countries or withdraw the product from the market. If pricing is set at unsatisfactory levels, or if the price decreases, our business could be harmed, possibly materially. If we fail to obtain and sustain an adequate level of coverage and reimbursement for our products by third party payers, our ability to market and sell our products would be adversely affected and our business would be harmed.
Due to the generally limited addressable market for our target orphan indications and the potential for our therapies to offer therapeutic benefit in a single administration, we face uncertainty related to pricing and reimbursement for these product candidates.
The relatively small market size for orphan indications and the potential for long-term therapeutic benefit from a single administration present challenges to pricing review and negotiation of our product candidates for which we may obtain marketing authorization. Most of our product candidates target rare diseases with relatively small patient populations. If we are unable to obtain adequate levels of reimbursement relative to these small markets, our ability to support our development and commercial infrastructure and to successfully market and sell our product candidates for which we may obtain marketing approval will be adversely affected.
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We also anticipate that many or all of our gene therapy product candidates may provide long-term, and potentially curative benefit, with a single administration. This is a different paradigm than that of other pharmaceutical therapies, which often require an extended course of treatment or frequent administration. As a result, governments and other payers may be reluctant to provide the significant level of reimbursement that we seek at the time of administration of our gene therapies or may seek to tie reimbursement to clinical evidence of continuing therapeutic benefit over time. Although it is possible that our product candidates will need to be administered only once, there may be situations in which re-administration is required, which may further complicate the pricing and reimbursement for these treatments. In addition, considering the anticipated cost of these therapies, governments and other payers may be particularly restrictive in making coverage decisions. These factors could limit our commercial success and materially harm our business.
Risks Related to Our Financial Position and Need for Additional Capital
We have incurred significant losses to date, expect to incur losses over the next several years and may never achieve or maintain profitability.
We had a net loss of $124.3 million in the nine months ended September 30, 2020, $124.2 million in the full year 2019 and $83.3 million in the full year 2018. As of September 30, 2020, we had an accumulated deficit of $784.0 million. To date, we have financed our operations primarily through the sale of equity securities and convertible debt, venture loans, through upfront payments from our collaboration partners and, to a lesser extent, subsidies and grants from governmental agencies and fees for services. We have devoted substantially all our financial resources and efforts to research and development, including preclinical studies and clinical trials. We expect to continue to incur significant expenses and losses over the next several years, and our net losses may fluctuate significantly from quarter to quarter and year to year. Our losses will be materially impacted by the amount of license revenue that we will recognize in accordance with ASC 606 in the event of the closing of the transactions contemplated by the CSL Behring Agreement.
We anticipate that our expenses will increase substantially as we:
| ● | Advance the clinical development of AMT-130, our Huntington’s disease gene therapy program; |
| ● | Build-out our commercial and medical affairs infrastructure and seek marketing approval for any product candidates (including etranacogene dezaparvovec in the event that the transactions contemplated by the CSL Behring Agreement do not close) that successfully complete clinical trials; |
| ● | Advance multiple research programs related to gene therapy candidates targeting liver-directed and CNS diseases; |
| ● | Continue to expand, enhance and optimize our technology platform, including our manufacturing capabilities, next-generation viral vectors and promoters, and other enabling technologies; |
| ● | Continue to expand our employee base to support research and development, as well as general and administrative functions; |
| ● | Acquire or in-license rights to new therapeutic targets or product candidates; and |
| ● | Maintain, expand and protect our intellectual property portfolio, including in-licensing additional intellectual property rights from third parties. |
We may never succeed in these activities and, even if we do, may never generate revenues that are sufficient to achieve or sustain profitability. Our failure to become and remain profitable would depress the value of our company and could impair our ability to expand our business, maintain our research and development efforts, diversify our product offerings or even continue our operations.
We will likely need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain capital when needed may force us to delay, limit or terminate our product development efforts or other operations which could have a material adverse effect on our business, financial conditions, results of operations and cash flows.
We expect to incur significant expenses in connection with our on-going activities and that we will likely need to obtain substantial additional funding in connection with our continuing operations, in particular if the CSL Behring transaction would not close. In addition, we have based our estimate of our financing requirements on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect.
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Adequate capital may not be available to us when needed or may not be available on acceptable terms. Our ability to obtain debt financing may be limited by covenants we have made under our Second Amended and Restated Loan and Security Agreement (as amended, the “2018 Amended Facility”) with Hercules Technology Growth Capital, Inc. (“Hercules”) and our pledge to Hercules of substantially all our assets as collateral. If we raise additional capital through the sale of equity or convertible debt securities, our shareholders' ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of our ordinary shares.
If we raise additional funds through collaborations, strategic alliances, or marketing, distribution or licensing arrangements with third parties, we may have to issue additional equity, relinquish valuable rights to our technologies, future revenue streams, products or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts, which would have a negative impact on our financial condition, results of operations and cash flows.
Our existing and any future indebtedness could adversely affect our ability to operate our business.
As of September 30, 2020, we had $35.0 million of outstanding principal of borrowings under the 2018 Amended Facility, which we are required to repay in monthly principal installments from January 2022 through June 2023. We could in the future incur additional debt obligations beyond our borrowings from Hercules. Our existing loan obligations, together with other similar obligations that we may incur in the future, could have significant adverse consequences, including:
| ● | requiring us to dedicate a portion of our cash resources to the payment of interest and principal, reducing money available to fund working capital, capital expenditures, research and development and other general corporate purposes; |
| ● | increasing our vulnerability to adverse changes in general economic, industry and market conditions; |
| ● | subjecting us to restrictive covenants that may reduce our ability to take certain corporate actions or obtain further debt or equity financing; |
| ● | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and |
| ● | placing us at a disadvantage compared to our competitors that have less debt or better debt servicing options. |
We may not have sufficient funds, and may be unable to arrange for additional financing, to pay the amounts due under our existing loan obligations. Failure to make payments or comply with other covenants under our existing debt could result in an event of default and acceleration of amounts due. Under the 2018 Amended Facility, the occurrence of an event that would reasonably be expected to have a material adverse effect on our business, operations, assets or condition is an event of default. If an event of default occurs and the lender accelerates the amounts due, we may not be able to make accelerated payments, and the lender could seek to enforce security interests in the collateral securing such indebtedness, which includes substantially all our assets.
Risks Related to Other Legal Compliance Matters
Our relationships with customers and third-party payers will be subject to applicable anti-kickback, anti-bribery, fraud and abuse and other laws and regulations, which, if we are found in violation thereof, could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and third-party payers will play a primary role in the recommendation and prescription of any products for which we obtain marketing approval. Our future arrangements with third party payers and customers may expose us to broadly applicable anti-bribery laws, including the Foreign Corrupt Practices Act, as well as fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we would be able to market, sell and distribute any products for which we obtain marketing approval.
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Efforts to ensure that our business arrangements with third parties will comply with applicable laws and regulations will involve substantial costs. If our operations, or the activities of our collaborators, distributors or other third-party agents are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs and the curtailment or restructuring of our operations. The cost associated with any of these actions could be substantial and could cause irreparable harm to our reputation or otherwise have a material adverse effect on our business, financial condition and results of operations.
We are subject to laws governing data protection in the different jurisdictions in which we operate. The implementation of such data protection regimes is complex, and should we fail to fully comply, we may be subject to penalties that they may have an adverse effect on our business, financial condition and results of operations.
Many national and state laws govern the privacy and security of health information and other personal and private information. They often differ from each other in significant ways. For instance, the EU has adopted a comprehensive data protection law called the General Data Protection Regulation (“GDPR”) that took effect in May 2018. The GDPR, together with the national legislation of the EU member states governing the processing of personal data, impose strict obligations and restrictions on the ability to collect, analyze and transfer personal data, including health data from clinical trials and adverse event reporting. In particular, these obligations and restrictions concern the consent of the individuals to whom the personal data relates, the information provided to the individuals, the transfer of personal data out of the EU, security breach notifications, security and confidentiality of the personal data, and imposition of substantial potential fines for breaches of the data protection obligations. The GDPR imposes penalties for non-compliance of up to the greater of EUR 20 million or 4% of worldwide revenue. Data protection authorities from the different EU member states may interpret the GDPR and national laws differently and impose additional requirements, which add to the complexity of processing personal data in the EU. Guidance on implementation and compliance practices are often updated or otherwise revised. The significant costs of compliance with, risk of regulatory enforcement actions under, and other burdens imposed by the GDPR as well as under other regulatory schemes throughout the world related to privacy and security of health information and other personal and private data could have an adverse impact on our business, financial condition and results of operations.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We cannot eliminate the risk of contamination or injury from these materials. We also could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.
Although we maintain employer's liability insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.
In addition, we may incur substantial costs to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions that could have a material adverse effect on our business, financial condition and results of operations.
Product liability lawsuits could cause us to incur substantial liabilities and to limit commercialization of our therapies.
We face an inherent risk of product liability related to the testing of our product candidates in human clinical trials and in connection with product sales. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
| ● | decreased demand for any product candidates or products that we develop or sell; |
| ● | injury to our reputation and significant negative media attention; |
| ● | negative publicity or public opinion surrounding gene therapy; |
| ● | withdrawal of clinical trial participants; |
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| ● | significant costs to defend the related litigation; |
| ● | substantial monetary awards to trial participants or patients; |
| ● | loss of revenue; |
| ● | reduced resources of our management to pursue our business strategy; and |
| ● | the inability to further develop or commercialize any products that we develop. |
Dependent upon the country where the clinical trial is conducted, we currently hold coverages ranging from EUR 500,000 to EUR 6,500,000 per occurrence and per clinical trial. Such coverage may not be adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage as we expand our clinical trials. In addition, insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise. In the event insurance coverage is insufficient to cover liabilities that we may incur, it could have a material adverse effect on our business, financial condition and results of operations.
Healthcare legislative and regulatory reform measures may have a material adverse effect on our financial operations.
Our industry is highly regulated and changes in law may adversely impact our business, operations or financial results. The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or the PPACA, is a sweeping measure intended to, among other things, expand healthcare coverage within the United States, primarily through the imposition of health insurance mandates on employers and individuals and expansion of the Medicaid program. Several provisions of the law may affect us and increase certain of our costs.
In addition, other legislative changes have been adopted since the PPACA was enacted. These changes include aggregate reductions in Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013 and, following passage of the Bipartisan Budget Act of 2018, will remain in effect through 2027 unless additional Congressional action is taken. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several types of providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our customers and, accordingly, our financial operations.
We anticipate that the PPACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and an additional downward pressure on the reimbursement our customers may receive for our products. Further, there have been, and there may continue to be, judicial and Congressional challenges to certain aspects of the PPACA. For example, the U.S. Tax Cuts and Jobs Act of 2017 includes a provision repealing, effective January 1, 2019, the tax-based shared responsibility payment imposed by the Affordable Care Act on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the "individual mandate". Additional legislative and regulatory changes to the PPACA, its implementing regulations and guidance and its policies, remain possible in the 116th U.S. Congress and under the Trump Administration. However, it remains unclear how any new legislation or regulation might affect the prices we may obtain for any of our product candidates for which regulatory approval is obtained. Any reduction in reimbursement from Medicare and other government programs may result in a similar reduction in payments from private payers. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our products.
Our internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.
Our internal computer systems and those of our current and any future collaborators and other contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. The size and complexity of our information technology systems, and those of our collaborators, contractors and consultants, and the large amounts of confidential information stored on those systems, make such systems vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees, third-party vendors and/or business partners, or from cyber-attacks by malicious third parties. Cyber-attacks are increasing in their frequency, sophistication and intensity, and have become increasingly difficult to detect. Cyber-attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information. Cyber-attacks also could include phishing attempts or e-mail fraud to cause payments or information to be transmitted to an unintended recipient. The increased number of employees working remotely due to COVID-19 might increase our vulnerability to the above risk.
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While we have not experienced a system failure, accident, cyber-attack, or security breach that has resulted in a material interruption in our operations to date, we have experienced and addressed recent system failures, cyber-attacks and security breaches. In the future, such events could result in a material disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. Additionally, any such event that leads to unauthorized access, use or disclosure of personal information, including personal information regarding our patients or employees, could harm our reputation, cause us not to comply with federal and/or state breach notification laws and foreign law equivalents and otherwise subject us to liability under laws and regulations that protect the privacy and security of personal information. Security breaches and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above. While we have implemented security measures to protect our information technology systems and infrastructure, there can be no assurance that such measures will prevent service interruptions or security breaches that could adversely affect our business and the further development and commercialization of our product and product candidates could be delayed.
Risks Related to Employee Matters and Managing Growth
Our future success depends on our ability to retain key executives and technical staff and to attract, retain and motivate qualified personnel.
We are highly dependent on hiring, training, retaining and motivating key personnel to lead our research and development, clinical operations and manufacturing efforts. Although we have entered into employment agreements with our key personnel, each of them may terminate their employment on short notice. We do not maintain key person insurance for any of our senior management or employees.
The loss of the services of our key employees could impede the achievement of our research and development objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing senior management and key employees may be difficult and may take an extended period because of the limited number of individuals in our industry with the breadth and depth of skills and experience required to successfully develop gene therapy products. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms.
If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.
Risks Related to Our Ordinary Shares
The price of our ordinary shares has been and may in the future be volatile and fluctuate substantially.
Our share price has been and may in the future be volatile. From the start of trading of our ordinary shares on the Nasdaq Global Select Market on February 4, 2014 through October 22, 2020, the sale price of our ordinary shares ranged from a high of $82.49 to a low of $4.72. The closing price on October 22, 2020, was $41.26 per ordinary share. The stock market in general and the market for smaller biopharmaceutical companies in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. The market price for our ordinary shares may be influenced by many factors, including:
| ● | the success of competitive products or technologies; |
| ● | results of clinical trials of our product candidates or those of our competitors; |
| ● | public perception of gene therapy; |
| ● | regulatory delays and greater government regulation of potential products due to adverse events; |
| ● | regulatory or legal developments in the European Union, the United States and other countries; |
| ● | developments or disputes concerning patent applications, issued patents or other proprietary rights; |
| ● | the recruitment or departure of key personnel; |
| ● | the level of expenses related to any of our product candidates or clinical development programs; |
| ● | the results of our efforts to discover, develop, acquire or in-license additional product candidates or products; |
| ● | actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; |
| ● | variations in our financial results or those of companies that are perceived to be similar to us; |
| ● | changes in the structure of healthcare payment systems; |
| ● | market conditions in the pharmaceutical and biotechnology sectors; |
| ● | mergers, acquisitions, licensing and collaboration activity among our peer companies in the pharmaceutical and biotechnology sectors; and |
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| ● | general economic, industry and market conditions. |
An active trading market for our ordinary shares may not be sustained.
Although our ordinary shares are listed on the Nasdaq Global Select Market, an active trading market for our shares may not be sustained. If an active market for our ordinary shares does not continue, it may be difficult for our shareholders to sell their shares without depressing the market price for the shares or sell their shares at all. Any inactive trading market for our ordinary shares may also impair our ability to raise capital to continue to fund our operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.
Our directors, executive officers and major shareholders, if they choose to act together, will continue to have a significant degree of control with respect to matters submitted to shareholders for approval.
