ANNUAL
REPORT
2015
It’s in our RNA
Including magazine
ProQR Therapeutics N.V.
T: +31 88 166 7000
W: www.proqr.com
E: info@proqr.com
Office Leiden:
Darwinweg 24, 2333 CR Leiden,
The Netherlands
Office Palo Alto:
543 Bryant Street, Palo Alto,
CA 94301, US
PAGE I
Magazine
ANNUAL REPORT 2015
ProQR
Game-changing innovator
in the interest of patients
For decades there was little hope for people with a rare genetic disease.
Due to the innovative efforts of several companies, people with rare genetic
diseases like cystic fibrosis (CF) may cherish hope. Since the discovery of RNA
modification, a future beckons in which DNA errors can be corrected at the
RNA level, overcoming some of the challenges that are associated with, for
example, gene therapies. Undoubtedly, further development of this technolo-
gy offers hope of a better life for millions of patients. This is the world where
ProQR Therapeutics is focusing.
Initially, ProQR was founded to beat
a cure. ProQR originated from the
cystic fibrosis in just one child. Now,
drive of Dutchman Daniel de Boer,
ProQR’s quest leads far beyond, as
who was looking for a treatment
its mission is to develop treatments
for his son. He eventually founded
for all patients with rare genetic
ProQR together with preeminent
diseases.
leaders in the biotech space: Dinko
Valerio, Henri Termeer and Gerard
quartered in the bioscience park in
Leiden, the Netherlands. Surround-
ed by several other innovative
organizations, ProQR’s scientific
staff pioneer in the development of
medicines in its relentless efforts to
find medicines to fight rare genetic
diseases.
Since its inception in 2012, ProQR
quickly advanced an RNA repair
technology for CF that was discov-
ered by a world-renowned RNA sci-
entist from Massachusetts General
Hospital and called their molecule
QR-010. A second program called
QR-110 was launched to fight the
most common cause of genetic
blindness in children, a disease
called Leber’s congenital amaurosis.
This program is based on a tech-
nology discovered by a university in
the Netherlands. With pre-clinical
data for the programs in hand, the
company completed a successful
IPO on the Nasdaq Stock Market in
2014.
ProQR’s focus
ProQR has shown remarkable exe-
cution power. It has taken the initial
idea of the QR-010 program for
CF targeted at the ∆F508 mutation
into two global clinical studies in
a total of 80 CF patients to date. It
advanced the second program, QR-
110, which targets Leber’s congeni-
tal amaurosis due to the p.Cys998X
mutation and is moving this second
program towards the clinic in 2016.
With the start of it’s innovation unit,
the company has been actively
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ANNUAL REP ORT 2015
Growth numbers
105
8
100
140M
10M
5
ProQRians
1
Programs
1
Targets under evaluation
520K
Capital raised in €
49K
Patient potential
2012
2013
2014
2015
RNA and our genes, in short
The company, with offices and labs
Platenburg.
expanding the pipeline to utilize its
Genetic diseases are caused by a defect in our genes, our DNA.
in Leiden (the Netherlands) and
Palo Alto (CA, US), is a result of what
is globally known as ‘patient-driven
drug development’. It is a great
RNA modification – the name of
the game
Only four years after the company’s
example of people impacted by a
formation, ProQR is part of the
disease starting their own quest for
thriving global biotech sector, head-
RNA technologies to target severe
These broken genes cause downstream effects on the proteins
genetic disorders. ProQR now has
which cause the diseases. To create proteins our cells make a
promising programs in five thera-
copy of our genes, called the RNA, which functions as the blue-
peutic areas.
print for proteins. ProQR’s technologies aim to repair the defects
in the RNA to restore protein function and take away the underly-
ing cause of a disease.
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Magazine
ANNUAL REPORT 2015
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RNA MODULATION
an elegant approach
The ProQR way
Historically, there have not been many treatment
tempting to fix the underlying defect at the genetic level
small and do not need a vector or vehicle to be deliv-
• Dystrophic epidermolysis bullosa, a severe disorder
through DNA modification, which permanently changes
ered to the target organ. The molecules are specifically
that causes fragile skin
options for severe genetic diseases. Over the past few
the genetic makeup of patients and is hard to deliver to
designed for the disease and its particular defect and
• Usher syndrome, the most common cause of com-
decades, many new approaches have been developed
the right cells and organs. ProQR aims to repair genetic
therefore can have potential wide applicability. ProQR
bined deaf and blindness
but there is still a clear unmet need for many patients.
defects through RNA modification, which potentially
has developed a toolbox of RNA technologies to make
• Fuchs endothelial corneal dystrophy (FECD), a com-
These new approaches include looking at an alternative
removes the underlying cause of genetic diseases, but
molecules with which the company can potentially treat
mon disease causing vision loss
way to add the functionality lost by the genetic defect
does not permanently alter cells. Furthermore, the
many genetic disorders.
• Friedreich’s ataxia, results in progressive damage to
by adding the missing proteins, but the applicability is
repair only takes place in cells that express the gene
limited to some diseases only. Another approach is at-
that is causing the disease and the RNA molecules are
How does the QR-010 molecule work?
Unlike any other CF treatment currently in develop-
the nervous system
• Huntington’s disease, affecting muscle coordination
and cognition
ment, QR-010 aims to repair the ∆F508 mutation in the
• Beta-amyloid related disorders including Alzheimer’s
RNA. After the RNA is repaired, a normal healthy CFTR
disease, the most common form of dementia.
Research and development pipeline
QRX-704
Huntington’s disease
QRX-313
Epidermolysis bullosa
QRX-504
Fuchs (FECD)
QRX-411
Usher syndrome
QRX-604
Friedreich's ataxia
QRX-203
Alzheimer’s disease
QR-110
LCA
>2,000 patients
QR-010
cystic fibrosis
>49,000 patients
Innovation
Pre-clin
development
Phase 1 &
clinical PoC
Pivotal
studies
protein can be formed that is expected to have normal
function. The goal of ProQR’s QR-010 is to stop the
progression of cystic fibrosis.
How does the QR-110 molecule work?
As with all of ProQR’s molecules, QR-110 aims to repair
the mutation at the RNA level, in this case restoring
CEP290 function. To target the p.Cys99X mutation in
the CEP290 gene ProQR needed a different approach
than the one used for QR-010 for CF. Therefore, a sec-
ond technology was licensed and QR-110 was designed.
Other molecules in development
ProQR has a pipeline with molecules targeting more
diseases than just CF and LCA. Other diseases that the
company is working on include:
The molecules are
specifically designed
for the disease and
its particular defect
and therefore can
have potential wide
applicability
Indy Klaver (14)
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ANNUAL REP ORT 2015
Dreaming of
a care-free life
A group of teenage girls on bikes enters a street in Oostzaan, a pretty rural
town just north of Amsterdam. They chatter and laugh on the way home after
a long day at school in nearby Zaanstad. For a neutral observer it would be
difficult to distinguish the girl in the group who suffers from cystic fibrosis
(CF), a rare genetic disease with a high mortality rate.
Cystic fibrosis at a glance
Cystic fibrosis is a life-threatening, genetic disease
that causes persistent lung infections and progres-
sively limits the ability to breathe. In people with CF,
a defect in the CFTR gene causes the production of
faulty CFTR protein causing a thick, build-up of mu-
cus in the lungs, pancreas and other organs. In the
lungs, the mucus clogs the airways and traps bacte-
ria leading to infections, extensive lung damage and
eventually, respiratory failure. In the pancreas, the
mucus prevents the release of digestive enzymes
that allow the body to break down food and absorb
vital nutrients. The most common CF mutation is
the ∆F508 mutation that affects about 70% of the
70,000 CF patients worldwide.
with severe coughing and lung in-
knows the whole routine is nec-
not there all the time. A life without
fection. “Once or twice a year, when
essary to lead a fairly normal life.
the medication, without the rules
a bacteria of some sort makes me
“But it is just too much sometimes. I
that are all ‘for your own good’. I
sick, breathing becomes difficult.
hate it, get angry, take it out on my
hear that too often. I don’t want to
It’s as if I am breathing through
mom.”
a straw. I sometimes experience
be the problem child. I wish there
was some sort of pill that would
breathing difficulties, for example
‘Fairly normal’ means that Lin-
get rid of CF for good.” In short, a
when I try to run up the stairs at
da and Indy can go on day trips,
healthy, hassle-free life.
school. I have to stop and catch my
shopping in Amsterdam or even to
breath. Having an infection means
an amusement park. Linda: “But
Looking outside from the living
I have to go to hospital. I need
we will need to bring the bag with
room, with dinner almost ready,
Meet Indy Klaver, who just got
hooked up to an oxygen tank.
a week or two with intravenous
medication, nebulizer and other
Indy spots a ray of sunshine over
home. A 14 year-old 1.75 meters tall
Havo/VWO high school student who
is one of the 70,000 people around
Today was good
Fortunately, it is not like that for
the world that suffer from CF. CF is
now with Indy. She says “Today was
a rare and progressive genetic dis-
good. I even participated in sports
ease, that mostly affects the lungs
classes at school. I’m okay most of
medication such as antibiotics and
necessities. There is no spontaneity
the flat, water-rich countryside of
prednisolone to recover.”
in Indy’s life. Every step needs to be
Oostzaan. “It’s almost spring and
planned carefully.”
then comes summer. I like dry,
A matter of discipline
“Staying out of hospital is a mat-
ter of discipline”, Indy’s mother
Dreams for the future
Being a 14-year old, Indy does
sunny summers. They are easy on
my lungs and I love going out to the
nearby Twiske nature area with my
but also stretches to the pancreas,
the times, provided I take care of
Linda adds. Indy: “I get up early in
have her dreams for the future. “I
friends for a swim. Come to think of
liver, kidneys, and intestine and is
myself. When I take my medication,
the morning, to take my oral and
want to be a lawyer, to help other
it… mum, do you think we can go to
potentially fatal at a median age
when I eat well and get enough
nebulized medication. I go over this
people. Or a DJ, doing shows every
France this summer?” Linda leaves
of 27 years in the United States.
sleep, I have a good chance of stay-
routine again in the evening. I take
night, sleeping late in the morning.
the question unanswered for now.
Indy may face a future of lung and
ing out of trouble. And of staying
healthy chocolate energy drinks to
And having sushi for breakfast.
She serves meatballs for dinner.
digestion problems, of having to
out of the hospital.”
school. When I eat, I need to take
Preferably, without the pills.” Some
“Eat well”, she adds. “We need to
take extensive medication, under-
enzyme tablets to prevent stomach
moments later, after having given
keep your body weight to at least
going lengthy breathing treatments,
The trouble Indy is referring to is
aches. At night I take food supple-
her dreams some more thought:
55 kilos. Don’t forget your pills, by
and possibly progressing into being
the occasional setback that starts
ments via a feeding tube.” Indy
“Or at least a life in which the CF is
the way.”
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ANNUAL REPORT 2015
BUILDING ON
THE POTENTIAL OF
RNA MODULATION
Promising programs in five therapeutic areas
The world is waiting for a breakthrough, game-changing innovation. ProQR’s target
is to develop life-changing treatments with ProQR’s unique RNA modulation tech-
nologies, which could be the key to repair the underlying defects in genetic disease.
ProQR’s scientists are proud of the results for the
one other CF disease causing mutation) with the option
QR-010 molecule in the lab. The outcomes have been
to enroll an additional 16. The NPD assay selectively
promising and we believe no other experimental
measures the activity of the impaired CFTR protein in
medicine ever showed similar effects on CFTR function,
the nasal epithelium in CF patients, which is similar to
the protein that is defective in CF. ProQR has shown it
the lung epithelium. Both studies are expected to re-
can move fast, by initiating two global clinical studies in
port top-line data in mid to late 2016. Clinical develop-
under three years after its inception.
ment for its Leber’s congenital amaurosis program will
be prepared in 2016, supported by a strong pre-clinical
The first is a Phase 1b study evaluating the safety and
proof of concept.
tolerability of inhaled QR-010 in 64 CF patients that
are homozygous (carrying two copies) for the ∆F508
Beyond these, there is a world of possible ideas and
mutation. This study also measures some exploratory
leads to be explored. The innovation unit – the com-
efficacy endpoints including a measure of lung func-
pany’s in-house discovery engine – currently has over
tion. The second study is a proof-of-concept study eval-
100 disease targets under evaluation and has brought
uating the effect of QR-010 on an important measure
forward promising programs in five therapeutic areas.
of CFTR function, nasal potential difference (NPD). The
The company is organized in teams dedicated to one
study plans to enroll 16 CF patients, eight homozygous
program to ensure the utmost focus while the company
(carrying two copies) for the ∆F508 mutation and eight
is expanding. Based on its proprietary RNA technolo-
compound heterozygous (one copy of the ∆F508 plus
gies, we believe ProQR is building a pipeline of hope.
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125
ProQRians
Gender of employees
Average age
Number of nationalities
PAGE IX
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ANNUAL REPORT 2015
Dinko Valerio,
biotech veteran and
Chairman of the ProQR
Supervisory Board
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I witnessed critical
scientists from
outside change their
minds instantly:
we discovered
something really
valuable
“We leave no
stone unturned”
Dinko Valerio, ProQR’s Chairman of the Supervisory Board, is a scientist and an
entrepreneur. The gene therapy professor, founder and builder of Crucell, is
fully aware of the great scientific potential of ProQR. Four years after having met
Daniel de Boer, Valerio insists: “The crown jewel of ProQR is its success in tar-
geting diseases at the RNA level. It offers the potential for treating hundreds of
genetic diseases. We feel a responsibility to live up to the great expectations.”
organization in order. We have the
had my doubts. Then the data from
turned. And third: impatience! This
toolbox of RNA technologies. We
in vivo experiments came in. They
combination does beg the necessity
have a whole series of programs
were spectacular. I witnessed criti-
for high scrutiny on the other side.
with potential and are on the brink
cal scientists from outside change
At ProQR we have surrounded
of receiving our first human data.
their minds instantly: we discovered
ourselves with highly critical people,
The principle remains the same –
something really valuable. What
who are the ‘top of the bill’ in their
we try to repair genetic errors at
followed – the programs, the leads,
field to ensure the highest stan-
the RNA level in order to restore
the studies - was the result of an-
dards.”
protein function in specific diseas-
other three years of execution and
es.”
investing a lot of human energy.
“Meanwhile, we try to monitor our
But now we have something in
entrepreneurial spirit. The greatest
When did Valerio first realise that
hand that may be able to target the
danger is complacency. In the first
ProQR potentially holds a ‘golden
biological errors in cystic fibrosis,
four years we have been hugely
nugget’? “The first defining moment
Leber’s congenital amaurosis and
successful. We have built a great
was during the initial meeting with
beyond.”
Daniel. I noticed there that we could
team in a short time, developed
superb technology and got our
lift each other to a higher level.
Valerio: “We want to develop a drug
finances in order. But we are not
His impatience and his fearless
for CF independently. It certainly
there yet. We must first show that
approach sparked my enthusiasm
is an option to cooperate with
we can help patients. With the read-
that has never left me. Until now, it
partners for other programs. The
out of our first clinical studies in CF
has proved to be a great advantage
management and the supervisory
patients in the second half of this
that a non-scientist, someone from
board endorse this philosophy. We
year we are very close to being able
outside biotech, leads the way. He
want to keep the drive and sustain
to do that.”
is new to the fact that biotech is a
the high energy, attract the best
It was no coincidence that ProQR
Our meeting led to the creation of
long-term task. He has a healthy
talent and move on.”
“And in the long run? “We have the
founder and former IT entrepre-
ProQR. We recruited key figures
neur Daniel de Boer and Dinko
such as Henri Termeer and Gerard
Valerio found each other. “After
Platenburg and a large number of
finding out that his son was a
young scientists.”
patient, he was looking for people
who would join his quest for a cure
for cystic fibrosis. I had been work-
Ready for great discoveries
Four years later, ProQR is ready
kind of impatience and always
pushes us to go faster.”
No stone unturned
According to Valerio, three human
organization, the people, the tech-
nology and the external partners.
This is a powerful combination that
Spectacular data
The second defining moment came
qualities are required in addition
has the ability to make great things
to the science to produce a drug
happen.”
when data from early experiments
that works. “First, it is the enormous
with a novel proprietary technology
drive. Second, a lack of fear to try
ing on gene therapy in this area.
for great discoveries. “We have our
was available. “It looked good, but I
new things, to leave no stone un-
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A team’s
A team’s
‘QUEST FOR
‘QUEST FOR
TREATMENTS’
TREATMENTS’
Since its formation, ProQR has grown exponentially, from 19 employees in
2014 to well over 125 today. To all of them, the interest of the patients always
comes first. Their mission is to make ProQR the innovation powerhouse that
delivers actual progress in treating rare genetic diseases.
ProQRians do not
limit themselves
to the beaten
path, they will
always ask ‘why’
ProQR was founded and built for
that purpose, around a group of
A deep desire
To be successful, ProQR scien-
limit themselves to the beaten path,
atmosphere, in which people love
belief that this is the way to make
they will always ask ‘why’, and do
to work and maintain productive
things better. A team of rebels at
biotech veterans with significant
tists bring a lot more to the table
whatever it takes to be successful.
and happy lives.
times, always prepared to challenge
track records, supported by a
than professionalism, knowledge
strong staff of devoted and interna-
and a lot of experience in various
tional scientists. Today, ProQR con-
demanding environments. Suc-
The purpose of ‘fun & joy’
ProQR’s culture promotes open-
It’s in our RNA
It takes a specific DNA, or RNA in
established approaches and meth-
ods. We believe ProQR’s team is
truly cutting new paths in the dense
sists of a group of highly energized
cess can only be the result of a
ness, team spirit and personal
this case, to be a ProQRian. Work-
forest of rare genetic diseases.
and talented people with different
deep desire to find new ways, new
responsibility among its employees.
ing at ProQR means being part of
backgrounds from 27 different na-
technologies and new applications.
We believe that the ‘fun & joy’ of
a supportive and persistent team.
tionalities with a common purpose:
It actually comes from not going
developing life-changing treatments
A team that dares to be different, a
using ground-breaking science to
‘where the path may lead’, but in-
actually means something. At Pro-
team that is bold, a team that defies
make a meaningful impact on the
stead going ‘where there is no path
QR, employees demand the utmost
the impossible. A passionate team
lives of patients.
and leave a trail.’ ProQRians do not
of themselves in a positive, fulfilling
that thinks bigger, because of the
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PAGE XIV
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“The WOW
moments
of discovering
new drugs”
We are all committed to making a
difference in patients’ lives.”
‘Ideas engine’
Janne works in ProQR’s innovation
unit, the ‘ideas engine’ of the com-
pany, a separate group of scientists
responsible for the expansion of
the company’s pipeline beyond
CF and LCA. “The multicultural
background offers a multitude of
approaches and brings up lots of
ideas on how and where we can ap-
ply current and new RNA technolo-
gies. Finding potential therapies for
diseases is the name of the game.
Janne Turunen,
ProQR Innovation Unit
Janne Turunen is one of ProQR’s scientists who are actually working in the front
line of drug development. The company’s Innovation Unit is ProQR’s idea cen-
First we develop the technology,
the attitude that triggers discov-
ProQR introduced the seven Habits
then we will take a disease model
eries to happen. This allows ‘wow
of Happiness, that sort of serve as
where we think the technology may
moments’, big and small, to happen
the core values. These seven habits
work. The next step is to provide a
and keeps us motivated.”
shape the ProQR working code that
proof of concept for the best ones.
are managed by an actual Happi-
As soon as our department pro-
Janne insists that ProQR operates
ness Manager, whose aim it is to
vides this proof, other departments
with a minimum of hierarchy. “Sure,
secure and promote positive and
go to work on the task of making it
there are units and departments,
healthy working conditions at the
work in the real world.”
but a chat with the decision makers,
company. “Celebrate both success
scientific and business leads, is only
and mistakes, is one of the habits.
“We pitch our ideas – even during
a few steps away. That is unique
A drink, a nice dinner, sometimes
lunch or at the coffee table – to
and maintaining that company
just music and some dancing on the
each other and together we find
culture is important. It is part of this
department floor. Don’t be afraid,
out if an idea has potential.
company’s lifeline and future. This
approach people when you need
is the company where a great idea
help. Be prepared to help. Be open
In the forefront
Janne believes that ProQR is very
takes off without ten-page reports
about your frustrations. At ProQR,
being written first. Even now at
we thrive in the exploring mode. It
much in the forefront of develop-
125 people I feel it still has all the
is part of the DNA of this company
ments in the matured RNA domain.
positive and exciting characteristics
– perhaps I should say: the RNA,
tre and pressure cooker at the same time, as Janne Turunen (36) explains. “This
“Our aim is to bring the huge poten-
of an IT start up.”
is a great place to work, together with a very energetic group of people from
various backgrounds, countries and experiences that works enormously hard
towards the same goal.”
tial of RNA technology to the next
level, to the reality of everyday. To
be successful, we need people that
Small but deliberate steps
As in pioneering? “Very much so.
in that comparison. The quest for
success is long and we need a lot
are able to think across scientific ar-
Making small but deliberate steps
of happiness and wow moments to
eas and that are open and happy to
towards creating impact with RNA
reach the goal.”
communicate to colleagues outside
technology. The goal is clear, but
haha! Some have compared us to
Google, and there is some truth
“I noticed this company for the fact
much later I moved to Leiden and
their direct field of expertise.”
the route is not. We need to find
that it is all about RNA research.
became part of the ProQR quest
the route by experimenting. We
In Finland, where I was born and
that goes far beyond just CF.” Janne
ProQR needs explorers with at least
decide to work with a specific meth-
raised, I did my Ph.D. studies on
is not only in Leiden because of the
one trait in common, says Janne:
od that has not been used before.
basic RNA biology. I was looking for
scientific challenge. “It is also the
“It is all about allowing yourself
When an experiment is disappoint-
a way to put the science to work,
passion that got me hooked. All
to experiment, to venture with a
ing, we try something else.”
to improve the lives of people. Not
this work is leading to something.
sort of ‘infantile’ curiosity. This is
ANNUAL
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2015
ANNUAL
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It’s in our RNA
Including magazine
PAGE 1 / 72
Annual Report 2015
Table of Contents
Table of Contents
Message from the CEO
Key figures
Management Board
Supervisory Board
Management Board Report
Supervisory Board Report
Corporate Governance
Risk Management
Financial Statements 2015
2
3
4
5
7
13
16
25
27
PAGE 2 / 72
Annual Report 2015
Message from the CEO
Message from the CEO
2015 was a remarkable year for ProQR. We have started enrolling not one but two clinical studies for our
cystic fibrosis (CF) molecule QR-010 and brought a second molecule forward for Leber’s congenital amaurosis
(LCA), QR-110. We grew our company to 125 talented employees all dedicated to improve the lives of patients
in need. We expanded our headquarters in Leiden, NL and put our stick in the ground in the US with the
opening of an office in Palo Alto, CA. The growth of our organization and facilities enabled us to make
significant progress on our RNA based therapeutics pipeline.
ProQR was founded in 2012 as a company focused on finding a treatment for patients with CF. Our molecule
for ∆F508 CF, QR-010, is a single stranded, chemically modified antisense RNA oligonucleotide. We
demonstrated that the naked molecule is well taken up by target cells and together with internationally
recognized leaders we demonstrated that QR-010 restores normal levels of CFTR function, the protein
affected by CF. In 2015, our team achieved a major milestone by dosing the first patient with CF with QR-010.
Our two global trials are actively enrolling and are well supported by the CF medical community and patients.
This is a truly exciting step in the development of our company and could lead to a transformative therapy for
patients with CF.
But our enthusiasm for the potential of RNA based therapeutics does not stop with CF. ProQR recognizes the
significant potential of RNA based therapeutics for the treatment of eye disease, and as a result, in 2015 we
strengthened our efforts in ophthalmology. Led by strong and experienced leadership, our ophthalmology
team is driving several discovery stage programs and advanced QR-110 for LCA into pre-clinical development.
LCA is the most common form of genetic blindness in children and we are targeting the most prevalent
mutation. These very exciting programs hold an important promise for patients who will go blind without a
meaningful treatment.
Building on the strong progress in our CF and ophthalmology units, we boldly invested in our innovation
team. The result is extraordinary – by applying our toolbox of RNA technologies we have invented and
patented numerous molecules for severe genetic diseases like epidermolysis bullosa, Fuchs endothelial
corneal dystrophy and Usher syndrome. We plan to continue to invest in our growing pipeline in 2016 to
make a difference in many more lives of patients and their loved ones.
On a personal note, I want to thank all ProQRians for another year of passion, commitment, energy,
adventure, fun and hard work. Many thanks to patients, the clinical research teams and the medical and
scientific communities for joining us in our efforts. And thanks to our shareholders for the continued support
in our mission. I look forward to another exciting year in which we will readout our first two clinical trials of
QR-010, move QR-110 towards clinical development and expand and advance our pipeline.
Daniel de Boer
Key figures
PAGE 3 / 72
Annual Report 2015
Key figures
dsssds
2015
2014
Result from continued operations (in € 1,000)
Net revenue
Other income
Research and development costs
General and administrative costs
Operating result
Net result
Balance sheet information (in € 1,000)
Non-current assets
Current assets
Total assets
Shareholders’ equity
Non-current liabilities
Current liabilities
Cash flows (in € 1,000)
Net cash used in operating activities
Net cash used in investing activities
Net cash generated by financing activities
Ratio’s (in %)
Current ratio
Solvency
Figures per share
Weighted average number of shares outstanding
Basic and diluted earnings per share (in €)
Cash flow per share (in €)
Employees (in FTE)
Average number of staff for the period
--
3,235
(23,401)
(6,837)
(27,003)
(20,832)
2,340
97,769
100,109
89,799
4,824
5,486
(24,232)
(1,324)
1,620
--
313
(10,267)
(6,507)
(16,461)
(12,127)
1,350
113,897
115,247
109,404
2,829
3,014
(14,457)
(1,233)
119,883
17.8
89.7
37.8
94.9
23,343,262
11,082,801
(0.89)
(1.03)
(1.09)
9.40
86.1
37.8
PAGE 4 / 72
Annual Report 2015
Management Board
Management Board
We have a two-tier board structure consisting of our Management Board (raad van bestuur) and a separate
Supervisory Board (raad van commissarissen). The Management Board operates under the chairmanship of
the Chief Executive Officer and shares responsibility for the deployment of ProQR’s strategy and policies, and
the achievement of its objectives and results.
Under Dutch Law, the Management Board has ultimate responsibility for the management and external
reporting of the Company and is answerable to shareholders at the General Meeting of Shareholders.
Pursuant to the two-tier corporate structure, the Management Board is accountable for its performance to a
separate and independent Supervisory Board.
The following table sets out information with respect to each of our Management Board members, their
respective ages and their positions at the Company as of the date of this annual report.
Name
Gender
Date of Birth
Position
Date of
Appointment
Term
expires
Daniel de Boer
Male
April 12, 1983
Chief Executive Officer
February 21, 2012
René Beukema
Male March 26, 1964
Chief Corporate
Development Officer and
General Counsel
April 17, 2014
2018
2017
The following sets forth biographical information regarding our management board members.
Daniel de Boer is our founding Chief Executive Officer and has served as such since our incorporation in
February 2012. Mr. de Boer is a passionate and driven entrepreneur and advocate for CF patients, and has
assembled an experienced team of successful biotech executives as co-founders and early investors. As a
serial entrepreneur in IT, he founded and led a number of tech companies through phases of growth,
initiating development and launch of several IT related products in several European countries. Prior to
founding ProQR, Mr. de Boer served as a founder and Chief Executive Officer of RNA Systems, founder and
Chief Executive Officer of PC Basic, and founder and Chief Executive Officer of Running IT. Mr. de Boer is
responsible for the overall strategy and general business in the company.
René Beukema has served as our Chief Corporate Development Officer and General Counsel since April 2014.
Mr. Beukema joined us in September 2013 and is a seasoned in-house corporate lawyer in the Dutch
biotechnology arena. Prior to joining us, Mr. Beukema served as general counsel and corporate secretary of
Crucell N.V. for twelve years, following his experience as a senior legal counsel at GE Capital / TIP Europe and
legal counsel at TNT Express Worldwide. Mr. Beukema was also a venture partner of Aescap Venture, a life
sciences venture capital firm. Mr. Beukema is the co-founder and advisor of Mytomorrows N.V., a Dutch life
sciences company, and a member of the VU Medical Cancer Center children in Amsterdam. He holds a post-
doctoral degree in corporate law from the University of Nijmegen in co-operation with the Dutch Association
of In-house Counsel (Nederlands Genootschap van Bedrijfsjuristen) and a Master’s degree in Dutch law from
the University of Amsterdam.
PAGE 5 / 72
Annual Report 2015
Supervisory Board
Supervisory Board
The Supervisory Board supervises the policies of the Management Board and the general course of affairs of
ProQR and advises the Management Board thereon. The Supervisory Board, in the two-tier corporate
structure under Dutch law, is a separate and independent corporate body.
The following table sets forth information with respect to each of our supervisory board members and their
respective ages as of the date of this annual report. The terms of office of all our supervisory board members
expire according to a rotation schedule drawn up by our supervisory board.
Our supervisory board is currently composed of the following members, all of whom are independent under
applicable NASDAQ standards and all of whom, with the exception of Mr. Antoine Papiernik are independent
under the Dutch Corporate Governance Code (DCGC):
Name
Gender Nationality
Date of Birth
Position Date of Appointment
Term expires
Dinko Valerio
Male
NL
August 3, 1956
Chairman
January 1, 2014
Alison Lawton
Female
US September 26, 1961
Member
September 17, 2014
Antoine Papiernik
Henri Termeer
Paul Baart
Male
Male
Male
FR
NL
NL
July 21, 1966
Member
January 1, 2014
February 28, 1946
Member
January 1, 2014
November 9, 1950
Member
June 10, 2015
2016
2018
2018
2016
2019
The following sets forth biographical information regarding our supervisory board members.
Dinko Valerio is one of our founders and currently serves as the chairman of our supervisory board. Mr.
Valerio has served on our supervisory board since January 2014. Mr. Valerio is a scientist and an experienced
biotech entrepreneur with experience in both public and private companies as CEO and board member. Mr.
Valerio is founder and former CEO of Crucell N.V., a Dutch biotech company, and founder and general
partner of Aescap Venture, a life sciences venture capital firm. In 1999, Mr. Valerio was one of the founders of
Galapagos Genomics N.V., a spinout from Crucell N.V. which develops novel mode of action medicines.
Adding to his corporate experience, Mr. Valerio is a professor in the field of gene therapy of the
hematopoietic system at the University of Leiden. He received his Master of Science degree in Biology from
the University of Amsterdam in 1982 and completed his Ph.D. in Molecular Genetics with Honors at the
University of Leiden in 1986. Mr. Valerio also was a visiting scientific specialist at Genentech Inc., San
Francisco in 1985 and a postdoctoral fellow at the Salk Institute, San Diego from 1986 to 1987. He is an
author on more than 100 articles in peer-reviewed journals and an inventor on 11 patent-families. We believe
that Mr. Valerio's experience in the venture capital industry, particularly with biopharmaceutical companies,
and his experience serving on the boards of directors of a number of biopharmaceutical companies provide
him with the qualifications and skills to serve as chairman of our supervisory board.
Alison Lawton has served on our supervisory board since September 2014. Ms Lawton is currently the Chief
Operating officer of Aura Biosciences Inc. From January 2013 to January 2014, Ms. Lawton served as Chief
Operating Officer of OvaScience, Inc., a public life sciences company. From 1991 to 2013, Ms. Lawton worked
at various positions of increasing responsibility at Genzyme Corporation, or Genzyme, and subsequently at
Sanofi-Aventis, following its 2011 acquisition of Genzyme, each a global biopharmaceutical company. Ms.
Lawton served as head of Genzyme Biosurgery, where she was responsible for Genzyme’s global orthopedics,
PAGE 6 / 72
Annual Report 2015
Supervisory Board
surgical and cell therapy and regenerative medicine businesses. Prior to that, Ms. Lawton oversaw Global
Market Access at Genzyme, which included Regulatory Affairs, Global Health Outcomes and Strategic Pricing,
Global Public Policy, and Global Product Safety & Risk Management. Before joining Genzyme, Ms. Lawton
worked for seven years in the United Kingdom at Parke-Davis, a pharmaceutical company. Ms. Lawton serves
on the board of directors of Verastem, Inc., a public biopharmaceutical company. She also served on the
board of directors of Cubist Pharmaceuticals for three years until its acquisition by Merck &Co., Inc. in 2015.
She currently consults for X4 Pharmaceuticals. She is past President and Chair of the Board of Regulatory
Affairs Professional Society and past FDA Advisory Committee member for Cell and Gene Therapy
Committee. In 2016 she is joining the board of directors of CoLucid Pharmaceuticals. She earned her BSc in
Pharmacology, with honors, from King’s College London. We believe that Ms. Lawton’s significant operational,
international, regulatory and senior management experience within the pharmaceutical and biotechnology
industries, as well as experience serving on a board of directors within the industry, provide her with the
qualifications and skills to serve as a member of our supervisory board.
Antoine Papiernik has served on our supervisory board since January 2014. Mr. Papiernik is managing partner
at Sofinnova Partners, which he joined in 1997. Mr. Papiernik has been an initial investor and active board
member in public companies like Actelion, Addex, Auris Medical, Orexo, NovusPharma (then sold to CTI),
Movetis (then sold to Shire), Mainstay, Pixium and Stentys, which went public respectively on the Zurich Stock
Exchange, the NASDAQ Global Market, the Stockholm Stock Exchange, the Milan Nuovo Mercato, the Belgium
Stock Exchange, the Dublin Stock Exchange and EuroNext Paris, in Cotherix (initially NASDAQ listed, then sold
to Actelion), Core Valve (sold to Medtronic), Fovea (sold to Sanofi Aventis) and Ethical Oncology Science (EOS,
sold to ClovisOncology). Mr. Papiernik has also invested in and is a board member of private companies MD
Start, ReCor, Shockwave Medical and Reflexion Medical. Mr. Papiernik has an MBA degree from the Wharton
School of Business, University of Pennsylvania. We believe that Mr. Papiernik's experience in the venture
capital industry, particularly with biopharmaceutical companies, and his experience serving on the boards of
directors of a number of biopharmaceutical companies provide him with the qualifications and skills to serve
as member of our supervisory board.
Henri Termeer is vice chairman and has served on our supervisory board since January 2014. From October
1983 to June 2011, Mr. Termeer served as chairman, president and chief executive officer of Genzyme
Corporation. For ten years prior to joining Genzyme, Mr. Termeer worked for Baxter International
Laboratories, Inc., a manufacturer of human health care products. Mr. Termeer resigned from Genzyme in
June 2011 following the acquisition of Genzyme by Sanofi. Widely acknowledged for his contributions to the
biotechnology industry and health care field, Mr. Termeer is active in the areas of humanitarian assistance,
policy issues, and innovation in providing access to health care. He is a member of the board of each of
Massachusetts General Hospital and Partners HealthCare and a member of the board of fellows of Harvard
Medical School. Mr. Termeer is also a member of the board of the Massachusetts Institute of Technology and
serves on its Executive Committee and a board member of the Biotechnology Industry Organization (BIO). He
is a board member of the New England Healthcare Institute, a nonprofit, applied research health policy
organization he was instrumental in founding and on the boards of Life Sciences Foundation, Boston Ballet,
Museum of Science, WGBH and Project Hope. Mr. Termeer is also currently a board member of Abiomed Inc.,
Aveo Pharmaceuticals, Verastem, Inc., Moderna Therapeutics and was a board member of Allergan, Inc. from
2014 through its acquisition by Actavis in March 2015. Mr. Termeer was chairman of the Federal Reserve
Bank of Boston’s board of directors from 2010-2011. Mr. Termeer studied economics at the Economische
Hogeschool (Erasmus University, the Netherlands) and earned an MBA from the Darden School at the
University of Virginia. We believe that Mr. Termeer’s experience in the pharmaceutical and biotechnology
industries and his experience serving on the boards of directors of a number of biopharmaceutical
companies provide him with the qualifications and skills to serve as member of our supervisory board.
PAGE 7 / 72
Annual Report 2015
Supervisory Board
Paul Baart has served on our supervisory board since June 2015. Mr Baart made his career in public
accounting in both the Netherlands and the USA. At PwC the Netherlands he served on the management
board and the supervisory board. He was also a member of the global board of PwC International. He has
served many large (listed) and international clients in various industries. He held professional qualifications
both in the Netherlands and in the USA. He was chairman of Royal NIVRA, the Dutch Institute of Registered
Accountants (now NBA), member of the Dutch Council on Annual Reporting (RJ) and supervisory board
member of Nyenrode Business University. Present roles include outside member Enterprise Chamber
Amsterdam Court of Appeal (Ondernemingskamer) and chairman Supervisory Board Grant Thornton the
Netherlands. He studied business economics at the Vrije Universiteit in Amsterdam, where he also passed the
Registeraccountantsexam. We believe that Mr. Baart’s significant international experience in public
accounting, as well as his broad experience in management, oversight and boardroom consulting provide
him with the qualifications and skills to serve as member of our supervisory board and chairman of our audit
committee.
PAGE 8 / 72
Annual Report 2015
Management Board Report
Management Board Report
The Company
ProQR Therapeutics N.V., or “ProQR” or the “Company”, is dedicated to changing lives through the creation of
transformative RNA medicines for the treatment of severe orphan diseases such as cystic fibrosis and Leber’s
congenital amaurosis. Based on our unique proprietary RNA repair platform technologies we are growing our
pipeline with patients and loved ones in mind.
We were incorporated in the Netherlands, on February 21, 2012 and reorganized from a private company
with limited liability to a public company with limited liability on September 23, 2014. Legal demerger of our
Company was effectuated as per June 30, 2015. Our Company has its statutory seat in Leiden, the
Netherlands. The address of its headquarters and registered office is Darwinweg 24, 2333 CR Leiden, the
Netherlands.
Operations
We are an innovative biopharmaceutical company engaged in the discovery and development of RNA-based
therapeutics for the treatment of severe genetic orphan disorders. Utilizing our unique proprietary RNA
repair technologies we are building a pipeline in severe genetic disorders. We believe we can target rare
genetic disorders in which a single protein is defective due to certain types of genetic mutations. We design
our therapeutic candidates to specifically target and repair the defective messenger RNA, or mRNA, that is
transcribed from a mutated gene in order to restore functional or normal (wild-type) protein and therefore,
we believe, has the potential to modify the disease. We believe that this unique approach offers several
advantages compared with small molecule, gene therapy and other therapeutic approaches in the treatment
of certain genetic diseases. Our current clinical stage molecule is QR-010, a single stranded RNA-based
oligonucleotide that is designed to repair the genetic defect in the most prevalent mutation in cystic fibrosis,
or CF. We are currently studying this molecule in two global clinical trials in 80 CF patients. Our second
molecule is QR-110, a single stranded RNA-based oligonucleotide that targets the most prevalent mutation in
the CEP290 gene for Leber’s congenital amaurosis, or LCA, patients and is currently in preclinical
development. Beyond that, our in-house discovery engine that we call the innovation unit has been active in
building a pipeline based upon our toolbox of RNA technologies that we have in-licensed or developed in-
house. We have launched a number of discovery programs including programs in dystrophic epidermolysis
bullosa, Usher syndrome, Fuchs endothelial corneal dystrophy (FECD), Huntington’s disease, Alzheimer’s
disease and Friedreich’s ataxia.