Our directors, executive officers and major shareholders holding more than 5% of our outstanding ordinary shares, in the aggregate, beneficially own approximately 45.5% of our issued shares (including such shares to be issued in relation to exercisable options to purchase ordinary shares) as at September 30, 2020. As a result, if these shareholders were to choose to act together, they may be able, as a practical matter, to control many matters submitted to our shareholders for approval, as well as our management and affairs. For example, these persons, if they choose to act together, could control the election of the board directors and the approval of any merger, consolidation or sale of all or substantially all our assets. These shareholders may have interests that differ from those of other of our shareholders and conflicts of interest may arise.
Provisions of our articles of association or Dutch corporate law might deter acquisition bids for us that might be considered favorable and prevent or frustrate any attempt to replace our board.
Certain provisions of our articles of association may make it more difficult for a third party to acquire control of us or effect a change in our board. These provisions include:
| ● | staggered terms of our directors; |
| ● | a provision that our directors may only be removed at a general meeting of shareholders by a two-thirds majority of votes cast representing more than half of the issued share capital of the Company; and |
| ● | a requirement that certain matters, including an amendment of our articles of association, may only be brought to our shareholders for a vote upon a proposal by our board. |
We do not expect to pay dividends in the foreseeable future.
We have not paid any dividends since our incorporation. Even if future operations lead to significant levels of distributable profits, we currently intend that earnings, if any, will be reinvested in our business and that dividends will not be paid until we have an established revenue stream to support continuing dividends. Accordingly, shareholders cannot rely on dividend income from our ordinary shares and any returns on an investment in our ordinary shares will likely depend entirely upon any future appreciation in the price of our ordinary shares.
If we fail to maintain an effective system of internal controls, we may be unable to accurately report our results of operations or prevent fraud or fail to meet our reporting obligations, and investor confidence and the market price of our ordinary shares may be materially and adversely affected.
If we fail to maintain the adequacy of our internal control over financial reporting, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting. If we fail to maintain effective internal control over financial reporting, we could experience material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our ordinary shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from The Nasdaq Global Select Market, regulatory investigations and civil or criminal sanctions. Our reporting and compliance obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future.
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Unfavorable global economic conditions, including those caused by political instability in the United States or by the U.K.’s recent departure from the European Union (“Brexit”), could adversely affect our business, financial condition or results of operations.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. Political instability in the United States and surrounding Brexit has the potential to disrupt global economic conditions and supply changes. While we do not believe that our operations will be directly adversely affected materially by Brexit, we may not be able to anticipate the effects Brexit will have on our suppliers and any collaborators. The most recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets.
A severe or prolonged economic downturn, such as the most recent global financial crisis, could result in a variety of risks to our business, including weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could strain our suppliers, possibly resulting in supply disruption, or cause delays in payments for our services by third-party payers or our collaborators. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
Risks for U.S. Holders
We have in the past qualified and in the future may qualify as a passive foreign investment company, which may result in adverse U.S. federal income tax consequence to U.S. holders.
Based on our average value of our gross assets, our cash and cash equivalents as well as the price of our shares we qualified as a passive foreign investment company (“PFIC”) for U.S. federal income tax for 2016 but not in 2017, 2018 or 2019. A corporation organized outside the United States generally will be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which at least 75% of its gross income is passive income or on average at least 50% of the gross value of its assets is attributable to assets that produce passive income or are held to produce passive income. Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. Our status in any taxable year will depend on our assets and activities in each year, and because this is a factual determination made annually after the end of each taxable year, there can be no assurance that we will continue to qualify as a PFIC in future taxable years. The market value of our assets may be determined in large part by reference to the market price of our ordinary shares, which is likely to fluctuate, and may fluctuate considerably given that market prices of biotechnology companies have been especially volatile. If we were considered a PFIC for the current taxable year or any future taxable year, a U.S. holder would be required to file annual information returns for such year, whether the U.S. holder disposed of any ordinary shares or received any distributions in respect of ordinary shares during such year. In certain circumstances a U.S. holder may be able to make certain tax elections that would lessen the adverse impact of PFIC status; however, in order to make such elections the U.S. holder will usually have to have been provided information about the company by us, and we do not intend to provide such information.
The U.S. federal income tax rules relating to PFICs are complex. U.S. holders are urged to consult their tax advisors with respect to the purchase, ownership and disposition of our shares, the possible implications to them of us being treated as a PFIC (including the availability of applicable election, whether making any such election would be advisable in their particular circumstances) as well as the federal, state, local and foreign tax considerations applicable to such holders in connection with the purchase, ownership and disposition of our shares.
Any U.S. or other foreign judgments may be difficult to enforce against us in the Netherlands.
Although we now report as a U.S. domestic filer for SEC reporting purposes, we are incorporated under the laws of the Netherlands. Some of the members of our board and senior management reside outside the United States. As a result, it may not be possible for shareholders to effect service of process within the United States upon such persons or to enforce judgments against them or us in U.S. courts, including judgments predicated upon the civil liability provisions of the federal securities laws of the United States. In addition, it is not clear whether a Dutch court would impose civil liability on us or any of our Board members in an original action based solely upon the federal securities laws of the United States brought in a court of competent jurisdiction in the Netherlands.
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The United States and the Netherlands currently do not have a treaty providing for the reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether or not predicated solely upon U.S. securities laws, would not automatically be recognized or enforceable in the Netherlands. To obtain a judgment which is enforceable in the Netherlands, the party in whose favor a final and conclusive judgment of the U.S. court has been rendered will be required to file its claim with a court of competent jurisdiction in the Netherlands. Such party may submit to the Dutch court the final judgment rendered by the U.S. court. If and to the extent that the Dutch court finds that the jurisdiction of the U.S. court has been based on grounds which are internationally acceptable and that proper legal procedures have been observed, the Dutch court will, in principle, give binding effect to the judgment of the U.S. court, unless such judgment contravenes principles of public policy of the Netherlands. Dutch courts may deny the recognition and enforcement of punitive damages or other awards. Moreover, a Dutch court may reduce the amount of damages granted by a U.S. court and recognize damages only to the extent that they are necessary to compensate actual losses or damages. Enforcement and recognition of judgments of U.S. courts in the Netherlands are solely governed by the provisions of the Dutch Civil Procedure Code.
Therefore U.S. shareholders may not be able to enforce against us or our board members or senior management who are residents of the Netherlands or countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws.
The rights and responsibilities of our shareholders and directors are governed by Dutch law and differ in some important respects from the rights and responsibilities of shareholders under U.S. law.
Although we now report as a U.S. domestic filer for SEC purposes, our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in the Netherlands. The rights of our shareholders and the responsibilities of members of our board under Dutch law are different than under the laws of some U.S. jurisdictions. In the performance of their duties, our board members are required by Dutch law to consider the interests of uniQure, its shareholders, its employees and other stakeholders and not only those of our shareholders (as would be required under the law of most U.S. jurisdictions). As a result of these considerations our directors may take action that would be different than those that would be taken by a company organized under the law of some U.S. jurisdictions.
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Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
None.
Item 6.Exhibits
See the Exhibit Index immediately preceding the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.
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EXHIBIT INDEX
10.2* Separation agreement, executed August 25, 2020, by and between uniQure Inc. and Robert Gut
31.1* Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2* Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1± Section 1350 Certification
101* The following financial information from our Quarterly Report on Form 10-Q for the period ended September 30, 2020, filed with the Securities and Exchange Commission on October 27, 2020, is formatted in Inline Extensible Business Reporting Language (“iXBRL”): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations and Comprehensive Loss; (iii) Consolidated Statements of Shareholders’ Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements (tagged as blocks of text)
104* The cover page from our Quarterly Report on Form 10-Q for the period ended September 30, 2020, filed with the Securities and Exchange Commission on October 27, 2020, is formatted in Inline Extensible Business Reporting Language (“iXBRL”)
† Portions of this exhibit (indicated by asterisks) have been omitted in accordance with the rules of the Securities and Exchange Commission.
* Filed herewith.
± Furnished herewith.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
UNIQURE, N.V. |
By: /s/ Matthew Kapusta Matthew Kapusta Chief Executive Officer (Principal Executive and Financial Officer) |
By: /s/ Christian Klemt Christian Klemt Chief Accounting Officer |
Dated October 27, 2020
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Exhibit 10.1
RESIGNATION AND SEPARATION AGREEMENT
THE UNDERSIGNED PARTIES:
uniQure biopharma B.V., a company with limited liability, having its registered office and principal place of business in Amsterdam duly represented in this matter by J.L. Burggraaf hereinafter referred to as “Employer”,
and
Dr. Sander J. van Deventer, hereinafter referred to as “Employee”,
Hereinafter jointly referred to as “Parties”;
WHEREAS:
The Employee has been employed by the Employer since 7 August 2017, most recently on the basis of an open-end employment contract dated 20 August 2019 (the “Employment Contract”) in the position of Executive Vice President, Research and Product Development. The Employee’s most recently earned salary is €29,435 gross per month, including holiday allowance and other emoluments;
a) The Employee has informed the Employer about his intention to resign immediately in order to pursue other opportunities;
b) The Employee has been on a leave of absence effective on or about July 27, 2020;
c) The Employer desires to retain Employee for an additional period to allow for the orderly transition of the Employee’s duties and of related functions of the organization for which Employee currently has responsibility; and
d) The Employee and Employer have agreed to the arrangements provided below to facilitate an orderly transition and to terminate the Employment Contract, which arrangements they wish to lay down as follows in this agreement (hereinafter referred to as the “Agreement”), which they intend to constitute their entire settlement;
DECLARE THAT THEY HAVE AGREED AS FOLLOWS:
1. The Effective Date of this Agreement is August 25, 2020.
2. The Employment Contract will end due to the resignation of the Employee on September 14, 2020 (hereinafter referred to as the “Termination Date”) without requiring any further legal act by either Party.
3. The Employer will pay the Employee a gross employment termination payment equal to the Severance Pay as defined in Sections 2.4.1 and 2.4.3 of the Employment Contract (i.e., € 588.700) to compensate for the Employee’s loss of wages and/or to supplement benefits paid pursuant to social security legislation (hereinafter referred to as the “Employment Termination Payment”).
4. The Employer will transfer the Employment Termination Payment to the Employee’s bank account as currently known to the Employer no later than four weeks after the Termination Date.
5. As of the Effective Date, the Employee will not be performing his role as, and will not have the title of, Executive Vice President, Research and Product Development, and instead agrees to have the title and role of, Scientific Advisor during the organizational transition prior to the Termination Date.
6. Until the Termination Date, the Employee will receive the usual gross monthly salary of €29.435,00. All other terms of employment will remain in full force and effect until the Termination Date unless the Parties stipulate otherwise in this Agreement.
7. At the Employee’s written request, the Employment Contract may be terminated before the Termination Date (hereinafter referred to as the “Earlier Termination Date”) for purposes of pursuing a bone fide employment opportunity. Upon such written request, the Employee will not be obliged to observe the notice period, and all references to “Termination Date” in this Agreement will be construed as reading “Earlier Termination Date”.
8. The Employer, in its sole discretion subject to applicable law, may choose to put the Employee on garden leave at any time on or after the Effective Date and prior to the Termination Date. Garden leave will be considered equal to continuation of employment at the current Pro-rata Base Salary, and the Employee will continue his working duties as a Scientific Advisor to the Employer.
9. By signing this Agreement and as of the Effective Date, the Employee resigns his position and steps down as director of the Employer, the Employer’s affiliates and all other companies where he was appointed as a director as part of his Employment Contract with the Employer. As soon as possible thereafter and with immediate effect, the Employee’s entry as director of the Employer and the Employer’s affiliates will be removed from the records of the Commercial Register of the Chamber of Commerce. The Employee will cooperate with said deregistration.
10. The Employer will advise the competent body to discharge the Employee from liability for the policies pursued and management conducted by the Employee until that time at the next meeting. The competent body will only be able to adopt that resolution if it is established that no facts or circumstances exist that render it impossible to grant the Employee discharge from liability. At the time of signing this Agreement, each of the Employer and the Employee is not aware of any facts and/or circumstances that render it impossible to grant the Employee discharge from liability. Upon request, the Employee will be given a copy of the relevant minutes.
11. The equity agreements concluded between Employer and Employee pursuant to the uniQure N.V. 2014 Share Incentive Plan as amended (hereinafter referred to as the “Equity Plan”) will
remain in full force and effect per their terms and are not altered by the terms of this Agreement, except as expressly provided in this paragraph, namely:
11.1 Pursuant to this Agreement, all grants of equity will continue to vest until the Termination Date, at which time all such grants of equity shall cease to vest (excepting the grants of Performance Share Units (hereinafter referred to as “PSUs”) addressed in item (iii) below);
11.2 Any unvested shares of the three grants of options to purchase ordinary shares of uniQure N.V. dated on or about 20 September 2017, 26 January 2018, and 26 January 2019 respectively will accelerate and be fully vested as of the Termination Date; and
11.3 The PSUs that have been earned as of the Termination Date (i.e., the PSUs dated on or about 26 January 2018 and 26 January 2019 respectively), will vest according to their terms (i.e., three years following the grant date subject to the terms and conditions of the respective equity grants).
12. This Agreement, including, without limitation, all provisions related to grants of equity pursuant the Equity Plan, is subject to the approval of the Board of Directors of uniQure N.V. (the “Board”). This Agreement shall be void if not approved by the Board within thirty (30) days of the Effective Date unless another date is mutually agreed to in writing by the Parties.
13. Within four weeks of the Termination Date the Employer will draw up a regular final settlement. Holiday and other leave entitlement will be deemed to have been taken at the Termination Date. The Employee hereby expressly waives any compensation for holiday and other leave entitlement that he has accrued but not taken. Employee shall be allowed to take any remaining holiday and other leave entitlement during the period from the Effective Date to the Termination date, and Employee shall coordinate such leave with Employer’s human resources department. Periods during which the employee is consuming his holiday and other leave shall not be considered garden leave.
14. Apart from the foregoing, the Employer will not owe the Employee any other compensation, in any form or for any reason whatsoever, irrespective of the provisions of the Employment Contract and/or any applicable collective bargaining agreement (“CAO”), unless this Agreement expressly provides otherwise. The Employee is no longer entitled to any amounts in bonuses, commissions, profit-sharing and/or variable remuneration (in any form or for any year whatsoever).
15. The Employee acknowledges that he is not entitled to any transitional compensation within the meaning of Section 673 of Book 7 of the Dutch Civil Code. If and in so far as necessary, the Parties agree that any transitional compensation is included in the Employment Termination Payment.
16. RESERVED.
17. The Employee will return all items that are in his possession by virtue of his Employment Contract, including any computers, computer equipment, mobile telephone, keys, and cards.
Pursuant to Clause 11 of the Employment Contract, the Employee will return all documents, correspondence, other information carriers, copies thereof, and other data or information of Employer. All items will be returned in clean and good condition to the Employer by the Termination Date.
18. Non-Competition and Restrictive Clauses. Clause 10 (confidentiality obligation) of the Employment Contract will continue to apply according to its terms after the Termination Date. Clause 13 (non-compete and business relationship clause) and Clause 16 (penalty clause) of the Employment Contract are replaced with this Section 18.
18.1 Permitted Activities. The provisions of Clauses 18.2 through 18.4 shall not apply in the following limited circumstances provided in this Section 18.1 (the “Permitted Activities”), provided that Employee is otherwise in full compliance with the terms of Clauses 18 and 19:
18.1.1 Employee shall be allowed to act as an Operating Partner at Forbion, including conceptualizing, searching, sourcing, evaluating and working on deal flow for Forbion Fund IV, Forbion Fund V, Forbion Growth Opportunities Fund I, and BioGeneration Ventures IV and any other new Forbion or BGV Fund.
18.1.2 Employee shall be allowed to act in the capacity as an employee, director, advisor or consultant at Oxitope Pharma B.V. on the research and development of antibodies for oxidized phospholipids for inflammation, including for the development of a gene therapy format for certain Oxitope antibodies and dyslipidemia-related complications such as NASH and vascular dementias.
18.1.3 Employee shall be allowed to act in the capacity as an employee, director, advisor or consultant at Dyne Therapeutics (https://www.dyne-tx.com/) on the research and development of anti-sense and gene-skipping technologies for Duchenne, DMD and other muscle diseases based on antibody-DNA conjugates.
18.1.4 Employee shall be allowed to serve on the Scientific Advisory Boards of Forbion’s portfolio companies Engene Inc. (advising on the research and development of gene therapies for diseases of the digestive system, lungs and bladder) and Hookipa Pharma Inc. (advising on the research and development of arena virus gene vector-based vaccines and treatments of immunotherapeutics, targeting infectious diseases and cancers).
18.1.5 In addition to the activities described in Clauses 18.1.1 through 18.1.4, Employee shall be allowed to act in the capacity of an employee, director, advisor or consultant for any company engaged in the research, development and other business activities in the Additional Permitted Fields (as defined below), including the research and development of gene therapies in such fields (more specifically including but not limited to such gene therapies targeting the central nervous system, liver or using Adeno Associated Virus Serotype 5 (AAV5)), provided that Employee provides advance written notice to Employer of any work in such Additional Permitted Fields (consisting of a notice of the name of the company, the date such work is to commence and the scope of the field the Employee will be working in). Additional Permitted
Fields means the fields of: dyslipidemia (excluding ANGPTL3); oxidized phospholipids; and any additional targets or indications that may be added pursuant to the following provisions of this Section 18.1.5. Employee shall be allowed to add additional targets or indications to the list of Additional Permitted Fields upon written notice (including email to legalnotices@uniqure.com) to Employer and Employer’s written acknowledgement within two weeks of receipt of such notice that such additional target or indication was not an area being evaluated, researched or developed by Employer or its affiliates: (i) in the case of a program or project involving AAV5, during the period from Employee’s date of hire through the date of the written notice of such additional target or indication; and (ii) in the case of all other programs or projects, during the period from Employee’s date of hire through the Termination Date. In the event the acknowledgement in the foregoing sense cannot be given, the Employer shall provide the Employee with sufficient documentation in order for the Employee to be able to properly verify that such additional target or indication was indeed an area being evaluated, researched or developed by Employer or its affiliates during the applicable period. (For clarification, the requirement that Employee provide notice to Employer of work in Additional Permitted Fields shall only apply during the Non-Competition Period, which expires August 31, 2021.)
18.1.6 Notwithstanding the above, Employee acknowledges that he shall not at any time be allowed to be engaged in any activity involving the use of proprietary technologies of Employer or its affiliates as evidenced in writing (by electronic or other documents), including, without limitation, miQURE technology, Synpromics promoters, uniQure’s Dual Bac technology, uniQure’s insect cell rep patents and technology, and uniQure’s proprietary technology built on AAV5 technology.
18.2 Non-Competition. Except as provided in Clause 18.1, during the period beginning on execution of this Agreement and extending through August 31, 2021 (the “Non-Competition Period), without the prior written consent of the Employer (which will not be unreasonably withheld), the Employee shall not be engaged or involved or have any share in any manner whatsoever, directly or indirectly, whether on his own behalf or for third parties (including, without limitation, in any role (paid or unpaid) as an employee, director, advisor, or consultant), in any enterprise competing with that of the Employer and/or the Employer’s affiliates (including, the fields of gene therapies targeting the central nervous system, gene therapies targeting the liver, and gene therapies using Adeno-Associated Virus Serotype 5 (aka AAV5)), nor act, in any manner whatsoever, directly or indirectly, whether on his own behalf or for third parties, as an intermediary in relation to such activities.
18.3 Except as provided in Clause 18.1, for the Non-Competition Period, without the prior written consent of the Employer (which will not be unreasonably withheld), the Employee shall not perform or have performed professional services in connection with any product or research or development or commercialization that competes with products, or research or development or commercialization of Employer (“Employer’s Activities”), directly or indirectly, (including, in the fields of gene therapies targeting the central nervous system, gene therapies targeting the liver, and gene therapies using Adeno-Associated Virus Serotype 5 (aka AAV5)) whether on his own behalf or for third parties, provided the Employer’s Activities have been started prior to the Termination Date.
18.4 RESERVED.
18.5 Non-Solicitation of uniQure Employees. Both during the term of the Agreement and during the Non-Competition Period, without the prior written consent of the Employer (which will not be unreasonably withheld), the Employee shall refrain, from becoming engaged or involved in any manner whatsoever, directly or indirectly, whether on his own behalf or for third parties, in actively enticing away, taking (or causing to have taken) into employment, nor make use of, in any manner whatsoever, directly or indirectly, whether on his own behalf or for third parties, the work of employees or persons who in a period beginning one year prior to the Termination Date and extending through the Non-Competition Period are or have been in the employment of the Employer and/or the Employer’s affiliates (“uniQure Employees”, each a “uniQure Employee”). Employee shall make any company or other third party he works for as an employee, consultant, or advisor aware of his obligations pursuant to this Clause 18. Notwithstanding the provisions of Section 18.1, it shall not be a “Permitted Activity” for Employee to work as (or continue to work as) an employee, consultant or advisor for any company or other third party that, during the Non-Competition Period, takes into employment, or makes use of, in any manner whatsoever, directly or indirectly, the work of a uniQure Employee. In the case of a large pharmaceutical company having multiple divisions or a university of higher education, the hiring of a uniQure Employee for a project or division unrelated to the services being performed by Employee will not affect the status of any otherwise “Permitted Activity”.
18.6 Employee acknowledges and agrees to adhere to this clause as the Employer has a serious business interest in binding the Employee to the non-competition and business relationship clause, due to the fact that (i) within the organization of the Employer competition-sensitive information as well as confidential information related to the Employer, such as but not limited to products, or research or development or commercialization of Employer (“Sensitive Business Information”) are available and (ii) in the position of Executive Vice President, Research and Product Development the Employee has had access to this Sensitive Business Information and may have continued access to such Sensitive Business Information and/or has maintained contacts with partners, suppliers, competitors etc. Given the aforesaid considerations (i) and (ii) in this clause, combined with the education and capacities of the Employee, the Employer has a well-founded fear that its business interest will be harmed substantially if the Employee performs competing activities as set forth in Clause 18 during the Non-Competition Period.
18.7 Penalty Clause. In the event the Employee acts in violation of any of the obligations under the articles 18 through 19 of this Agreement or Article 10 of the Employment Agreement (Confidentiality), the Employee shall (upon written objective substantiation of such violation), contrary to section 7:650 paragraphs 3, 4 and 5 Dutch Civil Code, without notice of default being required, forfeit to the Employer for each such violation, a penalty in the maximum amount of EUR 10.000,00 comprising of as well as a penalty of EUR 1.000,00 for each day such violation has taken place and continues. Alternatively, the Employer will be entitled to claim full damages. Employee acknowledges that certain economic benefits beyond the severance provisions of his Employment Agreement have been provided in this Agreement (including, the acceleration of certain equity grants), and the value of such additional benefits would be included as part of any claim for full damages.
19. Employee agrees, to the extent permitted by law, that he will not, at any time after the Effective Date hereof, make any negative announcements, remarks or comments, orally or in writing that reasonably could be construed to be derogatory or disparaging to the Employer or its affiliates (collectively, the “Company”) or any of shareholders, officers, directors, employees, attorneys or agents, of the Company, or which reasonably could be anticipated to be damaging or injurious to the Company’s reputation or good will or to the reputation or good will of any person associated with the Company. Notwithstanding the above, your non-disparagement obligation shall not prohibit you from testifying truthfully in any legal proceeding or as otherwise required by law.
20. As of the Termination Date, Employee releases and forever discharges the Employer and its affiliates and each of their directors, officers and employees from each and every claim in law or equity that Employee may have had, or may have, that has arisen directly or indirectly out of, or that relates directly or indirectly to, any circumstance, agreement, activity, action, omission, event or matter occurring or existing prior to the Termination Date.
21. The Parties will release an internal and external notification announcing the termination of the Employment Contract of the Employee. The external announcement is targeted to be released within one week of the Effective Date but will be determined between Parties. The content of the external communication will be coordinated between Employee and Employer’s Investor Relations department. The internal announcement will be made shortly prior to the external announcement on a date and time to be determined by Employer. Prior to the internal announcement, Employee will not discuss his (potential) departure with the staff. The (content of the) internal announcement will be coordinated between Employee and the Employer’s Human Resources department. Notwithstanding the forgoing, Employer may make any public disclosure, including disclosure of the Agreement, that is reasonably required by law.
22. If any of the Employee’s social media profiles state that he works for the Employer, no later than on the Termination Date the Employee must ensure that those references are updated to reflect the actual situation, either by removing the reference or by stating the date on which his or her employment ended.
23. The Parties will observe strict confidentiality in respect of third parties regarding both the formation and the substance of this Agreement unless the law orders or reasonably requires either Party to disclose this Agreement or parts thereof.
24. The Parties waive their rights to rescind this Agreement. In the event that a court holds any provision of this Agreement to be void or otherwise non-binding, the remaining provisions of this Agreement will remain in full force and effect.
25. With the exception of the obligations arising from this Agreement, the Employee and the Employer, including its affiliated legal entities, employees and directors, grant each other full and final discharge from liability regarding all claims arising from the Employment Contract, its termination or the CAO (where applicable) or for whatever other reason.
26. By signing this Agreement, the Employee expressly declares that (a) he has a proper and full understanding of the substance and consequences of this Agreement, (b) he agrees to the substance and consequences of this Agreement, (c) he has been given the opportunity to seek assistance or advice from a legal advisor, and (d) he has not concealed any facts and/or circumstances of which he should reasonably be aware that they could have affected this Agreement.
27. Since the Employee resigns and this Agreement is solely meant to lay down the consequences of this resignation for the period until the Termination Date and the period thereafter as well as the fact that the Employee intends to start in a new position with another employer, the Parties are of the opinion that this Agreement does not qualify as an early retirement scheme (RVU).
28. This Agreement is a settlement agreement within the meaning of Section 900 of Book 7 of the Dutch Civil Code. Therefore, Sections 900 up to and including 906 of Book 7 of the Dutch Civil Code apply to this Agreement.
29. This Agreement is governed by Dutch law. The Dutch courts have jurisdiction to hear any disputes ensuing from it.
Agreed and signed in duplicate,
Signed for approval: | | Signed for approval: |
| | |
| | |
/s/J. L. Burggraaf | | /s/ S.J.H. van Deventer |
On behalf of uniQure biopharma B.V. | | Employee |
J.L. Burggraaf | | S.J.H. van Deventer |
| | |
Date: August 25, 2020 | | Date: August 25, 2020 |
City: Amsterdam | | City: Amsterdam |
Signed for Release of Claims on the Termination Date:
| |
/s/ S.J.H. van Deventer | |
Employee | |
Date: September 14, 2020 | |
City: Amsterdam | |
Exhibit 10.2
August 25, 2020
Robert Gut
Re: | Separation from Employment |
Dear Robert,
As we have discussed, the purpose of this letter agreement (“Agreement”) is to set forth our mutual understanding and agreement concerning the terms and conditions of your separation from employment with uniQure, Inc. (the “Company”), which generally are described in the Employment Agreement between you and the Company dated March 1, 2020 (the “Employment Agreement”). In consideration of the mutual promises set forth below, we have agreed as follows:
1. Separation from Employment.
a. As of the thirtieth (30th) day following the commencement of the employment of the Company’s President, Research & Development (your “Separation Date”), you hereby resign, and your separation from employment shall be effective as of the Separation Date (your “Separation Date”). You also resign your position as an executive director of uniQure N.V. effective as of your Separation Date. You relinquish as of the Separation Date any and all positions that you have held with the Company, and you will not be considered an employee or director of the Company or any of its affiliates for any purpose after that date. If the employment of the Company’s President, Research & Development has not commenced by October 31, 2020, this Agreement shall be null and void.
b. During the period from the execution of this Agreement through the Separation Date, you shall continue in your current role with your current duties, but you may be assigned additional or different duties by the Chief Executive Officer or his designee to assist with and effect a transition of the organization.
c. The Parties expect that, following your resignation as an executive director of uniQure N.V., the Board of Directors of uniQure N.V. (the “Board”) will nominate you for appointment as a non-executive director of uniQure N.V. at an extraordinary meeting of shareholders, but the Parties acknowledge that such a nomination is solely at the discretion of the Board and is not a promise, obligation, or inducement of this Agreement.
d. You and the Company will develop an internal and external communication plan that is reasonable in the circumstances and mutually agreeable to the Parties.
Robert Gut
Separation Agreement
Page 2
2. Final Compensation. Regardless of whether you accept this Agreement, on your Separation Date, the Company shall provide you with your Accrued Benefits, as that term is defined in the Employment Agreement. Specifically, the Company shall provide you with final payment of base salary due for time worked through the Separation Date as well as payment for any accrued but unused vacation time. You agree that such payment represents all compensation to which you are entitled in connection with your employment. Any additional requests by you for reimbursement of business expenses must be submitted for payment using the Company’s standard expense reimbursement system no later than the Separation Date.
3. Separation Payment. Subject to: (i) the Company’s receipt of this Agreement signed by you; (ii) your full acceptance of the terms of, and full performance under, this Agreement (including, without limitation, your acceptance of the general release of legal claims contained in Paragraph 9 below (the "General Release")); (iii) your satisfactory performance of the responsibilities and duties of your position with the Company up through your Separation Date, and (iv) the expiration of the seven (7) day revocation period contained in Paragraph 11 below (the "Revocation Period") without revocation):
a. the Company agrees to pay you with a lump sum severance payment equal to Six Hundred Ninteen Thousand Five Hundred Forty-Nine dollars ($619,549) (i.e., 140% of your annual base salary of base annual salary of Four Hundred Forty-Two Thousand Five Hundred Thirty-Five dollars ($442,535)) less all applicable federal, state and local taxes and other withholdings.
b. the Company further agrees to pay you a Pro-rata Bonus calculated as the product of the formula B x (D/365), where B represents Forty percent (40%) of your annual base salary of Four Hundred Forty-Two Thousand Five Hundred Thirty-Five dollars ($442,535), and D represents the number of days from January 1, 2020 through the Separation Date.
c. The lump sum severance payment of Section 3(a) and the Pro-rata Bonus of Section 3(b) are collectively referred to as the (the "Separation Payment"). The Separation Payment will be made to you no later than thirty (30) days following the date you sign and deliver this Agreement to the Company and after the Revocation Period has expired without any notice of revocation by you.
d. Provided that you and your eligible dependents, if any, are participating in the Company’s group health, dental and vision plans on the termination date and elect on a timely basis to continue that participation in some or all of the offered plans through the federal law commonly known as “COBRA,” the Company will pay or reimburse you for your full COBRA premiums (i.e., employer and employee portion) until the earlier to occur of: (a) twelve (12) months from the Separation Date, (b) the date you become eligible to enroll in the health, dental and/or vision plans of another employer, (c) the date you (and/or your eligible dependents, as applicable) are no longer eligible for COBRA coverage, or (d) the Company in good
Robert Gut
Separation Agreement
Page 3
faith determines that payments under this paragraph would result in a discriminatory health plan pursuant to the Patient Protection and Affordable Care Act of 2010, as amended, and any guidance or regulations promulgated thereunder (collectively, “PPACA”). You agree to notify the Company promptly if you become eligible to enroll in the plans of another employer or if you or any of your dependents cease to be eligible to continue participation in the Company’s plans through COBRA.