QR-010 and Cystic Fibrosis (CF)
CF is a genetic disease that affects an estimated 70,000 to 100,000 patients worldwide and causes early
morbidity and mortality. CF currently has no cure. The median age of death for CF patients in the US is 27
years, and more than 90% of CF patients die from respiratory failure. To date, all but two of the therapies
approved to treat CF patients are designed to treat the symptoms of CF rather than address the underlying
cause. CF is caused by mutations in the gene that encodes for a protein called cystic fibrosis transmembrane
conductance regulator, or CFTR. Although there are more than 1,900 different genetic mutations that cause
CF patients. In CF patients, this mutated gene and the resulting defective protein lead to the dysfunction of
multiple organ systems, including the lungs, pancreas and gastrointestinal tract. In the lung airways, absence
of functional CFTR protein leads to unusually thick, sticky mucus that clogs the lungs and increases
vulnerability to chronic, life-threatening lung infections.
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Annual Report 2015
Management Board Report
Our lead product candidate in the CF space, QR-010, a first-in-class RNA-based oligonucleotide, is designed to
F508 mutation in
the CFTR gene of CF patients and subsequently producing wild-type, or normal CFTR protein. QR-010 is
designed to be self-administered through a small, handheld aerosol delivery device, or nebulizer, in the form
of a mist inhaled into the lungs. In pre-clinical studies we have shown this method could allow maximum
exposure of QR-010 to the primary target organ, the lung, as well as significant exposure to other affected
organs through systemic absorption into the blood. Based on our extensive pre-clinical studies on safety,
delivery and efficacy in relevant cell and animal models we have started two global clinical studies of QR-010
in 2015.
In June 2015, we started enrollment in our first clinical trial directly in CF patients. This Phase 1b clinical trial,
which we refer to as PQ-010-001, is a randomized, double-blind, placebo-controlled, 28-day dose-escalation
study that is conducted in 23 sites in North America and Europe. The primary endpoint of the study is to
evaluate the safety, tolerability and absorption, distribution and degradation, or pharmacokinetics, of single
and multiple ascending doses of inhaled QR-010 in 64 CF patients carrying two copies (homozygotes) of the
∆F508 mutation. As exploratory efficacy endpoints, this study will also assess sweat chloride, weight gain,
CFQ-R Respiratory Symptom Score and lung function, measured by FEV1. These measures could be indicative
of the potential efficacy of QR-010 although the study is not powered for statistical significance on these
endpoints. In parallel with our Phase 1b trial we are conducting a proof-of-concept, or POC, study, which we
refer to as PQ-010-002, designed to investigate the drug candidate’s ability to restore CFTR function in the
nasal lining of eight ∆F508 homozygous (carry two allelic copies) and eight compound heterozygous (carry
one copy of the ∆F508 mutation and one other disease causing mutation). We expect to report top-line data
from both our Phase 1b trial and our POC study in mid to late 2016.
QR-010 has been granted orphan drug designation in the United States and the European Union. Generally, if
a product with an orphan drug designation subsequently receives the first marketing approval for the
indication for which it has such designation, the product is entitled to a period of market exclusivity. This
exclusivity precludes the U.S. Food and Drug Administration, or FDA, or the European Medicines Agency, or
EMA, as applicable, from approving another marketing application for the same or, in the European Union, a
similar drug for the same indication for that time period, unless the later product is clinically superior.
Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review
and approval process.
QR-110 and Leber’s Congenital Amaurosis (LCA)
LCA is the most common genetic cause of blindness in childhood. LCA is caused by a genetic defect in 19 or
more associated genes. The most common mutation is the p.Cys998X (also known as c.2991+1655A>G) in the
CEP290 (Centrosomal protein of 290 kDa) gene. Although diagnosis rates vary, based on our estimations we
believe this mutation occurs in approximately 2,000 patients in the Western world. Most patients affected by
this mutation lose sight in the first few years of life. There is currently no disease modifying therapy available
on the market or being tested in clinical development for this specific subtype of the disease. In LCA patients,
this mutation leads to significant decrease of active CEP290 protein in the photoreceptor cells in the retina in
the eye. The absence of this essential protein causes blindness.
Our lead product candidate in the LCA space, QR-110, a first-in-class oligonucleotide, is designed to treat the
disease by repairing the underlying cause in the mRNA, which results in the production of wild-type CEP290
protein. The p.Cys998X mutation is a substitution of one nucleotide in the pre-mRNA that leads to a defective
mRNA and non-functional protein. QR-110 is designed to bind to the mutated location in the pre-mRNA,
thereby leading to normally spliced or wild-type mRNA, which could produce wild-type or normal protein. QR-
110 is designed to be administered through intravitreal injections in the eye. We believe the activity in pre-
clinical models of LCA provides support for the clinical development and therapeutic potential of QR-110. In
PAGE 10 / 72
Annual Report 2015
Management Board Report
2016 we intend to start our first clinical trial directly in LCA patients. There is recent precedent for an
accelerated development path in another LCA mutation, and we believe this accelerated development
pathway can also be applied to QR-110.
We have filed for orphan drug designation for QR-110 in the U.S. and the European Union.
Innovation pipeline
Beyond CF and LCA, our innovation unit, which is our internal discovery engine, is currently evaluating over
100 disease targets through our internal research or that of external collaborators. These disease targets are
based on our multiple RNA technologies that were discovered internally or in-licensed. We have a rigorous
evaluation process in identifying programs for our pipeline that includes establishing genetic causality, ability
to deliver to the target organ, intellectual property protection, strong proof of concept, and a high unmet
need. Our early stage programs are in various stages of discovery and target different severe genetic
disorders where we believe our technologies have the potential to make a life altering impact for affected
patients. These include programs for epidermolysis bullosa, a severe genetic skin disorder that impacts
young children, Usher syndrome and Fuchs endothelial corneal dystrophy (FECD) programs to further
strengthen our ophthalmology franchise, programs in our early central nervous system, or CNS, franchise
that include Huntington’s disease and Alzheimer’s disease as well as a program for Friedreich’s ataxia.
Human resources
At ProQR we have set ourselves the immense task of developing drugs that will potentially transform the lives
of patients suffering from severe genetic diseases like cystic fibrosis and Leber’s congenital amaurosis. To
make this happen we demand the utmost of ourselves. We actively create a caring atmosphere filled with fun
and joy, in which we love to work and maintain productive and happy lives. At ProQR we foster
empowerment, self development, creativity and a sense of community.
We are a supportive, ingenious and persistent team that does things different. We're passionate and driven
to change the lives of patients and their loved ones.
Corporate social responsibility
It is required by regulatory authorities to demonstrate the quality, safety and efficacy of a new drug in both
animals and humans, before the authorities can approve the new product and will provide Marketing
authorization. ProQR attaches great importance to minimalizing the number of animals needed in the
obligatory animal studies and guarding their welfare. Our aim is to monitor continually that animal
experiments will be performed only if there are no viable or legal alternatives.
External collaborators contracted for the execution of our in-vivo pre-clinical studies (contract research
organizations, CROs) are selected based on their expertise, quality and accreditations for laboratory animal
care and welfare. The housing and husbandry must comply with the highest international standards.
Personnel responsible for housing, husbandry and care of the animals must have received adequate and
relevant documented education.
We strive for welfare improvements to be implemented in CRO policies. An important achievement in 2014
was that on our request our preferred CRO has replaced the housing which was compliant with their national
legislations and installed new group housings with significantly more living space that to a larger extent take
in consideration the physiological and behavioral needs of the laboratory animals concerned. This will also
contribute to higher welfare standards in the studies for other (future) clients.
PAGE 11 / 72
Annual Report 2015
Management Board Report
Main financial developments
Financial position
In 2015, we successfully expanded our operating activities. Operating costs went up significantly while our
liquidity and solvency went down. ProQR’s cash and cash equivalents at December 31, 2015 amounted to
€ 94,865,000 compared to € 112,736,000 at December 31, 2014. During the year 2015, operating cash used
amounted to € 24,232,000, compared to € 14,457,000 in 2014. Shareholders’ equity decreased to
€ 89,799,000.
As at December 31, 2015, we had non-current liabilities of € 4,824,000, which fully consisted of borrowings
from a government body.
Income statement
We have generated losses since our formation in February 2012. For the years ended December 31, 2013,
2014 and 2015, we incurred net losses of approximately € 3,253,000, € 12,127,000 and € 20,832,000,
respectively. As at December 31, 2015, we had an accumulated deficit of € 36,630,000. We expect to continue
incurring losses for the foreseeable future as we continue our pre-clinical studies of our product candidates,
continue clinical development of our product candidate QR-010, advance QR-110 into clinical development,
increase investments in our other research programs, apply for marketing approval of our product
candidates and, if approved, build a sales and marketing infrastructure for the commercialization of our
product candidates. To date, we have not generated any revenues from royalties or product sales. Based on
our current plans, we do not expect to generate royalty or product revenues for the foreseeable future.
Other income is incidental by nature. In August 2014, we entered into an agreement with Cystic Fibrosis
Foundation Therapeutics, Inc., or CFFT, a subsidiary of the Cystic Fibrosis Foundation, pursuant to which CFFT
agreed to provide us with up to $ 3 million to support the clinical development of QR-010. In 2015, the QR-010
project has received funding of € 6 million from the European Union’s Horizon 2020 research and innovation
programme under grant agreement No 633545. Consequently, other income increased from € 313,000 in
2014 to € 3,235,000 in 2015. We expect to continue generating other income from CFFT and Horizon 2020 in
2016.
Research and development costs increased to € 23,401,000 from € 10,267,000 in 2014. These research and
development costs comprise allocated employee costs, costs related to our clinical trials, costs for production
of clinical and pre-clinical compounds and drug substances by contract manufacturers, fees and other costs
paid to contract research organizations, or CROs, costs of materials and laboratory consumables, license- and
IP-costs and other allocated costs. These costs were primarily related to our product candidates, QR-010 and
QR-110, and our innovation unit. Our research and development expense is highly dependent on the
development phases of our product candidates and is expected to continue to increase, although it fluctuates
significantly from period to period.
The variances in research and development costs between the years ended December 31, 2015 and 2014 are
mainly due to:
costs we incurred on clinical studies for QR-010;
increased staff costs as a result of increased staff working on (pre-)clinical development of our product
candidates and the growth of our innovation unit. The number of full-time equivalent employees working
on research and development increased from 40 at December 31, 2014 to 72 at December 31, 2015;
increased costs for externally conducted studies, including various in vivo studies, proof of concept
studies and dose ranging and toxicity studies conducted in connection with the development of our
product candidates;
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Annual Report 2015
Management Board Report
costs for the production of QR-010 and QR-110 compounds, including the costs of a GMP batch of QR-
010 in preparation of our Phase 1b clinical study;
increased laboratory costs including purchases of compounds and laboratory materials used by the
research and development staff in proportion to the increase in the number of employees, and increased
costs for the use of laboratories;
increased project-related consultancy costs, including regulatory and intellectual property support; and
increased share-based compensation, reflecting grants of share options to research and development
staff made after we adopted our Option Plan in September 2013.
General and administrative costs increased to € 6,837,000 in 2015 from € 6,507,000 in 2014. These general
and administrative costs comprise employee costs, office costs, general consultancy costs and other costs.
The increase was primarily related to:
increased staff costs associated with the increase of our general and administrative staff from 19 full-
time equivalent employees at December 31, 2014 to 27 full-time equivalent employees at December 31,
2015;
increased office and general costs, including office rent, information technology and communication
costs, travel costs and office consumables, as well as costs to improve our internal control environment
in 2015;
increased costs for legal support, accounting and other consultancy costs, including costs incurred in
preparation of our IPO amounting to € 1,763,000 in 2014, resulting in a modest increase of total G&A
costs in 2015; and
increased share-based compensation, reflecting grants of share options to non-research and
development staff made after we adopted our Option Plan in September 2013.
In 2015 share-based compensation amounted to € 1,212,000, compared to € 646,000 in 2014. Net financial
income amounted to € 6,171,000, compared to € 4,334,000 in 2014. This increase in financial income results
from the interest income on the proceeds of our IPO and particularly foreign exchange differences on cash
denominated in U.S. dollars.
Outlook
We expect to continue growing in 2016 in terms of research and development expenses as well as the
number of employees compared to 2015. We believe we have sufficient cash to fund these expenses and to
prepare the Company for future growth. Given the development stage of the Company, we do not anticipate
revenues in the foreseeable future.
Leiden, March 31, 2016
On behalf of the Management Board,
Daniel de Boer
CEO
PAGE 13 / 72
Annual Report 2015
Supervisory Board Report
Supervisory Board Report
ProQR Therapeutics has chosen for its governance structure to be a so-called two-tier system. In such a
setting the Supervisory Board supervises and advises the Management Board in performing their
management tasks and setting the strategy of the Company. The Supervisory Board as well as its individual
members act in the interests of ProQR, its business and development and all of its stakeholders.
During the year we welcomed James Shannon as Boardmember-elect. James is a seasoned pharma executive
with ample know how in drug development from his previous positions as Chief Medical Officer at Glaxo
SmithKline and Global Head Pharma Development at Novartis. With this, we believe that the Board is
complete. All of the relevant industry-expertise is represented and as a collective the board members bring a
wealth of experience in building and growing successful companies. Our interactions as a group as well as in
the sub committees over the last year were intense and constructive. We believe that the executive Board of
Directors benefitted from these interactions and, vice versa, it further strengthened the Supervisory Board’s
confidence in our management.
Below is a more specific description of the Supervisory Board’s activities during the financial year 2015 and
other relevant information on its functioning.
Activities of the Supervisory Board
The Supervisory Board and the Board of Directors met 4 times during 2015, and have held various additional
informal meetings and telephone conferences, both collectively and individually. During these meetings, the
progress of the various projects, the main risks of the business, the funding and the strategic direction of the
Company were discussed. In addition, a two day off-site was held during which specifically the long-term
strategy of the company was discussed. The Supervisory Board meetings were very well attended (100%) and
the Committees reported back on their activities to the full Supervisory Board on a regular basis.
Committees of the Supervisory Board
We have an audit committee, a compensation committee and a nominating and corporate governance
committee. We have adopted a charter for each of these committees.
Compensation Committee
The Compensation Committee has met 3 times in 2015.
Compensation report 2015
In September 2014, the supervisory board adopted our Compensation Policy. This Compensation Policy also
applied to the financial year 2015 and will apply to subsequent years. The Compensation Policy is designed
based on the following principles:
Three compensation pillars consisting of:
Annual Base Salary
Short Term Incentive (annual cash bonus)
Long Term Incentive (Stock Option Plan)
Flexibility: the Compensation Policy should provide flexibility to allow the Supervisory Board, acting on
the recommendation of the Compensation Committee, to reward the Management Board in a fair and
equitable manner;
This Compensation Policy should drive the right kind of management behaviour, discourage unjustified
risk taking and minimise any gaming opportunity;
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Supervisory Board Report
This Compensation Policy should pay for performance, taking into account not only the measurable
financial performance of / or milestones achieved by the Company, but also, where appropriate, the
efforts made by the Management Board, individually and as a whole, in managing the Company. For the
variable components, the Compensation Committee performs an analysis of the possible outcomes
under different scenarios;
Design of the Compensation Policy shall be based on current legislation applicable in the Netherlands;
This Compensation Policy shall foster alignment of interests with shareholders;
The pension of the Management Board shall be based on the defined contribution system; and
Pay differentials and position within the Company are taken into account and are considered and
evaluated regularly.
Annual Base Salary
The Compensation Committee reviewed the annual base salary of the Management Board taking into
consideration the Compensation Reference Group as contained in the Compensation Policy. Based on this
review the annual base salary levels for 2015 have been set at EUR 285,000 for the CEO, Daniel de Boer and
at EUR 255,000 for the chief corporate development officer and general counsel, René Beukema.
Short Term Incentive
The Compensation Committee reviewed the performance of the Company during 2015 in comparison to the
objectives and reviewed the achievements of the members of the Management Board versus their personal
objectives.
Based on the recommendation of the Compensation Committee, the Supervisory Board decided early 2016
that the CEO Daniel de Boer has achieved 100% and the chief corporate development officer and general
counsel, René Beukema has achieved 100% of the objectives that had been set to determine their individual
bonus awards for the year 2015. For 2015 the individual bonuses have been set at EUR 99,750 for Daniel de
Boer and EUR 62,500 for René Beukema. These bonuses will be paid in cash in the first quarter of 2016.
Long Term Incentive
Based on the recommendation of the Compensation Committee, the Supervisory Board decided to grant
stock options in 2015 to the CEO, Daniel de Boer and the chief corporate development officer and general
counsel, René Beukema. Based on this decision stock options with an exercise price of USD 18.32 have been
granted with respect to 23,902 shares to the CEO, Daniel de Boer and 8,713 shares to the chief corporate
development officer and general counsel, René Beukema.
Pensions
The pension contributions paid during 2015 amount to EUR 10,180 for the CEO, Daniel de Boer and EUR
14,304 for the chief corporate development officer and general counsel, René Beukema.
Supervisory board remuneration
In September 2014, our shareholders approved a compensation policy whereby members of our supervisory
board will receive board fees of € 25,000 per year and the chairperson will receive board fees of € 30,000 per
year. In addition, each board committee chairperson will receive € 5,000 per year for service on such
committee (except for the chairperson for the nominating committee who will receive € 3,000), and each
other member of a board committee will receive € 3,000 per year for service on such committee. On top of
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Supervisory Board Report
that several supervisory board members were granted options as set out in Note 23 to the financial
statements or EUR 40,000 in cash.
Nominating and Corporate Governance Committee
The chairman of the Nominating and Corporate Governance Committee elected to involve the entire
Supervisory Board in the selection process of additional Supervisory Board members. Hence no formal
nomination committee meeting was held. Based on discussions held, James Shannon was nominated to join
the Supervisory Board. His appointment is subject to approval of the Annual General Meeting of
Shareholders in June 2016.
Audit Committee
The audit committee met five times in 2015. Main topics addressed were the quarterly results, enterprise risk
management and SOx implementation, F-3 shelf filing and the management letter of the external auditor for
2015.
The audit committee also reviewed ProQR’s annual financial statements, including non-financial information,
prior to publication thereof. These financial statements for 2015 have been audited and provided with an
unqualified opinion by our external auditor, Deloitte Accountants B.V., and were extensively discussed with
the auditors in the meetings of the Supervisory Board, Audit Committee and Management Board on March
24, 2016. The Supervisory Board is of the opinion that the Financial Statements 2015 meet all requirements
and recommends that the Annual General Meeting of Shareholders adopts the financial statements and the
appropriation of net result proposed by the Management Board.
The Company’s external auditor attended all Audit Committee meetings. The Audit Committee evaluates the
performance of Deloitte as independent external auditor annually. Due to the limited size of the Company, it
was concluded that there was currently no need to appoint an internal auditor.
The Supervisory Board is responsible for the quality of its own performance and it discusses, once a year on
its own, without the members of the Management Board present, both its own functioning and that of the
individual members, and the functioning of the Management Board and that of its individual members. The
Supervisory Board discussed its composition and competencies and has nominated James Shannon to join
the Supervisory Board based on this review. We feel the additional efforts of all staff at ProQR form a strong
foundation for the success and growth of the Company and all milestones reached this past year. Therefore,
we would like to express our thanks to the members of the Management Board, senior management and all
other employees for their contribution and performance during the year. In particular we thank our
shareholders for their continued support.
Leiden, March 31, 2016
On behalf of the Supervisory Board,
Dinko Valerio
Chairman
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Annual Report 2015
Corporate Governance
Corporate Governance
ProQR attaches great importance to corporate governance. In this report, the Company addresses its overall
corporate governance structure and states to what extent and how it applies the principles and best practice
provisions of the Dutch Corporate Governance Code (“DCGC” or “the Code”). This report also includes the
information which the Company is required to disclose pursuant to the Dutch governmental decree on Article
10 Takeover Directive and the governmental decree on Corporate Governance.
Deviations from certain aspects of the Code, when deemed necessary in the interests of the Company, will be
disclosed in the Annual Report. Deviations are due to our Company being listed in the United States with
most of our investors being outside of the Netherlands, as well as to the international business focus of our
Company. As a Company listed on NASDAQ, we comply with NASDAQ’s corporate governance listing
standards, except for instances where we follow our home country’s corporate governance practices in lieu of
certain NASDAQ’s standards as explained below, as NASDAQ investors are more familiar with NASDAQ’s rules
than with the Code.
Substantial changes in the Company’s corporate governance structure and in the Company’s compliance with
the DCGC, if any, will be submitted to the General Meeting of Shareholders for discussion under a separate
agenda item. The Supervisory Board and the Management Board, which are responsible for the corporate
governance structure of the Company, are of the opinion that the principles and best practice provisions of
the DCGC that are addressed to the management board and the supervisory board, interpreted and
implemented in line with the best practices followed by the Company, are being applied.
The full text of the DCGC can be found at the website of the Monitoring Commission Corporate Governance
Code (www.commissiecorporategovernance.nl) and for an overview of our conformity with the Code the
following documents are available at our website (www.ProQR.com): audit committee charter, compensation
committee charter, nominating and corporate governance committee charter and our code of business
conduct and ethics.
Management Board
Our management board is responsible for the day-to-day management of our operations under the
supervision of the supervisory board. The management board is required to:
keep the supervisory board informed in a timely manner in order to allow the supervisory board to carry
out its responsibilities;
consult with the supervisory board on important matters; and
submit certain important decisions to the supervisory board for its approval.
Our management board may perform all acts necessary or useful for achieving our corporate purposes,
other than those acts that are prohibited by law or by our articles of association. The management board as a
whole and any management board member individually, are authorized to represent us in dealings with third
parties.
Under our articles of association, the number of management board members is determined by the
supervisory board, and the management board must consist of at least one member. The supervisory board
elects a CEO from among the members of the management board.
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Corporate Governance
Members of the management board are appointed by the general meeting of shareholders upon a binding
nomination of the supervisory board. Our general meeting of shareholders may at all times deprive such a
nomination of its binding character by a resolution passed by at least two-thirds of the votes cast
representing more than 50% of our issued share capital, following which our supervisory board shall draw up
a new binding nomination.
Our management board rules provide that, unless the resolution appointing a management board member
provides otherwise, members of our management board will serve for a maximum term of four years. Our
articles of association provide that the management board members must retire periodically in accordance
with a rotation schedule adopted by the management board. A management board member who retires in
accordance with the rotation schedule may be reappointed immediately for a term of not more than four
years at a time.
Supervisory Board
Our supervisory board is responsible for the supervision of the activities of our management board and our
Company’s general affairs and business. Our supervisory board may, also on its own initiative, provide the
management board with advice and may request any information from the management board that it deems
appropriate. In performing its duties, the supervisory board is required to act in the interests of our Company
(including its stakeholders) and its associated business as a whole. The members of the supervisory board
are not authorized to represent us in dealings with third parties.
Pursuant to Dutch law, members of the supervisory board must be natural persons. Under our articles of
association, the number of supervisory board members is determined by our supervisory board itself,
provided there will be at least three supervisory board members. Our articles of association provide that
members of the supervisory board are appointed by the general meeting of shareholders upon a binding
nomination by the supervisory board. Our general meeting of shareholders may at all times deprive such a
nomination of its binding character by a resolution passed by at least two-thirds of the votes cast
representing more than 50% of our issued share capital, following which our supervisory board shall draw up
a new binding nomination.
Our supervisory board rules provide that members of our supervisory board will serve for a maximum
duration of three four-year terms. Our articles of association provide that the supervisory board members
must retire periodically in accordance with a rotation schedule adopted by the supervisory board. A
supervisory board member who retires in accordance with the rotation schedule can be reappointed
immediately. The rotation schedule provides that the terms of office of the members of our supervisory
board are staggered, such that approximately one-fourth of our supervisory board members will be subject
to election in any one year and which has the effect of creating a staggered board (which may in turn deter a
takeover attempt). The supervisory board appoints a chairman from among its members.
Save for Antoine Papiernik, each member of our supervisory board has been and remains fully independent
within the meaning of best practice provision III.2.2 of the DCGC. Mr. Papiernik is affiliated with Sofinnova
which holds 11.9 % of our shares and is therefore not independent within the meaning of best practice
provision III.2.2.f of the Code. We feel this deviation is justified by his specific knowledge and experience of
our business. Based on the above, we comply with best practice provision III.2.1 of the DCGC, according to
which not more than one supervisory board member is allowed not to be independent.
Under our articles of association, the general meeting of shareholders may suspend or remove supervisory
board members at any time. A resolution of our general meeting of shareholders to suspend or remove a
supervisory board member may be passed by a simple majority of the votes cast, provided that the
resolution is based on a proposal by our supervisory board. In the absence of a proposal by our supervisory
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Corporate Governance
board, a resolution of our general meeting of shareholders to suspend or remove a supervisory board
member shall require a majority of at least two-thirds of the votes cast representing more than 50% of our
issued share capital.
In a meeting of the supervisory board, each supervisory board member is entitled to cast one vote. A
supervisory board member may grant a written proxy to another supervisory board member to represent
him at a meeting of the supervisory board. All resolutions by our supervisory board are adopted by a simple
majority of the votes cast unless our supervisory board rules provide otherwise. In case of a tie in any vote of
the supervisory board, the chairman of the supervisory board shall have the casting vote. Our supervisory
board may also adopt resolutions outside a meeting, provided that such resolutions are adopted in writing,
all supervisory board members are familiar with the resolution to be passed and provided that no
supervisory board member objects to such decision-making process.
Committees of the Supervisory Board
We have an audit committee, a compensation committee and a nominating and corporate governance
committee. We have adopted a charter for each of these committees.
Audit Committee
Our audit committee consists of Paul Baart (chairman), Antoine Papiernik and Alison Lawton. Paul Baart was
appointed at our AGM on June 10, 2015. Until that date, Henri Termeer was the chairman of the audit
committee. Each member satisfies the independence requirements of the NASDAQ listing standards / Rule
10A-3(b)(1) under the Exchange Act, and each member, with the exception of Antoine Papiernik as stated
above, meets the criteria for independence set forth in best practice III.2.2 of the DCGC. Paul Baart, Henri
Termeer and Antoine Papiernik each qualify as an “audit committee financial expert,” as defined by the SEC in
Item 16A: “Audit Committee Financial Expert” and as determined by our supervisory board. The audit
committee oversees our accounting and financial reporting processes and the audits of our financial
statements. The audit committee is responsible for, among other things:
the operation of the internal risk management and control systems, including supervision of the
enforcement of relevant primary and secondary legislation, and supervising the operation of codes of
conduct;
the provision of financial information by the company (choice of accounting policies, application and
assessment of the effects of new rules, information about the handling of estimated items in the financial
statements, forecasts, work of internal and external auditors, etc.);
compliance with recommendations and observations of internal and external auditors;
reviewing the need for an internal audit function;
the policy of the company on tax planning;
relations with the external auditor, including, in particular, his independence, remuneration and any non-
audit services for the company;
the financing of the company; and
the applications of information and communication technology.
Compensation Committee
Our compensation committee consists of Antoine Papiernik (chairman), Dinko Valerio, Henri Termeer and
Alison Lawton. Each member satisfies the independence requirements of the NASDAQ listing standards / Rule
10A-3(b)(1) under the Exchange Act, and each member, with the exception of Antoine Papiernik, meets the
criteria for independence set forth in best practice III.2.2 of the DCGC. The compensation committee assists
our supervisory board in reviewing and approving or recommending our compensation structure, including
all forms of compensation relating to our supervisory board members, our management board members
and our officers. Members of our management board may not be present at any compensation committee
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Corporate Governance
meeting while their compensation is deliberated. Subject to and in accordance with the terms of the
compensation policy approved by our general meeting of shareholders from time to time, as required by
Dutch law, the compensation committee is responsible for, among other things:
making a proposal to the supervisory board for the remuneration policy to be pursued;
making a proposal for the remuneration of the individual members of the management board, for
adoption by the supervisory board; such proposal shall, in any event, deal with: (i) the remuneration
structure and (ii) the amount of the fixed remuneration, the shares and/or options to be granted and/or
other variable remuneration components, pension rights, redundancy pay and other forms of
compensation to be awarded, as well as the performance criteria and their application; and
preparing the remuneration report as referred to in best practice provision II.2.12.
Our supervisory board may also delegate certain tasks and powers under our Option Plan to the
compensation committee.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Dinko Valerio (chairman), Henri Termeer
and Paul Baart. Each member satisfies the independence requirements of the NASDAQ listing standards as
well as the criteria for independence set forth in best practice III.2.2 of the DCGC. The nominating and
corporate governance committee assists our supervisory board in selecting individuals qualified to become
our supervisory board members and management board members and in determining the composition of
the management board, supervisory board and its committees and our officers. The nominating and
corporate governance committee is responsible for, among other things:
drawing up selection criteria and appointment procedures for supervisory board members and
management board members;
periodically assessing the size and composition of the supervisory board and the management board,
and making a proposal for a composition profile of the supervisory board;
periodically assessing the functioning of individual supervisory board members and management board
members, and reporting on this to the supervisory board;
making proposals for appointments and reappointments; and
supervising the policy of the management board on the selection criteria and appointment procedures
for senior management.
Insurance and Indemnification of Management Board and Supervisory Board Members
Under Dutch law, management board members, supervisory board members and certain other
representatives may be held liable for damages in the event of improper or negligent performance of their
duties. They may be held jointly and severally liable for damages to the Company for infringement of the
articles of association or of certain provisions of the Dutch Civil Code. They may also be liable towards third
parties for infringement of certain provisions of the Dutch Civil Code. In certain circumstances they may also
incur additional specific civil and criminal liabilities.
Our articles of association provide that we will indemnify our management board members, supervisory
board members, former management board members and former supervisory board members (each an
“Indemnified Person”) against (i) any financial losses or damages incurred by such Indemnified Person and
(ii) any expense reasonably paid or incurred by such Indemnified Person in connection with any threatened,
pending or completed suit, claim, action or legal proceedings, whether civil, criminal, administrative or
investigative and whether formal or informal, in which he becomes involved, to the extent this relates to his
position with the Company, in each case to the fullest extent permitted by applicable law. No indemnification
shall be given to an Indemnified Person (a) if a Dutch court has established, without possibility for appeal,
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Corporate Governance
that the acts or omissions of such Indemnified Person that led to the financial losses, damages, suit, claim,
action or legal proceedings result from either an improper performance of his duties as an officer of the
Company or an unlawful or illegal act and (b) to the extent that his financial losses, damages and expenses
are covered by an insurance and the insurer has settled these financial losses, damages and expenses (or has
indicated that it would do so). Our supervisory board may stipulate additional terms, conditions and
restrictions in relation to such indemnification.
Board composition and diversity
Our management board comprised two persons in 2015, both of whom are male. Our supervisory board has
four male members and one female member. As a Company, we support diversity of culture, gender and age
in our Company. Our current management board and supervisory board members were selected based on
the required profile and talent and abilities of the members without positive or negative bias on gender,
culture or age. In the future, this will continue to be our basis for selection of new board members.
Controls and procedures
Our managing board and our chief financial officer, after evaluating the effectiveness of our disclosure
controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2015, have
concluded that based on the evaluation of these controls and procedures required by Rule 13a-15(b) of the
Exchange Act, our disclosure controls and procedures were effective. The internal risk management and
control systems provide reasonable assurance that the financial reporting does not contain any errors of
material importance and that the risk management and control systems worked properly in the year under
review.
Risk factors and the risk management approach, as well as the sensitivity of our results to external factors
and variables are described in more detail in ”Risk Management”. Our internal control system has been
discussed with the Audit Committee and the external auditors.
In view of the requirements of the U.S. Securities Exchange Act, procedures are in place to enable the CEO
(chief executive officer) and the CFO (chief financial officer) to provide certifications with respect to the
Annual Report on Form 20F.
General Meeting of Shareholders
General meetings of shareholders are held in Leiden, Amsterdam, Rotterdam, The Hague, or in the
municipality of Haarlemmermeer (Schiphol Airport), the Netherlands. All shareholders and others entitled to
attend general meetings of shareholders are authorized to attend the general meeting of shareholders, to
address the meeting and, in so far as they have such right, to vote, either in person or by proxy.
We must hold at least one general meeting of shareholders each year, to be held within six months after the
end of our financial year. A general meeting of shareholders shall also be held within three months after our
management board has considered it to be likely that the Company’s equity has decreased to an amount
equal to or lower than half of its paid up and called up capital. If the management board and supervisory
board have failed to ensure that such general meetings of shareholders as referred to in the preceding
sentences are held in a timely fashion, each shareholder and other person entitled to attend shareholders’
meetings may be authorized by the Dutch court to convene the general meeting of shareholders.
Our management board and our supervisory board may convene additional extraordinary general meetings
of shareholders whenever they so decide. Pursuant to Dutch law, one or more shareholders and/or others
entitled to attend general meetings of shareholders, alone or jointly representing at least ten percent of our
issued share capital may on their application, be authorized by the Dutch court to convene a general meeting
of shareholders. The Dutch court will disallow the application if it does not appear to it that the applicants
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Corporate Governance
have previously requested that the management board or supervisory board convenes a shareholders’
meeting and neither the management board nor the supervisory board has taken the necessary steps so that
the shareholders’ meeting could be held within six weeks after the request.
General meetings of shareholders are convened by a notice which includes an agenda stating the items to be
discussed. For the annual general meeting of shareholders the agenda will include, among other things, the
adoption of our annual accounts, the appropriation of our profits or losses and proposals relating to the
composition and filling of any vacancies of the management board or supervisory board. In addition, the
agenda for a general meeting of shareholders includes such items as have been included therein by our
management board or our supervisory board. Pursuant to Dutch law, one or more shareholders and/or
others entitled to attend general meetings of shareholders, alone or jointly representing at least 3% of the
issued share capital have the right to request the inclusion of additional items on the agenda of shareholders’
meetings. Such requests must be made in writing, substantiated, or by a proposal for a resolution and
received by us no later than the sixtieth day before the day the relevant general meeting is held. No
resolutions will be adopted on items other than those which have been included in the agenda.
We will give notice of each general meeting of shareholders by publication on our website and, to the extent
required by applicable law, in a Dutch daily newspaper with national distribution, and in any other manner
that we may be required to follow in order to comply with Dutch law, applicable stock exchange and SEC
requirements. We will observe the statutory minimum convening notice period for a general meeting of
shareholders.
Pursuant to our articles of association, our management board may determine a record date
(registratiedatum) of 28 calendar days prior to a general meeting of shareholders to establish which
shareholders and others with meeting rights are entitled to attend and, if applicable, vote in the general
meeting of shareholders. The record date, if any, and the manner in which shareholders can register and
exercise their rights will be set out in the convocation notice of the general meeting. Our articles of
association provide that a shareholder must notify the Company in writing of his identity and his intention to
attend (or be represented at) the general meeting of shareholders, such notice to be received by us ultimately
on the seventh day prior to the general meeting. If this requirement is not complied with or if upon direction
of the Company to that effect no proper identification is provided by any person wishing to enter the general
meeting of shareholders, the chairman of the general meeting of shareholders may, in his sole discretion,
refuse entry to the shareholder or his proxy holder.
Pursuant to our articles of association, our general meeting of shareholders is chaired by the chairman of our
supervisory board. If the chairman of our supervisory board is absent and has not charged another person to
chair the meeting in his place, the supervisory board members present at the meeting shall appoint one of
them to be chairman. If no supervisory board members are present at the general meeting of shareholders,
the general meeting of shareholders will be chaired by our CEO or, if our CEO is absent, another managing
board member present at the meeting and, if none of them is present, the general meeting shall appoint its
own chairman. The person who should chair the meeting may appoint another person in his stead.
The chairman of the general meeting may decide at his discretion to admit other persons to the meeting. The
chairman of the general meeting shall appoint another person present at the shareholders’ meeting to act as
secretary and to minute the proceedings at the meeting. The chairman of the general meeting may instruct a
civil law notary to draw up a notarial report of the proceedings at the Company’s expense, in which case no
minutes need to be taken. The chairman of the general meeting is authorized to eject any person from the
general meeting of shareholders if the chairman considers that person to disrupt the orderly proceedings.
The general meeting of shareholders shall be conducted in the English language.
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Corporate Governance
Voting Rights and Quorum Requirements
In accordance with Dutch law and our articles of association, each issued ordinary share and preferred share
confers the right on the holder thereof to cast one vote at the general meeting of shareholders. The voting
rights attached to any shares held by us or our direct or indirect subsidiaries are suspended as long as they
are held in treasury. Dutch law does not permit cumulative voting for the election of management board
members or supervisory board members.
Voting rights may be exercised by shareholders or by a duly appointed proxy holder (the written proxy being
acceptable to the chairman of the general meeting of shareholders) of a shareholder, which proxy holder
need not be a shareholder. Our articles of association do not limit the number of shares that may be voted by
a single shareholder.
Under our articles of association, blank votes, abstentions and invalid votes shall not be counted as votes
cast. Further, shares in respect of which a blank or invalid vote has been cast and shares in respect of which
the person with meeting rights who is present or represented at the meeting has abstained from voting are
counted when determining the part of the issued share capital that is present or represented at a general
meeting of shareholders. The chairman of the general meeting shall determine the manner of voting and
whether voting may take place by acclamation.
In accordance with Dutch law and generally accepted business practices, our articles of association do not
provide quorum requirements generally applicable to general meetings of shareholders. To this extent, our
practice varies from the requirement of NASDAQ Listing Rule 5620(c), which requires an issuer to provide in
its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of the
outstanding voting shares.
Resolutions of the general meeting of shareholders are adopted by a simple majority of votes cast without
quorum requirement, except where Dutch law or our articles of association provide for a special majority
and/or quorum in relation to specified resolutions.
Anti-takeover provisions
We have adopted several provisions that may have the effect of making a takeover of our Company more
difficult or less attractive, including:
granting a perpetual and repeatedly exercisable call option to a protection foundation, which confers
upon the protection foundation the right to acquire, under certain conditions, the number of preferred
shares in the capital of the Company. The issuance of such preferred shares will occur upon the
protection foundation’s exercise of the call option and will not require shareholder consent;
the staggered four-year terms of our supervisory board members, as a result of which only
approximately one-fourth of our supervisory board members will be subject to election in any one year;
a provision that our management board members and supervisory board members may only be
appointed upon a binding nomination by our supervisory board, which can be set aside by a two-thirds
majority of our shareholders representing more than half of our issued share capital;
a provision that our management board members and supervisory board members may only be
removed by our general meeting of shareholders by a two-thirds majority of votes cast representing
more than 50% of our issued share capital (unless the removal was proposed by the supervisory board);
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 management board that has been
approved by our supervisory board.
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Corporate Governance
Deviations from the Dutch Corporate Governance Code
The Code contains a “comply-or-explain” principle, offering the possibility to deviate from the Code as long as
any such deviations are explained. We acknowledge the importance of good corporate governance. However,
at this stage, we do not comply with all the provisions of the DCGC, to a large extent because we believe that
deviations from such provisions are in the interest of the Company, e.g. in order to attract and maintain
individuals with specific biotech expertise. The main deviations from best practice provisions are listed below.
Pursuant to the best practice provisions II.2.4 and II.2.5 of the DCGC, options granted to our
management board members should not be exercisable during the first three years after the date of
grant; shares granted to our management board members for no financial consideration should be
retained by them for a period of at least five years or until they cease to hold office, whichever is the
shorter period; and the number of options and/or shares granted to our management board members
should be dependent on the achievement of pre-determined performance criteria. We do not intend to
comply with all of the above requirements as we believe it is in the best interest of the company to
attract and retain highly skilled management board members on conditions based on market practice, as
we believe these are.
Pursuant to best practice provision II.2.8 the remuneration of the management board in the event of
dismissal may not exceed one year’s salary. The management services agreements with our
management board members provide for a lump-sum equal to 24 months of the individual’s monthly
gross fixed salary. Based on the risk profile of the Company and to be able to attract highly skilled
management, we assumed this period to be appropriate.
Best practice provision III.7.1 prohibits the granting of shares or rights to shares to members of the
supervisory board as compensation. It is common practice for companies listed on the NASDAQ Global
Market to grant shares to the members of the supervisory board as compensation, in order to align the
interests of the members of the supervisory board with our interests and those of our shareholders, and
we have granted and expect to grant options to acquire ordinary shares to some of our supervisory
board members.