4. Tax Provision. In connection with the Separation Payment provided to you pursuant to this Agreement, the Company shall withhold and remit to the tax authorities the amounts required under applicable law, and you shall be responsible for all applicable taxes with respect to such Separation Payment under applicable law. The Company does not guarantee any particular tax effect for any of the payments or other consideration set forth in this Agreement, and you shall be solely responsible and liable for the satisfaction of all taxes, penalties and interest that may be imposed on you or for your account in connection with the Agreement (including any taxes, penalties and interest under IRC Section 409A), and the Company shall not have any obligation to indemnify or otherwise hold you (or any beneficiary) harmless from any or all of such taxes, penalties or interest. You acknowledge that you are not relying upon advice or representation of the Company with respect to the tax treatment of any of the separation benefits set forth in this Agreement.
5. Health Insurance Continuation. Regardless of whether you accept this Agreement, you will remain on the Company’s insured health plan at the level(s) you are currently enrolled through October 31, 2020. Notice of your rights and obligations concerning continuation of coverage shall be sent to you under separate cover in accordance with applicable law.
6. Status of Employee Benefits and Stock Options. Except as otherwise expressly provided in Section 5 of this Agreement, your participation in all employee benefit plans of the Company shall end as of your Separation Date in accordance with the terms of those plans. Information will be provided on terminating participation in all plans, including either maintaining your existing 401k account, or rolling it over to another provider. The Company confirms that you will have vested Stock Options, Performance Share Units (“PSUs”), and Restricted Share Units (“RSU’s”) as of your Separation Date pursuant to the terms of your grants. Stock Options may be exercised pursuant to the terms and conditions of your Share Option Agreements and the Company’s Amended and Restated 2014 Share Incentive Plan. You will not be eligible to participate in the Company Employee Stock Purchase Plan (“ESPP”) for any current or future offering period. For any any such offering period, the Company will refund any payroll contributions that you may have made pursuant to the ESPP, and no stock will be purchased on your behalf. This Agreement does not grant or promise to grant any equity, and, except where expressly provided, does not modify the terms of any prior grant of equity or modify the terms of any agreement signed pursuant to a grant of equity. The terms of the grants of equity and agreements signed pursuant to grants of equity shall control in case of conflict with this Agreement.
Robert Gut
Separation Agreement
Page 4
7. Confidentiality. As a material inducement to the Company to enter into this Agreement, you agree to keep any non-public aspects of this Agreement (including any negotiations or discussions related hereto)(“Agreement-Related Information”), in complete confidence. Except as you may be required by local, state or federal law or regulation or by compulsory process of law, and provided that in case of such requirement you shall immediately, unless precluded by law, notify the Company of such requirement in writing, you agree that neither you nor any person acting by, through, under, or in concert with you will, at any time, disclose Agreement-Related Information, except for disclosures: (i) to an attorney of your choice who may be advising you in connection with this Agreement; (ii) to your accountant or tax preparer; or (iii) to your immediate family, provided that all such persons to whom you disclose such information are first advised by you prior to such disclosure of the confidential nature of the information and your obligations under this Agreement, and further provided that the subsequent disclosure by any such persons of the amount of this settlement or the terms of this Agreement will be treated as if you had made such disclosure; and (iv) and, in any event, you shall at no time disclose Agreement-Related Information to any current or former employee of the Company.
8. Non-Disparagement/Cooperation. You agree, to the extent permitted by law, that you will not, at any time after the date hereof, make any remarks or comments, orally or in writing, to any customer, potential customer, partner, supplier, employee, shareholder, potential investor, or any other person, which or who have, or could reasonably be anticipated to have, business dealings with the Company, which remarks or comments reasonably could be construed to be derogatory or disparaging to the Company or any of its shareholders, officers, directors, employees, attorneys or agents, or which reasonably could be anticipated to be damaging or injurious to the Company’s reputation or good will or to the reputation or good will of any person associated with the Company. Notwithstanding the above, your non-disparagement obligation shall not prohibit you from testifying truthfully in any legal proceeding.
9. General Release.
(a) You hereby irrevocably and unconditionally release, acquit and forever discharge the Company, its parent entities and corporations, subsidiaries (whether wholly or partially owned), divisions, affiliates, predecessors, successors and assigns, and its and their respective current and former partners, owners, agents, directors, officers, fiduciaries, employees, supervisors, managers, representatives, attorneys, insurers and reinsurers, and all persons and entities acting by, through, under or in concert with the Company or any of the aforementioned entities or individuals, in their personal and professional capacities (collectively the "Releasees"), from any and all claims, demands, and causes of action of whatever kind or nature, including without limitation, all claims, demands, and causes of action arising from your employment or separation from employment with the Company, that you or your
Robert Gut
Separation Agreement
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heirs, executors, administrators, successors or assigns have, may have, or have at any time had, prior to the date you sign this Agreement against the Releasees, or any of them, whether arising under tort, contract, or other law and whether arising under state, federal, or other law including, but not limited to, Title VII of the Civil Rights Act of 1964 and as amended by the Civil Rights Act of 1991, 42 U.S.C. §§ 2000e, et seq.; the Americans with Disabilities Act, 42 U.S.C. §§ 12101, et seq, as amended; the Age Discrimination in Employment Act (including, without limitation, the Older Workers' Benefit Protection Act), 29 U.S.C. §§ 623, et seq.; the National Labor Relations Act, as amended, 29 U.S.C., § 151 et seq.; the Occupational Safety and Health Act, as amended; the Immigration Reform Control Act, as amended; § 503 of the Rehabilitation Act of 1973, 29 U.S.C. §§ 701, et seq.; the Civil Rights Act of 1866, 42 U.S.C. § 1981; except as otherwise provided herein the Consolidated Omnibus Budget Reconciliation Act of 1985, 42 U.S.C. § 1395(c); Executive Order 11246; the Employee Retirement Income Security Act, 29 U.S.C. §§ 1132 (a)(l)(B), et seq.; the federal Workers Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101 et seq.; Sarbanes Oxley Act of 2002, Public Law 107-204, including whistleblowing claims under 18 U.S.C. §§ 1514A and 1513(e); the Family and Medical Leave Act, 29 U.S.C. §§ 2601 et seq; all claims arising out of the claims under the MA Fair Employment Practices Act, M.G.L. c. 151B, the MA Wage and Hour laws, M.G.L. c. 149, et. al., M.G.L. c. 93, and all other claims and rights under any other federal, state, and local statutory and common law, including but not limited to public policy, contract and tort and any and all claims arising from any injuries or damages suffered by you, for attorney's fees, costs, non payment, or any other claim or damage you could assert against the Company and/or the Releasees. For the avoidance of doubt, this release includes any claims under the under the Massachusetts Wage Act and State Overtime Laws, including without limitation G.L. c. 149 § 148, 150 et seq. and G.L. c. 151 § lA et seq. You promise not to sue any of the Releasees on any of these released claims.
(b) You represent and warrant to the Company that no portion of any claim, demand, cause of action, or other matter released by you herein, nor any portion of any recovery or settlement to which you might be entitled from any Releasee, has been assigned or transferred to any other person or entity, either directly or by way of subrogation or operation of law.
(c) You acknowledge that you have been granted by the Company all requested paid and/or unpaid leave to which you may have been entitled. You represent that you are not aware of any facts that would support a claim by you against any of the Releasees for any violation of the Family and Medical Leave Act. You further acknowledge that you have been properly paid for all time worked and are unaware of any facts that would support a claim by you against any of the Releasees for any claim of unpaid wages or overtime or any other violation of the Fair Labor Standards Act or state wage and hour law.
Robert Gut
Separation Agreement
Page 6
Notwithstanding the above, this Release does not include and shall not preclude (a) any rights to any vested benefits or vested rights under employee benefit plans under the Employee Retirement Income Security Act (29 U.S.C. § 1001 et seq.), as amended; (b) any claims arising from a breach of this Agreement or rights to enforce this Agreement; (c) any action or proceeding against the Company for acts, incidents, occurrences, or inactions occurring after the execution of this Agreement and (d) any rights to indemnification that exist as of the Separation Date by the Company and/or the Company’s insurers from any claims against you by any third party involving your employment with the Company.
10. Protected Rights. You understand that nothing contained in this Agreement limits your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission (“Government Agencies”). You further understand that this Agreement does not limit your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company. You understand that you waive and release any personal entitlement to reinstatement, back pay, or any other types of damages, or injunctive relief, in connection with any actions taken by you on your behalf on your complaint or charge. You understand that by executing the General Release, you are forever releasing and waiving any and all claims against the Releasees.
11. Acknowledgments. You acknowledge and agree that you understand the meaning of this Agreement and that you freely and voluntarily enter into it and the General Release. You agree that no fact, evidence, event, or transaction, whether known or unknown, shall affect in any manner the final and unconditional nature of this Agreements and the General Release. Pursuant to the Older Workers Benefit Protection Act, you acknowledge that you have been advised:
(i) that you have twenty-one (21) days to consider this Agreement and General Release;
(ii) any modifications to this Agreement, whether material or immaterial, will not restart the twenty-one (21) day consideration period;
(iii) to consult with an attorney prior to executing this Agreement and General Release;
(iv) by signing this Agreement and General Release you will give up important legal rights, including the right to sue the Company;
(v) this Agreement and General Release does not release any
Robert Gut
Separation Agreement
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claims that arise after the execution of this Agreement and General Release; and
(vi) for a period of seven (7) days after executing this Agreement and General Release, you may revoke this Agreement and General Release by providing written notice of said revocation to me at the address of the Company set forth above, and this Agreement and General Release shall not become effective or enforceable until said seven-day period has expired without your revocation.
In the event that you execute this Agreement and General Release prior to the expiration of the twenty-one (21) day period during which you may consider it, you represent and acknowledge that you have done so voluntarily and of your own free will without any coercion or compulsion of any nature by the Company or anyone associated with the Company.
12. Acknowledgement of Confidentiality, Developments and Restrictive Covenants Agreement. You acknowledge that you are bound by the Company’s Confidentiality, Developments, and Restrictive Covenants Agreement, which copy is attached here as Exhibit 1 (the “Confidentiality Agreement”), including, without limitation, the provisions regarding confidentiality, disclosure and assignment of inventions, non-competition, non-solicitation, disclosure of certain provisions to future employers, tolling of post-employment obligations, and return of Company property. You further acknowledge that, pursuant to Section 8 of the Confidentiality Agreement, the Confidentiality Agreement shall survive your separation from the Company. (In case of a conflict between this Agreement and the Confidentiality Agreement, this Agreement shall control). You also acknowledge and represent that you have returned all property of the Company as required in Section 19 of the Confidentiality Agreement, including, without limitation, all documents, devices, equipment, keys, security passes, credit cards, hardware, data, databases, source code, object code, and data or computer programming code stored on an optical or electronic medium, and any copies thereof, relating to uniQure’s business and affairs, including any Confidential Information or any reference thereto, and you further represent that you are in compliance with Section 19 of the Confidentiality Agreement. Notwithstanding the foregoing, nothing in Exhibit 1 or set forth herein is intended to or shall interfere with your rights under the Defend Trade Secrets Act of 2016 which provides, in part, that “[a]n individual shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
13. Consulting. You agree that you will provide consulting services to the Company as
Robert Gut
Separation Agreement
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requested on an as-needed basis for the period beginning simultaneously with your separation from the Company and through the one-year anniversary of the Separation Date (the “Consulting Period”). You will provide consulting services consistent with your current position with the Company to assist in the transition of the clinical operations organization. Such services will be directed by the Chief Executive Officer or his delegee. The services shall be limited to no more than eight hours per week. You will be reimbursed at a rate of $500 per hour for the actual time spent providing such consulting services, to be invoiced monthly. If you are appointed as a non-executive director of uniQure N.V. by vote at an Annual or Extraordinary Meeting of Shareholders, the consultancy pursuant to this Section shall terminate immediately and simultaneously upon such appointment. The consultancy may be terminated only as provided in this Agreement, or by mutual agreement of the parties. For clarity, the parties intend that your grants of equity pursuant to the Company’s Amended and Restated 2014 Share Incentive Plan will continue to vest during the Consulting Period on the terms of such grants.
14. Governing Law and Interpretation. This Agreement shall be construed in accordance with the laws of the Commonwealth of Massachusetts without regard to choice or conflict of law principles. The language of all parts of this Agreement shall be construed as a whole, according to its fair meaning, and not strictly for or against either party.
15. Interpretation of Agreement. This Agreement sets forth the entire agreement between the parties pertaining to the subject matter hereof. Notwithstanding the foregoing, this Agreement does not abrogate, limit, or otherwise impair any of the Company’s rights or any of your post-employment obligations under the Confidentiality, Developments and Restrictive Covenants Agreement. Likewise, this Agreement does not supersede or impair any of the terms or condition of any Performance Share Unit Agreement, Share Option Agreement, or the Company’s Amended and Restated 2014 Share Incentive Plan.
16. No Reliance. You represent and acknowledge that, in executing this Agreement, you do not rely and have not relied upon any representation or statement outside this written agreement made by any of the Releasees or by any of the Releasees’ agents, representatives or attorneys with regard to the subject matter, basis or effect of this Agreement.
17. Waiver. Failure to insist on compliance with any term, covenant or condition contained in this Agreement shall not be deemed a waiver of that term, covenant or condition, nor shall any waiver or relinquishment of any right or power contained in this Agreement at any one time or more times be deemed a waiver or relinquishment of any right or power at any other time or times.
18. Severability and Modification. Should any term or provision of this Agreement be declared illegal, invalid or unenforceable by any court of competent jurisdiction and if such provision cannot be modified to be enforceable, such provision shall immediately become null and void, leaving the remainder of this Agreement in full force and effect.
Robert Gut
Separation Agreement
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Provided however, if your General Release is found invalid, illegal, and/or unenforceable, you agree to enter into a full and General Release with the Company that is not invalid, illegal and/or unenforceable without payment of additional consideration.
19. Amendment. This Agreement shall be binding upon the parties and may not be modified in any manner, except by an instrument in writing of concurrent or subsequent date signed by duly authorized representatives of the parties hereto. This Agreement is binding upon and shall inure to the benefit of the parties and their respective agents, assigns, heirs, executors, successors and administrators.
20. Representation. You represent that the Company has advised you, and you have had the opportunity, to thoroughly discuss all aspects of this Agreement with legal counsel, that you have read and understand the provisions herein, and that you are voluntarily entering into this Agreement.
| uniQure, Inc. | ||
| /s/ Matthew Kapusta | ||
| By: | Matthew Kapusta | |
| | Chief Executive Officer | |
AGREED TO AND EXECUTED THIS _24th DAY OF _August___________________ 2020.
/s/ Robert Gut___________
Robert Gut
(Acknowledgement below to be signed on Separation Date.)
AKNOWLEDGED AND AGREED, INCLUDING, WITHOUT LIMITATION, THE GENERAL RELEASE OF CLAIMS, AS OF OCTOBER _14_, 2020.