Pursuant to best practice provision III.7.2, any shares held by supervisory board members are long-term
investments. We do not request our supervisory board members to comply to this provision. We believe
it is in the best interest of the Company not to apply this provision in order to be able to attract and
retain highly skilled supervisory board members on internationally competitive terms.
Best practice provision IV.1.1 provides that the general meeting of shareholders may pass a resolution to
cancel the binding nature of a nomination for the appointment of a member of the management board
or of the supervisory board or a resolution to dismiss such member by an absolute majority of the votes
cast. It may be provided that such majority should represent a given proportion of the issued capital, but
this proportion may not exceed one third. In addition, best practice IV.1.1. provides that if such
proportion of the share capital is not represented at the meeting, but an absolute majority of the votes
cast is in favor of a resolution to cancel the binding nature of the nomination, a new general meeting of
shareholders will be convened where the resolution may be adopted by absolute majority, regardless of
the proportion of the share capital represented at the meeting. Our articles of association provide that
these resolutions can only be adopted with at least a 2/3 majority which must represent more than 50%
of our issued capital, and that no such second meeting will be convened, because we believe that the
decision to overrule a nomination by the management board or the supervisory board for the
appointment or dismissal of a member of our management board or of our supervisory board must be
widely supported by our shareholders.
Best practice provision IV.3.1 stipulates that meetings with analysts, presentations to analysts,
presentations to investors and institutional investors and press conferences must be announced in
advance on the Company’s website and by means of press releases. Provision must be made for all
shareholders to follow these meetings and presentations in real time, for example by means of
webcasting or telephone. After the meetings, the presentations must be posted on the Company’s
PAGE 24 / 72
Annual Report 2015
Corporate Governance
website. We believe that enabling shareholders to follow in real time all the meetings with analysts,
presentations to analysts and presentations to investors, would create an excessive burden on our
resources and therefore, we do not intend to comply with all of the above requirements.
Best practice provision IV.3.13 stipulates that an outline policy on bilateral contacts with the shareholders
shall be formulated and published on the Company’s website. The Company has not formulated such
policy as it believes this is already covered by our regular process for public disclosure of information.
Summary of significant corporate governance differences from NASDAQ Listing Standards
Our ordinary shares are listed on NASDAQ. The Sarbanes-Oxley Act of 2002, as well as related rules
subsequently implemented by the SEC, requires foreign private issuers, including our Company, to comply
with various corporate governance practices. As a foreign private issuer, subject to certain exceptions, the
NASDAQ listing standards permit a foreign private issuer to follow its home country practice in lieu of the
NASDAQ listing standards. Our corporate governance practices differ in certain respects from those that U.S.
companies must adopt in order to maintain a NASDAQ listing. The home country practices followed by our
Company in lieu of NASDAQ rules are described below:
We do not intend to follow NASDAQ’s quorum requirements applicable to meetings of shareholders. In
accordance with Dutch law and generally accepted business practice, our articles of association do not
provide quorum requirements generally applicable to general meetings of shareholders.
We do not intend to follow NASDAQ’s requirements regarding the provision of proxy statements for
general meetings of shareholders. Dutch law does not have a regulatory regime for the solicitation of
proxies and the solicitation of proxies is not a generally accepted business practice in the Netherlands.
We do intend to provide shareholders with an agenda and other relevant documents for the general
meeting of shareholders and shareholders will be entitled to give proxies and voting instructions to us
and/or third parties.
We intend to take all actions necessary for us to maintain compliance as a foreign private issuer under the
applicable corporate governance requirements of the Sarbanes-Oxley Act of 2002, the rules adopted by the
SEC and NASDAQ’s listing standards.
PAGE 25 / 72
Annual Report 2015
Risk Management
Risk Management
Our business is subject to numerous risks and uncertainties. In the table below, we focus on the key risks and
uncertainties the Company currently faces. For the avoidance of doubt, this does not mean that the risks
which were previously signaled and not described here are no longer relevant. For a complete understanding
of the risks that we face you should also read the full list of risks and uncertainties as disclosed in item 3.D
Risk Factors of the annual report on Form 20-F. Some of these risks and uncertainties are outside the control
of the Company, others may be influenced or mitigated. In 2015, we have implemented a Risk & Control
framework, based on the COSO 2013 internal control framework, to secure the Company’s in-control
position. Consequently, our control environment has improved significantly compared to last year. As part of
the SOx implementation program for 2016, we will further enhance the COSO 2013 framework and entity
level controls. Improvement of our Risk & Control framework is an ongoing effort for the Company.
Our main risks are those that threaten the achievement of the Company’s objectives, as well as the in-control
position of the Company. If any of these risks actually occurs, our business, prospects, operating results and
financial condition could suffer materially. These risks include, but are not limited to, the following:
Risk related to
Risk area
Expected impact upon
materialization
Risk-mitigating actions
Development and
Regulatory Approval of
our Product Candidates
Our products will not be able to
The Company will be unable to
This is an inherent risk with drug
demonstrate safety and efficacy
commercialize the product and
development as the safety and
in the preclinical studies and
therefore generate revenues.
efficacy of products can only be
clinical trials that are needed to
obtain product approval.
assessed when these studies
are conducted. However, the
Company has multiple products
in the pipeline and therefore is
diversified. The Company also
monitors the progress of the
programs and aims to make
decisions that mitigate safety
and efficacy related risks.
The regulatory approval process
Failure to comply with the
Although the Company
is lengthy, time-consuming and
requirements in the regulatory
monitors the regulatory
unpredictable and products
process could result in delays,
landscape and engages with the
developed may ultimately not
suspension, refusals and
authorities when it deems that
lead to regulatory approval of
withdrawal of approvals as well
necessary, this is an inherent
the product.
as fines.
risk in biotech drug
development and therefore has
limited mitigation abilities.
We may not able to maintain
orphan product exclusivity for
We may not be able to obtain
approval for our competing
We have been granted orphan
drug designation for QR-010
QR-010 or obtain such status for
QR-110 or future product
products for a significant period
of time.
and have applied for orphan
drug designation for QR-110.
candidates for which we seek
this status, or our competitors
may be able to obtain orphan
product exclusivity before we
do.
We intend to make the
applications for other product
candidates that meet the
requirements.
PAGE 26 / 72
Annual Report 2015
Risk Management
Risk related to
Risk area
Expected impact upon
materialization
Risk-mitigating actions
Capital Needs and
Financial Position
The Company depends largely
Volatility of the Company’s
The ability of third party
on equity financing and
share price, failure to deliver
financing is dependent on
financing through third party
under collaboration agreements
external factors and is therefore
collaboration agreements and
and/or the reevaluation or
not entirely in the Company’s
government subsidies.
withdrawal of government
control. The Company monitors
subsidies may have a negative
the market conditions for
impact on the Company's ability
opportunities to add additional
to obtain future financing.
capital.
Dependence on Third
Parties
The Company relies upon third-
Failure of third parties to
The Company reviews and
party contractors and service
provide services of a suitable
monitors the activities of the
providers for the execution of
quality and within acceptable
third parties. These include
several aspects of its preclinical
timeframes may cause delay or
setting contractual deliverables,
and clinical development
failure of the Company's
quality assurance audits and
programs, which include CRO’s,
development programs.
performance reports, among
third party manufacturers and
other service providers.
other activities.
Intellectual Property
The Company is highly
Inadequate intellectual property
The Company files and
dependent on its portfolio of
protection or enforcement may
prosecutes patent applications
patents and other intellectual
impede the Company’s ability to
to protect its products and
property, proprietary
compete effectively. If the
technologies to the best of its
information and knowhow and
Company is not able to protect
knowledge and with assistance
its ability to protect and enforce
its trade secrets, know-how or
from internal and external
these assets.
other proprietary information,
counsel. Prior to disclosing any
the value of its technology and
confidential information to third
The Company is subject to the
product candidates could be
parties, the Company maintains
risk of infringing third party
significantly diminished.
strict confidentiality standards
intellectual property rights.
Intellectual property rights
and agreements for
conflicts may result in costly
collaborating parties.
litigation and could result in the
Company having to pay
substantial damages or limit the
Company’s ability to
commercialize its product
candidates.
Commercialization of Our
Product Candidates
We face competition from
If our competitors develop
Competition is an inherent risk
entities that have developed or
technologies or product
for any industry including drug
may develop product
candidates more rapidly than
development. Through our IP
candidates for our target
we do or their technologies,
strategy and orphan drug
indications, including companies
including delivery technologies,
designation application, we
developing novel treatments for
are more effective, our ability to
attempt to have data exclusivity
CF patients.
develop and successfully
for our products. Development
commercialize our product
candidates may be adversely
in other companies is essentially
out of our control but we
affected.
monitor the competitive
landscape and incorporate that
into our business strategy.
In addition to the above key risks, the Company’s activities expose it to a variety of financial risks: market risk
(including currency risk, interest rate risk and price risk), credit risk and liquidity risk. Unfavorable exchange
rate developments and historically low interest rates may impact the financial income of the Company. The
Company has a cash management policy in place to minimize potential adverse effects resulting from
unpredictability of financial markets on the Company’s financial performance.
PAGE 27 / 72
Annual Report 2015
Financial Statements 2015
Financial Statements 2015
Consolidated statement of financial position at December 31, 2015
dsssds
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Current assets
Social securities and other taxes
Prepayments and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
Shareholders' equity
Share capital
Share premium reserve
Equity settled employee benefits reserve
Translation reserve
Accumulated deficit
LIABILITIES
Non-current liabilities
Finance lease liabilities
Borrowings
Current liabilities
Finance lease liabilities
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Other current liabilities
Note
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
7
8
9
10
11
12
13
14
141
2,199
2,340
956
1,948
94,865
97,769
163
1,187
1,350
426
735
112,736
113,897
100,109
115,247
934
123,595
1,899
1
(36,630)
89,799
--
4,824
4,824
15
885
235
16
144
4,191
5,486
934
123,581
687
--
(15,798)
109,404
15
2,814
2,829
34
1,247
341
127
--
1,265
3,014
TOTAL EQUITY AND LIABILITIES
100,109
115,247
The accompanying notes are an integral part of these financial statements.
PAGE 28 / 72
Annual Report 2015
Financial Statements 2015
Consolidated statement of profit or loss and comprehensive income for the year ended
December 31, 2015
dsssds
Other income
Research and development costs
General and administrative costs
Total operating costs
Operating result
Financial income and expense
Result before corporate income taxes
Corporate income taxes
Note
2015
€ 1,000
2014
€ 1,000
15
16
18
19
3,235
313
(23,401)
(6,837)
(10,267)
(6,507)
(30,238)
(16,774)
(27,003)
6,171
(16,461)
4,334
(20,832)
(12,127)
--
--
Result for the year (attributable to equity holders of the Company)
(20,832)
(12,127)
Other comprehensive income
Items that will never be reclassified to profit or loss
Items that are or may be reclassified to profit or loss
Foreign operations – foreign currency translation differences
1
--
Total comprehensive income for the year
(attributable to equity holders of the Company)
(20,831)
(12,127)
Share information
20
Weighted average number of shares outstanding1
23,343,262
11,082,801
Earnings per share attributable to the equity holders
of the Company (expressed in Euro per share)
Basic earnings per share1
Diluted earnings per share1
The accompanying notes are an integral part of these financial statements.
(0.89)
(0.89)
(1.09)
(1.09)
1 Basic and diluted earnings are equal due to the anti-dilutive nature of the options outstanding since the Company is loss-
making.
PAGE 29 / 72
Annual Report 2015
Financial Statements 2015
Consolidated statement of changes in equity for the year ended December 31, 2015
Share
Capital
Share
Premium
Equity
Settled
Employee
Benefit
Reserve
Translation
Reserve
Accumulated
Deficit
Total
Equity
€ 1,000
€ 1,000
€ 1,000
€ 1,000
€ 1,000
€ 1,000
Balance at January 1, 2014
59
3,482
Result for the year
Recognition of share-based
payments
--
--
--
--
Shares issued in the period
880
122,291
Treasury shares issued
(5)
(2,192)
Balance at December 31, 2014
934
123,581
Result for the year
Other comprehensive income
Recognition of share-based
payments
Share options exercised
--
--
--
0
--
--
--
14
41
--
646
--
--
687
--
--
1,212
--
Balance at December 31, 2015
934
123,595
1,899
The accompanying notes are an integral part of these financial statements.
--
--
--
--
--
--
--
1
--
--
1
(3,671)
(89)
(12,127)
(12,127)
--
--
--
646
123,171
(2,197)
(15,798)
109,404
(20,832)
(20,832)
--
--
--
1
1,212
14
(36,630)
89,799
PAGE 30 / 72
Annual Report 2015
Financial Statements 2015
Consolidated statement of cash flows for the year ended December 31, 2015
dsssds
Cash flow from operating activities
Result for the year
Adjustments for:
— Depreciation
— Share-based compensation
— Financial income and expense
Changes in working capital
Cash used in operations
Corporate income tax paid
Interest received/(paid)
Note
2015
€ 1,000
2014
€ 1,000
(20,831)
(12,127)
7, 8
12
18
480
1,212
(6,171)
637
(24,673)
--
441
126
646
(4,334)
1,090
(14,599)
--
142
Net cash used in operating activities
(24,232)
(14,457)
Cash flow from investing activities
Purchases of intangible assets
Purchases of property, plant and equipment
(28)
(1,296)
(124)
(1,109)
Net cash used in investing activities
(1,324)
(1,233)
Cash flow from financing activities
Net proceeds from issuance of shares
Proceeds from exercise of share options
Proceeds from borrowings
Redemption of financial lease
Net cash generated by financing activities
Net increase/(decrease) in cash and cash equivalents
Currency effect cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The accompanying notes are an integral part of these financial statements.
12
13
13
11
11
--
14
1,640
(34)
118,250
--
1,667
(34)
1,620
119,883
(23,936)
104,193
6,065
112,736
4,414
4,129
94,865
112,736
PAGE 31 / 72
Annual Report 2015
Financial Statements 2015
Notes to the consolidated financial statements for the year ended December 31, 2015
1. General Information
ProQR Therapeutics N.V., or “ProQR” or the “Company”, is a development stage company domiciled in the
Netherlands that primarily focuses on the development and commercialization of novel therapeutic
medicines.
Since September 18, 2014, the Company’s ordinary shares are listed on the NASDAQ Global Market under
ticker symbol PRQR.
The Company was incorporated in the Netherlands, on February 21, 2012 and has been reorganized from a
private company with limited liability to a public company with limited liability on September 23, 2014. The
Company has its statutory seat in Leiden, the Netherlands. The address of its headquarters and registered
office is Darwinweg 24, 2333 CR Leiden, the Netherlands.
Legal demerger of our Company was effectuated as per June 30, 2015. At December 31, 2015, ProQR
Therapeutics N.V. is the ultimate parent company of the following entities:
ProQR Therapeutics Holding B.V. (the Netherlands, 100%);
ProQR Therapeutics I B.V. (the Netherlands, 100%);
ProQR Therapeutics II B.V. (the Netherlands, 100%);
ProQR Therapeutics III B.V. (the Netherlands, 100%);
ProQR Therapeutics IV B.V. (the Netherlands, 100%);
ProQR Therapeutics I Inc. (United States, 100%).
As used in these consolidated financial statements, unless the context indicates otherwise, all references to
“ProQR”, the “Company” or the “Group” refer to ProQR Therapeutics N.V. including its subsidiaries.
2. Basis of preparation
(a) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards, or IFRS, as adopted by the European Union (“EU”).
With reference to the income statement of the Company, use has been made of the exemption pursuant to
Section 402 of Book 2 of the Netherlands Civil Code.
(b) Basis of measurement
The financial statements have been prepared on the historical cost basis except for financial instruments and
share-based payment obligations which have been based on fair value. Historical cost is generally based on
the fair value of the consideration given in exchange for assets.
(c) Functional and presentation currency
These consolidated financial statements are presented in euro, which is the Company’s functional currency.
All amounts have been rounded to the nearest thousand, unless otherwise indicated.
(d) Going Concern
The management board of ProQR has, upon preparing and finalizing the 2015 financial statements, assessed
the Company’s ability to fund its operations for a period of at least one year after the date of signing these
financial statements.
PAGE 32 / 72
Annual Report 2015
Financial Statements 2015
The management board of the Company is confident about the continuity of the Company based on its
existing funding, taking into account the Company’s current cash position and the projected cash flows based
on the activities under execution on the basis of ProQR’s business plan and budget, which includes, amongst
other activities, clinical studies using QR-010 in patients suffering from cystic fibrosis.
(e) Use of estimates and judgements
In preparing these consolidated financial statements, management has made judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised if the revision affects only that period or in the
period of the revision and future periods if the revision affects both current and future periods.
Information about assumptions and estimation uncertainties that may have a significant risk of resulting in a
material adjustment is included below.
(i) Share-based payments
Share options granted to employees and consultants are measured at the fair value of the equity instruments
granted. Fair value is determined through the use of an option-pricing model considering, among others, the
following variables:
The exercise price of the option;
The expected life of the option;
The current value of the underlying shares;
The expected volatility of the share price;
The dividends expected on the shares; and
The risk-free interest rate for the life of the option.
For the Company’s share option plans, management’s judgment is that the Black-Scholes valuation method is
the most appropriate for determining the fair value of the Company’s share options.
Initially, the Company’s ordinary shares were not publicly traded and consequently the Company needed to
estimate the fair value of its share and the expected volatility of that value. The expected volatility of all
options granted was therefore based on the average historical volatility of the Company’s peers over a period
that agrees with the expected option life. All assumptions and estimates are further discussed in Note 12(e)
to the financial statements. The value of the underlying shares was determined on the basis of the prior sale
of company stock method. As such, the Company has benchmarked the value per share to external
transactions of Company shares and external financing rounds.
For options granted from the moment of listing, the Company uses the closing price of the ordinary shares
on the previous business day as exercise price of the options granted.
The result of the share option valuations and the related compensation expense is dependent on the model
and input parameters used. Even though Management considers the fair values reasonable and defensible
based on the methodologies applied and the information available, others might derive a different fair value
for the Company’s share options.
PAGE 33 / 72
Annual Report 2015
Financial Statements 2015
(ii) Corporate income taxes
The Company recognizes deferred tax assets arising from unused tax losses or tax credits only to the extent
that the Company has sufficient taxable temporary differences or there is convincing evidence that sufficient
taxable profit will be available against which the unused tax losses or unused tax credits can be utilized.
Management’s judgment is that such convincing evidence is currently not sufficiently available and a deferred
tax asset is therefore only recognized to the extent that the Company has sufficient taxable temporary
differences.
(iii) Grant income
Grants (to be) received are reflected in the balance sheet as other receivables or deferred income. At each
balance sheet date, for grants approved, the Company estimates the associated costs incurred, the level of
service performed and the progress of the associated projects. Based on this analysis grant income is
recognized.
(iv) Research and development expenditures
Research expenditures are currently not capitalized but are reflected in the income statement because the
criteria for capitalization are not met. At each balance sheet date, the Company estimates the level of service
performed by the vendors and the associated costs incurred for the services performed.
Although we do not expect the estimates to be materially different from amounts actually incurred, the
understanding of the status and timing of services performed relative to the actual status and timing of
services performed may vary and could result in reporting amounts that are too high or too low in any
particular period.
(f) Changes in accounting policies
The financial statements have been prepared on the basis of International Financial Reporting Standards
(“IFRS”), as issued by the International Accounting Standards Board (“IASB”). New Standards and
Interpretations, which became effective as of January 1, 2015, did not have a material impact on our financial
statements.
3. Significant Accounting Policies
The Company has consistently applied the following accounting policies to all periods presented in these
consolidated financial statements.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. The financial statements of subsidiaries are included in the consolidated
financial statements from the date on which control commences until the date on which control ceases.
(ii) Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary,
and any non-controlling interests and other components of equity. Any resulting gain or loss is recognised in
profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
(iii) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are
PAGE 34 / 72
Annual Report 2015
Financial Statements 2015
eliminated against the investment to the extent of the Group’s interest in the investee. Unrealised losses are
eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of
impairment.
(b) Classes of financial instruments
Financial instruments are both primary financial instruments, such as receivables and payables, and financial
derivatives. For primary financial instruments, reference is made to the treatment per the corresponding
balance sheet item.
Financial derivatives are valued at fair value. Upon first recognition, financial derivatives are recognized at fair
value and then revalued as at balance sheet date.
(c) Foreign currencies
(i) Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency
at the exchange rate at the reporting date. Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are translated into the functional currency at the exchange rate
when the fair value was determined. Foreign currency differences are generally recognized in profit or loss.
Non-monetary items that are measured based on historical cost in a foreign currency are not translated.
(ii) Foreign operations
The assets and liabilities of foreign operations are translated into euro at exchange rates at the reporting
date. The income and expenses of foreign operations are translated into euros at the exchange rates at the
dates of the transactions. Foreign currency differences are recognized in OCI and accumulated in the
translation reserve, except to the extent that the translation difference is allocated to NCI.
(d) Recognition of other income
Other income includes amounts earned from third parties and are recognized when earned in accordance
with the substance and under the terms of the related agreements and when it is probable that the economic
benefits associated with the transaction will flow to the entity and the amount of the income can be
measured reliably. The grants are recognized in other income in the same period in which the related R&D
costs are recognized.
(e) Government grants—WBSO
The WBSO (“afdrachtvermindering speur- en ontwikkelingswerk”) is a Dutch fiscal facility that provides
subsidies to companies, knowledge centers and self-employed people who perform research and
development activities (as defined in the WBSO Act). Under this Act, a contribution is paid towards the labor
costs of employees directly involved in research and development. The contribution is in the form of a
reduction of payroll taxes and social security contributions. Subsidies relating to labor costs are deferred and
recognized in the income statement as negative labor costs over the period necessary to match them with
the labor costs that they are intended to compensate.
(f) Employee benefits
(i) Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognized for the
amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as
a result of past service provided by the employee and the obligation can be estimated reliably.
PAGE 35 / 72
Annual Report 2015
Financial Statements 2015
(ii) Share-based payment transactions
The grant-date fair value of equity-settled share-based payment awards granted to employees is generally
recognized as an expense, with a corresponding increase in equity, over the vesting period of the awards. The
amount recognized as an expense is adjusted to reflect the number of awards for which the related service
and non-market performance conditions are expected to be met, such that the amount ultimately recognized
is based on the number of awards that meet the related service and non-market performance conditions at
the vesting date. For share-based payment awards with non-vesting conditions, the grant-date fair value of
the share-based payment is measured to reflect such conditions and there is no true-up for differences
between expected and actual outcomes.
(iii) Pension obligations
The Company operates defined contribution pension plans for all employees funded through payments to
insurance companies. The Company has no legal or constructive obligation to pay further contributions once
the contributions have been paid. The contributions are recognized as employee benefit expense when they
are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in
the future payments is available.
(g) Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax. It is recognized in
profit or loss except to the extent that it relates to a business combination, or items recognized directly in
equity or in OCI.
(i) Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported
in the income statement because of items of income or expense that are taxable or deductible in other years
and items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax
rates that have been enacted or substantively enacted by the end of the reporting period.
(ii) Deferred tax
Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered. Since the Company does not expect to be profitable in the foreseeable future, its
deferred tax assets are valued at nil.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realized, based on tax rates (and tax laws) that have been enacted or
substantively enacted by the end of the reporting period. The measurement of deferred tax liabilities and
assets reflects the tax consequences that would follow from the manner in which the Company expects, at
the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
(h) Intangible assets
(i) Licenses
Acquired patents have a finite useful life and are carried at cost less accumulated amortization and
impairment losses. Amortization is calculated using the straight-line method to allocate the cost of patents
over their estimated useful lives (generally 10 years unless a patent expires prior to that date). Amortization
begins when an asset is available for its intended use.
PAGE 36 / 72
Annual Report 2015
Financial Statements 2015
(ii) Research and development
Research expenditures are recognized as expenses as incurred. Costs incurred on development projects are
recognized as intangible assets of the date that it can be established that it is probable that future economic
benefits that are attributable to the asset will flow to the Company considering its commercial and
technological feasibility, generally when filed for regulatory approval for commercial production, and when
costs can be measured reliably. Given the current stage of the development of the Company’s products no
development expenditures have yet been capitalized.
Registration costs for patents are part of the expenditures for the research and development project.
Therefore, registration costs for patents are expensed as incurred as long as the research and development
project concerned does not yet meet the criteria for capitalization.
(iii) Other intangible assets
Other intangible assets, including software, that are acquired by the Company and have finite useful lives are
measured at cost less accumulated amortization and accumulated impairment losses.
(iv) Amortization
Amortization is calculated to write off the cost of intangible assets less their estimated residual values using
the straight-line method over their estimated useful lives, and is recognized in profit or loss.
The estimated useful lives for current and comparative periods are as follows:
Software:
3 years.
Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
(i) Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any
accumulated impairment losses. If significant parts of an item of property, plant and equipment have
different useful lives, then they are accounted for as separate items (major components) of property, plant
and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognized in
profit or loss.
(ii) Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives, and is recognized in profit or
loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is
reasonably certain that the Company will obtain ownership by the end of the lease term.
The estimated useful lives of property, plant and equipment for current and comparative periods are as
follows:
Leasehold improvements:
5 - 10 years.
Laboratory equipment:
5 years.
Other:
3 - 5 years.
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if
appropriate.
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Annual Report 2015
Financial Statements 2015
(j) Impairment of tangible and intangible assets
At the end of each reporting period, the Company reviews the carrying amounts of its tangible and intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If
any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent
of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual
asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset
belongs. Where a reasonable and consistent basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-
generating units for which a reasonable and consistent allocation basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an indication that the asset may be impaired.
The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for which
the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An
impairment loss is recognized immediately in profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit)
is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been determined had no impairment loss been
recognized for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is
recognized immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which
case the reversal of the impairment loss is treated as a revaluation increase.
(k) Financial assets
All financial assets are recognized and derecognized on the trade date where the purchase or sale of a
financial asset is under a contract whose terms require delivery of the financial asset within the timeframe
established by the market concerned, and are initially measured at fair value, plus transaction costs, except
for those financial assets classified as at fair value through profit or loss, which are initially measured at fair
value.
(i) Loans and receivables
Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted
in an active market are classified as “loans and receivables”. Loans and receivables are measured at
amortized cost using the effective interest method, less any impairment.
An allowance for doubtful accounts is established when there is objective evidence that the Company will not
be able to collect all amounts due according to the original terms of receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter into bankruptcy or financial reorganization, and
default or delinquency in payments are considered indicators that the trade receivable is impaired. Loans
and receivables are included in ‘current assets’, except for maturities greater than 12 months after the
balance sheet date, which are classified as ‘non-current assets’.
For all financial assets, the fair value approximates its carrying value.
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Annual Report 2015
Financial Statements 2015
(l) Cash and cash equivalents
Cash and cash equivalents include cash on hand and all highly liquid investments with original maturities of
three months or less that are convertible to a known amount of cash and bear an insignificant risk of change
in value.
(m) Financial liabilities and equity instruments
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
(i) Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the Company are recognized at the proceeds
received, net of direct issue costs.
(ii) Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs
incurred, and are subsequently measured at amortized cost using the effective interest method, with interest
expense recognized on an effective yield basis.
The effective interest method is a method of calculating the amortized cost of a financial liability and of
allocating interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments through the expected life of the financial liability, or, where
appropriate, a shorter period.
Borrowings and other financial liabilities are classified as ‘non-current liabilities,’ other than liabilities with
maturities up to one year, which are classified as “current liabilities”.
The Company derecognizes financial liabilities when the liability is discharged, cancelled or expired. For all
financial liabilities, the fair value approximates its carrying amount.
(n) Leases
(i) Determining whether an arrangement contains a lease
At inception of an arrangement, the Company determines whether such an arrangement is or contains a
lease.
At inception or on reassessment of an arrangement that contains a lease, the Company separates payments
and other consideration required by such an arrangement into those for the lease and those for other
elements on the basis of their relative fair values. If the Company concludes for a finance lease that it is
impracticable to separate the payments reliably, then an asset and a liability are recognized at an amount
equal to the fair value of the underlying asset. Subsequently, the liability is reduced as payments are made
and an imputed finance cost on the liability is recognized using the Company’s incremental borrowing rate.
(ii) Leased assets
Assets held by the Company under leases that transfer to the Company substantially all of the risks and
rewards of ownership are classified as finance leases. The leased assets are measured initially at an amount
equal to the lower of their fair value and the present value of the minimum lease payments. Subsequent to
initial recognition, the assets are accounted for in accordance with the accounting policy applicable to that
asset.
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Financial Statements 2015
Assets held under other leases are classified as operating leases and are not recognized in the Company’s
statement of financial position.
(iii) Lease payments
Payments made under operating leases are recognized in profit or loss on a straight-line basis over the term
of the lease. Lease incentives received are recognized as an integral part of the total lease expense, over the
term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term
so as to produce a constant periodic rate of interest on the remaining balance of the liability.
4. New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods
beginning after 1 January 2016, and have not been applied in preparing these consolidated financial
statements. Those which may be relevant to the Group are set out below. The Group does not plan to adopt
these standards early.
IFRS 9 Financial Instruments
IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and
Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial
instruments, including a new expected credit loss model for calculating impairment on financial assets, and
the new general hedge accounting requirements. It also carries forward the guidance on recognition and
derecognition of financial instruments from IAS 39.
IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption
permitted.
IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is
recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction
Contracts and IFRIC 13 Customer Loyalty Programmes.
IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption
permitted.
IFRS 16 Leases
IFRS 16 specifies how a company will recognise, measure, present and disclose leases. The standard provides
a single lessee accounting model, requiring lessees to recognise assets and liabilities for all leases unless the
lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as
operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its
predecessor, IAS 17.
IFRS 16 is effective for annual reporting periods beginning on or after 1 January 2019, with early adoption
permitted.
The adoption of these Standards and Interpretations are not expected to have a material effect on the
financial statements.
PAGE 40 / 72
Annual Report 2015
Financial Statements 2015
5. Financial Risk Management
5.1. Financial risk factors
The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest
rate risk and price risk), credit risk and liquidity risk. The Company’s overall financial risk management seeks
to minimize potential adverse effects resulting from unpredictability of financial markets on the Company’s
financial performance.
Financial risk management is carried out by the finance department. The finance department identifies and
evaluates financial risks and proposes mitigating actions if deemed appropriate.
(a) Market risk
Market risk is the risk that changes in market prices – such as foreign exchange rates, interest rates and
equity prices – will affect the Company’s income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimizing the return.
Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognized assets and liabilities in
foreign currencies, primarily with respect to the U.S. Dollar. The Company has an exposure associated with
the time delay between entering into a contract, budget or forecast and the realization thereof. The Company
operates a foreign exchange policy to manage the foreign exchange risk against the functional currency
based on the Company’s cash balances and the projected future spend per major currency.
At December 31, 2015 there was a net liability in U.S. Dollars of € 1.1 million (2014: € 0.7 million). Foreign
currency denominated receivables and trade payables are short term in nature (generally 30 to 45 days). As a
result foreign exchange rate movements on receivables and trade payables, during the years presented had
an immaterial effect on the financial statements.
At year-end, a substantial amount of our cash balances are denominated in U.S. Dollars. This amount reflects
our current expectation of future expenditure in U.S. dollars.
A reasonably possible strengthening (weakening) of the U.S. Dollar by 10% against all other currencies at
December 31 would have affected the measurement of our cash balances denominated in a U.S. Dollar and
affected equity and profit or loss by € 5.2 million (2014: € 4.3 million). The analysis assumes that all other
variables, in particular interest rates, remain constant.
Price risk
The market prices for the production of preclinical and clinical materials and services as well as external
contracted research may vary over time. Currently, the commercial prices of any of the Company’s product
candidates is uncertain. When the development products near the regulatory approval date or potential
regulatory approval date, the uncertainty of the potential sales price decreases. The Company is not exposed
to commodity price risk.
Furthermore the Company does not hold investments classified as available-for-sale or at fair value through
profit or loss, therefore are not exposed to equity securities price risk.
PAGE 41 / 72
Annual Report 2015
Financial Statements 2015
Cash flow and fair value Interest rate risk
The Company’s exposure to interest rate risks is limited due to the use of loans with fixed rates. The
Company has one loan and a financial lease with a fixed interest, totaling € 4,839,000 at December 31, 2015
(2014: € 2,863,000). Details on the interest rates and maturities of these loans are provided in Note 13.
(b) Credit risk
Credit risk represents the risk of financial loss caused by default of the counterparty. The Company has no
large receivables balances with external parties. The Company’s principal financial assets are cash and cash
equivalents which are placed at ABN Amro and Rabobank. Our cash management policy is focused on
preserving capital, providing liquidity for operations and optimizing yield while accepting limited risk (Short-
term credit ratings must be rated A-1/P-1/F1 at a minimum by at least one of the Nationally Recognized
Statistical Rating Organizations (NRSROs) specifically Moody’s, Standard & Poor’s or Fitch. Long-term credit
rating must be rated A- or A3 at a minimum by at least one NRSRO).
As of December 31, 2015 and December 31, 2014, substantially all of our cash and cash equivalents were
placed at two large institutions, Rabobank and ABN Amro. Both institutions are highly rated (ratings of Aa2
and A2 respectively) with sufficient capital adequacy and liquidity metrics.
There are no financial assets past due date or impaired. No credit limits were exceeded during the reporting
period.
(c) Liquidity risk
Liquidity risk represents the risk that an entity will encounter difficulty in meeting obligations associated with
its financial liabilities. Prudent liquidity risk management implies ensuring sufficient availability of cash
resources for funding of operations and planning to raise cash if and when needed, either through issue of
shares or through credit facilities. Management monitors rolling forecasts of the Company’s liquidity reserve
on the basis of expected cash flow.
The table below analyzes ProQR’s undiscounted liabilities into relevant maturity groupings based on the
remaining period at year-end until the contractual maturity date:
dsssds
At December 31, 2015
Borrowings
Finance lease liabilities
Trade payables and other payables
At December 31, 2014
Borrowings
Finance lease liabilities
Trade payables and other payables
Less than
1 year
Between
1 and 2 years
Between
2 and 5 years
€ 1,000
€ 1,000
€ 1,000
Over
5 years
€ 1,000
--
15
5,471
5,486
--
34
2,980
3,014
1,691
4,712
--
--
--
--
1,691
4,712
--
15
--
15
3,884
--
--
3,884
--
--
--
--
--
--
--
--
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Annual Report 2015
Financial Statements 2015
5.2. Capital risk management
The Company's objectives when managing capital are to safeguard the Company's ability to continue as a
going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain
an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to
shareholders (although at this time the Company does not have retained earnings and is therefore currently
unable to pay dividends), return capital to shareholders, issue new shares or sell assets to reduce debt.
The total amount of equity as recorded on the balance sheet is managed as capital by the Company.
5.3. Fair value measurement
For financial instruments that are measured on the balance sheet at fair value, IFRS 13 requires disclosure of
fair value measurements by level of the following fair value measurement hierarchy:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (level 3).
The Company has no assets and liabilities that are measured at fair value at December 31, 2015 and 2014.
The carrying amount of all financial assets and financial liabilities is a reasonable approximation of the fair
value and therefore information about the fair values of each class has not been disclosed.
6. Segment Information
The Company operates in one reportable segment, which comprises the discovery and development of
innovative, RNA based therapeutics. The management board is identified as the chief operating decision
maker. The management board reviews the operating results regularly to make decisions about resources
and to assess overall performance.
The Company has not generated any sales revenues since inception.
All non-current assets of the Company are located in the Netherlands. The amounts provided to the
management board with respect to total assets and liabilities are measured in a manner consistent with that
of the financial statements.
7. Intangible Assets
dsssds
Balance at January 1, 2014
Cost
Accumulated amortization
Carrying amount
Additions
Movement for the period
Balance at December 31, 2014
Cost
Accumulated amortization
Carrying amount
Additions
Amortization
Movement for the period
Balance at December 31, 2015
Cost
Accumulated amortization
Carrying amount
PAGE 43 / 72
Annual Report 2015
Financial Statements 2015
Licenses
Software
€ 1,000
€ 1,000
Total
€ 1,000
39
--
39
--
--
39
--
39
--
--
--
39
--
39
--
--
--
124
124
124
--
124
28
(50)
(22)
152
(50)
102
--
--
39
124
124
163
--
163
28
(50)
(22)
191
(50)
141
In 2012, the Company acquired an exclusive license from the Massachusetts General Hospital. The initial
payment in respect of the license, in the amount of € 39,000, will be amortized over the commercial life of
products based on the license during the patent-life.
There were no amortization charges in 2014. The amortization charge for 2015 is included in the general and
administrative costs for an amount of € 50,000.
PAGE 44 / 72
Annual Report 2015
Financial Statements 2015
8. Property, Plant and Equipment (‘PP&E’)
dsssds
Balance at January 1, 2014
Cost
Accumulated depreciation
Carrying amount
Additions
Depreciation
Disposals
Movement for the period
Balance at December 31, 2014
Cost
Accumulated depreciation
Carrying amount
Additions
Depreciation
Disposals
Movement for the period
Balance at December 31, 2015
Cost
Accumulated depreciation
Carrying amount
Leasehold
improvements
Laboratory
equipment
Other
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
5
(1)
4
321
(16)
--
305
326
(17)
309
659
(77)
--
582
985
(94)
891
190
(19)
171
579
(85)
--
494
769
(104)
665
367
(201)
--
166
1,136
(305)
831
33
(4)
29
209
(25)
--
184
242
(29)
213
415
(145)
(6)
264
651
(174)
477
228
(24)
204
1,109
(126)
--
983
1,337
(150)
1,187
1,441
(423)
(6)
1,012
2,772
(573)
2,199
The depreciation charge is included in the research and development costs for an amount of € 361,000 (2014:
€ 119,000) and in the general and administrative costs for an amount of € 62,000 (2014: € 7,000).
9. Social Security and Other Taxes
dsssds
Value added tax
Wage tax
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
953
3
956
426
--
426
All receivables are considered short-term and due within one year.
PAGE 45 / 72
Annual Report 2015
Financial Statements 2015
10. Prepayments and Other Receivables
dsssds
Prepayments
Other receivables
All receivables are considered short-term and due within one year.
11. Cash and Cash Equivalents
dsssds
Cash at banks
Bank deposits
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
1,401
547
1,948
408
327
735
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
94,865
--
94,865
83,084
29,652
112,736
The cash at banks is at full disposal of the Company. Bank deposits are convertible into cash upon request of
the Company.
12. Shareholders’ Equity
(a) Share capital
dsssds
Number of shares 2015
Number of shares 2014
Ordinary
Preferred
Ordinary
Preferred
In issue at January 1
Issued for cash
Conversion of preferred shares
Exercise of share options
Treasury shares issued
23,338,154
--
--
7,811
--
In issue at December 31 – fully paid
23,345,965
--
--
--
--
--
--
6,108,152
9,490,336
8,265,179
--
(525,513)
23,338,154
--
8,265,179
(8,265,179)
--
--
--
The authorized share capital of the Company amounting to € 934,000 consists of 23,345,965 ordinary shares
with a par value of € 0.04 per share. All issued shares have been fully paid in cash.
On April 17, 2014, the Company authorized and issued a total of 8,265,179 preferred shares, of which 619,682
preferred shares were issued as a result of the conversion of the outstanding convertible loan. In addition, on
the same date, 444,884 ordinary shares were issued to the Foundation “Stichting ProQR Therapeutics
Participation”. The gross proceeds from this share issuance (excluding the shares issued to the Foundation)
PAGE 46 / 72
Annual Report 2015
Financial Statements 2015
amounted to € 41,998,000 while the transaction costs amounted to € 1,632,000, resulting in net proceeds of €
40,366,000. The net proceeds received in cash amounted to € 37,806,000, while non-cash proceeds as a result
of the conversion of the convertible loan amounted to € 2,560,000.