/s/ Robert Gut___________
Robert Gut
Robert Gut
Separation Agreement
Page 10
EXHIBIT 1
Confidentiality, Developments, and Restrictive Covenants Agreement
Confidential
Exhibit 10.3
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of September 14, 2020 (the “Effective Date”), by and between uniQure, Inc., 113 Hartwell Avenue, Lexington, MA 02421 (together with any and all of its affiliates, the “Company”) and Ricardo E. Dolmetsch Ph.D. (the “Executive”).
WITNESSETH:
WHEREAS, the Company wishes to employ President, Research & Development.
WHEREAS, Executive wishes to be employed by the Company and to serve in such capacity under the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and intending to be legally bound hereby, the Company and Executive agree as follows.
1.Employment. The Company hereby agrees to employ Executive, and Executive hereby accepts such employment by the Company, as a full-time employee for the period and upon the terms and conditions contained in this Agreement. Any prior agreement related to the Executive’s employment with the Company, whether written or oral, is hereby terminated as of the Effective Date.
2.Term. Executive’s term of employment with the Company under this Agreement shall begin on the Effective Date and shall continue in force and effect from year to year unless terminated earlier in accordance with Section 19 (the “Term”).
3.Position and Duties. During the Term, Executive shall serve the Company as its President, Research & Development. Executive will be responsible for directing the research, product and clinical development of uniQure’s pipeline, reporting directly to the uniQure Chief Executive Officer (the “CEO”). Executive will perform other duties consistent with the job description and as may be customarily provided by a person in such position.
4.During the Term, Executive shall devote full business time, best efforts, skill, knowledge, attention and energies to the advancement of the Company’s business and interests and to the performance of Executive’s duties and responsibilities as an employee of the Company. Executive shall abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein that may be adopted from time to time by the Company. However, Executive shall be permitted to continue his current position with Stanford University as an Adjunct Professor of Neurobiology. Further, Executive shall retain all copyrights and other intellectual property rights to his academic and other writings, oral presentation materials, and other works that are created by Executive outside the scope of Executive’s employment with Company (“Executive Works”), provided that such Executive Works do not incorporate and are not derived from any intellectual property (including, without limitation, inventions, trade secrets, copyrighted works, and data), proprietary information, confidential information, written documents or other works of Company.
Dolmetsch Employment Agreement | Page 1 | Initials |
Confidential
5.During the Term, Executive shall not be engaged in any business activity which, in the judgment of the Company, conflicts with Executive’s duties hereunder, whether or not such activity is pursued for pecuniary advantage. Should Executive wish to provide any services to any other person or entity other than the Company or to serve on the board of directors of any other entity or organization, Executive shall submit a written request to the Company for consideration and approval by the Company, which approval shall not unreasonably be withheld. If the Company later makes a reasonable, good faith determination that Executive’s continued service on another entity’s board would be detrimental to the Company, it will give Executive thirty (30) days’ written notice that it is revoking the original approval, and Executive will resign from the applicable board within thirty (30) days after receipt of such notice. Notwithstanding the foregoing, Executive may engage in civic and charitable organizations and manage Employee’s personal and business affairs during normal business hours provided such activities do not, individually or collectively, interfere with the performance of his duties hereunder.
6.Location. Executive shall perform the services hereunder from the Company’s USA headquarters at 113 Hartwell Avenue, Lexington MA, USA; provided, however, that Executive shall be required to travel from time to time for business purposes, including, without limitation, to the Company’s facilities in Amsterdam, Netherlands.
7.Compensation and Benefits.
(a) | Base Salary. For all services rendered by Executive under this Agreement, the Company will pay Executive a base salary at the annual rate of Five Hundred Thousand dollars ($500,000), which shall be reviewed annually by the CEO for adjustment (the base salary in effect at any time, the “Base Salary”). Executive’s Base Salary shall be paid in bi-weekly installments, less withholdings as required by law and deductions authorized by Executive, and payable pursuant to the Company’s regular payroll practices in effect at the time and as may be changed from time to time, subject to the terms of this agreement. |
(b) | Discretionary Bonus. Following the end of each calendar year and subject to the approval of the Company, Executive shall be eligible for a target retention and performance bonus of up to Fifty percent (50%) of the annual Base Salary based on performance and the Company’s performance and financial condition during the applicable calendar year, as determined by the Company in its sole discretion (a “Bonus”). In any event, Executive must be an active employee of the Company as of the 1st of October of the relevant calendar year and on the date the Bonus is distributed in order to be eligible for and to earn any Bonus, as it also serves as an incentive to remain employed by the Company. |
(c) | Sign-on Bonus. Executive shall receive a sign-on bonus of Two Hundred Fifty Thousand dollars ($250,000) (the “Sign-on Bonus”), less all applicable taxes and withholdings, payable on January 4, 2020, subject to Executive’s continued employment with the Company as of that date and further subject to the repayment provisions of Section 18 (Repayment of Certain Employment Benefits). |
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8.Equity. Subject to Board of Directors approval at the next regularly scheduled uniQure N.V. Board meeting after the execution of this Agreement and commencement of employment, Executive shall be granted:
(a) | Fifty-Five Thousand (55,000) restricted stock units of the Company (RSUs), such RSUs vesting pro-rata on each of the first three anniversaries of the grant date; |
(b) | (b) 10,000 (Ten Thousand) restricted stock units of the Company, such RSUs vesting fully on the first anniversary of the grant date; and |
(c) | an option to purchase Thirty-Five Thousand (35,000) ordinary shares of the Company, having an exercise price as of the closing share price on the date of grant, such option vesting over a period of four years, with one-quarter of the shares vesting on the first anniversary of the grant date and the remaining shares vesting quarterly on a pro-rata basis during the remainder of the vesting period. |
Each grant will be pursuant to uniQure N.V.’s Amended and Restated 2014 Share Incentive Plan, and the terms will otherwise reflect the standard vesting and other terms and conditions contained in the Share Incentive Plan and the Company’s standard equity grant agreements. Such option will be approved by the Board of Directors of uniQure N.V. not later than at its next regularly scheduled meeting. If the Board fails to make the grant at such regularly scheduled meeting, it shall be deemed a Good Reason event under Section 19(f) hereof. The Executive will be eligible for future equity grants pursuant to the Company’s policies and procedures. Any additional grants during the first-year of employment (not including those provided above) will be prorated based on hire date, and all future grants of equity shall be subject to the provisions of this Agreement, including, without limitation, Sections 17 (Change of Control) and 19 (Termination).
9.Retirement and Welfare Benefits. Executive is eligible to participate in any and all benefit programs that the Company establishes and makes available to its employees from time to time, provided that Executive is eligible under (and subject to all provisions of) the plan documents that govern those programs. These include medical, dental and disability insurances. Benefits are subject to change at any time in the Company’s sole discretion.
10.Paid Time Off and Holidays. Executive is eligible for 4 weeks of paid vacation per calendar year (prorated for any partial year during the term) to be taken at such times as may be approved in advance by the Company. Executive is also entitled to all paid holidays observed by the Company in the United States. Executive shall have all rights and be subject to all obligations and responsibilities with respect to paid time off and holidays as are set forth in the Company’s employee manual or other applicable policies and procedures, which may provide for benefits greater than but not less than those provided in this Agreement.
11.Expense Reimbursement. During the Term, Executive shall be reimbursed by the Company for all necessary and reasonable expenses incurred by Executive in connection with the performance of Executive’s duties hereunder (including business trips to the uniQure
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Amsterdam headquarters). Executive shall keep an itemized account of such expenses, together with vouchers and/or receipts verifying the same and submit for reimbursement on a monthly basis. Any such expense reimbursement will be made in accordance with the Company’s travel and expense policies governing reimbursement of expenses as are in effect from time to time.
12.Withholding. All amounts set forth in this Agreement are on a gross, pre-tax basis and shall be subject to all applicable federal, state, local and foreign withholding, payroll and other taxes, and the Company may withhold from any amounts payable to Executive (including any amounts payable pursuant to this Agreement) in order to comply with such withholding obligations.
13.IP and Restrictive Covenants. The Company’s agreement to enter into this Agreement is contingent upon Executive’s execution of the Company’s Confidentiality, Developments, and Restrictive Covenants Agreement, attached as Exhibit A to this Agreement. Nothing in this Agreement or the Confidentiality, Developments, and Restrictive Covenants Agreement shall prohibit or restrict Executive from initiating communications directly with, responding to any inquiry from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or filing a claim or assisting with an investigation directly with a self-regulatory authority or a government agency or entity, including the Equal Employment Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange Commission, Congress, any agency Inspector General or any other federal, state or local regulatory authority (collectively, the “Regulators”), or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation. Executive does not need the prior authorization of the Company to engage in conduct protected by this subsection, and Executive does not need to notify the Company that Executive has engaged in such conduct. Please take notice that federal law provides criminal and civil immunity to federal and state claims for trade secret misappropriation to individuals who disclose trade secrets to their attorneys, courts, or government officials in certain, confidential circumstances that are set forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a suspected violation of the law, or in connection with a lawsuit for retaliation for reporting a suspected violation of the law.
14.At-Will Employment. This Agreement shall not be construed as an agreement, either express or implied, to employ Executive for any stated term, and shall in no way alter the Company’s policy of employment at-will, under which both the Company and Executive remain free to end the employment relationship for any reason, at any time, with or without Cause or notice. Similarly, nothing in this Agreement shall be construed as an agreement, either express or implied, to pay Executive any compensation or grant Executive any benefit beyond the end of employment with the Company.
15.Conflicting Agreements. Executive acknowledges and represents that by executing this Agreement and performing Executive’s obligations under it, Executive will not breach or be in conflict with any other agreement to which Executive is a party or is bound, and that Executive is not subject to any covenants against competition or similar covenants that would affect the performance of Executive’s obligations for the Company.
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16.No Prior Representations. This Agreement and its exhibits constitute all the terms of Executive’s hire and supersedes all prior representations or understandings, whether written or oral, relating to the terms and conditions of Executive’s employment.
17.Change of Control. In the event of a Change of Control as defined below, the vesting conditions that may apply to any options, restricted shares, restricted stock units, performance stock units or other grants of equity held by Executive pursuant to this Agreement and the Company’s Amended and Restated 2014 Share Incentive Plan will be automatically waived, and all the Stock Options will be deemed to be fully exercisable commencing on the date of the Change of Control and ending on the eighteen (18) month anniversary of the Change of Control or, if earlier, the expiration of the term of such Stock Options. For purposes of this Agreement, “Change of Control” shall mean the date on which any of the following events occurs:
(a) | any “person,” as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Act”) (other than the Company, any of its subsidiaries, or any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company or any of its subsidiaries), together with all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under the Act) of such person, shall become the “beneficial owner” (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing forty (40) percent or more of the combined voting power of the Company’s then outstanding securities having the right to vote in an election of the Board (“Voting Securities”) (in such case other than as a result of an acquisition of securities directly from the Company); or |
(b) | a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election; or |
(c) | the consummation of (i) any consolidation or merger of the Company where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Act), directly or indirectly, shares representing in the aggregate more than fifty (50) percent of the voting shares of the Company issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any), or (ii) any sale or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company. |
18.Repayment of Certain Employment Benefits. If Executive voluntarily terminates Executive’s employment with the Company for any reason or Executive is terminated by the Company for Cause in either case within the first 24 months following the Effective Date, Executive shall repay any and all amounts paid as the Sign-on Bonus (pursuant to Section 7) according to the following schedule:
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Period of Employment |
| Payback% | |
0 months – 12 months | | 100% of the Sign-on Bonus | |
12 months+ – 18 months | | 50% of the Sign-on Bonus | |
18 months+ – 24 months | | 25% of the Sign-on Bonus | |
24 months+ | | 0% of the Sign-on Bonus | |
Executive expressly authorizes the Company to deduct any amounts owed by Executive to the Company pursuant to this Section from any amounts owed to Executive by the Company or any of its affiliates, including any accrued compensation or any other amounts owed by the Company or its affiliates to Executive, in the event of Executive’s termination as provided in this Section. Executive further agrees that: (1) Executive will pay to the Company any amounts owed pursuant to this Section within 30 days of the date of termination of Executive’s employment with the Company, and (2) Executive will not have any offset against, or claim for indemnification from, the Company or any of its affiliates related to any amounts owed by Executive pursuant to this Section.
19.Termination. The Term shall continue until the termination of Executive’s employment with the Company as provided below.
(a) | Events of Termination. Executive’s employment, Base Salary and any and all other rights of Executive under this Agreement or otherwise as an employee of the Company will terminate: |
(i) | upon the death of Executive; |
(ii) | upon the Disability of Executive (immediately upon notice from either party to the other). For purposes hereof, the term “Disability” shall mean an incapacity by accident, illness or other circumstances which renders Executive mentally or physically incapable of performing the duties and services required of Executive hereunder on a full-time basis for a period of at least 120 consecutive days. |
(iii) | upon termination of Executive for Cause; |
(iv) | upon the resignation of employment by Executive without Good Reason (upon sixty (60) days’ prior written notice); |
(v) | upon termination by the Company for any reason other than those set forth in Sections 19(a)(i) through 19(a)(iv) above; |
(vi) | upon voluntary resignation of employment by Executive for Good Reason as described in Section 19(f), below; |
(vii) | upon a Change of Control Termination as described in Section 19(g), below. |
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(b) | In the event Executive’s termination occurs pursuant to Sections 19(a)(i) - (iv) above, Executive will be entitled only to the Accrued Benefits through the termination date. The Company will have no further obligation to pay any compensation of any kind (including, without limitation, any Bonus or portion of a Bonus that otherwise may have become due and payable to Executive with respect to the year in which such termination date occurs), or severance payment of any kind, unless otherwise provided herein. For purposes of this Agreement, Accrued Benefits shall mean (i) payment of Base Salary through the termination date, (ii) subject to the above and to Section 7(b), payment of any bonus for performance periods completed prior to the termination date, (iii) any payments or benefits under the Company’s benefit plans that are vested, earned or accrued prior to the termination date (including, without limitation, earned but unused vacation); and (iv) payment of unreimbursed business expenses incurred by Executive. |
(c) | For purposes of this Agreement, “Cause” shall mean the good faith determination by the Company after written notice from the Company to Executive that one or more of the following events has occurred and stating with reasonable specificity the actions that constitute Cause and the specific reasonable cure (related to subsections (i) and (viii) below): |
(i) | Executive has willfully or repeatedly failed to perform Executive’s material duties and such failure has not been cured after a period of thirty (30) days’ written notice; |
(ii) | any reckless or grossly negligent act by Executive having the foreseeable effect of injuring the interest, business or reputation of the Company, or any of its parents, subsidiaries or affiliates in any material respect; |
(iii) | Executive’s evidenced use of any illegal drug, or illegal narcotic, or excessive amounts of alcohol (as determined by the Company in its reasonable discretion) on Company property or at a function where Executive is working on behalf of the Company; |
(iv) | the indictment on charges or conviction for (or the procedural equivalent of conviction for), or entering of a guilty plea or plea of no contest with respect to a felony; |
(v) | the conviction for (or the procedural equivalent of conviction for), or entering of a guilty plea or plea of no contest with respect to a misdemeanor which, in the Company’s reasonable judgment, involves moral turpitude deceit, dishonesty or fraud; except that, in the event that Executive is indicted on charges for a misdemeanor set forth in this subsection 19(c)(v), the Company may elect, in its sole discretion, to place Executive on administrative garden leave |
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with or without continuation of full compensation and benefits under this Agreement during the pendency of the proceedings;
(vi) | conduct by or at the direction of Executive constituting misappropriation or embezzlement of the property of the Company, or any of its parents or affiliates (other than the occasional, customary and de minimis use of Company property for personal purposes); |
(vii) | a breach by Executive of a fiduciary duty owing to the Company, including the misappropriation of (or attempted misappropriation of) a corporate opportunity or undisclosed self-dealing; |
(viii) | a material breach by Executive of any material provision of this Agreement, any of the Company’s written employment policies or Executive’s fiduciary duties to the Company, which breach, if curable, remains uncured for a period of thirty (30) days after receipt by Executive of written notice of such breach from the Company, which notice shall contain a reasonably specific description of such breach and the specific reasonable cure requested by the Board; and |
(ix) | any breach of Executive’s Confidentiality, Developments, and Restrictive Covenants Agreement. |
(d) | The definition of Cause set forth in this Agreement shall govern for purposes of Executive’s equity compensation and any other compensation containing such a concept. |
(e) | Notice Period for Termination Under Section 19(a)(iv). Upon a termination of Executive under Section 19(a)(iv), during the notice period the Company may, in its sole discretion, relieve Executive of all of Executive’s duties, responsibilities, and authority, may restrict Executive’s access to Company property, and may take other appropriate measures deemed necessary under the circumstances. |
(f) | Termination by Executive for Good Reason. During the Term, Executive may terminate this Agreement at any time upon thirty (30) days’ written notice to the Company for Good Reason. For purposes of this Agreement, “Good Reason” shall mean that Executive has complied with the Good Reason Process (hereinafter defined) following the occurrence of any of the following actions undertaken by the Company without Executive’s express prior written consent: (i) the material diminution in Executive’s responsibilities, authority and function; (ii) a material reduction in Executive’s Base Salary, provided, however, that Good Reason shall not be deemed to have occurred in the event of a reduction in Executive’s Base Salary which is pursuant to a salary reduction program affecting the |
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CEO and all or substantially all other senior management employees of the Company and that does not adversely affect Executive to a greater extent than other similarly situated employees; provided, however that such reduction may not exceed twenty (20%) percent; (iii) a material change in the geographic location at which Executive provides services to the Company (i.e., outside a radius of fifty (50) miles from Lexington, Massachusetts); or (iv) a material breach by the Company of this Agreement or any other material agreement between Executive and the Company concerning the terms and conditions of Executive’s employment, benefits or Executive’s compensation (each a “Good Reason Condition”).
“Good Reason Process” shall mean that: (i) Executive has reasonably determined in good faith that a Good Reason Condition has occurred; (ii) Executive has notified the Company in writing of the first occurrence of the Good Reason Condition within 60 days of the first occurrence of such condition; (iii) Executive has cooperated in good faith with the Company’s efforts, for a period not less than thirty (30) days following such notice (the “Cure Period”), to remedy the condition; (iv) notwithstanding such efforts, the Good Reason Condition continues to exist; and (v) Executive terminates employment within sixty (60) days after the end of the Cure Period. If the Company cures to Executive’s satisfaction (not unreasonably withheld) the Good Reason condition during the Cure Period, Good Reason shall be deemed not to have occurred.
(g) | Termination as A Result of a Change of Control. For purposes of this Agreement, “Change of Control Termination” shall mean any of the following: |
(i) | Any termination by the Company of Executive’s employment, other than for Cause (as defined in Section 19(c), above), that occurs within the period beginning ninety (90) days before and continuing until twelve (12) months after the Change of Control; or |
(ii) | Any resignation by Executive for Good Reason (as defined in Section 19(f), above), that occurs within twelve (12) months after the Change of Control. |
(iii) | For purposes of this Section 19(g), “Change of Control” shall have the same meaning as defined above in Section 17. |
(h) | Separation Benefits. Should Executive experience a termination of employment during the Term pursuant to Section 19(a)(v), (vi) or (vii) above, in addition to the Accrued Benefits Executive shall also be entitled to: |
(i) | Lump Sum Severance Payment: |
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a.In the case of a termination of employment during the Term pursuant to Section 19(a)(v) or (vi) above: a lump sum severance payment equal to 100% of the sum of (A) Executive’s annual Base Salary and (B) Executive’s target Bonus amount pursuant to Section 7(b) hereof (i.e., Fifty percent (50%) of Executive’s annual Base Salary);
b.In the case of a termination of employment during the Term pursuant to Section 19(a)(vii) above: a lump sum severance payment equal to 150% of the sum of (A) Executive’s annual Base Salary and (B) Executive’s target Bonus amount pursuant to Section 7(b) hereof (i.e., Fifty percent (50%) of Executive’s annual Base Salary);
(ii) | a Pro-rata Bonus paid at the target bonus amount for the year of termination, as set forth in and subject to Section 7(b); as used in this Agreement, the term “Pro-rata Bonus” shall mean the product of the formula B x D/365 where B represents the target Bonus (i.e., Fifty percent (50%) of Executive’s annual Base Salary), and D represents the number of days elapsed in the calendar year through the date of the separation of Executive’s employment from the Company. |
(iii) | Provided that Executive and Executive’s eligible dependents, if any, are participating in the Company’s group health, dental and vision plans on the termination date and elect on a timely basis to continue that participation in some or all of the offered plans through the federal law commonly known as “COBRA,” the Company will pay or reimburse Executive for Executive’s full COBRA premiums (i.e., employer and employee portion) until the earlier to occur of: (a) the expiration of the COBRA Payment Term (as defined below), (b) the date Executive becomes eligible to enroll in the health, dental and/or vision plans of another employer, (c) the date Executive (and/or Executive’s eligible dependents, as applicable) is no longer eligible for COBRA coverage, or (d) the Company in good faith determines that payments under this paragraph would result in a discriminatory health plan pursuant to the Patient Protection and Affordable Care Act of 2010, as amended, and any guidance or regulations promulgated thereunder (collectively, “PPACA”). Executive agrees to notify the Company promptly if Executive becomes eligible to enroll in the plans of another employer or if Executive or any of Executive’s dependents cease to be eligible to continue participation in the Company’s plans through COBRA. “COBRA Payment Term” mean (x) in the case of a termination of employment during the Term pursuant to Section 19(a)(v) or (vi) above, the twelve (12) month anniversary of Executive’s termination date, and (y) in the case of a |
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termination of employment during the Term pursuant to Section 19(a)(vii) above, the eighteen (18) month anniversary of Executive’s termination date.
To avoid duplication of severance payments, any amount paid under this subsection shall be offset against any severance amounts that may be owed by the Company to Executive pursuant to any of Company’s Change of Control guidelines as may be adopted or amended.
20.General Release of Claims. Notwithstanding any provision of this agreement, all severance payments and benefits described in Section 19 of this Agreement (except for payment of the Accrued Benefits) are conditioned upon the execution, delivery to the Company, and expiration of any applicable revocation period without a notice of revocation having been given by Executive, all by the 30th day following the termination date of a General Release of Claims by and between Executive (or Executive’s estate) and the Company in the form attached as Exhibit B to this Agreement. (In the event of Executive’s death or incapacity due to Disability, the release will be revised for signature accordingly.) Provided any applicable timing requirements set forth above have been met, the payments and benefits will be paid or provided to Executive as soon as administratively practicable (but not later than forty-five (45) days) following the date Executive signs and delivers the General Release to the Company and any applicable revocation period has expired without a notice of revocation having been given. Any severance or termination pay will be the sole and exclusive remedy, compensation or benefit due to Executive or Executive’s estate upon any termination of Executive’s employment (without limiting Executive’s tights under any disability, life insurance, or deferred compensation arrangement in which Executive participates or at the time of such termination of employment or any Option Agreements or any other equity agreements to which Executive is a party). If such 45-day period spans two calendar years, payment will be paid after such 45-day period and revocation period have expired.
21.Certain Company Remedies. Executive acknowledges that Executive’s promised services and covenants are of a special and unique character, which give them peculiar value, the loss of which cannot be reasonably or adequately compensated for in an action at law, and that, in the event there is a breach hereof by Executive, the Company will suffer irreparable harm, the amount of which will be impossible to ascertain. Accordingly, the Company shall be entitled, if it so elects, to institute and prosecute proceedings in any court of competent jurisdiction, either at law or in equity, to obtain damages for any breach of this Agreement, or to enjoin Executive from committing any act in breach of this Agreement. The remedies granted to the Company in this Agreement are cumulative and are in addition to remedies otherwise available to the Company at law or in equity.
22.Indemnification.
(a) | The Company agrees that Executive shall be entitled to indemnification to the fullest extent permitted by Delaware law and under the Company’s articles of incorporation, bylaws and any other corporate-related plan, program or policy. In addition, for a period of at least three (3) years after Executive’s termination of employment, the Company shall maintain a |
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directors and officers liability insurance policy under which Executive shall be included as a “Covered Person.”
(b) | In addition, and for the sake of clarity, the Company hereby specifically agrees that (i) if Executive is made a party, or is threatened to be made a party, to any “Proceeding” (defined as any threatened or actual action, suit or proceeding whether civil, criminal, administrative, investigative, appellate or other) by reason of the fact that (1) Executive is or was an employee, officer, director, agent, consultant or representative of the Company, or (2) is or was serving at the request of the Company as employee, officer, director, agent, consultant or representative of another person, or (ii) if any “Claim” (defined as any claim, demand, request, investigation, dispute, controversy, threat, discovery request or request for testimony or information) is made, or threatened to be made, that arises out of or relates to Executive’s service in any of the foregoing capacity or to the Company, then Executive shall be indemnified and held harmless by the Company to the fullest extent permitted by applicable law, against any and all costs, expenses, liabilities and losses (including, without limitation, attorney’s fees, judgments, interest, expenses of investigation, penalties, fines, taxes or penalties and amounts paid or to be paid in settlement) incurred or suffered by Executive in connection therewith, except with respect to any costs, expenses, liabilities or losses (A) that were incurred of suffered as a result of Executive’s willful misconduct, gross negligence or knowing violation of any written agreement between Executive and the Company, (B) that a court of competent jurisdiction determines to have resulted from Executive’s knowing and fraudulent acts; provided, however, that the Company shall provide such indemnification only if (I) notice of any such Proceeding is given promptly to the Company, by Executive; (II) the Company is permitted to participate in and assume the defense of any such Proceeding; (III) such cost, expense, liability or loss results from the final judgment of a court of competent jurisdiction or as a result of a settlement entered into with the prior written consent of the Company; and (IV) in the case of any such Proceeding (or part thereof) initiated by Executive, such Proceeding (or part thereof) was authorized in advance in writing by the Company. Such indemnification shall continue even if Executive has ceased to be an employee, officer, director, agent, consultant or representative of the Company until all applicable statute of limitations have expired, and shall inure to the benefit of Executive’s heirs, executors and administrators. The Company shall pay directly or advance to Executive all costs and expenses incurred by Executive in connection with any such Proceeding or Claim (except for Proceedings brought by the Company against Executive for claims other than shareholder derivative actions) within 30 days after receiving written notice requesting such an advance. Such notice shall include, to the extent required by applicable law, an undertaking by Executive to repay the amount advanced if Executive was ultimately determined not to be entitled to indemnification against such costs and expenses |
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23.Miscellaneous.
(a) | Right to Offset. The Company may offset any undisputed amounts Executive owes the Company at the time of Executive’s termination of employment (including any payment of Accrued Benefits or separation pay), except for secured or unsecured loans, against any amounts the Company owes Executive hereunder, subject in all cases to the requirements of Section 409A of the Code. |
(b) | Cooperation. Executive agrees that, during and after Executive’s employment with the Company, subject to reimbursement of Executive’s reasonable expenses, Executive will cooperate fully with the Company and its counsel with respect to any matter (including, without limitation, litigation, investigations, or governmental proceedings) in which Executive was in any way involved during Executive’s employment with the Company. Executive shall render such cooperation in a timely manner on reasonable notice from the Company, and at such times and places as reasonably acceptable to Executive and the Company. The Company, following Executive’s termination of employment, exercises commercially reasonable efforts to schedule and limit its need for Executive’s cooperation under this paragraph so as not to interfere with Executive’s other personal and professional commitments. |
(c) | Company Documents and Property. Upon termination of Executive’s employment with the Company, or at any other time upon the request of Company, Executive shall forthwith deliver to Company any and all documents, notes, notebooks, letters, manuals, prints, drawings, block diagrams, photocopies of documents, devices, equipment, keys, security passes, credit cards, hardware, data, databases, source code, object code, and data or computer programming code stored on an optical or electronic medium, and any copies thereof, in the possession of or under the control of Executive that embodies any confidential information of the Company. Executive agrees to refrain from purging or deleting data from any Company-owned equipment, including email systems, in connection with Executive’s termination. To the extent that Executive possesses any data belonging to Company on any storage media owned by Executive (for example, a home computer’s hard disk drive, portable data storage device, etc.), Executive agrees that Executive will work cooperatively with the Company to return such data and ensure it is removed from Executive’s devices in a manner that does not adversely impact any personal data. Executive agrees not to take any steps to delete any Company data from any device without first obtaining Company’s written approval. Executive agrees to cooperate with Company if Company requests written or other positive confirmation of the return or destruction of such data from any personal storage media. Nothing herein shall be deemed to prohibit Executive from retaining (and making copies of): Executive’s personal non-business-related correspondence files; or (ii) documents relating to Executive’s personal compensation, benefits, and obligations, and documents reasonably necessary to prepare personal income tax returns. |
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(d) | Waivers. No waiver of any provision will be effective unless made in writing and signed by the waiving party. The failure of any party to require the performance of any term or obligation of this Agreement does not prevent subsequent enforcement of that term or obligation. The waiver by any party of any breach of this Agreement does not waive any subsequent breach. |
(e) | Section 409A. This Agreement is intended to comply with Section 409A of the Code, and its corresponding regulations, or an exemption thereto, and payments may only be made under this Agreement upon an event and in a manner permitted by Section 409A of the Code, to the extent applicable. Severance benefits under this Agreement are intended to be exempt from Section 409A of the Code under the “short-term deferral” exception, to the maximum extent applicable, and then under the “separation pay” exception, to the maximum extent applicable. Notwithstanding anything in this Agreement to the contrary, if required by Section 409A of the Code, if Executive is considered a “specified employee” for purposes of Section 409A of the Code and if payment of any amounts under this Agreement is required to be delayed for a period of six months after separation from service pursuant to Section 409A of the Code, payment of such amounts shall be delayed as required by Section 409A of the Code, and the accumulated amounts shall be paid in a lump-sum payment within 10 days after the end of the six-month period. If Executive dies during the postponement period prior to the payment of benefits, the amounts withheld on account of Section 409A of the Code shall be paid to the personal representative of Executive’s estate within 60 days after the date of Executive’s death. All payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under Section 409A of the Code. For purposes of Section 409A of the Code, each payment hereunder shall be treated as a separate payment, and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments. In no event may Executive, directly or indirectly, designate the fiscal year of a payment. Notwithstanding any provision of this Agreement to the contrary, in no event shall the timing of Executive’s execution of the General Release, directly or indirectly, result in Executive’s designating the fiscal year of payment of any amounts of deferred compensation subject to Section 409A of the Code, and if a payment that is subject to execution of the General Release could be made in more than one taxable year, payment shall be made in the later taxable year. All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement be for expenses incurred during the period specified in this Agreement, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a fiscal year not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other fiscal |
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year, (iii) the reimbursement of an eligible expense be made no later than the last day of the fiscal year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits not be subject to liquidation or exchange for another benefit.