On September 15, 2014, the general meeting of shareholders of the Company resolved to approve and effect
a capital reorganization, including a share split and bonus share issuance. The combined effect of the share
split and bonus share issuance was a 101.804232-for-1 share split of the outstanding ordinary and preferred
shares held by the Company’s shareholders. This share split became effective on September 15, 2014.
On September 18, 2014, the Company was listed at the NASDAQ Global Market under ticker symbol PRQR. In
connection with this listing, the Company issued a total of 8,625,000 ordinary shares against the initial public
offering price of $ 13.00, resulting in gross proceeds of $ 112,125,000 (€ 87,202,000). The number of shares
issued includes the exercise of the overallotment option granted to the underwriters. The net proceeds
raised in the offering amounted to € 80,376,000, net of € 8,589,000 of underwriting discounts and offering
expenses, of which € 6,826,000 was processed through share premium and € 1,763,000 was included in the
statement of comprehensive income as general and administrative costs.
All of the issued preferred shares were converted into the Company’s ordinary shares. The conversion rate
for the preferred shares was one-to-one, adjusted for the stock splits.
(b) Treasury shares
All treasury shares presented in the statement of changes in equity relate to ordinary shares that have legally
been issued, but that are within control of the Company. At 31 December 2015, the Company held 1,174,849
of the Company’s shares (2014: 1,182,660).
(c) Equity settled employee benefit reserve
The costs of share options for employees, members of the supervisory board and members of the
management board are recognized in the income statement, together with a corresponding increase in
equity during the vesting period, taking into account (deferral of) corporate income taxes. The accumulated
expense of share options recognized in the income statement is shown separately in the equity category
‘equity settled employee benefit reserve’ in the ‘statement of changes in equity’.
(d) Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations.
(e) Share options
The Company operates an equity-settled share-based compensation plan which was introduced in 2013.
Options may be granted to employees, members of the supervisory board, members of the management
board and consultants. The compensation expenses included in operating costs for this plan were €
1,212,000 in 2015 (2014: € 646,000), of which € 801,000 (2014: € 404,000) was recorded in general and
administrative costs and € 411,000 (2014: € 242,000) was recorded in research and development costs.
Options granted under this stock option plan are exercisable once vested. Any vesting schedule may be
attached to the granted options, however the typical vesting period is four years (25% after every year). The
options expire ten years after date of grant. Options granted under the stock option plan are granted at
exercise prices which equal the fair value of the ordinary shares of the Company at the date of the grant.
The Company accounts for its employee stock options under the fair value method. The fair value of the
options is estimated at the date of grant using the Black-Scholes option-pricing model, with on average the
PAGE 47 / 72
Annual Report 2015
Financial Statements 2015
following assumptions:
dsssds
Risk-free interest rate
Expected dividend yield
Expected volatility
Expected life in years
Options
granted in 2015
Options
granted in 2014
1.497%
0%
86.8%
5 years
0.616%
0%
88.6%
5 years
The resulting weighted average grant date fair value of the options amounted to € 10.35 in 2015 (2014:
€ 2.58). The stock options granted have a 10 year life following the grant date and are assumed to be
exercised five years from date of grant for all awards.
Movements in the number of options outstanding and their related weighted average exercise prices are as
follows:
dsssds
Balance at January 1
Granted
Forfeited
Exercised
Lapsed
Balance at December 31
Exercisable
2015
2014
Number of
options
Average
exercise price
Number of
options
Average
exercise price
998,765
125,798
(7,817)
(7,811)
--
1,108,935
339,352
€ 2.78
€ 15.27
€ 4.64
€ 1.78
--
€ 4.19
379,323
691,722
(11,095)
(61,185)
--
998,765
94,729
€ 1.11
€ 3.52
€ 1.20
€ 1.11
--
€ 2.78
The options outstanding at December 31, 2015 had an exercise price in the range of € 1.11 to € 20.34 (2014: €
1.11 to € 12.15) and a weighted-average contractual life of 8.3 years (2014: 9.2 years).
The weighted-average share price at the date of exercise for share options exercised in 2015 was € 19.30
(2014: € 3.04).
Please refer to Note 23 for the options granted to key management personnel.
PAGE 48 / 72
Annual Report 2015
Financial Statements 2015
13. Non-current liabilities
(a) Borrowings
dsssds
Innovation credit
Accrued interest on innovation credit
Innovation credit (“Innovatiekrediet”)
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
4,228
596
4,824
2,588
226
2,814
On June 1, 2012, ProQR was awarded an Innovation credit by the Dutch government, through its agency RVO
(previously: “AgentschapNL”) of the Ministry of Economic Affairs, for the Company’s cystic fibrosis program.
Amounts were drawn under this facility in the course of 2013, 2014 and 2015. The credit covers 35% of the
costs incurred in respect of the program up to an initial maximum of € 5.0 million through December 31,
2016.
The credit is interest-bearing at a rate of 10% per annum. The credit, including accrued interest, is repayable
in three instalments on August 31, 2017, August 31, 2018 and August 31, 2019, depending on the technical
success of the program.
The assets which are co-financed with the granted innovation credit are subject to a right of pledge for the
benefit of RVO.
(b) Finance lease liabilities
dsssds
Balance at January 1
Initial recognition new finance leases
Interest expense accrued
Payment of finance lease liabilities
Balance at December 31
Current portion at December 31
2015
€ 1,000
2014
€ 1,000
49
--
--
(34)
15
15
--
83
--
--
(34)
49
(34)
15
Certain of the Company’s property, plant and equipment items are subject to finance leases. These leases
relate to laboratory equipment. The net carrying amount of leased assets amounts to € 48,000 (2014: €
64,000).
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Annual Report 2015
Financial Statements 2015
Future minimum lease payments under finance leases as at December 31, 2015 are as follows:
dsssds
2015
2014
Minimum
payments
Present value
of payments
Minimum
payments
Present value
of payments
Less than 1 year
Between 1 and 5 years
More than 5 years
15
--
--
15
--
--
34
15
--
34
15
--
The interest used for the present value of payments is 2%.
14. Current Liabilities
dsssds
Current portion finance lease liabilities
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Accrued expenses and other liabilities
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
15
885
235
16
144
4,191
5,486
34
1,247
341
127
--
1,265
3,014
At December 31, 2015, current liabilities includes deferred income resulting from receipt of the first
installment of the € 6 million grant from the European Commission (EC) under the Horizon 2020 program to
finance the clinical development of QR-010.
The majority of the Company’s current liabilities are denominated in euros.
15. Other income
dsssds
Grant income
Rental income from property subleases
2015
€ 1,000
3,188
47
3,235
2014
€ 1,000
313
--
313
In August 2014, the Company entered into an agreement with Cystic Fibrosis Foundation Therapeutics, Inc.,
or CFFT, a subsidiary of the Cystic Fibrosis Foundation, pursuant to which CFFT agreed to provide the
PAGE 50 / 72
Annual Report 2015
Financial Statements 2015
Company with up to $ 3 million to support the clinical development of QR-010. The grant is recognized in
other income in the same period in which the related R&D costs are recognized.
In 2015, the European Commission (EC) through its Horizon 2020 program awarded ProQR and its academic
partners a grant of € 6 million (ProQR: € 4.4 million) to support the clinical development of QR-010 in the
period up till December 31, 2017. Horizon 2020 is one of the largest research and innovation programs in the
European Union with nearly € 80 billion in available funding for qualified projects from 2014 to 2020.
Both grants are recognized in other income in the same period in which the related R&D costs are
recognized.
16. Research and Development Costs
Research and development costs amounted to € 23,401,000 in 2015 (2014: € 10,267,000) and comprise
allocated employee costs, the costs of materials and laboratory consumables, the costs of external studies
including, amongst others, clinical studies and toxicology studies and external research, license- and IP-costs
and allocated other costs.
17. Employee Benefits
dsssds
Wages and salaries
Social security costs
Pension costs – defined contribution plans
Equity-settled share based payments
2015
€ 1,000
7,128
596
478
1,212
9,414
2014
€ 1,000
3,845
320
217
646
5,028
Average number of employees for the period
86.1
37.8
Employees per activity at December 31 (converted to FTE):
dsssds
Research and Development
General and Administrative
December 31,
2015
December 31,
2014
72.4
27.1
99.5
40.1
18.7
58.8
Of all employees 94.5 FTE are employed in the Netherlands (2014: 54.8 FTE).
Included in the wages and salaries for 2015 is a credit of € 372,000 (2014: € 301,000) with respect to WBSO
subsidies.
18. Financial Income and Expense
dsssds
Interest income
Current accounts and deposits
Interest costs
Interest on loans and borrowings
Foreign exchange result
Net foreign exchange benefit/(loss)
19. Income Taxes
The calculation of the tax charge is as follows:
dsssds
PAGE 51 / 72
Annual Report 2015
Financial Statements 2015
2015
€ 1,000
2014
€ 1,000
501
183
(395)
(265)
6,065
4,416
6,171
4,334
2015
€ 1,000
2014
€ 1,000
Income tax provision based on domestic rate (25%)
5,208
3,032
Tax effect of:
Non-deductible expenses
Tax incentives
Current year losses for which no deferred tax asset was recognized
Income tax charge
Effective tax rate
(309)
136
(5,035)
--
0%
(207)
2,065
(4,890)
--
0%
Due to the operating losses incurred since inception the Company has no tax provisions as of the balance
sheet date. Furthermore, no significant temporary differences exist between accounting and tax results.
Realization of deferred tax assets is dependent on future earnings, if any, the timing and amount of which are
uncertain. Accordingly, the Company has not yet recognized any deferred tax asset related to operating
losses. As per December 31, 2015, the Company has a total amount of € 46.9 million (2014: € 26.8 million) tax
loss carry-forwards available for offset against future taxable profits. According to current tax regulations the
first amount of the tax loss carry-forwards will expire in 2021.
20. Earnings Per Share
(a) Basic and diluted earnings per share
Basic earnings per share are calculated by dividing the result attributable to equity holders of the Company
by the weighted average number of shares outstanding during the year.
PAGE 52 / 72
Annual Report 2015
Financial Statements 2015
dsssds
Result attributable to equity holders of the Company (€ 1,000)
Weighted average number of shares
Basic (and diluted) earnings per share (€ per share)
2015
2014
(20,832)
(12,127)
23,343,262
11,082,801
€ (0.89)
€ (1.09)
(b) Diluted earnings per share
For the periods included in these financial statements, the share options are not included in the diluted
earnings per share calculation as the Company was loss-making in all periods. Due to the anti-dilutive nature
of the outstanding options, basic and diluted earnings per share are equal.
(c) Dividends per share
The Company did not declare dividends for any of the years presented in these financial statements.
21. Operational Leases
Since 2012, the Company is domiciled in Leiden. It currently has concluded rental agreements for laboratory
space and offices at two locations and one office in the US.
The lease expenditure charged to the income statement in 2015 amounts to € 703,000 (2014: € 258,000). The
future aggregate minimum lease payments under non-cancellable operating leases are as follows:
dsssds
Less than 1 year
Between 1 and 5 years
More than 5 years
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
1,837
7,212
--
9,049
509
277
--
786
The Company leases out a part of its offices in the US. In 2015, total sublease income amounted to € 47,000
(2014: nil). At 31 December, the future minimum lease payments under non-cancellable leases are receivable
as follows:
dsssds
Less than 1 year
Between 1 and 5 years
More than 5 years
December 31,
2015
December 31,
2014
€ 1,000
185
--
--
185
€ 1,000
--
--
--
--
PAGE 53 / 72
Annual Report 2015
Financial Statements 2015
22. Commitments and Contingencies
(a) Claims
There are no claims known to management related to the activities of the Company.
(b) Patent license agreement
The Company and the General Hospital Corporation (MGH) have entered into a Patent License Agreement
pursuant to which the Company may have certain royalty obligations. The Company is also obligated to pay
MGH up to $ 700,000 in milestone payments upon the achievement of certain development and regulatory
milestones and, beginning after its first commercial sale of a product covered by the licensed patent rights, a
$ 10,000 annual license fee which is creditable against royalties due to MGH in the same calendar year. In
addition, the Company is obligated to pay MGH 2% of any net sales by the Company, its affiliates or
sublicensees on licensed products made or sold in the United States, as well as a low double-digit percentage
of any payments the Company may receive from any sublicensee anywhere in the world.
The Company and the Radboud University Medical Center have entered into a Patent License Agreement
under which the Company is granted a world-wide exclusive license pursuant to which the Company may
have certain royalty obligations in relation to its product QR-110 for Leber’s congenital amaurosis. Pursuant
to the terms the Company has made an upfront payment and has to make sales-based royalty payments
after market authorization. The Company has the option to make a one-time payment in case the company
terminates the agreement before or after regulatory approval of the product. The Company may terminate
the agreement for any reason.
The Company and the Radboud University Medical Center have entered into a Patent License Agreement
under which the Company is granted a world-wide exclusive license under which the Company may have
certain royalty obligations in relation to Type II Usher Syndrome. Pursuant to the terms the Company has
made an upfront payment and has to make sales-based royalty payments after market authorization. The
Company has the option to make a one-time payment in case the Company terminates the agreement before
or after regulatory approval of the product. The Company may terminate the agreement for any reason.
The Company and the Leiden University Medical Centre have entered into a Patent License Agreement under
we were granted a world-wide exclusive license pursuant to which we may have certain royalty obligations in
relation to several CNS diseases. The Company is also obligated to pay LUMC up to € 910,000 in milestone
payments upon the achievement of certain development and regulatory milestones and, beginning after its
first commercial sale of a product covered by the licensed patent rights, a € 50,000 annual license fee which is
creditable against royalties due to LUMC in the same calendar year. In addition, the Company is obligated to
pay LUMC 3% of any net sales by the Company, its affiliates or sublicensees on licensed products. The
Company has the right to buy off the royalty obligations by a one-time payment of € 50 million.
The Company and PARI Pharma GmbH entered into an agreement pursuant to which the Company is granted
an exclusive license to the use of PARI’s eflow technology for the administration of oligonucleotide-based
mutations. Pursuant to the terms of the agreement, we have made an upfront payment, fees for
development work and are obligated to make sales-based royalty payments after market authorization.
(c) Clinical support agreement
In August 2014, the Company entered into an agreement with Cystic Fibrosis Foundation Therapeutics, Inc.,
or CFFT, a subsidiary of the Cystic Fibrosis Foundation, pursuant to which CFFT agreed to provide the
Company with up to $ 3 million to support the clinical development of QR-010.
PAGE 54 / 72
Annual Report 2015
Financial Statements 2015
Pursuant to the terms of the agreement, the Company is obligated to make a one-time milestone payment to
CFFT of up to approximately $ 80 million, payable in three equal annual installments following the first
commercial sale of QR-010, the first of which is due within 90 days following the first commercial sale. The
Company is also obligated to make a one-time milestone payment to CFFT of up to $ 3 million if net sales of
QR-010 exceed $ 500 million in a calendar year. Lastly, the Company is obligated to make a payment to CFFT
of up to approximately $ 6 million if it transfers, sells or licenses QR-010 other than for certain clinical or
development purposes, or if the Company enters into a change of control transaction. Either CFFT or the
Company may terminate the agreement for cause, which includes the Company’s material failure to achieve
certain commercialization and development milestones. The Company’s payment obligations survive the
termination of the agreement.
(d) Research and development commitments
The Company has research and development commitments, mainly with CRO's, amounting to € 9,481,000 at
December 31, 2015 (2014: € 1,758,000). Of these obligations an amount of € 9,084,000 is due in 2016, the
remainder is due in 1 to 5 years.
23. Related-Party Transactions
Details of transactions between the Company and related parties are disclosed below.
(a) Compensation of the Supervisory Board
On June 10, 2015, a new member, Mr. Paul Baart, was appointed to our supervisory board. The remuneration
of the supervisory board members in 2015 is set out in the table below:
dsssds
2015
Mr. Dinko Valerio
Mr. Henri Termeer
Mr. Antoine Papiernik
Ms. Alison Lawton
Mr. Paul Baart
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
36
34
73
31
73
247
--
--
--
--
--
--
12
11
--
48
--
71
48
45
73
79
73
318
The remuneration of the supervisory board members in 2014 is set out in the table below:
dsssds
2014
PAGE 55 / 72
Annual Report 2015
Financial Statements 2015
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
33
33
--
10
76
--
--
--
--
--
65
57
--
8
130
98
90
--
18
206
Mr. Dinko Valerio
Mr. Henri Termeer
Mr. Antoine Papiernik
Ms. Alison Lawton
As at December 31, 2015:
Mr. Valerio holds 943,420 ordinary shares in the Company, as well as 32,272 options. In 2014, Mr. Valerio
was granted 64,646 options under the Option Plan to acquire depositary receipts issued for ordinary
shares at an exercise price of € 1.11 per option. Under this option grant, 32,374 options were exercisable
immediately, while the remaining 32,272 options vest in four annual equal tranches of 25% starting for
the first time as of the first anniversary of the date of grant. Mr. Valerio exercised 32,374 options on June
30, 2014, for which he received 32,374 depositary receipts issued for ordinary shares after payment of
the exercise price. These depositary receipts have been included in his total number of ordinary shares
held.
Mr. Termeer holds 1,730,714 ordinary shares in the Company as well as 28,709 options. In 2014,
Mr. Termeer was granted 57,520 options under the Option Plan to acquire depositary receipts issued for
ordinary shares at an exercise price of € 1.11 per option. Under this option grant 28,811 options were
exercisable immediately, while the remaining 28,709 options vest in four annual equal tranches of 25%
starting for the first time as of the first anniversary of the date of grant. Mr. Termeer exercised 28,811
options on June 30, 2014, for which he received 28,811 depositary receipts issued for ordinary shares
after payment of the total exercise price. These depositary receipts have been included in his total
number of ordinary shares.
Mr. Antoine Papiernik does not hold any shares or options in the Company. As a managing partner of
Sofinnova Partners SAS, the management company of Sofinnova Capital VII FCPR, holder of 2,769,125
ordinary shares, Mr. Papiernik may be deemed to have share voting and investment power with respect
to such shares.
Ms. Lawton holds 12,820 options. In 2014, Ms. Lawton was granted 7,850 options under the Option Plan
to acquire depositary receipts issued for ordinary shares at an exercise price of € 10.03 per option. In
2015, she was granted 4,970 options with an exercise price of € 16.10 per option. Under these option
grants options vest in four annual equal tranches of 25% starting for the first time as of the first
anniversary of the date of grant.
Mr. Paul Baart does not hold any shares or options in the Company.
PAGE 56 / 72
Annual Report 2015
Financial Statements 2015
(b) Compensation of key management personnel
Our management board is supported by our officers, or senior management. The total remuneration of the
management board and senior management in 2015 amounted to € 2,420,000 with the details set out in the
table below:
dsssds
Mr. D.A. de Boer
Mr. R.K. Beukema
Management Board
Senior Management
2015
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
3971
3132
710
943
1,653
7
13
20
27
47
164
88
252
468
720
568
414
982
1,438
2,420
1
2
Short term employee benefits in 2015 includes a bonus for Mr. Daniel de Boer, of € 100,000.
Short term employee benefits in 2015 includes a bonus for Mr. René Beukema, of € 46,000.
The total remuneration of the management board and senior management in 2014 amounted to € 1,818,000
with the details set out in the table below:
dsssds
2014
Mr. D.A. de Boer1
Mr. R.K. Beukema2
Management Board
Senior Management
Short term
employee
benefits
Post
employment
benefits
Share-based
payment
Total
€ 1,000
€ 1,000
€ 1,000
€ 1,000
696
154
850
448
1,298
10
17
27
41
68
195
55
250
202
452
901
226
1,127
691
1,818
1
2
Short-term employee benefits in 2014 includes a bonus for our chief executive officer, Mr. Daniel de Boer, of € 500,000.
Share-based payments includes € 165,000 of employee benefits resulting from the repayment of the loan by Mr. De Boer.