(f) | Governing Law; Consent to Exclusive Jurisdiction and Venue. This Agreement and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts (notwithstanding any conflict-of-laws doctrines of such state or other jurisdiction to the contrary), and without the aid of any canon, custom or rule of law requiring construction against the draftsman. The parties hereby consent and submit to the exclusive jurisdiction of the federal and state courts in the Commonwealth of Massachusetts, and to exclusive venue in any Massachusetts federal court and/or Massachusetts state court located in Suffolk County, for any dispute arising from this Agreement. |
(g) | Notices. Any notices, requests, demands, and other communications described in this Agreement are sufficient if in writing and delivered in person or sent postage prepaid, by certified or registered U.S. mail or by FedEx/UPS to Executive at Executive’s last known home address and a copy by e-mail to Executive, or in the case of the Company, to the attention of the CFO or SVP HR, copy to the CEO at the main office of uniQure, N.V. Any notice sent by U.S. mail shall be deemed given for all purposes 72 hours from its deposit in the U.S. mail, or the next day if sent by overnight delivery. |
(h) | Successors and Assigns. Executive may not assign this Agreement, by operation of law or otherwise, without the Company’s prior written consent. Without the Company’s consent, any attempted transfer or assignment will be void and of no effect. The Company may assign its rights under this Agreement if the Company consolidates with or merges into any other entity, or transfers substantially all of its properties or assets to any other entity, provided that such entity expressly agrees to be bound by the provisions hereof. This Agreement will inure to the benefit of and be binding upon the Company and Executive, their respective successors, executors, administrators, heirs, and permitted assigns. |
(i) | Counterparts; Facsimile. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile transmission, PDF, electronic signature or other similar electronic means with the same force and effect as if such signature page were an original thereof. |
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(j) | Severability. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other provision or provisions may be invalid or unenforceable in whole or in part. |
(k) | Enforceability. If any portion or provision of the Agreement is declared illegal or unenforceable by a court of competent jurisdiction, the remainder of the Agreement will not be affected, and each remaining portion and provision of this Agreement will be valid and enforceable to the fullest extent permitted by law. |
(l) | Survival. Sections 13, 20, 21, and the Company’s Confidentiality, Developments, and Restrictive Covenants Agreement (Exhibit A) and all other provisions necessary to give effect thereto, shall survive the termination of Executive’s employment for any reason. |
(m) | Recoupment and Other Policies. All payments under this Agreement shall be subject to any applicable clawback and recoupment policies and other policies that may be implemented by the Board from time to time, including, without limitation, the Company’s right to recover amounts in the event of a financial restatement due in whole or in part to fraud or misconduct by one or more of the Company’s executives or in the event Executive violates any applicable restrictive covenants in favor of the Company to which Executive is subject. |
(n) | Entire Agreement; Amendment. This Agreement contains the entire understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written, between the parties hereto (including without limitation any prior employment agreements between the parties hereto); provided, however, that any agreements referenced in this Agreement or executed herewith are not superseded. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may be amended or modified only by a written instrument signed by Executive and by a duly authorized representative of the Company. |
(o) | Section Headings. The section headings in this Agreement are for convenience only, form no part of this Agreement and shall not affect its interpretation. |
24.Company shall reimburse Executive or otherwise pay for the costs of the defense from any claims by his former employer that the Executive’s actions pursuant to this Agreement violate the non-competition provisions of his Employment Agreement dated April 19, 2013, provided that: (i) Executive has fully disclosed to Company the nature and extent of all of
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Executive’s relevant actual or potentially competitive pre-employment activities; (ii) Executive fully complies with all reasonable requirements requested by Company to avoid a violation of Executive’s non-competition obligation or related restrictive covenants; and (iii) Executive provides to Company control of all aspects of such defense, including, without limitation, the ability to select counsel and the ability to negotiate, compromise and settle any and all such claims on reasonable terms. Executive shall not knowingly or intentionally violate any non-competition provisions or other restrictive covenants of any prior employment agreement. Executive must inform Company of any actual or potential violation of such non-competition provisions or other restrictive covenants and must cooperate with Company to implement any reasonable provisions to avoid or obviate any such actual or potential violations.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written.
| uniQure, Inc. | ||
| | | |
| By: | /s/ Matthew Kapusta | |
| | Name: Matthew Kapusta | |
| | Title: Chief Executive Officer | |
| | | |
| EXECUTIVE | ||
| | | |
| | /s/ Ricardo E. Dolmetsch Ph.D. | |
| Ricardo E. Dolmetsch Ph.D. | ||
| | | |
| | | |
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EXHIBIT A
UNIQURE, INC.
CONFIDENTIALITY, INVENTIONS, AND
RESTRICTIVE COVENANTS AGREEMENT
This Confidentiality, Inventions, and Restrictive Covenants Agreement (the “Agreement”) is made between uniQure, Inc. (“uniQure”), and Ricardo E. Dolmetsch Ph.D. (the "Employee") (collectively, the “Parties”) in conjunction with an Employment Agreement providing additional severance and other benefits dated September 14, 2020.
In exchange for uniQure’s agreement to employ Employee in a capacity of high trust and confidence and/or in which Employee will develop or receive highly sensitive Confidential Information and in which Employee may develop customer or supplier Goodwill, and for other good and valuable consideration, including the compensation and benefits referred to herein and/or provided for in Employee’s offer letter or employment agreement, the receipt and sufficiency of which are hereby acknowledged, Employee hereby agrees as follows:
1.Employment At Will. Employee agrees that Employee remains an “at will” employee of uniQure and that Employee may terminate Employee’s employment at any time. Employee further agrees that uniQure may similarly terminate Employee’s employment at any time as per the Employment Agreement between the Parties. This agreement does not create a contract for employment for any specified duration, either expressly or by implication.
2.Subsequent Material Changes in Employment. Even though the nature of Employee’s relationship with uniQure is as an “at will” employee, the Parties have entered into this Agreement with the understanding that it is possible that Employee’s position, title, duties and responsibilities could increase, decrease, develop, evolve, or otherwise change in a material way in the future and, in light of that understanding, the Parties nevertheless intend that this Agreement shall follow Employee throughout the entire course of Employee’s or her employment with uniQure and that any such subsequent material change shall not affect either the enforceability or the validity of this Agreement.
3.Non-disclosure of Confidential Information. Employee acknowledges that, for Employee to perform Employee’s duties properly, Employee will have access to and uniQure must necessarily entrust Employee with certain proprietary and confidential business information (the "Confidential Information"). Employee agrees that, during the term of Employee’s employment with uniQure and at all times thereafter, regardless of the reason for termination of employment, Employee will not disclose any Confidential Information or use it in any way, except with prior written authorization and on behalf of uniQure, whether or not such Confidential Information is produced by Employee's own efforts.
a.For purposes of this Agreement, “Confidential Information” means all original and copies of all material, data, documents, and information in any format (including without limitation all hardcopy, softcopy, electronic, web, and computer-based information, documents, data files, records, videos, pictures, and recordings) which constitutes confidential and/or trade secret information as further defined in this Agreement and/or Massachusetts law. Examples of Confidential Information include, but are not limited to:
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| ● | All such information and knowledge about uniQure and the products, services, standards, specifications, procedures, business methods and techniques which are not in the public domain or generally known in the industry; |
| ● | business development plans and activities, including the identity and characteristics of uniQure’s current and prospective customers, vendors, suppliers, or any other type of business relationship; |
| ● | information concerning pending and prospective mergers, acquisitions, or other types of transactions; |
| ● | the prices, terms and conditions of uniQure's contracts or agreements with its current and prospective customers, vendors, suppliers, or any other type of business relationship; |
| ● | the identities, needs and requirements of uniQure's current and prospective customers, vendors, suppliers, or any other type of business relationship; |
| ● | cost and pricing policies and data, including the costs of uniQure’s business and all results of its business operations; |
| ● | financial information, including but not limited to results from operations, results relating to various brands, profit/loss and revenue figures, transaction data, account information; |
| ● | facility and data security-related information, including door access codes, computer access codes, security system PINs, computer system user identification information, passwords and remote access codes; |
| ● | personnel information; and |
| ● | intellectual property, including any patents, trademarks or servicemarks, of uniQure. |
b.Employee further acknowledges that the development or acquisition of such Confidential Information is the result of great effort and expense by uniQure, that the Confidential Information is critical to the survival and success of uniQure, and that the unauthorized disclosure or use of the Confidential Information would cause uniQure irreparable harm.
4.Inventions and Developments:
a.Disclosure: Employee shall promptly and fully disclose to uniQure any and all writings, inventions, products, ideas, discoveries, developments, methods, techniques, technical data, processes, formulas, improvements, know-how, biological or chemical materials, compositions and scientific or business innovations (whether or not reduced to practice and whether or not protectable under state, federal or foreign patent, copyright, trade secret or similar laws) (collectively the “Inventions”) that Employee makes, conceives, devises, invents, creates, develops or writes, either solely or jointly with others, either within or without uniQure, during the period of Employee's employment with uniQure.
b.Further Assurances: Upon and/or following disclosure of each Invention to uniQure, Employee will, during Employee's employment and at any time thereafter, at the request and cost of uniQure, sign, execute, make and do all such deeds, instruments, documents, acts and things as uniQure and its duly authorized agents may reasonably require to apply for, obtain and vest in the name of uniQure alone (unless uniQure
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otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world, including all right, title and interest in the Inventions, and when so obtained or vested to renew and restore the same; and to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection.
c.Works Made For Hire: Employee acknowledges that all written or computer coded materials manifested in documents, systems design, disks, tapes, drawings, reports, specifications, data, memoranda or otherwise prepared in whole or in part by Employee, jointly or singly, in the course of Employee's employment, whether on uniQure’s time or on Employee’s own time, including without limitation all Inventions, shall be "works made for hire" under the Copyright Act of 1976 (the "Copyright Act"), and shall be the sole property of uniQure and uniQure shall be the sole author of such works within the meaning of the Copyright Act. All such works (the “Work Product”), as well as all copies of such works in whatever medium, shall be owned exclusively by uniQure and Employee hereby expressly disclaims any and all interests in such works. If the copyright to any such work shall not be the property of uniQure by operation of law, Employee hereby and without further consideration, irrevocably assigns to uniQure all right, title and interest in such work, including all so-called "moral rights," and will assist uniQure and its nominees in every proper way, at uniQure's expense, to secure, maintain and defend for uniQure's own benefit copyrights and any extensions and renewals thereof on such work, including translations thereof in any and all countries, such work to be and to remain the property of uniQure whether copyrighted or not. If the foregoing moral rights cannot be so assigned under the applicable laws of the countries in which such rights exist, Employee hereby waives such moral rights and consents to any action of uniQure that would violate such rights in the absence of such consent. Employee warrants that no Work Product shall contain any material owned by any third party, except as disclosed to uniQure pursuant to subsection (b), and that as to any such material, Employee shall have all rights necessary to provide to uniQure the full, unrestricted benefits to such material as incorporated into the Work Product.
d.Assignment: Without in any way limiting the foregoing, Employee hereby assigns to uniQure all right, title and interest to all Inventions, including but not limited to patent rights and copyrights.
e.Power of Attorney: In the event uniQure is unable, after reasonable effort, to secure Employee's signature on any letters patent, copyright or other analogous protection relating to an Invention, whether because of Employee's physical or mental incapacity or for any other reason whatsoever, Employee hereby irrevocably designates and appoints uniQure and its duly authorized officers and agents as Employee’s agent and attorney-in-fact, to act for and in Employee’s behalf and stead to execute and file any such application or applications and to do all other lawfully permitted acts to further the prosecution thereon with the same legal force and effect as if executed by Employee.
f.Employee Developments: Employee represents that all developments, inventions, works of authorship or other intellectual property rights to which Employee claims ownership as of the date of this Agreement (the "Employee Developments"), and which the parties agree are excluded from this Agreement, are listed in Exhibit A attached
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hereto. If no such Employee Developments are listed on Exhibit A, Employee represents that there are no such Employee Developments at the time of signing this Agreement.
g.After the date hereof, Employee will promptly disclose to uniQure and uniQure agrees to receive all disclosures in confidence, any improvements, discoveries, software, designs or writing of Employee that exist, regardless of the state of completion, to determine if they shall be deemed Inventions.
5.Restrictive Covenants:
a.For the purposes of this Section:
“Competing Products and Services” means any product, process, therapy or service of any person or organization other than uniQure that is in development or has been commercialized and that involves a gene therapy or the manufacture of a gene therapy: (i) for the treatment of any disease for which uniQure has a product or therapy on the market or in any phase of development during the term of Employee’s employment with uniQure, including, without limitation, any such products in the field of cardiovascular, central nervous system, liver or metabolic disease, or (ii) using an adeno-associated virus serotype (AAV); or (iii) that otherwise is directly competitive (or, for any products, processes, therapies or services in the development stage, would be directly competitive, if marketed or sold) with any uniQure product or therapy on the market or in any phase of development during the term of Employee’s employment with uniQure, provided in all cases that such gene therapies or the manufacture of such gene therapies shall be limited to those for specific targets, indications and/or diseases for which Employee provided services pursuant to his Employment Agreement to research, develop or commercialize.
“Competing Organization” means any legal entity, including, without limitation, any company, corporation, partnership, sole proprietorship, bureau, ministry or agency, that develops, makes, uses, sells, imports, distributes, sells Competing Products and Services or otherwise consults or assists with such activities.
“Prohibited Activities” means any specific types of services performed by the Employee for uniQure or its affiliates at any time during the two (2) years preceding the termination of employment.
b.Non-Solicitation and Non-Acceptance: Employee agrees that during Employee’s employment and for a period of eighteen (18) months after the termination of employment for any reason, Employee shall not directly or indirectly:
i.recruit, solicit, or hire any employee, consultant, independent contractor who performed services for uniQure, or induce or attempt to induce any such employee, consultant, or independent contractor, to reduce or discontinue Employee’s employment, contractual, or other affiliation with uniQure;
ii.contact or accept business from any individual or entity that was an actual or prospective customer or business relationship of uniQure and that Employee serviced, had contact with, or learned Confidential Information about
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during employment at uniQure, for the purpose of soliciting the sale of or selling Competing Products and Services to such individual or entity and/or to divert any portion of that individual’s or entity’s business away from uniQure.
c.Non-competition: Employee agrees that during Employee’s employment and for a period of twelve (12) months after the termination of employment (the “Non-Competition Period”), except in the case where Employee is terminated by uniQure without cause, Employee shall not directly or indirectly, perform Prohibited Activities (whether as an employee, consultant, independent contractor, member of a board of directors, or in any other capacity) to a Competing Organization within the Geographic Area assigned to Employee in Employee’s position(s) with uniQure, or where Employee provided services or had a material presence or influence, during any time within the last two (2) years of employment with uniQure. Notwithstanding the foregoing, nothing herein shall prevent Employee from becoming employed by or otherwise rendering services to a Competing Organization whose business is diversified, if the scope of Employee’s services to such Competing Organization is limited to identifiable parts, segments, entities or business units of such business that, are not engaged in providing or producing Competing Services. Employee agrees that if Employee seeks to become employed or otherwise renders services to such a Competing Organization during the restricted period, prior to Employee’s employment or rendering such services, (i) Employee shall provide uniQure with written assurance from such Competing Organization and from Employee that Employee will not render services directly or indirectly in connection with any Competing Services, and (ii) Employee receives written approval of Employee’s intended employment or rendering such services (such approval shall not be unreasonably withheld and shall be provided by uniQure within ten (10) days from receipt of the written assurances set forth in subsection (i)). uniQure may, in its sole discretion, waive all or a portion of the Non-Competition Period. uniQure and Employee mutually agree that the following consideration offered to Employee in Employee’s employment agreement supports Employee’s promises, undertakings, and obligations under this Section 5(c) regarding post-employment non-competition: the equity grants associated with Employees Employment Agreement, bonus payments and additional severance benefits, which consideration Employee acknowledges and agree is adequate, fair, reasonable, and mutually agreed upon. The “Geographic Area” assigned to Employee is worldwide.
d.Nothing contained herein shall preclude Employee from participating, directly or indirectly, as a passive investor in the securities of any publicly-traded corporation.
e.Disclosure of Agreement to Subsequent Employers: During the eighteen (18) month period following Employee’s termination of employment from uniQure for any reason, Employee agrees to disclose this Agreement to every subsequent employer by which Employee may subsequently be employed or otherwise engaged in exchange for compensation
f.Disclosure of Future Employment to uniQure. For a period of one (1) year after the termination of employment with the Company for any reason, Employee shall promptly notify the Company of any change of address, and of any subsequent employment (stating the name and address of the employer and the title and duties of the
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position) or other business activity. In the event Employee fails to comply with this paragraph the non-solicitations, non-acceptance and noncompete periods set forth in paragraphs 5(a)-(c) shall be tolled, and shall commence with the date of the entry of a preliminary injunction
g.Reasonableness of Temporal Scope: Employee agrees that the temporal restrictions set forth in this Section are fair and are reasonably required for the protection of uniQure’s legitimate business interests in light of Employee’s substantial role as an employee of uniQure.
h.Reasonableness of Geographic Scope: Employee agrees that the geographic scope on Employee’s obligations set forth in this Section is both appropriate and reasonable.
i.Tolling of Post-Employment Obligations: If it is later determined by a court of competent jurisdiction that injunctive relief is warranted to prevent Employee from engaging in certain post-employment conduct, then the restrictive periods shall be tolled for the lesser of the period of time that Employee is determined by a court of competent jurisdiction to have had already been engaging in the prohibited conduct prior to the injunction and the maximum period allowed by law. The Parties intend that uniQure shall be entitled to full restrictive periods of post-employment conduct that does not breach or threaten to breach this Agreement.
6.Specific Performance. Employee acknowledges that a breach of this Agreement will cause irreparable injury to uniQure, that uniQure's remedies at law will be inadequate in case of any such breach or threatened breach, and that uniQure will be entitled to preliminary injunctive relief, without bond, and other injunctive relief in case of any such breach or threatened breach.
7.Waivers. The waiver by uniQure or Employee of any action, right or condition in this Agreement, or of any breach of a provision of this Agreement, shall not constitute a waiver of any other occurrences of the same event.
8.Survival, Binding Effect. This Agreement shall survive the termination of Employee’s employment with uniQure regardless of the manner of such termination and shall be binding upon Employee and Employee’s heirs, executors and administrators.
9.Assignability by uniQure. This Agreement is assignable by uniQure and inures to the benefit of uniQure, its subsidiaries, affiliated corporations, successors and assignees. This Agreement, being personal, is not assignable by Employee.
10.Severability. The covenants of this Agreement are intended to be separable, and the expressions used therein are intended to refer to divisible entities. Accordingly, the invalidity of all or any part of any section of this Agreement shall not render invalid the remainder of this Agreement or of such section. If, in any judicial proceeding, any provision of this Agreement is found to be so broad as to be unenforceable, it is hereby agreed that such provision shall be interpreted to be only so broad as to be enforceable.
11.Notice of Immunity Rights. You shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of confidential information or a trade secret that is made in confidence to a Federal, State, or local government official or to an attorney
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solely for the purpose of reporting or investigating a suspected violation of law. You shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of confidential information or a trade secret that is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the confidential information or trade secret to the attorney of the individual and use the confidential/trade secret information in the court proceeding, provided that the individual files any document containing the confidential information or trade secret under seal and does not disclose the confidential information or trade secret, except pursuant to court order.
12.Protected Rights. Nothing contained in this Agreement limits your ability to file a charge or complaint with the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Securities and Exchange Commission or any other federal, state or local governmental agency or commission ("Government Agencies"). You further recognize that this Agreement does not limit your ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to uniQure. This Agreement does not limit your right to receive an award for information provided to any Government Agencies.
13.Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, but not the Commonwealth’s laws concerning conflict of laws, and shall be deemed to have been made in Massachusetts.
14.Consent To Exclusive Jurisdiction/Venue. The Parties hereby consent and submit to the exclusive jurisdiction of the federal and state courts in the Commonwealth of Massachusetts, and to exclusive venue in any Massachusetts federal court and/or Massachusetts state court located in Suffolk County, for any dispute arising from this Agreement.
15.Covenant Not To Sue Outside Of Massachusetts. Employee hereby agrees that Employee will not commence, prosecute, or assist in any way another person or entity to commence or prosecute, any legal action or other proceeding (including but not limited to a declaratory judgment action) against uniQure concerning a dispute arising from or relating to this Agreement in any forum or jurisdiction other than the state and federal courts in the state of Massachusetts.
16.Right to Consult Legal Counsel. Employee acknowledges that Employee has been advised of Employee’s right to consult with legal counsel prior to signing this Agreement, and that Employee has had a full and adequate opportunity to do so.
17.Waiver of Right to Jury Trial and Punitive Damages. EACH PARTY WAIVES ANY RIGHT TO SEEK A JURY TRIAL AND TO CLAIM FOR OR RECOVER ANY PUNITIVE DAMAGES IN ANY PROCEEDING REGARDING ANY DISPUTE THAT MAY ARISE BETWEEN THEM.
18.Entire Agreement, Amendments. This Agreement constitutes the entire understanding of the parties with respect to its subject matter, supersedes any prior communication or understanding with respect thereto, and no modification or waiver of any provision hereof shall be valid unless made in writing and signed by all of the parties hereto.
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19.Return of uniQure Property and Confidential Information/Non-Deletion of Data. Upon termination of Employee’s engagement by uniQure, or at any other time upon the request of uniQure, Employee shall forthwith deliver to uniQure any and all documents, devices, equipment, keys, security passes, credit cards, hardware, data, databases, source code, object code, and data or computer programming code stored on an optical or electronic medium, and any copies thereof, relating to uniQure’s business and affairs, including all materials that are in the possession of or under the control of Employee and that incorporate any Confidential Information or any reference thereto. Employee agrees to refrain from purging or deleting data from any uniQure-owned equipment, including email systems, in connection with Employee’s termination. To the extent that Employee possesses any data belonging to uniQure on any storage media owned by Employee (for example, a home computer’s hard disk drive, portable data storage device, etc.), Employee agrees that Employee will work cooperatively with uniQure to return such data and ensure it is removed from Employee’s devices in a manner that does not adversely impact any personal data. Employee agrees not to take any steps to delete any uniQure data from any device without first obtaining uniQure’s written approval. Employee agrees to cooperate with uniQure if uniQure requests written or other positive confirmation of the return or destruction of such data from any personal storage media.
20.EMPLOYEE ACKNOWLEDGES AND AGREES THAT THE CONSIDERATION PROVIDED TO EMPLOYEE AT THE COMMENCEMENT OF EMPLOYMENT BEYOND THE EMPLOYEES BASE SALARY (INCLUDING, WITHOUT LIMITATION, ANY PROMISE OF STOCK OR OPTION GRANTS, SIGNING BONUS, OR OTHER BONUS) CONSTITUTE SUFFICIENT CONSIDERATION FOR EMPLOYEE’S AGREEMENT TO ABIDE BY THE TERMS OF THIS AGREEMENT.
21.This Agreement may be executed in multiple counterparts, each of which shall be treated as an original. Facsimile signatures shall be valid and effective for all purposes.
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EMPLOYEE | ||
| | |
By: | /s/ Ricardo E. Dolmetsch Ph.D. | |
Name: Ricardo E. Dolmetsch Ph.D. | | |
| | |
Date: August 5, 2020 | | |
| | |
uniQure, Inc. | ||
| | |
By: | /s/ Matthew Kapusta | |
Name: Matthew Kapusta | | |
| | |
Date: August 5, 2020 | | |
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EXHIBIT A
LIST OF EMPLOYEE DEVELOPMENTS
(if none, please write the word “none” and sign below)
None
|
| Signature |
| | |
| | /s/ Ricardo E. Dolmetsch Ph.D. |
| | Ricardo E. Dolmetsch Ph.D. |
Date: August 5, 2020 | | |
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EXHIBIT B
GENERAL RELEASE OF CLAIMS
In exchange for the promises and benefits set forth in Section 19 of the Employment Agreement between uniQure, Inc. and Ricardo E. Dolmetsch Ph.D. made as of September 14, 2020, and to be provided to me following the Effective Date of this General Release, I, Ricardo E. Dolmetsch, on behalf of myself, my heirs, executors and assigns, hereby acknowledge, understand and agree as follows:
1.On behalf of myself and my family, heirs, executors, administrators, personal representatives, agents, employees, assigns, legal representatives, accountants, affiliates and for any partnerships, corporations, sole proprietorships, or other entities owned or controlled by me, I fully release, acquit, and forever discharge uniQure, Inc., its past, present and future officers, directors, shareholders, agents, representatives, insurers, employees, attorneys, subsidiaries, affiliated corporations, parents, and assigns (collectively, the “Releasees”), from any and all charges, actions, causes of action, claims, grievances, damages, obligations, suits, agreements, costs, expenses, attorneys’ fees, or any other liability of any kind whatsoever, suspected or unsuspected, known or unknown, which have or could have arisen out of my employment with or services performed for Releasees and/or termination of my employment with or termination of my services performed for Releasees (collectively, “Claims”), including:
a. | Claims arising under Title VII of the Civil Rights Act of 1964 (as amended); the Civil Rights Acts of 1866 and 1991; the Americans With Disabilities Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act; the Occupational Health and Safety Act; the Sarbanes-Oxley Act; the Massachusetts Law Against Discrimination (M.G.L. c. 151B, et seq., and/or any other laws of the Commonwealth of Massachusetts related to employment or the separation from employment; |
b. | Claims for age discrimination arising under the Age Discrimination in Employment Act of 1967 (as amended) (“ADEA”) and the Older Workers Benefits Protection Act, except ADEA claims that may arise after the execution of this General Release; |
c. | Claims arising out of any other federal, state, local or municipal statute, law, constitution, ordinance or regulation; and/or |
d. | Any other employment related claim whatsoever, whether in contract, tort or any other legal theory, arising out of or relating to my employment with the Company and/or my separation of employment from the Releasees. |
e. | Excluded from this General Release are any claims that cannot be released or waived by law. This includes, but is not limited to, my right to file a charge with or participate in an investigation conducted by certain government agencies, such as the EEOC or NLRB. I acknowledge and agree, however, that I am releasing and waiving my right to any monetary recovery should any government agency pursue any claims on my behalf that arose prior to the effective date of this General Release. |
f. | I waive all rights to re-employment with the Releasees. If I do apply for employment with the Releasees, the Releasees and I agree that the Releasees need not employ me, and that if the |
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Releasees declines to employ me for any reason, it shall not be liable to me for any cause of action or damages whatsoever.
2.Release of Other Claims. I fully release, acquit, and forever discharge the Releasees from any and all other charges, actions, causes of action, claims, grievances, damages, obligations, suits, agreements, costs, expenses, attorneys’ fees or any other liability of any kind whatsoever related to my employment, my employment agreement, my termination or the business of uniQure of which I have knowledge as of the time I sign this General Release.
3.I further acknowledge that I have received payment, salary and wages in full for all services rendered in conjunction with my employment with uniQure, Inc., including payment for all wages, bonuses, and accrued, unused paid time off, and that no other compensation is owed to me except as provided herein. I specifically understand that this general release of claims includes, without limitation, a release of claims for alleged wages due, overtime or other compensation or payment including any claim for treble damages, attorneys’ fees and costs pursuant to the Massachusetts Wage Act and State Overtime Law M.G.L. c. 149, §§148, 150 et seq. and M.G.L. c. 151, §IA et seq. and I further acknowledge that I are unaware of any facts that would support a claim against the Released Parties for violation of the Fair Labor Standards Act or the Massachusetts Wage Act.
4.Notwithstanding anything to the contrary herein, nothing in this General Release shall be deemed to release any of the Releasees for: (i) any claim for the payment of compensation due under the Employment Agreement; (ii) any claim for any of the Accrued Benefits under the Employment Agreement; (iii) any claim for any separation benefit under Section 19 of the Employment Agreement including, without limitation, separation pay and accelerated vesting of stock options (as applicable and as defined in the Employment Agreement); or (iv) any rights to indemnification or coverage under a directors and officers liability insurance policy.
5.Restrictive Covenants. I acknowledge and agree that all of my obligations under the restrictive covenants in my Confidentiality, Developments, and Restrictive Covenants Agreement remain in full force and effect and shall survive the termination of my employment with the Releasees and the execution of this General Release.
6.Consultation with Attorney. I am advised and encouraged to consult with an attorney prior to executing this General Release. I acknowledge that if I have executed this General Release without consulting an attorney, I have done so knowingly and voluntarily.
7.Period for Review. I acknowledge that I have been given at least 21 days from the date I first received this General Release (or at least 45 days from the date I first received this General Release if my termination is part of a group reduction in force) during which to consider signing it.
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8.Revocation of General Release. I acknowledge and agree that I have the right to revoke my acceptance of this General Release if I notify the Releasees in writing within 7 calendar days following the date I sign it. Any revocation, to be effective, must be in writing, signed by me, and either: a) postmarked within 7 calendar days of the date I signed it and addressed to the then current address of uniQure, Inc.’s headquarters (to the attention of the CEO); orb) hand delivered within 7 days of execution of this General Release to the uniQure, Inc.’s CEO. This General Release will become effective on the 8th day after I sign it (the “Effective Date”); provided that I have not timely revoked it.
I ACKNOWLEDGE AND AGREE THAT I HAVE BEEN ADVISED THAT THE GENERAL RELEASE IS A LEGAL DOCUMENT, AND I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY CONCERNING THIS GENERAL RELEASE. I ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ AND FULLY UNDERSTAND ALL PROVISIONS OF THIS GENERAL RELEASE AND I AM VOLUNTARILY AND KNOWINGLY SIGNING IT.
IN, WITNESS WHEREOF, I have duly executed this Agreement under seal as of the ________ day of _______[month],_________ [year].
Ricardo E. Dolmetsch Ph.D.
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Exhibit 31.1
Certification of Chief Executive Officer
I, Matthew Kapusta, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of uniQure N.V.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /s/ MATTHEW KAPUSTA |
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| Matthew Kapusta |
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| Chief Executive Officer |
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| October 27, 2020 |
Exhibit 31.2
Certification of Chief Financial Officer
I, Matthew Kapusta, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of uniQure N.V.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
| By: | /s/ MATTHEW KAPUSTA |
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| Matthew Kapusta |
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| Principal Financial Officer |
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| October 27, 2020 |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of uniQure N.V. (the “Company”) on Form 10-Q for the period ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Matthew Kapusta, Chief Executive Officer and Principal Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1 the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2 the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| By: | /s/ MATTHEW KAPUSTA |
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| Matthew Kapusta |
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| Chief Executive Officer and |
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| Principal Financial Officer |
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| October 27, 2020 |
A signed original of this written statement required by Section 906 has been provided to uniQure N.V. and will be retained by uniQure N.V. and furnished to the SEC or its staff upon request.