Mr. René Beukema joined the Company on September 1, 2013 and was appointed to the management board on
April 17, 2014. The table includes his remuneration received since January 1, 2014.
As at December 31, 2015:
Mr. de Boer holds 1,213,201 ordinary shares in the Company as well as 79,894 options. In 2014, Mr. de
Boer was awarded a total number of 55,992 options to acquire ordinary shares at € 3.04 per option. In
2015, he was awarded 23,902 options at an exercise price of € 16.10 per option. These options vest over
four years in equal annual installments and had a remaining weighted-average contractual life of 8.7
years at December 31, 2015.
Mr. Beukema holds 284,720 ordinary shares in the Company as well as 147,065 options. In 2014,
Mr. Beukema was awarded 30,541 options to acquire ordinary shares at € 3.04 per option. In 2015, he
PAGE 57 / 72
Annual Report 2015
Financial Statements 2015
was awarded 8,713 options at an exercise price of
€ 16.10 per option. These options vest over four years in equal annual installments and had a remaining
weighted-average contractual life of 8.0 years at December 31, 2015.
ProQR does not grant any loans, advanced payments and guarantees to members of the Management and
Supervisory Board.
24. Subsequent events
Material subsequent events have not been identified.
PAGE 58 / 72
Annual Report 2015
Financial Statements 2015
Company balance sheet at December 31, 2015
(Before appropriation of result)
dsssds
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Financial fixed assets
Current assets
Social securities and other taxes
Prepayments and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
Shareholders' equity
Share capital
Share premium reserve
Equity settled employee benefits reserve
Translation reserve
Accumulated deficit
Unappropriated result
LIABILITIES
Provisions
Non-current liabilities
Finance lease liabilities
Borrowings
Current liabilities
Finance lease liabilities
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Other current liabilities
Note
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
--
--
0
0
774
1,638
94,862
97,274
163
1,187
--
1,350
426
735
112,736
113,897
97,274
115,247
934
123,595
1,899
1
(15,798)
(20,832)
89,799
934
123,581
687
--
(3,671)
(12,127)
109,404
1,922
--
--
4,824
4,824
--
--
38
--
144
547
729
15
2,814
2,829
34
1,247
341
127
--
1,265
3,014
27
28
29
30
31
32
13
33
TOTAL EQUITY AND LIABILITIES
97,274
115,247
The accompanying notes are an integral part of these financial statements.
Company income statement for the year ended December 31, 2015
dsssds
Note
Share in results of participating interests, after taxation
27
Other result after taxation
Net result for the year
The accompanying notes are an integral part of these financial statements.
PAGE 59 / 72
Annual Report 2015
Financial Statements 2015
2015
€ 1,000
(14,104)
(6,728)
2014
€ 1,000
--
(12,127)
(20,832)
(12,127)
PAGE 60 / 72
Annual Report 2015
Financial Statements 2015
Notes to the Company financial statements for the year ended December 31, 2015
25. General
The company financial statements are part of the 2015 financial statements of ProQR Therapeutics N.V. (the
‘Company’) and have been prepared in accordance with the legal requirements of Part 9, Book 2 of the
Netherlands Civil Code.
With reference to the income statement of the company, use has been made of the exemption pursuant to
Section 402 of Book 2 of the Netherlands Civil Code.
26. Principles for the measurement of assets and liabilities and the determination of the result
For setting the principles for the recognition and measurement of assets and liabilities and determination of
the result for its company financial statements, the Company makes use of the option provided in section
2:362(8) of the Netherlands Civil Code. This means that the principles for the recognition and measurement
of assets and liabilities and determination of the result (hereinafter referred to as principles for recognition
and measurement) of the company financial statements of the Company are the same as those applied for
the consolidated IFRS financial statements. See page 31 for a description of these principles.
Participating interests in group companies
Participating interests in group companies are accounted for in the company financial statements according
to the equity method. If the net asst value is negative, the participating interest is valued at nil. This likewise
takes into account other long-term interests that should effectively be considered part of the net investment
in the participating interest. If the company fully or partly guarantees the liabilities of the associated company
concerned, or has the effective obligation respectively to enable the associated company to pay its (share of
the) liabilities, a provision is formed. Upon determining this provision, provisions for doubtful debts already
deducted from the receivables from the associated company are taken into account. Refer to the basis of
consolidation accounting policy in the consolidated financial statements.
Result of participating interests
The share in the result of participating interests consists of the share of the Company in the result of these
participating interests. In so far as gains or losses on transactions involving the transfer of assets and
liabilities between the Company and its participating interests or between participating interests themselves
can be considered unrealised, they have not been recognised.
27. Financial fixed assets
dsssds
Participating interests in group companies
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
0
0
--
--
Movements in participating interests were as follows:
dsssds
Net asset value as of January 1
Demerger
Share in results of participating interests, after taxation
Exchange differences
Change in provisions for negative net asset value
Net asset value as of December 31
PAGE 61 / 72
Annual Report 2015
Financial Statements 2015
Participating
interests
in group
companies
Total
€ 1,000
€ 1,000
--
3,812
(14,104)
1
10,291
0
--
--
--
--
--
--
Legal demerger of our Company was effectuated as per June 30, 2015. At December 31, 2015, the Company,
having its statutory seat in Leiden, the Netherlands, is the ultimate parent company of the following
consolidated participating interests:
Name
ProQR Therapeutics Holding B.V.
ProQR Therapeutics I B.V.
ProQR Therapeutics II B.V.
ProQR Therapeutics III B.V.
ProQR Therapeutics IV B.V.
ProQR Therapeutics I Inc.
Location
Share in issued capital
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Leiden, the Netherlands
Delaware, United States
100%
100%
100%
100%
100%
100%
For details on the accounts receivable from participating interests and the other receivables, reference is
made to note 29.
28. Social Security and Other Taxes
dsssds
Value added tax
All receivables are considered short-term and due within one year.
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
774
774
426
426
PAGE 62 / 72
Annual Report 2015
Financial Statements 2015
29. Prepayments and Other Receivables
dsssds
Accounts receivable from group companies
Prepayments
Other receivables
All receivables are considered short-term and due within one year.
30. Cash and Cash Equivalents
dsssds
Cash at banks
Bank deposits
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
855
270
513
1,638
--
408
327
735
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
94,862
--
94,862
83,084
29,652
112,736
The cash at banks is at full disposal of the Company. Bank deposits are convertible into cash upon request of
the Company.
PAGE 63 / 72
Annual Report 2015
Financial Statements 2015
31. Shareholders’ equity
Share
Capital
Share
Premium
Equity
Settled
Employee
Benefit
Reserve
Trans-
lation
Reserve
Accumu-
lated
Deficit
Unappro-
priated
result
Total
Equity
€ 1,000
€ 1,000
€ 1,000
€ 1,000
€ 1,000
€ 1,000
Balance at January 1, 2014
59
3,482
Retained result
Recognition of share-based
payments
--
--
--
--
Shares issued in the period
880
122,291
Treasury shares issued
Result for the year
(5)
--
(2,192)
--
41
--
646
--
--
--
Balance at December 31,
2014
934
123,581
687
Retained result
Other comprehensive
income
Recognition of share-based
payments
Share options exercised
Result for the year
Balance at December 31,
2015
--
--
--
0
--
--
--
--
14
--
--
--
1,212
--
--
--
--
--
--
--
--
--
--
1
--
--
--
(418)
(3,253)
(89)
(3,253)
3,253
(12,127)
(12,127)
--
646
123,171
(2,197)
--
1
1,212
14
--
--
--
--
--
--
(20,832)
(20,832)
--
--
--
--
--
--
--
--
(3,671)
(12,127)
109,404
(12,127)
12,127
934
123,595
1,899
1
(15,798)
(20,832)
89,799
The 2014 result was added to the accumulated deficit in accordance with the resolution of the Annual
General Meeting of shareholders. At the upcoming Annual General Meeting of shareholders, it will be
proposed to add the 2015 result to the accumulated deficit. For more details we refer to note 12 to the
consolidated financial statements.
32. Provisions
dsssds
December 31,
2015
December 31,
2014
Provision for negative equity group companies
€ 1,000
€ 1,000
Balance at January 1
Provisions made during the year
Balance at December 31
--
1,922
1,922
--
--
--
PAGE 64 / 72
Annual Report 2015
Financial Statements 2015
33. Current Liabilities
dsssds
Current portion finance lease liabilities
Trade payables
Social securities and other taxes
Pension premiums
Deferred income
Accrued expenses and other liabilities
December 31,
2015
December 31,
2014
€ 1,000
€ 1,000
--
--
38
--
144
547
729
34
1,247
341
127
--
1,265
3,014
At December 31, 2015, current liabilities includes deferred income resulting from receipt of the first
installment of the € 6 million grant from the European Commission (EC) under the Horizon 2020 program to
finance the clinical development of QR-010.
The majority of the Company’s current liabilities are denominated in euros.
34. Commitments and Contingencies
(a) Claims
There are no claims known to management related to the activities of the Company.
(b) Clinical support agreement
In August 2014, the Company entered into an agreement with Cystic Fibrosis Foundation Therapeutics, Inc.,
or CFFT, a subsidiary of the Cystic Fibrosis Foundation, pursuant to which CFFT agreed to provide the
Company with up to $ 3 million to support the clinical development of QR-010.
Pursuant to the terms of the agreement, the Company is obligated to make a one-time milestone payment to
CFFT of up to approximately $ 80 million, payable in three equal annual installments following the first
commercial sale of QR-010, the first of which is due within 90 days following the first commercial sale. The
Company is also obligated to make a one-time milestone payment to CFFT of up to $ 3 million if net sales of
QR-010 exceed $ 500 million in a calendar year. Lastly, the Company is obligated to make a payment to CFFT
of up to approximately $ 6 million if it transfers, sells or licenses QR-010 other than for certain clinical or
development purposes, or if the Company enters into a change of control transaction. Either CFFT or the
Company may terminate the agreement for cause, which includes the Company’s material failure to achieve
certain commercialization and development milestones. The Company’s payment obligations survive the
termination of the agreement.
(c) Several liability and guarantees
The Company has issued declarations of joint and several liabilities for debts arising from the actions of
Dutch consolidated participating interests, as meant in article 2:403 of the Netherlands Civil Code.
The Company constitutes a tax entity with its Dutch subsidiaries for corporate income tax purposes; the
standard conditions prescribe that all companies of the tax entity are jointly and severally liable for the
corporate income tax payable.
35. Auditor fees
The fees for services provided by our external auditor, Deloitte Accountants B.V., are specified below for each
of the financial years indicated:
PAGE 65 / 72
Annual Report 2015
Financial Statements 2015
dsssds
Audit fees
Audit-related fees
Tax fees
All other fees
Audit fees
2015
€ 1,000
2014
€ 1,000
193
--
--
--
193
390
--
--
--
390
Consist of aggregate fees for professional services provided in connection with the annual audit of our
financial statements, the review of our quarterly financial statements, consultations on accounting matters
directly related to the audit, and comfort letters, consents and assistance with and review of documents filed
with the SEC. Audit fees for 2014 also included fees associated with our initial public offering.
PAGE 66 / 72
Annual Report 2015
Financial Statements 2015
Signing of the Annual Report
Leiden, March 31, 2016,
D.A. de Boer
D. Valerio
R.K. Beukema
H.A. Termeer
A.B. Papiernik
A. Lawton
P.R. Baart (as of June 10, 2015)
PAGE 67 / 72
Annual Report 2015
Financial Statements 2015
Other information
Independent auditor’s report
Reference is made to the independent auditor’s report as included hereinafter.
Statutory arrangement concerning the appropriation of the result
In Article 21 of the Company statutory regulations the following has been presented concerning the
appropriation of result:
1. The profit is at the free disposal of the General Meeting of Shareholders.
2. The Company may only distribute profits to shareholders and other recipients to distributable profits to
the extent that the equity exceeds the paid-up capital plus the reserves required by law.
3. Distribution of profits shall take place after adoption of the annual accounts from which it becomes clear
that distribution is permissible.
4. When calculating the distribution of profits shares held by the Company shall be disregarded, unless this
shares has been encumbered with usufruct or right of pledge or certificates thereof are issued as a result of
which the entitlement to profits accrue to the usufructuary, pledgee or holder of the certificates.
5. Certificates held by the Company or whereon the Company holds limited rights as a result of which the
Company is entitled to distribution of profits shall also be disregarded when calculating the distribution of
profits.
6. The Company may make interim distributions, only if the requirements in paragraph 2 are met.
Proposed result appropriation for the financial year 2015
The Company proposes the general meeting of shareholders to add the loss for the year ended December
31, 2015 of € 20,832,000 to the accumulated deficit. The financial statements reflect this proposal.
Subsequent events
Material subsequent events have not been identified.
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Annual Report 2015
Financial Statements 2015
Independent auditor’s report
To the Shareholders and Supervisory Board of ProQR Therapeutics N.V.
Report on the audit of the financial statements 2015
Our Opinion
We have audited the financial statements 2015 of ProQR Therapeutics N.V. based in Leiden, The Netherlands.
The financial statements include the consolidated financial statements and the company financial
statements.
In our opinion:
The consolidated financial statements give a true and fair view of the financial position of ProQR
Therapeutics N.V. as of December 31, 2015, and of its result and its cash flows for 2015 in accordance
with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and with
Part 9 of Book 2 of the Dutch Civil Code.
The company financial statements give a true and fair view of the financial position of ProQR
Therapeutics N.V. as of December 31, 2015, and of its result for 2015 in accordance with Part 9 of Book 2
of the Dutch Civil Code.
What we have audited
The consolidated financial statements comprise:
The consolidated statement of financial position as at December 31, 2015.
The following consolidated statements for the year ended December 31, 2015: profit or loss and
comprehensive income, changes in equity and cash flows.
The notes comprising a summary of the significant accounting policies and other explanatory
information.
The company financial statements comprise:
The company balance sheet at December 31, 2015.
The company income statement for the year ended December 31, 2015.
The notes comprising a summary of the significant accounting policies and other explanatory
information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our
responsibilities under those standards are further described in the “Our responsibilities for the audit of the
financial statements” section of our report.
We are independent of ProQR Therapeutics N.V. in accordance with the Verordening inzake de
onafhankelijkheid van accountants bij assurance-opdrachten (ViO) and other relevant independence
regulations in the Netherlands. Furthermore we have complied with the Verordening gedrags- en
beroepsregels accountants (VGBA).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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Annual Report 2015
Financial Statements 2015
Our audit approach
As part of our audit we have determined materiality and used it to assess the risks of material misstatement.
We have specifically assessed accounts where subjectivity is high because of estimates regarding uncertain
future developments. We have likewise specifically focused on the risk related to management override of
controls and the risk of material misstatement due to fraud. In addition, our audit expressly included the
continuity and reliability of the automated information systems.
Materiality
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements. The materiality affects the nature, timing and extent of our audit procedures and the
evaluation of the effect of identified misstatements on our opinion.
Based on our professional judgement we determined the materiality for the financial statements as a whole
at EUR 2 million. The materiality is based on 7,5% of normalized loss before tax. We have also taken into
account misstatements and/or possible misstatements that in our opinion are material for the users of the
financial statements for qualitative reasons.
We agreed with the supervisory board that misstatements in excess of EUR 100,000, which are identified
during the audit, would be reported to them, as well as smaller misstatements that in our view must be
reported on qualitative grounds.
Scope of the group audit
ProQR Therapeutics N.V. is at the head of a group of entities. The financial information of this group is
included in the financial statements of ProQR Therapeutics N.V..
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and
performing the group audit. In this respect we have determined the nature and extent of the audit
procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group
entities or operations. We have performed audit procedures on all group entities. The work is performed by
the group engagement team.
The financial administration for all group entities is centralized in the Netherlands. Consequently, we have
centralized our audit approach and we have been able to obtain sufficient and appropriate audit evidence
about the group’s financial information to provide an opinion about the financial statements.
Our key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements. We have communicated the key audit matters to the supervisory board. The
key audit matters are not a comprehensive reflection of all matters discussed.
These matters were addressed in the context of our audit of the financial statements as a whole and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Research and development expenses
The total research and development expenses for the year 2015 amounts to EUR 23.4 million. These research
and development expenses consists of payroll costs of employees as well as outsourced research and
development activities with third party suppliers. The research and development activities with these
suppliers are concluded in master service agreements and statements of work. These outsourced research
and development activities are typically performed over a period of time and allocation of expenses in each
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Annual Report 2015
Financial Statements 2015
reporting period based on the progress of the work involves judgment. Our audit procedures included,
amongst others, the review of the agreements with suppliers and the related accounting evaluation as well as
the timing of expenses recognized.
Significant contracts
In 2015, ProQR Therapeutics N.V. concluded several significant contracts, amongst others, the agreements
with European Commission in relation to H2020 grant and the above mentioned research and development
agreements. These contracts contain terms and conditions that may require complex accounting and/or
significant long-term commitments that require disclosure in the financial statements. Our audit procedures
included, amongst others, the review of the contract register, review of the contract terms and related
accounting evaluation of the impact on the financial statements including disclosures of the commitments.
Cash and cash equivalents
The total cash and cash equivalents as per December 31, 2015 amounts to EUR 94.9 million. We focused on
this area as the cash and cash equivalents are material to the financial statements. We reconciled the bank
balances to bank confirmations, recalculated the foreign exchange result on these balances and reviewed the
bank confirmations and underlying agreements for deposit balances to assess the presentation and
disclosure in the financial statements.
Responsibilities of management and the supervisory board for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the
management board report in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore,
management is responsible for such internal control as management determines is necessary to enable the
preparation of the financial statements that are free from material misstatement, whether due to fraud or
error.
As part of the preparation of the financial statements, management is responsible for assessing the
company’s ability to continue as a going concern. Based on the financial reporting framework mentioned,
management should prepare the financial statements using the going concern basis of accounting unless
management either intends to liquidate the company or to cease operations, or has no realistic alternative
but to do so. Management should disclose events and circumstances that may cast significant doubt on the
company’s ability to continue as a going concern in the financial statements.
The supervisory board is responsible for overseeing the company’s financial reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and
appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not
have detected all errors and fraud.
For an overview of our responsibilities we refer to the appendix of this audit report.
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Annual Report 2015
Financial Statements 2015
Report on other legal and regulatory requirements
Report on the management board report and the other information
Pursuant to legal requirements of Part 9 of Book 2 of the Dutch Civil Code (concerning our obligation to
report about the management board report and other information):
We have no deficiencies to report as a result of our examination whether the management board
report, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of the Dutch
Civil Code, and whether the information as required by Part 9 of Book 2 of the Dutch Civil Code has
been annexed.
We report that management board report, to the extent we can assess, is consistent with the financial
statements.
Engagement
We were engaged by the supervisory board as auditor of ProQR Therapeutics N.V. as of the audit for the year
2012 and operated as statutory auditor ever since that date.
Amsterdam, March 31, 2016
Deloitte Accountants B.V.
P.J.M.A. van de Goor
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Annual Report 2015
Financial Statements 2015
Appendix to the independent auditor’s report
Our responsibilities for the audit of the financial statements
We have exercised professional judgment and have maintained professional skepticism throughout the audit,
in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our
audit included e.g.:
Identifying and assessing the risks of material misstatement of the financial statements, whether due to
fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtaining an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control.
Evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Concluding on the appropriateness of management’s use of the going concern basis of accounting, and
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Company ceasing to continue as a going concern.
Evaluating the overall presentation, structure and content of the financial statements, including the
disclosures.
Evaluating whether the financial statements represent the underlying transactions and events in a
manner that achieves fair presentation.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant findings in internal control that we identify
during our audit.
We provide the Supervisory Board with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters
that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or, in extremely rare circumstances, when non-mentioning is in the public
interest.
ANNUAL
REPORT
2015
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ProQR Therapeutics N.V.
T: +31 88 166 7000
W: www.proqr.com
E: info@proqr.com
Office Leiden:
Darwinweg 24, 2333 CR Leiden,
The Netherlands
Office Palo Alto:
543 Bryant Street, Palo Alto,
CA 94301, US